Special court discharges city builders in money-laundering case

Published on Aug 24, 2022 10:54 PM IST

The special PMLA (Prevention of Money Laundering Act) court on Wednesday discharged Omkar Developers’ chairman Kamal Kishore Gupta and managing director Babulal Varma in a money-laundering case, registered by the Enforcement Directorate (ED), on the grounds that when there was no scheduled offence, continuation of the case would be nothing but a futile exercise

Omkar Developers’ chairman Kamal Kishore Gupta (right) and managing director Babulal Varma HT Archives
Omkar Developers’ chairman Kamal Kishore Gupta (right) and managing director Babulal Varma HT Archives
By, Mumbai

The special PMLA (Prevention of Money Laundering Act) court on Wednesday discharged Omkar Developers’ chairman Kamal Kishore Gupta and managing director Babulal Varma in a money-laundering case, registered by the Enforcement Directorate (ED), on the grounds that when there was no scheduled offence, continuation of the case would be nothing but a futile exercise.

“In the absence of scheduled offence there cannot be any proceeds of crime. When there are no proceeds of crime, there cannot be money laundering and when there is no money laundering, prosecution for the same under the Prevention of Money Laundering Act is not maintainable. When this situation is glaring, court cannot continue the trial of the present accused as if the court is a post office to frame the charge at the behest of prosecution,” special judge MG Deshpande said.

Advocates Vijay Aggarwal and Rahul Aggarwal, appearing for Varma, and advocate Abad Ponda, representing Gupta, had pleaded that in view of the recent Supreme Court verdict the two could not be prosecuted as the predicate offence against them had been closed by police and the court concerned had accepted the closure report.

The plea was opposed by the ED’s lawyers, Hiten Venegaokar and Kaita Patil.

The money-laundering case against Gupta and Varma was based on a cheating case registered by the Aurangabad police in March 2020. The defence pointed out that the case was closed after the complainant filed an affidavit stating that the case was registered on account of a misunderstanding.

Further, the preliminary inquiry by the Mumbai police against the accused on the complaint of Yes Bank for default on payment of loan was also closed and the same was informed to the bank.

The defence had relied upon the letter of September 07, 2021 by a senior inspector of the Economic Offences Wing (EOW) to Yes Bank, informing them about the closure of the preliminary inquiry in regards to the complaint made by the bank alleging diversion of 410 crore from the loan sanctioned and disbursed by it.

The special PMLA court said that the order of the Aurangabad court accepting the closure report against the accused had not been challenged till date either by the ED or the informant. The court also considered that “there is no contemporaneous FIR registered by the jurisdictional police (EOW, Mumbai) in respect of criminal activity relating to generation of proceeds of crime through Yes Bank loan. For this reason, also the present PMLA case cannot be continued.”

Gupta and Verma were released on interim bail on August 8 after their lawyers contended that their judicial custody could not be extended in the money-laundering case as the predicate offence based on which the probe by the ED was initiated had been closed.

After the release, they had sought discharge. While opposing the discharge, the ED had pleaded that the two should be sent back to judicial custody.

Special judge Deshpande refused to accept the prayer of the prosecution for judicial custody of the two and said, “It [the court] cannot join hands with vengeful complainant like the ED to humiliate accused persons by continuing their judicial custody that too, in utter disregard to the recent law of the land.”

“Generally, courts keep their hands off when there is evidence against the accused to substantiate the offence. Exactly taking advantage of this, the ED eccentrically and whimsically cannot say that there has to be an automatic extension of judicial custody, as per practice and procedure of this court,” the order of the court said.

As per the law laid down by the Supreme Court, a schedule offence or predicate offence refers to the base case where the accused has made monetary gains by illegal means.

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  • ABOUT THE AUTHOR

    Charul Shah is senior reporter covering the legal beat for Hindustan Times. She has spent over a decade in the industry covering criminal investigations and judiciary from Mumbai, Ahmedabad and Bengaluru.

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