New Delhi: Drawing a sharp ethical boundary for the legal profession, the Telangana High Court has held that advocates cannot invoke professional privilege to shield themselves from prosecution under the Prevention of Money Laundering Act (PMLA) if they cross the “Lakshman Rekha” and become active participants in criminal enterprises.
Dismissing a writ petition filed by advocate M.A. Akhtar seeking to quash an Enforcement Case Information Report (ECIR), an internal document used by the Enforcement Directorate (ED) to initiate proceedings.
The court ruled last week that the independence of the bar does not translate into immunity from investigation for possession of proceeds of crime.
“When an Advocate crosses the Lakshman Rekha and becomes an active participant in criminal activity, he cannot claim the protective shield of professional privilege,” the court said.
“The independence of the Bar does not translate into a license for advocates to engage in money laundering or to possess proceeds of crime,” it added.
Justices P. Sam Koshy and Suddala Chalapathi Rao emphasised that professional privilege is not an absolute shield for illegal acts, calling the petitioner’s attempt to “shield himself” as an advocate a “transparent ploy to escape legitimate investigation into his possession and concealment of proceeds of crime”.
The bench further clarified that while the advocate-client relationship is sacrosanct under Section 132 of the Bharatiya Sakshya Adhiniyam, this protection extends only to communications made during bona fide professional engagement and does not provide a “charter for Advocates to participate in criminal activities with impunity”.
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Allegations of illegal commissions in land scam
The case stems from an ED investigation into the alleged laundering of proceeds by Akhtar from the fraudulent acquisition and sale of prohibited government land.
Akhtar argued that he was being targeted merely for providing legal advice and receiving legitimate professional fees, which were duly accounted for in his tax returns. He maintained that his role was limited to drafting documents and representing clients in judicial forums.
However, the ED presented evidence suggesting Akhtar was a central figure in a coordinated scheme to launder the proceeds from the fraudulent acquisition and sale of prohibited government land.
The petitioner, according to the ED, received Rs 1.15 crore (Rs 90 lakh from one individual and Rs 25 lakh from another). The ED contended these were not fees but “illegal commissions” for arranging forged and fabricated documents to facilitate illegal land mutations.
Identical amounts were allegedly paid to the petitioner’s brother, indicating a “pre-planned distribution of proceeds between co-conspirators”.
The court said that the present case involves “active participation by the petitioner as a beneficiary and facilitator in a criminal enterprise designed to launder proceeds of crime”.
“The amounts received by the petitioner also far exceed any reasonable professional fees that could be charged for legitimate legal services. The absence of any retainer agreement, fee structure documentation, or contemporaneous records of legal services rendered belies the petitioner’s characterization of these receipts as legitimate professional income,” the court said.
“The banking records and statements of witnesses establish that these amounts constituted illegal commissions for arranging fabricated documentation necessary to effectuate the illegal mutation and subsequent sale,” it added.
A major point of contention was the petitioner’s claim that he could not be prosecuted because he was not named as an accused in the original predicate offence, the FIR registered by the local police.
A predicate offence is a criminal case registered by law enforcement or investigative agencies under sections in the PMLA, 2002, that fall within its schedules.
The high court rejected the claim, citing Supreme Court precedents to affirm that money laundering is a standalone offence.
The bench noted that the PMLA’s reach is broad, covering “whosoever” is involved in the process of dealing with proceeds of crime, regardless of whether they are named in the initial criminal complaint.
Thus, it said, “to grant immunity to Advocates who actively participate in money laundering schemes would create a dangerous precedent and undermine the entire anti-money laundering regime”.
It added that the purpose of the PMLA would be defeated “if sophisticated offenders could shield themselves behind professional privileges while actively facilitating and benefiting from criminal enterprises”.
The petitioner also challenged the search and seizure operations conducted at his premises on 28 April 2025, on procedural grounds.
The court found these challenges to be “devoid of merit”, noting that the ED had scrupulously complied with the PMLA Act. The “reasons to believe” were properly recorded and forwarded to the adjudicating authority in a sealed envelope immediately following the operation, it said.
The court concluded that there was no justification to interfere with the ongoing investigation, as the petitioner had adequate statutory remedies available under the PMLA.
The court said individual liberty and societal interest must be balanced in favour of effective investigation and prosecution of economic offences.
It added that the right to life and liberty under Article 21 includes “the right of society to be protected from economic offences and money laundering activities that corrode the foundations of the national economy”.
(Edited by Sugita Katyal)
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