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No PMLA offence without proceeds of crime: Delhi court

NEW DELHI: A Delhi court has refused to take cognisance of a money laundering charge sheet filed by the Enforcement Directorate (ED) against Adhunik Corporation Ltd and its directors in connection with the coal block allocation scam, ruling that an attempt to acquire proceeds of crime does not constitute money laundering under the Prevention of Money Laundering Act (PMLA).

THE COURT HELD THAT PROCEEDS OF CRIME MUST ALREADY EXIST FOR MONEY LAUNDERING CHARGES TO APPLY

In a 28-page order issued on December 23, special judge Arun Bhardwaj clarified that for charges under Section 3 of the PMLA to apply, proceeds of crime must already exist. “An attempt to acquire proceeds of crime or undue benefits” does not qualify, the court said.

PMLA Lawyer Chandigarh Panchkula Mohali

ED alleged that the accused directors. Mahesh Kumar Agarwal and Nirmal Kumar Agarwal, fraudulently secured a coal block allocation using forged documents. While they were convicted by a CBI court in April 2022 for conspiracy and cheating, their sentence was stayed by the Delhi high court in May 2022 pending appeal.

ED, in its chargesheet. claimed the directors funnelled 50.37 crore into Adhunik Corporation through family members and group companies, linking the funds to the fraudulent coal allocation.

However, the court noted that the proceeds of crime were yet to materialise, rejecting ED’s argument. The court also highlighted that the investments predated the alleged conspiracy and continued after the coal block allocation was revoked.

Referring to a 2022 Delhi high court ruling, the judge reiterated that mere allocation of a coal block does not constitute proceeds of crime.

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