HC quashes PMLA case against DB Realty

The ED had alleged that contractors executing these projects had given kickbacks to companies and entities linked to Bhujbal and his family, and that the funds were subsequently projected as legitimate through a series of financial transactions

MUMBAI: The Bombay High Court has quashed the Enforcement Directorate’s (ED) money laundering case against DB Realty and its promoter, Vinod Goenka, in the Maharashtra Sadan money laundering case.

HC quashes PMLA case against DB Realty

Justice Ashwin D Bhobe quashed the PMLA (Prevention of Money Laundering Act) proceedings against Goenka and DB Realty, setting aside the special PMLA Court’s April 27, 2016, order issuing process and its May 14, 2019, order rejecting their discharge pleas.

The ED case arose from alleged irregularities in the awarding of contracts for the construction of Maharashtra Sadan in New Delhi, a Regional Transport Office building in Andheri, and a state guest house at Malabar Hill, during Chhagan Bhujbal’s tenure as Maharashtra’s public works department minister.

The ED had alleged that contractors executing these projects had given kickbacks to companies and entities linked to Bhujbal and his family, and that the funds were subsequently projected as legitimate through a series of financial transactions. Goenka, DB Realty and several other businessmen were named by the ED, which alleged that they had knowingly dealt with part of tho alleged proceeds of crime.

According to the ED, DB Realty paid ₹5 crore to Parvesh Construction Pvt Ltd as an advance for a proposed land acquisition, with the amount later refunded through banking channels. The agency alleged that the transaction was a sham aimed at laundering the money.

Justice Bhobe found that Goenka and DB Realty were not arraigned as accused in any of the scheduled offences and that the allegations against them were confined to transactions with Parvesh Construction, which had already been discharged on the finding that the money involved did not constitute proceeds of crime.

The court reiterated that the existence of “proceeds of crime” derived from a scheduled offence and is the very foundation of a prosecution under the PMLA.

The court held that once the alleged source entity was discharged on the finding that no proceeds of crime existed, the continuation of money laundering proceedings against persons alleged only to have dealt with those funds could not be sustained.