Laundered Hard Earned Money Of Homebuyers Looking For Shelter: Punjab & Haryana High Court Rejects Builder's Plea Challenging ED Arrest

The Punjab and Haryana High Court has dismissed the plea of a real estate company owner challenging his arrest by the Enforcement Directorate (ED), observing that "huge proceeds of crime have been identified, and prima facie, the offence of money laundering is clearly made out" against him.

Justice Mahabir Singh Sindhu said,

"about 1500 prospective home buyers have invested their hard earned money with the hope that they will get shelter, but the entire money of Rs.363 crore (approx.) has been misappropriated and laundered by the petitioner in conspiracy with other co-accused; thus, there is no option, except to dismiss the petition."

Singh is allegedly a major share holder of M/s Mahira Homes Pvt. Ltd which is the holding company of various other associate companies, including M/s Sai Aaina Farms Pvt. Ltd. (SAFPL) dealing with construction projects in Gurugram.

In 2017, the Director of Town and Country Planning, Haryana (DTCP) granted license for construction of 1500 flats in favour of SAFPL, in Gurugram. The company furnished two Bank Guarantees and obtained requisite license in 2018 from Haryana Real Estate Regulatory Authority (HRERA) under the provisions of the Real Estate (Regulation and Development) Act, 2016.

On this basis, SAFPL collected booking amount from 1,500 prospective home buyers to the tune of Rs.363 crores.

One Neeraj Chaudhary, claiming to be the Additional Director of M/s D.S. Estates & Construction Pvt. Ltd. (in one of the companies of petitioner involved in construction), filed two separate complaints before the Magistrate Court for registration of FIRs against SAFPL, present petitioner as well as other co-accused. Consequently, FIR was registered under Sections 120-B, 406, 420, 467, 468 & 471 of the Indian Penal Code.

It was alleged in the above FIRs that SAFPL furnished fake bank guarantees in favour of DTCP while obtaining license. The ED found some of the above offences are “scheduled offence” as envisaged under Section 2(y) of the Prevention of Money Laundering Act, 2002 (PMLA) and thus recorded ECIR.

After hearing the submissions and examining the material on record, the Court rejected Singh's arguments and noted that non-bailable warrant was issued after Singh and other co-accused failed to appear despite repetitive summons.

The Court noted that as per the records the arrest memo was duly served on Singh and thereafter ED approached Special judge for his production but the judge was not available. The Court further noted that ED also approached duty magistrate to produce Singh but he also expressed his inability.

Justice Sindhu further highlighted that non-bailable warrants were issued against Singh as a "last resort" when he failed to appear before the ED as well as the Special Judge, despite issuance of summons and non-bailable warrants on various occasions.

"There is sufficient material to the effect that petitioner knowingly and deliberately avoided the process of law and remained hidden at unknown places to thwart the ongoing investigation. Thus, the E.D was quite justified while approaching learned Special Judge and obtaining the non-bailable warrants, time and again to enforce the provisions of PMLA. Consequently, there would be no hesitation to observe that petitioner is trying to rake up the issue regarding non- bailable warrants which has already attained finality upto Hon'ble the Supreme Court," it added.

The judge also took note of the fact that Singh tried to escape after he was arrested by ED officials. "Thus, all these facts clearly indicate that petitioner has no respect for the rule of law; rather tried to flee from the justice," the Court remarked.

Justice Sindhu also observed that the companies submitted fake bank guarantees "while obtaining licenses for Affordable Housing Projects and collected huge money from home buyers to the tune of Rs. 363 crore (approx.), Rs. 160 crore (approx) and Rs.90 crore (approx.), respectively on the basis of above licenses and siphoned off the money collected from the home buyers for their personal gains and the petitioner, who is the main beneficiary of the proceeds of crime, utilized the tainted money through various transactions and tried to convert the same into untainted money."

Court thus dismissed Singh's plea.

Case Title: Sikandar Singh v. Directorate of Enforcement and another

Mr. R.S. Rai and Mr. Chetan Mittal, Senior Advocates, with Mr. Jatin Sehgal, Mr. Adhirath Singh, Ms. Devna Soni, Ms. Molly Sharma, Mr. Viren Sibal, Mr. Raymon Singh, Mr. Aditya Varun, Mr. Shivashish Dwivedi, Mr. Ashish Garg, Mr. Viren Bansal, Mr. Aaryav Mehra, Ms. Prachi Gupta, Mr. Mayank Aggarwal, Mr. Satyam Sharda, & Ms. Rubina Virmani, Advocates, for the petitioner.

Mr. Zoheb Hossain, Special Counsel (through VC), Mr. Lokesh Narang, Senior Panel Counsel,

Mr. Manish Jain, Special Public Prosecutor (through VC), for the respondents.

Citation: 2024 LiveLaw (PH) 240

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