Delhi High Court Seeks Centre’s Stand On Plea Moved Against Inclusion Of Cas Within Reporting Entities, Under PMLA

The Delhi High Court in the case Rajat Mohan v. Union Of India And Ors observed and seek the stand of the Union Government wherein the plea is moved challenging the inclusion of the chartered Accounts, the Company Secretaries or Cost Accountants within the definition of the reporting entities and casting the other obligations on them under the Prevention of Money Laundering Act, PMLA.
The Division bench comprising of Chief Justice Satish Chandra Sharma and Justice Sanjeev Narula in the case observed and has granted time to Additional Solicitor General Chetan Sharma in order to obtain the proper instructions in the matter.
In the present case, the petition is moved by Rajat Mohan, who being the practicing Chartered Accountant, challenging the gazette notification which is published on May 05, 2023 wherein it expanded the definition of the word ‘person’ as used under Section 2(1) (sa) (vi) as well as the definition of the word ‘activity’ under the said Act.
The petition filed stated that it being the case of Mohan that the effect such inclusion is that they virtually make him and others notified under the impugned notification engage virtually in policing the clients of their own who interact with them in the fiduciary capacity even when the case under the Prevention of Money Laundering Act, PMLA has not even commenced.
The petition moved stated that the impugned notification has virtually put the cart before the horse and that the Prevention of Money Laundering Act, PMLA was not meant to harass persons prior to there even being a predicate offence in existence.
Further, the plea stated that the impugned notification is ultra vires the object of the Prevention of Money Laundering Act, PMLA as it creates the framework for a fishing and roving enquiry into every financial transaction of each individual or the citizens of the country who attends the office of the petitioner to engage his services without exception even before a money laundering proceeding in the case has been initiated against any such citizen or individual or juristic entity.
Adding to it, the said court stated that the scope and application PMLA is extremely rigorous and strict and even a bonafide oversight shall put the life, liberty careers of the Reporting Entities under threat.