Delhi High Court rejects EDs action against Indiabulls under money laundering Act

Delhi High Court rejects EDs action against Indiabulls under money laundering Act

Rules that the Bombay High Court had already nullified the FIR

The Delhi High Court has quashed the proceedings of the Enforcement Directorate (ED) against Indiabulls Housing and Finance Limited (IHFL) and its employees as well as the look-out circular issued against them.

The division bench of Justice Mukta Gupta and Justice Anish Dayal held that once the Bombay High Court had quashed the first information report (FIR) that formed the predicate offence, the proceedings of the ED could not endure. It rejected the summoning orders and the look-out notice on being informed that the Bombay court had already cancelled the Maharashtra FIR, the predicate offence for ED's Enforcement Case Information Report (ECIR).

The court held that no action under the Prevention of Money Laundering Act (PMLA) could be resorted to unless there was an underlying scheduled offence.

The court stated, "In light of the Vijay Madanlal Choudhary matter, we find no reason for the ECIR to be sustained against them in this case, without there being any evidence of a predicate offence or an FIR against them, which is in existence or is legally alive."

The court was dealing with a batch of petitions by employees of Indiabulls and related companies challenging the ED proceedings. It was argued that they had been roped in by the ED in the ECIR without any offence registered against them.

The proceedings emanated after an FIR was registered at the Palghar Police Station on a complaint by one of its shareholders.

The complainant, Ashutosh Kamble, who owned around 500 shares in the company, alleged that he sustained losses owing to the devaluation of his shares because of the suspected siphoning of cash and misdealing by Indiabulls.

He petitioned before the judicial magistrate at Wada district and secured an order under the Criminal Procedure Code (CrPC) to lodge an FIR and direct the police to conduct an inquiry.

Senior advocates Kapil Sibal, Mahesh Jethmalani, Rajiv Nayar, Vikram Nankani, and Sidharth Agarwal appeared on behalf of Indiabulls. They were assisted by advocates Rishi Agrawala, Karan Luthra, Ankit Banati, Shravan Niranjan, Gaurav Mishra, Jaiyesh Bakshi, Ravi Tyagi, Daman Popli, Mayuri Shukla, Neetu Devrani, Dheeraj Nair, Vishrutyi Sahni, Abinav Sekhri, and Aisha Jain.

The respondents were represented by additional solicitor general SV Raju, SPP Zoheb Hossain, and central government standing counsel Anurag Ahluwalia, Ajay Digpaul, Asheesh Jain, Kirtiman Singh, and Apporv Kurup. They were assisted by advocates Vivek Gurnani, Danish Faraz Khan, Swati Kwatra, Keshav Mann, Vedansh Anand, Waize Ali Noor, Kunjala Bhardwaj, Madhav Bajaj, Yash Upadhyay, Nidhi Mittal, and Ojaswa Pathak.