Maharashtra Sadan scam: HC strikes down money-laundering case against Chamankar brothers

The court ruled that once the accused have been discharged from the predicate offence, proceedings under the Prevention of Money Laundering Act (PMLA) cannot continue.

MUMBAI: The Bombay High Court on Tuesday struck down a decade-long money-laundering case, related to the Maharashtra Sadan scam, against real estate developers Krishna Shantaram Chamankar, his brother Prasanna, and their partnership firm KS Chamankar Enterprises.

Mumbai, India - Aug. 28, 2015 : Bombay High Court : ( Photo by Bhushan Koyande )

The court ruled that once the accused have been discharged from the predicate offence, proceedings under the Prevention of Money Laundering Act (PMLA) cannot continue.

A division bench of justices AS Gadkari and Rajesh S Patil delivered the verdict after hearing a petition filed by the Chamankars, who had sought to set aside the charge sheet in a money-laundering case registered against them in 2016. The case was based on two Enforcement Case Information Reports (ECIRs) filed by the Enforcement Directorate (ED) in 2015.

The proceedings originated from an FIR registered in 2015 by the Anti-Corruption Bureau (ACB), Mumbai. The case concerned alleged irregularities while awarding and executing contracts for constructing the Maharashtra Sadan in Delhi, the High Mount Rest House in Malabar Hill, and the Regional Transport Office building in Bandra. KS Chamankar Enterprises had been entrusted with the construction work.

In July 2021, a special ACB court discharged the Chamankars from the case, observing that the projects had been carried out in accordance with the contract terms and that no material existed to sustain the allegations. The ACB did not challenge the discharge order.

The Chamankars argued before the high court that since they had been discharged from the predicate offence by a competent criminal court, the very basis for continuing with the money-laundering case fell apart. They stressed that money-laundering charges cannot survive in isolation once the original offence has been set aside.

The ED opposed the plea, arguing that proceedings under the PMLA could still continue independently even if the accused had been cleared of the predicate offence. It maintained that the investigation and charge sheet filed in 2016 remained valid despite the discharge order.

The high court, however, rejected the ED’s contention, noting that the money-laundering case was entirely based on the FIR filed by the ACB in 2015. Once the ACB case had ended in a discharge, there was no longer any foundation for the ED’s prosecution, the court said.

“The order discharging the petitioners from the predicate offence has attained finality. Therefore, the ECIRs and charge sheet filed by the Enforcement Directorate against them cannot be sustained,” the bench said.

Allowing the Chamankars’ petition, the high court quashed the ECIRs and the charge sheet, concluding proceedings that had been pending for nearly a decade.