HC Orders Release of Attached Shares Under PMLA on Furnishing ‘Fixed Deposit Receipts’ Equivalent to Proceeds of Crime

Case Details: Gagan Infraenergy Ltd. v. Deputy Director Directorate of Enforcement - [2024] 164 taxmann.com 415 (HC - Delhi)

Judiciary and Counsel Details

• Dr Sudhir Kumar Jain, J.
• Anirudh Sharma, Hemant Shah, Gurpreet Singh Parwanda, Akshay Rana & Pallav Srivastava, Advs. for the Petitioner.
• Anurag Ahluwalia for the Respondent.

Facts of the Case

In the instant case, the petitioner (earlier GSIPL) was a promoter company of ‘JSPL’ besides a promoter of other companies of JSPL Group. It was engaged in the business of investment and finance operations by Inter Corporate Deposits and investment in equity shares/preference shares/debentures/mutual fund.

Respondent No.1/ED attached shares of JSPL held by the petitioner vide impugned the Provisional Attachment Order (POA) by claiming that GSIPL had acquired proceeds of crime through the sale of shares of JSPL.

The petitioner filed a writ petition to quash the POA. He also argued that physical attachment was not required to complete the trial and that shares could be restored to the petitioner by substituting a bank guarantee/FDR/Indemnity Bond or any other security.

High Court Held

The High Court noted that the Court may not order substitution of the attached property in the case of attachment due to proceeds of crime. However, the Court may allow substitution of the attached property if the attachment is an equivalent value of proceeds of crime.

The High Court held that since the petitioner was engaged in the business of investment and finance operations by Inter Corporate Deposits and investment in equity shares/preference shares/debentures/mutual funds and shares of JSPL lying with the petitioner were attached not as proceeds of crime but being the equivalent value of proceeds of crime, the impugned shares were to be released in favour of petitioner on furnishing interest bearing FDR equivalent to the value of impugned shares.