Cases Reported in HCC | Latest High Courts Cases on Economic offences

Economic Offences — Prevention of Money-Laundering Act, 2002 — Ss. 2(1)(p), 2(1)(u), 3 and 17(1) & (1-A) — Freezing of property — Jurisdiction of Enforcement Directorate — Condition precedent — Existence of predicate/ scheduled offence and identifiable proceeds of crime — Scope of — Held, jurisdiction of ED under S. 17 to search, seize or freeze property arises only upon existence of a predicate offence and material indicating property constitutes ” proceeds of crime” as defined under the Act — In absence of such foundational facts, exercise of power amounts to jurisdictional error — ED cannot expand investigation into independent allegations unconnected with scheduled offence nor assume role of investigating all criminal activity — Mere reproduction of statutory language without recording satisfaction that property is proceeds of crime is insufficient — Where no nexus established between frozen fixed deposits and proceeds of crime, action under S. 17(1-A) is without authority of law and void — Freezing order set aside [R.K.M. Powergen (P) Ltd. v. Enforcement Directorate, (2025) 1 HCC (Mad) 380]

Public Accountability, Vigilance and Prevention of Corruption — Prevention of Corruption Act, 1988 — Ss. 3, 4, 17, 13(2) and 13(1)(d) — Jurisdiction of CBI — Registration of FIR and investigation — Scope of — CBI’s jurisdiction to continue investigation once no offence under the 1988 Act disclosed — Legality of — Held, existence of FIR alleging the Prevention of Corruption Act, 1988 offence is sine qua non for exercise of power of investigation under S. 17 — Court to examine if accused in anyway has been prejudiced by steps taken by investigating agency — Once investigating officer conferred with power under S. 17, investigating officer can complete investigation of the 1988 Act and connected the non-PC Act offences — Officer empowered to complete investigation and submit final report — Where no the PC Act offence ultimately disclosed, investigation shall culminate in final report under S. 173(2) CrPC in respect of the non-PC Act offences — Such report must be filed before competent jurisdictional Magistrate, not Special Court — Jurisdiction of Special Court under Ss. 3 and 4 of the 1988 Act arises only when trial of the Prevention of Corruption Act offence is involved, “trying any case” under the PC Act being condition precedent — Further held, absence of the PC Act offence does not divest CBI of power to submit final report nor vitiate investigation unless prejudice caused — Petition dismissed [V. Subramanian v. Union of India, (2025) 1 HCC (Ker) 38]

Public Accountability, Vigilance and Prevention of Corruption — Prevention of Corruption Act, 1988 — Ss. 13(1)(d) (ii) and 13(2) — Illegality and favouritism in appointment — No direct pecuniary advantage discernible for public servant himself — Criminal misconduct by public servant — Allegation of —Trial court finding sufficient material to frame charges — Challenge to — Held, public servant need not personally gain pecuniary advantage; obtaining an advantage for others by abusing official position also constitutes offence under S. 13(1)(d)(ii) — Allegations of appointments made without due process, exceeding sanctioned posts, and favouring known associates or political affiliates, prima facie disclose criminal misconduct — Further held, allegations of nepotism and lack of transparency in recruitment properly considered by trial court, which found no evidence of fair and transparent process — Trial court rightly concluded that there was sufficient material to frame charges and proceed with trial — Petition dismissed [Swati Maliwal v. State (NCT of Delhi), (2024) 5 HCC (Del) 536]

Economic Offences — Prevention of Money-Laundering Act, 2002 — S. 45 — Bail — Grant of — Twin mandatory conditions for — Non-fulfilment of — Whether accused can be admitted to bail — Held, S. 45 mandates for giving opportunity to prosecutor to oppose bail application and further embodies twin mandatory conditions for allowing bail to accused (i) that there are reasonable grounds for believing that the accused is not guilty of offence of money laundering, and (ii) that accused is not likely to commit any offence while on bail — However, proviso to S. 45 also confers discretion on Special Court under PML Act to admit on bail an accused under the age of sixteen years, or woman, or sick or infirm or if person is accused of money laundering a sum of less than one crore rupees — Belief qua the accused being guilty of money laundering has to be tested on “reasonable grounds”, which means something more than “prima facie” grounds –No reasonable ground for believing that accused is not guilty of offences alleged — Rigours of S. 45 dissuade court from admitting accused to bail on merits — Applications dismissed — [Vedpal Singh Tanwar v. Enforcement Directorate, (2025) 3 HCC (Del) 543]

