J&K High Court Rules Section 5(1)(d) J&K PC Act Remains a Scheduled Offence Under PMLA

Justice Sanjay Dhar of the High Court of Jammu & Kashmir and Ladakh has dismissed a petition by M/S Reach Dredging Limited that challenged the Enforcement Directorate’s jurisdiction to probe alleged money laundering arising from a corruption case. The Court held that the offence under Section 5(1)(d) of the J&K Prevention of Corruption Act continues to be a “scheduled offence” under the Prevention of Money Laundering Act (PMLA), even after the 2018 amendment that omitted Section 13(1)(d) of the Central Prevention of Corruption Act.

When Dredging Work Turned Into a Money Laundering Probe

The case traces back to 2018, when the Executive Engineer, Flood Spill Channel, Narbal, issued a tender for construction and dredging work at the Hokersar Wetland. M/S Reach Dredging Limited emerged as the lowest bidder and was issued a Letter of Intent on 15 September 2018, followed by an allotment order in February 2019. The company completed the work in 2020 to the satisfaction of the irrigation and wildlife departments.

However, five years later, on 18 April 2025, the Anti-Corruption Bureau (ACB) Srinagar registered FIR No.7/2025 under Section 5(1)(d) of the J&K PC Act and Section 120-B RPC, alleging criminal misconduct. The petitioner challenged that FIR before the High Court, which on 23 September 2025 directed the ACB not to file a charge-sheet without court permission.

While that matter was pending, the Enforcement Directorate issued a summons on 17 September 2025 under Section 50 of the PMLA, requiring the company’s director to appear. The ED had also registered an Enforcement Case Information Report (ECIR) on 30 July 2025. Reach Dredging then moved a fresh petition under Section 528 BNSS, arguing the ED had no jurisdiction because the predicate offence was not a scheduled offence.

The Nub of the Dispute: Did the 2018 Amendment Cut the Cord?

Section 5(1)(d) of the J&K PC Act criminalises a public servant who, by corrupt or illegal means, obtains a valuable thing or pecuniary advantage for himself or another. Prior to 2018, this was mirrored by Section 13(1)(d) of the Central PC Act, a scheduled offence under the PMLA. In July 2018, Parliament omitted Section 13(1)(d) while simultaneously expanding Section 7 to cover bribery in a broader manner.

The petitioner argued that with the deletion of the corresponding central provision, Section 5(1)(d) of the J&K Act ceased to be a scheduled offence. It contended that Section 2(2) of the PMLA, which allows reference to a corresponding state law when the central enactment is not in force, could not rescue the situation because there was no corresponding central provision left.

The Enforcement Directorate countered that the conduct earlier covered by Section 13(1)(d) now falls within the ambit of the amended Section 7 of the Central PC Act—which is expressly listed in the PMLA schedule. Therefore, by virtue of Section 2(2), the J&K provision remains a scheduled offence.

Beyond the Deletion: The Court’s Textual and Purposive Reading

Justice Dhar began by reiterating the settled law from Vijay Madanlal Choudhary v. Union of India (2022 SCC OnLine SC 929): the existence of a scheduled offence is a sine qua non for invoking the PMLA. Proceeds of crime must be derived from criminal activity relating to a scheduled offence.

The Court then compared the pre-amendment Section 13(1)(d) with Section 5(1)(d) of the J&K Act and found them in pari materia . Turning to the Statement of Objects and Reasons of the 2018 Amendment Act, the Court observed that Parliament did not intend to decriminalise the conduct; rather, it wanted to consolidate bribery offences under a single, comprehensive provision.

The key insight: the new Section 7, with its Explanation-2, covers a public servant obtaining an undue advantage for himself or another by abusing his position or through corrupt or illegal means—the same conduct earlier punishable under Section 13(1)(d). The Court therefore concluded that the amended Section 7 is the corresponding central provision to Section 5(1)(d) of the J&K Act.

The petitioner’s alternative argument—that Section 7 corresponds to Section 4-A of the J&K PC Act—was rejected. Section 4-A only covers gratification for an official act and does not encompass the broader “abuse of position” element now found in Section 7.

Key Observations from the Bench

“After coming into effect of amendment Act of 2018, amended Section 7 of the Central PC Act is the provision corresponding to Section 5(1)(d) of the J&K PC Act.”

“Since amended Section 7 of the Central PC Act is a Scheduled offence, therefore, offence under Section 5(1)(d) of the J&K PC Act would also fall within the definition of a scheduled offence in the light of the provisions contained in Section 2(2) of the PMLA.”

“The Legislature, on the one hand, intended to expand the scope of Section 7 of the Central PC Act so as to include even the offences which are covered under Section 13(1)(d) of the said Act.”

The Court also clarified that Section 4-A of the J&K Act is not a substitute for the amended Section 7, as it does not cover acts of a public servant obtaining an advantage by abusing his position—unlike Section 7 which explicitly includes such conduct.

Petition Dismissed, ED’s Jurisdiction Upheld

Justice Dhar answered the first legal question—whether there is no corresponding provision to Section 5(1)(d) J&K in the Central PC Act after 2018—in the negative. Consequently, the second question about the validity of the ED’s proceedings also fell.

The petition was dismissed. The ED’s summons and the ECIR registered against M/S Reach Dredging Limited survive the challenge. The judgment reinforces that state-specific anti-corruption laws remain integrated with the PMLA framework through Section 2(2), provided the central statute covers analogous conduct—even if the exact provision has been renumbered or recast by amendment.