Supreme Court Dismisses ED's Plea Challenging HC Order That Allowed YS Bharathi Reddy To Substitute Attached Property With Fixed Deposits

The Supreme Court on Friday refused to entertain the Enforcement Directorate’s plea challenging the order of the Telangana High Court that allowed YS Bharathi Reddy, wife of Andhra Pradesh CM Jagan Mohan Reddy to substitute the property attached by the ED with fixed deposit.

The property had been attached by ED under the Prevention of Money Laundering Act, 2002, in a corruption case involving Bharathi Cement.

A division bench of Justice Abhay S. Oka and Justice Sanjay Karol observed that the impugned order made it clear that what was attached was not the proceeds of the crime and on that ground declined ED’s prayer:

“In the impugned orders, a finding has been recorded that the property which was attached was not what was acquired from the proceeds of the crime. This finding is not disputed by the petitioner. Moreover, it is not the case of the petitioner that the value of the attached property mentioned in the impugned orders is incorrect. In view of this, we decline to entertain the SLPs and the same are disposed of” the Court dictated in its order.

Additional Solicitor General SV Raju submitted in Court that the ED’s challenge is that whatever has been attached may not be substituted by some other property. On this point, Justice Oka asked the ASG “There is a finding recorded that these are not proceeds of the crime. What is your objection to this?”

ASG Raju responded that in the facts of the case the order may be correct. ”But your lordship may say that in case of proceeds of crime it may not be a precedent.” he submitted.

Justice Oka asked Senior Advocate Niranjan Reddy, the Counsel appearing for Bharathi Reddy, how they had given fixed deposit of face value of shares when the price of the shares is not known.

Reddy told the Court that “If the proceeds of crime are not directly found, they will attach an equivalent value. These shares are not proceeds of crime so it'll be the value for which attachment was effected.”

Reddy had approached the Telangana High Court to allow her to substitute the amount sought to be attached and recovered from her. In case of one property she had offered a fixed deposit of Rs.1,36,91,285 and in another she had offered a fixed deposit of Rs.6,13,89,370 in lieu of 61,38 937 equity shares of Rs.10.00 each belonging to M/s.Sandur Power Company Private Limited.

The Karnataka High Court had allowed her plea, on the ground that what had been attached by the ED was not the direct proceeds of the crime.

“Even in the provisional attachment order, it was clearly mentioned that value of the attached property was equivalent to proceeds of crime. In other words, even as per the attaching authority property attached was not acquired by proceeds of crime”, the  High Court had observed.

Case Details: Enforcement Directorate Vs. Y.S. Bharathi Reddy, Diary No. 22285-2023