The Bombay High Court has imposed the cost of Rs. 1 Lakhs on Enforcement Directorate (ED) for initiating a money laundering probe against a real estate developer without “proper application of mind”, noting central agencies must conduct themselves within parameters of law.
“I am compelled to levy exemplary costs because a strong message needs to be sent to the Law Enforcement Agencies like ED that they should conduct themselves within the parameters of law and that they cannot take law into their own hands without application of mind and harass citizens,” the bench of Justice Milind N. Jadhav said.
The applicant filed the Criminal Revision Application challenging the legality and validity of the order, issuing process passed by the Special Judge, Mumbai under the Prevention of Money Laundering Act, 2002 (PMLA), and sought the setting aside of the order, principally on the ground that prima facie no offence whatsoever is made out under Sections 406, 418, 420 read with 120B Indian Penal Code, 1860.
On 07.12.2012 Vile Parle Police Station forwarded chargesheet to the Directorate of Enforcement and on 23.03.2013 Enforcement Case Information Report (ECIR) was registered and taken up for investigation under the PMLA as prima facie case of money laundering was alleged to have been made out against Applicant.
The case of the Enforcement Directorate (ED) was that the applicant on behalf of M/s. Kamala Developers received an amount of Rs.4,27,16,900/- as ‘proceeds of crime’ from M/s. Sadguru Enterprises.
The second charge of ED to attribute this amount to ‘proceeds of crime’ is that M/s. Sadguru Enterprises has not delivered any of its services / obligations to the Complainant under the Renovation Agreement and therefore the amount received from him and routed to M/s. Kamala Developers is alleged as ‘proceeds of crime’.
Apart from thetwo charges there is no other case made out by ED. To understand the levy of this charge, one needs to understand what ‘proceeds of crime’ means under the PMLA.
Section 2 (1)(u) of PMLA refers to ‘proceeds of crime’ as “any property derived or obtained directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence…”. The explanation to this definition provides that such property would include any property relatable to the scheduled offence mentioned in the PMLA.
The court noted that prosecution and ED has not made out any case whatsoever for proceeding against the Applicants before the Court under the PMLA or even under IPC. At the highest if Complainant is aggrieved due to delay in receiving possession, his remedy lies in a Civil Court under the Sale Agreement which he has already invoked. No offense of cheating or Money Laundering exists qua the Applicants in the present case.
The court held that the issuance of process is a clear abuse of the process of the law. ED has conducted itself in a malafide manner when the various Agreements and correspondence between the parties clearly spell out their inter se rights. ED for reasons best known to it have supported Complainant’s false case without application of mind or without going through the record.
The court stated that the action of Complainant as also ED to put the criminal system into motion is clearly malafide and calls for imposition of exemplary costs.
The court directed the complainant to pay costs of Rs.1,00,000 to the Kirtikar Law Library, High Court, Mumbai and directed the Enforcement Directorate is directed to pay costs of Rs. 1,00,000 to the High Court Original Side Library, Room No.39, High Court, Mumbai within a period of four weeks. If the costs are not paid it shall be recovered from the Respondents as arrears of Land Revenue by the Collector, Mumbai and paid over to the law libraries.
Case Details
Case Title: Rakesh Brijlal Jain and Ors. Versus State of Maharashtra and Ors.
Case No.: Criminal Revision Application No. 379 Of 2016 With Interim Application No. 2936 Of 2024
Date: 21/01/2025
Counsel For Applicant: Kevic Setalvad, Senior Advocate a/w. Mr. Jehan Lalkaka i./by Mr. Bhavesh Thakur
Counsel For Respondent: D.S. Krishnaiyer
