New Delhi: The Delhi High Court has for the time being stayed a provisional order for attachment of a power plant in Madhya Pradesh by the Enforcement Directorate (ED) after it noted that a similar attempt from the same FIR was earlier not approved by the adjudicating authority under the Prevention of Money Laundering Act 2002.
The court passed the order after hearing a petition filed by M/s BLA Industries Private Limited, which has challenged the legality and validity of a provisional attachment order passed on 7 June for its power plant in Narsinghpur in Madhya Pradesh.
The petition, filed through advocates Kumar Vaibhaw and Mohd Ashaab and argued by Advocate Abhimanyu Bhandari, calls this order “arbitrary, illegal, unreasonable, misconceived”, asserting that an “identical” attachment order was previously passed by the ED in the same FIR, but was not approved by the PMLA adjudicating authority in June 2018.
It has contended that even though a challenge to this order is currently pending before the Appellate Tribunal, PMLA, the order has not been stayed. The company has therefore invoked the principle of res judicata, which means a case or an issue involving a dispute or allegation already decided by a court. The principle ensures that there is a finality to binding court decisions.
Taking note of this position on 13 August, Justice Rekha Palli, therefore, ordered, “In the light of this undisputed position that the impugned PAO (provisional attachment order) is based on the same facts which were the subject matter of the previous PAO dated 04.10.2018, which was not approved by the Adjudicating Authority, it is directed that till the next date, the operation of the impugned PAO dated 07.06.2021 shall remain stayed.”
The matter will now be heard in January 2022. The ED, in the meantime, has been given six weeks to file a reply.
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‘No doubt properties not proceeds of crime’
The FIR in the case was filed in January 2014, when it was alleged that a coal block was allocated to the petitioner, M/s BLA Industries Private Limited in 2004 for captive use (that is, the coal mining needs to be done by the company for that exclusive purpose) in a power plant.
However, it was alleged that the power plant was not active and the condition for captive use was altered by public servants, allowing the company to sell coal, thereby “causing undue favour”. The allegation was that the use of coal was diverted and it was sold in the open market instead.
The ED had therefore opined that the allocation of mine and the subsequent mining by the company was illegal and therefore, the gross receipts from the sale of coal should be treated as “proceeds of crime”. The FIR mentioned sections of the Indian Penal Code dealing with criminal conspiracy and cheating, as well as sections of the Prevention of Corruption Act that deal with criminal misconduct by a public servant.
In January 2018, a provisional attachment order was then passed by the ED, attaching 133 properties belonging to the company, amounting to Rs. 4.5 crore. However, the adjudicating authority under the PMLA in June 2018 did not approve this.
The adjudicating authority had said that it has come “to the prima facie conclusion that the Defendants have neither committed the Scheduled Offence, nor generated proceeds of crime or laundered them. No doubt the properties attached are not proceeds of crime or value thereof and are not involved in money laundering”.
However, on 7 June 2021, another provisional attachment order was passed citing the same FIR, this time attaching the power plant. This order was therefore challenged in the high court.
(Edited by Paramita Ghosh)
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