Srinagar: The High Court of J&K and Ladakh has dismissed a plea by a non-local company — M/S Reach Dredging Limited — accused of corruption in connection with a flood channel dredging project near the Hokersar Wetland.
The court ruled that the Enforcement Directorate (ED) can still invoke the Prevention of Money Laundering Act (PMLA) against the company despite the repeal of Section 13(1)(d) of the Central Prevention of Corruption (PC) Act.
Justice Sanjay Dhar held that the amended Section 7 of the Central PC Act, broadened in 2018 to cover a wider definition of bribery, now effectively substitutes for the repealed provision, keeping such offences within the Schedule to PMLA.
The company had sought to quash ED summons and the Enforcement Case Information Report (ECIR) registered against it, arguing that the agency had no jurisdiction to act since the underlying offence was not a “scheduled offence” under PMLA.
The dispute traces back to an e-NIT floated by the Executive Engineer, Flood Spill Channel, Narbal, in July 2018, inviting bids for construction and side-slope protection of a channel across the Hokersar Wetland, along with dredging of drainage and escape channels feeding into the wetland.
Reach Dredging emerged as the lowest bidder and was issued a Letter of Intent in September 2018, followed by a formal allotment order in February 2019.
The company claimed that the work was completed by 2020 to the satisfaction of both the executing department and the Wildlife department.
Nearly five years after completion, in April 2025, the Anti-Corruption Bureau (ACB), Srinagar, registered FIR No.7/2025 against the company under Section 5(1)(d) of the J&K PC Act — which deals with a public servant obtaining pecuniary advantage through corrupt or illegal means — read with criminal conspiracy under Section 120-B of the Ranbir Penal Code (RPC).
The company separately challenged that FIR before the High Court, which in September 2025 directed the ACB not to file a charge-sheet without the court’s permission.
In the interim, the ED registered an ECIR in July 2025 and issued summons in September 2025 under Section 50 of PMLA, directing the company’s director to appear, prompting the company to approach the High Court a second time.
Reach Dredging contended that Section 5(1)(d) of the J&K PC Act corresponded to Section 13(1)(d) of the Central PC Act — a provision omitted in 2018.
The Enforcement Directorate, represented by advocate Masooda Jan, countered Reach Dredging’s plea with three crisp arguments — all of which the court accepted.
The ED said the corruption charge against the company under the J&K law is essentially the same offence as one already listed under the central PMLA schedule — just under a state-law name. Same conduct, same legal character, different label.
It argued that Parliament’s 2018 clean-up of the anti-corruption law didn’t erase the offence; it folded it into a new, wider bribery provision (Section 7). The old provision was dropped only because the new one already covered it — and more.
It maintained that the law has a built-in bridge for states like J&K. Even though J&K’s corruption law isn’t directly named in the PMLA schedule, the ED pointed to a specific clause in PMLA that treats state-law equivalents as covered too.
So the gap the company relied on, the agency said, simply doesn’t exist in law.
Backing this up with the FIR and ECIR already on record, the ED maintained its summons were issued strictly within its powers — and Justice Sanjay Dhar agreed on all three counts, dismissing the company’s petition.
Justice Dhar examined the 2018 amendment’s Statement of Objects and Reasons and found that Parliament had not merely deleted Section 13(1)(d) but had folded its substance into a broadened Section 7, which now covers a public servant obtaining undue advantage through abuse of position or corrupt means — for himself or another.
The court rejected the company’s alternative argument that Section 4-A of the J&K PC Act was the true equivalent, holding that provision too narrow to capture what amended Section 7 covers.
Citing the Supreme Court’s 2022 ruling in Vijay Madanlal Choudhary v. Union of India, the court reiterated that a scheduled offence is a precondition for “proceeds of crime” and ED action, but found that precondition satisfied here.
Holding that amended Section 7 — a scheduled offence — corresponds to Section 5(1)(d) of the J&K PC Act, the court ruled the ED’s summons and ECIR were validly issued, and dismissed the dredging company’s plea.
