Delhi HC Quashes ED Order on Attachment of Assets Over Coal Deal

Prakash Industries and its related companies were allegedly involved in coal-block allocation cases being pursued by investigating agencies. The ED is probing a money-laundering case linked to the allocation.

The Delhi High Court has quashed a provisional order of attachment passed by the Directorate of Enforcement (ED) under which it seized properties worth about ₹227 crore belonging to a company and its related entities. Prakash Industries and its related companies were allegedly involved in coal-block allocation cases being pursued by investigating agencies. The ED is probing a money-laundering case linked to the allocation.

Justice Yashwant Varma of the Delhi High Court on Tuesday ruled that coal allocation could not amount to proceeds of crime per se under the money-laundering law. According to the order, only the gains that might have been obtained by the utilisation of the coal-block allocation could possibly be viewed as proceeds of crime. The high court ruled that since the offence was stated to have been committed and completed on September 4, 2003, and further there was no allegation that any illegal monetary gains were derived or obtained as on that date, and this coupled with the fact that the allocation itself would not represent proceeds of crime, led the court to an inescapable conclusion that the impugned proceedings were rendered patently illegal.

The Prevention of Money Laundering Act seeks to confiscate assets that may be derived or obtained from criminal activity and, therefore, only gains obtained by the utilisation of the allocation could be viewed as proceeds of crime and not the allocation itself. The ED had provisionally attached the properties of the Hisar, Haryana-based company in December 2021. The attached assets were land parcels in Hisar, Delhi, Noida and various parts of Chhattisgarh.

Senior advocate Kapil Sibal appeared for Prakash Industries and advocate Vijay Aggarwal represented the petitioner company, Hi-Tech Mercantile (India), a related entity of Prakash Industries.

The defence lawyers raised various issues before the high court including whether PMLA could be made applicable retrospectively and whether provisions of the Act were applicable when admittedly none of the predicate offences was scheduled at the time of the alleged commission of offence. The CBI had booked the company for allegedly obtaining coal allocation as well as diversion of extracted coal. The FIR and charge sheet were quashed by a lower Court. The CBI filed a second FIR in 2016 and a new charge sheet in 2020.

While the top court had stayed further proceedings before the trial court, the ED initiated a money-laundering probe against the company on the basis of a second chargesheet by the CBI. The HC observed that the offence of money laundering rests on the commission of a predicate offence and it cannot possibly survive or subsist once the predicate offence is found to be not established.

Source - https://m.economictimes.com/industry/indl-goods/svs/metals-mining/delhi-hc-quashes-ed-order-on-attachment-of-assets-over-coal-deal/articleshow/93013562.cms