PMLA Remand Order Valid if Prima Facie Case and Section 19 Compliance Exist, Irrespective of Alleged Illegal Custody in Predicate Offence: Madras High Court - 2024-09-11

Madras High Court Upholds PMLA Remand of Jaffer Sadiq , Rejects "Illegal Custody" Argument

CHENNAI: The Madras High Court on Wednesday dismissed a petition filed by Jaffer Sadiq challenging his remand in a money laundering case, ruling that the validity of a remand order under the Prevention of Money Laundering Act (PMLA), 2002, hinges on procedural compliance and a prima facie case, not on the alleged illegality of custody in a separate predicate offence.

A Division Bench of Justice S.M. Subramaniam and Justice V. Sivagnanam held that there was "no infirmity or perversity" in the remand order issued by the Principal Sessions Judge (Special Court under PMLA), Chennai, on July 15, 2024.

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Background of the Case

The case stems from a petition filed by Jaffer Sadiq seeking to quash his remand order. Sadiq was produced before the Chennai PMLA court based on a Production Transit (P.T.) Warrant while he was in judicial custody at Tihar Jail, Delhi, in connection with a case under the Narcotic Drugs and Psychotropic Substances (NDPS) Act.

The petitioner's challenge was primarily built on two arguments: 1. The Special Judge failed to apply judicial mind before ordering the remand. 2. Since Sadiq had been granted bail in the underlying NDPS case in Delhi, the P.T. Warrant used for his production in Chennai had become "infructuous" (ineffective), rendering his subsequent detention and remand illegal.

Arguments Before the High Court

Mr. Abdu Kumar Raja Rathinam , senior counsel for Jaffer Sadiq , argued that the Special Court should have recognized the invalidity of the P.T. Warrant post-bail and returned it, thereby releasing the accused. The core contention was that the foundation for his production in the PMLA case had collapsed, making the remand a procedural illegality.

Representing the Directorate of Enforcement (ED), Special Public Prosecutor Mr. N. Ramesh 's position, as noted by the court, was that all legal mandates for the arrest were fulfilled. The ED had recorded the reasons for arrest, communicated them to Sadiq , and informed his family, thereby complying with the stringent requirements of Section 19 of the PMLA. The ED asserted that a strong prima facie case for money laundering exists, as the NDPS case for which Sadiq was initially arrested constitutes a "scheduled offence" under the PMLA.

Court's Rationale and Findings

The High Court meticulously examined the reasoning of the PMLA Special Court and found it to be sound. The bench highlighted that the Special Judge had correctly focused on the requirements for a PMLA remand rather than adjudicating the legality of custody in the separate Delhi NDPS case.

In its judgment, the High Court observed:

"The learned Special Judge had gone through the records submitted by the Enforcement Directorate. On perusal of the records, it is found that the Assistant Director, Enforcement Directorate has recorded his reasons to believe in writing based on the materials in his possession and it was communicated to the accused... Therefore, the conditions stipulated for making arrest of the accused under Section 19 of Prevention of Money Laundering Act, 2002 (PMLA), have been complied with."

The bench further affirmed the lower court's finding that a prima facie case was established.

"Based on the materials available on record, the learned Special Judge found that prima facie case has been made out against the accused for the offence under Section 3 of PMLA, punishable under Section 4 of PMLA."

Crucially, the High Court separated the issue of the PMLA remand from the petitioner's grievance regarding his custody in the NDPS matter. It concluded that any debate over the legality of his detention in the Delhi case was not a relevant factor for determining the validity of the fresh remand order issued by the competent PMLA court in Chennai.

Final Decision

Concluding that the Special Judge had acted within jurisdiction and upon due satisfaction of the materials presented, the High Court found no grounds to interfere. "The petitioner has not made out any acceptable ground for the purpose of assailing the remand order," the bench stated, dismissing the criminal original petition and upholding the legality of Jaffer Sadiq 's continued remand in the money laundering case.