A special court dedicated to cases under the Prevention of Money Laundering Act (PMLA) has officially terminated a high-profile money laundering investigation involving eight current and former officials of the Central Railway. The court accepted the closure report submitted by the Enforcement Directorate (ED), bringing the legal proceedings to an end.
Core Allegations and the CBI's Initial Probe
The case originated from a Central Bureau of Investigation (CBI) probe initiated in 2022. Based on source information, the CBI's Anti-Corruption Branch registered a First Information Report (FIR) against senior divisional electrical engineer Ved Prakash and several others. They were accused of criminal conspiracy, cheating, and corruption under the Prevention of Corruption Act.
The central allegation was that these officials, posted at the Vidyavihar Store Depot and Kurla Car Shed in Mumbai, conspired with private suppliers to defraud the Railways. It was alleged they manipulated the procurement process for replaceable parts used in maintaining EMU (local train) rakes.
The purported scheme involved creating ambiguous item descriptions for non-stock purchases under the Limited Tender Category. This tactic allegedly ensured the items were not bought through the transparent Government e-Marketplace (GeM) portal and that only a select group of suppliers could understand the tender specifications. Furthermore, purchase orders were frequently kept below Rs 2.5 lakh to avoid mandatory account vetting and to restrict approval authority to the Senior Divisional Electrical Engineer level.
An internal inquiry by the Railways' Vigilance Department had reportedly found that items were purchased at rates 8 to 15 times higher than those paid by other railway divisions, potentially causing a loss exceeding Rs 22 crore to the public exchequer.
The Turnaround: Closure Reports and Legal Rationale
The case took a decisive turn when the CBI, after its investigation, filed a closure report in the original corruption case. On January 1, 2024, the special CBI court accepted this report. The CBI concluded that no case could be substantiated against the accused due to a lack of strong, logical, and cogent evidence. Specifically, the agency found insufficient proof that the officials conspired with private suppliers to purchase items at inflated rates.
Since the ED's money laundering case was predicated entirely on this CBI FIR, the ED subsequently sought closure of its parallel investigation under the PMLA. The special PMLA court, in its recent order, concurred with this position.
The judge noted the CBI court's finding that no case was made out against the accused. Crucially, the court invoked a key legal principle established by the Supreme Court in a ruling dated July 27, 2022. The apex court had held that a PMLA case cannot stand independently if there is no predicate or scheduled offence. The PMLA defines scheduled offences by listing sections from other laws, such as the Indian Penal Code and the Prevention of Corruption Act.
Court's Final Decision and Implications
With the closure report for the predicate offence (the CBI case) accepted by the competent court, the foundation for the money laundering case collapsed. The PMLA court judge explicitly stated that the continuation of the ED's Enforcement Case Information Report (ECIR) was not maintainable in law.
This ruling effectively absolves the eight Central Railway officials from both the corruption and the subsequent money laundering charges. The legal process has concluded that the evidence gathered was insufficient to prosecute them for the alleged multi-crore procurement scam.
The case highlights the interdependent nature of PMLA proceedings on the existence of a core criminal offence. Once the primary case is closed for lack of evidence, the attached money laundering investigation loses its legal basis for continuation.
