Legal
Bombay HC: Probe Agencies Can’t Harass Citizens, Imposes Rs 1 Lakh Fine on ED
The Bombay High Court has imposed a penalty of Rs 1 lakh on the Enforcement Directorate (ED) for initiating a money laundering investigation against a Mumbai-based developer, Rakesh Brijlal Jain, in a manner deemed “malafide.”
The court emphasized the need for law enforcement agencies to act within the bounds of the law and avoid harassment of citizens.
Justice Milind N. Jadhav, presiding over a single-judge bench, delivered the verdict while hearing a Criminal Revision Application (CRA) challenging the legality of an August 8, 2014, order by a special PMLA court.
The order had initiated proceedings against Jain, a partner at Kamala Developers. The petitioner argued that no prima facie case of cheating had been established and sought to have the special court’s order quashed.
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In its judgment, the High Court quashed the proceedings, terming them a “clear abuse of the process of law.” Justice Jadhav noted, “The ED, for reasons best known to it, supported the complainant’s false case without due diligence or examining the records.”
The court criticized the actions of both the complainant and the ED, stating that their conduct was malafide and amounted to misuse of the criminal justice system.
The case originated from a complaint filed by a property purchaser, alleging cheating and breach of agreement. The complainant claimed that Jain had taken payment for incomplete work and failed to deliver possession of the property on time.
However, the court observed that there was no misappropriation of funds or property, nor were there any proceeds of crime involved. It was noted that the property in question—a commercial space comprising two floors—had been delivered to the complainant before the issuance of the occupancy certificate.
The court held that the allegations under Sections 406, 418, and 420 of the Indian Penal Code (IPC) were baseless, and therefore, the charge of money laundering under Section 3 of the Prevention of Money Laundering Act (PMLA) did not arise.
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Justice Jadhav remarked, “The present case is a classic example of oppression under the guise of enforcing the PMLA.”
In addition to quashing the proceedings, the High Court directed the ED and the complainant, Gul Achhra, to deposit Rs 1 lakh with law libraries at the High Court premises within four weeks. The court also lifted the ED’s attachment of two flats and a garage owned by Jain.
Following the verdict, the ED’s counsel sought a stay on its implementation to allow time for an appeal to the Supreme Court. The High Court granted a four-week stay on the order.
