Calcutta HC Quashes ED Attachment of Company Land, Upholds Seizure of Shares Held by Husband and Wife Accused Under PMLA [Read Order]

The Calcutta High Court delivered a split verdict in a money laundering case involving the petitioner company. While granting relief to the company by setting aside the Enforcement Directorate’s attachment of its land, the Court upheld the seizure of shares and office property linked to the accused shareholders.

The Enforcement Directorate (ED) had provisionally attached assets of Shree Hanuman Cotton Mills Ltd. under Section 5(1) of the PMLA, including 25.39 acres of land at Fuleswar, an office room at N.S. Road, Kolkata, and 1793 shares held by Mahesh Kumar Kejriwal and his wife, Alka Kejriwal.

The attachment was premised on allegations that the Kejriwal family, accused in connected PMLA proceedings, could benefit from the liquidation of company assets, which ED argued would amount to “proceeds of crime.”

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The company and its directors challenged the attachment, contending that shareholders are not owners of company property and that ED’s action against corporate land was legally unsustainable.

The petitioner asserted that Shree Hanuman Cotton Mills Ltd., as a separate legal entity, owned the land and assets, not its shareholders. It was argued that shareholders’ rights are confined to dividends and voting, not direct ownership of company property. The petitioners Urged the Court to make permanent the interim injunction granted earlier, which had restrained ED from acting against company assets.

The Enforcement Directorate maintained that the attachment was justified since the liquidation of the company's assets could indirectly benefit the accused shareholders. Also requested that petitioners be directed to inform ED if the company enters liquidation or insolvency, to safeguard

Justice Sabyasachi Bhattacharyya reiterated the principle that shareholders are not owners of company assets. Even if accused persons held shares in Shree Hanuman Cotton Mills Ltd., their rights did not extend to the company’s land. On this basis, the Court held that the ED’s provisional attachment order dated March 31, 2022, and show‑cause notice dated May 5, 2022, were bad in law insofar as they concerned the company’s land.

However, the Court distinguished between company assets and property directly held by accused shareholders. It upheld the attachment of 1793 shares (1025 in Mahesh Kumar Kejriwal’s name and 768 in Alka Kejriwal’s name), and Office room No. 12 at N.S. Road, Kolkata.

The Court directed petitioners to notify ED if the company underwent liquidation or insolvency, ensuring ED could act to prevent disbursal of proceeds to accused shareholders. It also clarified that its observations would not prejudice ongoing criminal proceedings against the accused family members.

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