Bombay High Court's 'Strong Message' To ED: Act As Per Law, Don't Harass Citizens; Imposes 1 Lakh Cost

In a significant order, the Bombay High Court on Tuesday while imposing an exemplary costs of Rs 1 lakh on the Enforcement Directorate (ED) observed that it is high time that the central agencies like the ED should conduct themselves within the parameters of law and stop taking the law in the own hands and harass citizens. 

Single-judge Justice Milind Jadhav said a 'strong message' needs to be sent to the law enforcement agencies to ensure that the citizens are not harassed. 

"I am compelled to levy exemplary costs because a strong message needs to be sent to the Law Enforcement Agencies like ED that they should conduct themselves within the parameters of law and that they cannot take law into their own hands without application of mind and harass citizens," Justice Jadhav said. 

The judge pointed out that by now it is settled that an offence of Money Laundering is committed by an individual with a deliberate design with the motive to enhance his gains, disregarding the interest of the nation and society as a whole.

"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 PMLA," the judge remarked. 

The strong-worded observations were made while quashing a 'process' issued against a city-based developer on August 8, 2014 by a special PMLA court on an application filed before it by the ED. 

The case pertained to an alleged 'breach of agreement' between a purchaser and the developer, wherein, the former had entered into an agreement with a firm, which was basically a cross holding of the developer itself, for renovating two floors of a building in suburban Malad. The purchaser had agreed to pay over Rs 4 crore for this renovation.

The purchaser was the chairman of the newly constructed building's society and had separately purchased two floors (with 15 rooms each) for starting a residential hotel or guest house facility with separate entrance and parking amenities. 

As per the petition, a second agreement was signed between the purchaser and the developer with regards to the sale of the two floors of the building for a consideration of over Rs 6 crore. 

It was agreed between the parties that the developer will have to give the possession of the premises on July 30, 2007. However, the developer failed to hand over the premises along with the Occupancy Certificate (OC), which the developer stated was due to the major modifications in the renovations carried out on instructions of the purchaser and also by other flat owners in the entire building. 

However, aggrieved with the 'inevitable' delay, the purchaser lodged a complaint twice with the Malad Police Station, which refused to register an FIR on the ground that the dispute was purely civil in nature. The purchaser thereafter lodged a private complaint with a Magistrate in Andheri and obtained an order directing the Vile Parle Police Station to conduct an enquiry. 

The Vile Parle Police Station lodged an FIR in March 2009 and thereafter in August 2010 filed a chargesheet against the developer under charges of cheating etc. 

In December 2012, the Vile Parle Police Station forwarded its chargesheet to the ED, which thereafter lodged a criminal case against the developer. The ED accepted the contentions of the complainant purchaser that while the developer defrauded him, he also purchased two flats and one garage in a separate project at Andheri, which were purchased by the developer out of the 'proceeds of crime' (money paid by the complainant to the developer).

Accepting this contention, the ED proceeded to file its report before a special PMLA court, which too accepted it and later on permitted to attach the said properties allegedly purchased by the developer from the proceeds of crime. 

The developer therefore, challenged this order of the special court, before the single-judge, who upon going through these facts, held that the action on part of the ED and also the complainant purchaser was full of 'malafide.'

"In the facts of this case none of the ingredients of cheating are present. There is nothing which prohibits a developer from entering into a Sale Agreement and allowing execution of a simultaneous Agreement for providing additional amenities / renovation in the same premises through another entity. This is how development in Mumbai City takes place," the judge held. 

This practice of developers entering into simultaneous agreements with purchasers through a cross holding, Justice Jadhav said "is normal business practice and cannot be faulted with."

The action of Complainant as also ED in the above facts to put the criminal system into motion is clearly malafide and calls for imposition of exemplary costs, the judge said, while imposing a further cost of Rs 1 lakh on the complainant. 

"The Complainant was entitled to approach the Magistrate but he clearly suppressed the findings of the EOW and Malad Police Station in his Application filed before the Metropolitan Magistrate Court 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 added. 

With these observations, the judge quashed the proceedings issued against the developer. 

Appearance:

Senior Advocate Kevic Setalvad along with Advocates Jehan Lalkaka and Bhavesh Thakur appeared for the Applicants.

Additional Public Prosecutor Dr. DS Krishnaiyer represented the State.

Special Prosecutor Shriram Shirsat along with Advocates Karishma Raje and Shekhar Mane represented ED.

Gul Achhra, the Complainant appeared as party-in-person.

Case Title: Rakesh Brijlal Jain vs State of Maharashtra (Criminal Revision Application 379 of 2016)

Citation: 2025 LiveLaw (Bom) 25

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