Delhi High Court Temporarily Stays Money Laundering Proceedings Against Company Allegedly Owned By Former IAS Officer Babulal Agrawal

The Delhi High Court last week stayed the proceedings before Adjudicating Authority in a PMLA case against a company namely Prime Ispat Ltd, it's director and managing director. The company is allegedly owned by Babulal Agrawal, former IAS Officer of 1988 Batch serving in the State Government of Chhattisgarh.

The company had challenged the Provisional Attachment Order issued by the Enforcement Directorate along with complaint and show cause notice against it.

Justice Rekha Palli issued notice on the petition moved through Advocates Somesh Tiwari and Vidula Mehrotra and sought the response of Centre, ED and Adjudicating Authority, PMLA while posting the matter for further hearing on January 7, 2022. The matter was argued by Advocates Abhimanyu Bhandari and Abhishek Singh. 

The CBI had registered a case on the basis of a complaint against Agrawal, former IAS Officer, under relevant provisions of IPC and Prevention of Corruption Act. However the petitioners were not named as accused in the said case.

It was the case of the petitioners that the income tax authorities had illegally and without any authority conducted search and seizure operations at the official premises of their company and other accused persons including Agrawal.

Economic Offences Wing of Chandigarh had then issued another FIR against Agrawal and others. Subsequently, ECIR was registered by the ED. It was thus the case of the petitioners that neither the second FIR nor the ECIR had mentioned them as accused persons.

"... there is no material on record to show that any of this money deposited in these bank accounts belongs to Sh. Babulal Agrawal and that he has anything to do with the business of the Petitioner Company, and therefore this allegation is only made to prejudice the Petitioners. This allegation made by Respondent No.2 is based on no evidence and no material on record, whatsoever," the plea reads.

It was alleged that Agarwal's ill-gotten wealth was deposited through thousands of random villagers from the same village, and then routed to the Petitioner Company.

The plea on the other hand states,

"Such an allegation is only made to harass the Petitioners and Sh. Babulal Agrawal, who was an exceptional IAS officer and has time and again been awarded for his honesty and integrity for his services in the span of 28 years. In any event, the Petitioners herein are being harassed by the Respondent No.2 by being subjected to investigation spanning over 11 years only because the Petitioner No.2 and Petitioner No.3 are related to Sh. Babulal Agrawal."

During the course of hearing, it was submitted by the petitioners that the parties were directed to maintain status quo vide an order passed on November 13, 2019 and therefore the respondents could not have issued the impugned provisional attachment order or initiated any further proceedings against the them.

Hearing this, the Court said,

"Till the next date, the adjudicating authority will not proceed with the matter and will therefore fix a date after the next date of hearing before this Court."

"Issue notice. Learned counsel for the respondents accepts notice. While urging that the present petition is not maintainable, he prays for, and is granted, four weeks' time to file counter affidavit. Rejoinder thereto, if any, be filed within four weeks thereafter," the Court added.

Case Title: PRIME ISPAT LIMITED & ORS. v. UNION OF INDIA & ORS.

Click Here To Read Order