Allahabad high court quashes FIRs, ECIR against realty firm M3M

The court clarified that its judgement would not influence ongoing arbitration or civil proceedings between M3M India and other parties

The Allahabad high court on Friday quashed two FIRs and an Enforcement Case Information Report (ECIR) initiated against realty firm M3M India, citing a lack of legal grounds and substance in the allegations. The division bench of justices Ashutosh Srivastava and Ashwani Kumar Mishra observed that the criminal proceedings were an abuse of the legal process and appeared to be driven by malicious intent.

In response to the ruling, M3M India said, “We welcome the judgement of the high court, which upholds the principles of justice and fairness.” (HT Photo)

”Upon elaborate consideration of the issues raised in this matter, we have no hesitation in holding that initiation of criminal proceedings at the instance of the borrower is instituted on the strength of suppression and concealment of relevant facts, with unexplained delay and malicious intent to thwart legitimate steps taken by Indiabulls to recover the financial assistance extended to the borrower,” the bench stated in its order. “Such proceedings are also intended to create leverage in ongoing civil/arbitration proceedings. The criminal proceedings are, therefore, clearly an abuse of the process of law and deserve to be quashed.”

The court clarified that its judgement would not influence ongoing arbitration or civil proceedings between M3M India and other parties. “Any observation made in this judgement will not influence the ongoing inter-se proceedings before the arbitrator or pending before the court. All contentions of the parties in respect of the issues pending before the competent forums are left open for adjudication in accordance with law,” the order stated.

The court quashed the two FIRs—Case Crime No. 427 of 2023 (Indirapuram Police Station, Ghaziabad) and case crime no. 197 of 2023 (Beta-2 Police Station, Greater Noida)—as well as the enforcement directorate (ED) proceedings initiated based on these FIRs, registered as ECIR/HIU-I/06/2023 under the Prevention of Money Laundering Act (PMLA).

The FIRs, filed in April 2023 under sections 420 (cheating), 467 (forgery), 468 (forgery for purpose of cheating), 471 (using forged documents), and 120B (criminal conspiracy) of the Indian Penal Code, alleged financial harm caused by the undervaluation of property assets in transactions involving M3M India. The Enforcement Directorate subsequently launched an ECIR based on these complaints, escalating legal challenges for the realty firm.

The high court noted that the allegations were primarily commercial disputes, best addressed through civil or arbitration proceedings, rather than criminal investigations. In September 2024, the court had already granted a stay on PMLA proceedings against M3M before the appellate authority.

In response to the ruling, M3M India said, “We welcome the judgement of the high court, which upholds the principles of justice and fairness. This ruling reaffirms our commitment to ethical business practices and reinforces our trust in the judiciary. We remain focused on delivering value to our stakeholders and contributing to India’s real estate sector with integrity.”