Public Accountability, Vigilance And Prevention Of Corruption — Prevention of Corruption Act, 1988 — S. 17-A — Approval to conduct investigation of public servants — Can court reject FIR and investigation done merely because quality of application of mind in granting approval under S. 17-A is not satisfactory — Held, non- compliance with S. 17-A cannot be equated with inadequate application of mind by authority who grants approval under S. 17-A — While former is mandatory and its non-compliance can be ground to set aside FIR inadequate or unsatisfactory application of mind to materials while granting approval under S. 17-A can hardly be ground to quash FIR unless coupled with inability of investigating agency to gather incriminatory evidence — It depends on quality of allegation made in FIR and kind of materials investigating agency could gather — While evaluating them, court may also refer to quality of approval granted under S. 17-A — When FIR challenged, court can consider quality of approval granted under S. 17-A — If court has reason to believe that FIR might be vexatious, motivated or triggered by mala fide or there exists element of bona fide in manner of decision taken or recommendation made by public servant, approval granted under S. 17-A without adequate application of mind may become critical to outcome of decision in the case — If investigating agency gathered incriminating material during investigation, then quality of approval granted may not impact sustenance of FIR — Even where authority required to exercise subjective satisfaction, such satisfaction must be grounded “on materials which are of rationally probative value — In frivolous or vexatious proceedings, court owes duty to look into attending circumstances emerging from record of case over and above averments — FIR quashed — Petition allowed [K. Shiva Kumar v. State of T.N., (2025) 1 HCC (Mad) 139]

Public Accountability, Vigilance and Prevention of Corruption — Prevention of Corruption Act, 1988 — Ss. 13(1)(e) and 13(2) — Acquisition of assets disproportionate to known source of income — Joint possession — Other party claiming ownership/contribution — Effect of— Major/Adult son and wife of accused working — No valuation of gold and silver ornaments done from any goldsmith/competent person by investigating officer — Held, prosecution could not present clinching and cogent evidence that properties were purchased by the appellant — Held on facts, as prosecution failed to prove that appellant possessed properties disproportionate to his known source of income, trial court judgment based on improper appreciation of evidence, set aside — Appeal allowed [Murlidhar Sahu v. State of Chhattisgarh, (2025) 1 HCC (Chh) 121]

Public Accountability, Vigilance and Prevention of Corruption — Prevention of Corruption Act, 1988 — S. 17 — Competence of Investigating Officer for further investigation — Requirement that investigation be conducted by DSP or equivalent — Authorisation given to officer below such rank — Tenability of — Held, such authorisation constitutes valid empowerment under S. 17 — Further held, even assuming investigation was conducted by an officer of lower rank, such defect amounts only to an irregularity, not illegality — Irregular investigation does not vitiate prosecution absent proof of prejudice — Petition dismissed [Korah A.G. v. State of Kerala, (2025) 1 HCC (Ker) 101]

Public Accountability, Vigilance and Prevention of Corruption — Prevention of Corruption Act, 1988 — Ss. 7, 13(1)(d) and 13(2) — Illegal Gratification — Demand and Acceptance — Essential ingredients — Proof of, through reliable and admissible evidence — Held, prosecution must prove both demand and acceptance of illegal gratification — Failure to prove either is fatal to the case – — Conviction unsustainable — [Brijesh Kumar Meena v. State of Rajasthan, (2025) 1 HCC (Raj) 41]

Public Accountability, Vigilance and Prevention of Corruption — Prevention of Corruption Act, 1988 — Ss. 7, 7-A, 8 and 17-A [As amended by Prevention of Corruption (Amendment) Act, 2018] — Compliance with S. 17-A — Requirement of previous approval for enquiry/inquiry/investigation into acts relatable to official recommendations — Held, provision is mandatory — Allegations pertained to recommendations/comments made in discharge of official functions — No previous approval from competent authority obtained before registering FIR or commencing investigation — Further held, in absence of such mandatory approval, FIR and entire investigation stand vitiated and are void ab initio [Rakesh Kumar Meena v. State of Rajasthan, (2025) 1 HCC (Raj) 70]