While criticising the directorate of enforcement (ED) for overstepping its legal boundaries and harassing citizens without sufficient evidence, the Bombay High Court (HC) imposed exemplary costs of Rs1 lakh each on the ED and a complainant for initiating a false criminal case against a developer.
In a 60-page order, justice Milind Jadhav says, "It is seen that conspiracy of money laundering is hatched in secrecy and executed in darkness. The present case before me is a classic case of oppression in the garb of implementation of the Prevention of Money Laundering Act (PMLA). I am compelled to levy exemplary costs because a strong message needs to be sent to law enforcement agencies like ED that they should conduct themselves within the parameters of the law and that they cannot take the law into their own hands without application of mind and harass citizens."
The case is related to a dispute between Gul Achhra, a buyer, and Kamala Developers about renovating and selling two floors in the Ashok Enclave building in Malad.
For starting a hotel or guest house with separate entrance and parking amenities, he signed a separate agreement for the complete renovation and providing additional amenities on these two floors with 15 rooms.
Kamala Developers and GK Solutions Pvt Ltd, a company owned by Mr Achhra, signed the additional agreement to renovate the two floors and provide additional amenities, including exclusive car parking valued at over Rs6 crore.
After the developer failed to deliver the possession on time, Mr Achhra filed a complaint, which was dismissed by the Malad police station as a civil matter. However, he then approached the magistrate court at Andheri, alleging money laundering by the developer to buy properties in Andheri using the proceeds from the fraud (money paid by him). The magistrate court at Andheri directed the Vile Parle police station to conduct an enquiry into the matter. The Vile Parle police registered a first information report (FIR) in March 2009 and in August 2010, filed a chargesheet against Kamala Developers.
In December 2012, the Vile Parle police forwarded the chargesheet of alleged money laundering to the ED. The agency filed a report before the Special PMLA court and obtained permission to attach two flats and one garage purchased by Kamala Developers in Andheri from the proceeds of crime (money paid by the buyer).
Kamala Developers then approached the Bombay HC, challenging the order passed by the Special PMLA court.
Justice Jadhav from Bombay HC observed that the actions of the ED and the complainant were baseless, amounting to malicious prosecution. He says, "...(in) this case none of the ingredients of cheating are present. There is nothing that prohibits a developer from entering into a sale agreement and allowing execution of a simultaneous agreement for providing additional amenities and renovation in the same premises through another entity. This is how development in Mumbai city takes place."
"The complainant was entitled to approach the magistrate, but he clearly suppressed the findings of the economic offences wing (EOW) and Malad police station in his application filed before the metropolitan magistrate court at Andheri only for the reason that he wanted his complaint to be dealt with by the Vile Parle police station. Thus, the complainant had a clear sinister motive in his mind, which becomes clearly evident," the judge said, while quashing the proceedings against the developer.
The HC directed Mr Achhra to pay Rs1 lakh to the Kirtikar Law Library at Bombay HC, while the ED was directed to pay Rs1 lakh to the High Court Original Side Library.
(Criminal Revision Application 379 of 2016 Date: 21 January 2025)