The Delhi High Court has quashed the provisional attachment order by the Enforcement Directorate (ED) and held that it can only investigate the offence of money laundering in terms of Prevention of Money Laundering Act, 2002 and not assume that a dependent criminal offence
has been committed in relation to the same.
The petitioner counsel Ankur Chawla submitted that the Provisional Attachment Order impugned in the present writ petitions is wholly illegal since it was based on various factual allegations and assertions which do not form part of either the FIR, the ECIR or for that matter the complaint that subsequently came to be lodged.
On behalf of the Enforcement Directorate, Zoheb Hossain submitted that the chargesheet filed by the CBI establishes the nine instances of misrepresentation practised by the petitioner leading up to the allocation of the coal block.
He went on to highlight the fact that one of those misrepresentations was with respect to the net worth of the petitioner being Rs.532 crores when, in fact and as would be evident from the charge sheet submitted by CBI, the said calculation was found to be patently incorrect and misleading.
In view of the aforesaid submissions, Mr. Hossain contended that the respondents would have the requisite jurisdiction to attach the proceeds of crime and which would extend to any property derived or obtained directly from the commission of the said scheduled offence.
The Single Bench of Delhi High Court, however, noted that initiation of action under Section 5 of PMLA is premised on the competent authority having reason to believe that a person is in possession of proceeds of crime and that formation of such opinion is not related to the commission of a scheduled offence.
It was further observed that, “What needs to be emphasised is that while the adoption of peremptory measures by the ED may be justified and are so sanctioned by the Act, it would be incorrect to construe those powers as the ED alone being entitled to adjudge or declare that a predicate offence stands committed.”
As the investigation was ongoing for both the First Information Report (FIR) and the Enforcement Case Information Report (ECIR), the Enforcement Directorate (ED) lodged a complaint on July 17, 2018, and issued a provisional attachment order. This order alleged manipulation of share prices and the inducement for the allotment of preferential shares.
The court quashed the provisional attachment order, which related to allegations of manipulation of share prices and inducement for the purposes of allotting preferential shares.
The bench of Justice Yashwant Varma also noted that there were no such allegations present in the chargesheet filed by the Central Bureau of Investigation (CBI) or the Enforcement Case Information Report (ECIR) and, despite the ongoing investigations since 2014, the ED failed to furnish any information to the CBI to examine if allotting preferential shares would evidence any commission of an offence under the Indian Penal Code or any other statute.
Along with quashing the impugned provisional attachment order, the court also quashed the original complaint instituted by ED.
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