ED Can Probe Money Laundering In J&K Corruption Cases: J&K High Court Rules S. 5(1)(d) J&K PC Act Corresponds To Amended S. 7 Of Central 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." High Court of Jammu & Kashmir and Ladakh, in a significant ruling dated August 21, 2026, held that money laundering probes initiated by the Enforcement Directorate arising out of offences under the erstwhile State anti-corruption law remain legally sustainable despite parliamentary amendments to the Central corruption statute.

A single bench of Justice Sanjay Dhar dismissed a plea challenging an Enforcement Case Information Report and Section 50 summons, holding that the Directorate of Enforcement retains full jurisdiction under the Prevention of Money Laundering Act, 2002 to investigate predicate offences registered under Section 5(1)(d) of the Jammu & Kashmir Prevention of Corruption Act.

The petitioner company was awarded a dredging and flood spill channel contract across Hokersar Wetland in 2018, which it executed and completed in 2020. Five years later, the Anti-Corruption Bureau, Srinagar, registered FIR No. 7/2025 against the company for criminal misconduct under Section 5(1)(d) of the J&K PC Act read with Section 120-B of the Ranbir Penal Code. Based on this FIR, the Enforcement Directorate recorded ECIR No. SRZO/08/2025 and issued summons under Section 50 of the PMLA, prompting the petitioner to challenge the agency's jurisdiction before the High Court.

The primary question before the court was whether, upon the repeal and omission of Section 13(1)(d) of the Central Prevention of Corruption Act, 1988 via the 2018 Amendment Act, there ceased to be any corresponding provision in pari materia with Section 5(1)(d) of the erstwhile J&K PC Act. The court was also called upon to determine whether proceedings and summons issued by the Enforcement Directorate under the PMLA could be sustained in relation to offences committed under the State enactment.

Existence Of Scheduled Offence Is Sine Qua Non For PMLA Jurisdiction

Addressing the foundational requirements for an ED investigation, the court emphasized that the assumption of jurisdiction under the PMLA is inextricably tied to the existence of a scheduled offence yielding proceeds of crime. Relying on the landmark Supreme Court ruling in Vijay Madanlal Choudhary v. Union of India, the bench observed that the authorities under the 2002 Act cannot initiate action against any person on the mere assumption that property recovered constitutes proceeds of crime unless a scheduled offence is duly registered.

"The authorities under the 2002 Act cannot resort to action against any person for money-laundering on an assumption that the property recovered by them must be proceeds of crime and that a scheduled offence has been committed, unless the same is registered with the jurisdictional police."

Bridging State Offences Into PMLA Through Section 2(2)

The bench scrutinized the interplay between the Central PC Act and the J&K PC Act, noting that while the State legislation does not explicitly feature in the Schedule to the PMLA, Section 2(2) of the PMLA operates as an enabling bridge. The court explained that by virtue of Section 2(2), any reference in the PMLA Schedule to an enactment not in force in a particular territory must be construed as a reference to the corresponding law in force in that area at the material time.

2018 Amendment Subsumed Criminal Misconduct Under Recast Section 7

Rejecting the petitioner's argument that the 2018 legislative omission of Section 13(1)(d) of the Central PC Act rendered Section 5(1)(d) of the J&K PC Act non-existent in the Central schedule, the court analyzed the Statement of Objects and Reasons of the Prevention of Corruption (Amendment) Act, 2018. The bench observed that the deletion of Section 13(1)(d) was not an abolition of the offence but a legislative consolidation, as the newly substituted Section 7 read with Explanation 2 comprehensively absorbed all instances of a public servant obtaining an undue advantage by abusing official position or using corrupt means.

"Amended Section 7 covers the offence which is defined under the repealed Section 13(1)(d). It is for this reason that the Legislature deleted Section 13(1)(d) of the Central PC Act, as the same was superfluous. As a corollary, the offence defined under Section 5(1)(d) of the J&K PC Act would now be covered by an offence as defined under Section 7 of the Central PC Act."

Green Light For Ongoing ED Probes In Pre-Abrogation Corruption Cases

Distinguishing Section 4-A of the J&K PC Act, the High Court clarified that amended Section 7 of the Central Act squarely corresponds to Section 5(1)(d) of the J&K PC Act. Because Section 7 of the Central PC Act is an express scheduled offence under Paragraph 8 of the PMLA Schedule, the bench ruled that pre-abrogation corruption offences registered under Section 5(1)(d) of the J&K PC Act fully qualify as predicate offences under Section 2(1)(y) read with Section 2(2) of the PMLA, completely insulating ongoing ED probes from jurisdictional challenges.

Holding that the Enforcement Directorate acted entirely within the four corners of the law, the High Court dismissed the petition and validated the ECIR and Section 50 summons. The judgment solidifies the ED's statutory mandate to pursue money laundering proceedings in Jammu & Kashmir arising out of predicate corruption FIRs registered under the erstwhile State penal framework.

Date of Decision: 21 August 2026