‘Probe agencies can’t harass citizens’: Bombay HC imposes Rs 1 lakh cost each on ED, complainant for ‘malafide’ case against developer

A single-judge bench of Justice Milind N Jadhav passed a verdict on Criminal Revision Application (CRA) challenging legality and validity of order passed by a special judge on August 8, 2014, that initiated proceedings against developer Rakesh Brijlal Jain, partner of Kamala Developers.

The petitioner sought direction to set aside the order of a special court designated under the Prevention of Money Laundering Act (PMLA), 2002, on a ground that prima facie, no offence of cheating was made out in the case.

The court quashed and set aside the impugned order observing that issuance of proceedings was a “clear abuse of the process of law”. “ED, for reasons best known to it, have supported complainant’s false case without application of mind or without going through the record,” said the bench.

“The action of complainant as also ED in the above facts to put the criminal system into motion is clearly malafide…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 noted in the judgment.

The central agency had initiated a probe against Jain based on the complaint which was being investigated by Vile Parle Police station by a property purchaser alleging cheating and breach of agreement between the parties. The complainant had claimed that the developer had taken money for incomplete work and failed to deliver the possession of the property in time.

The judge observed that there was no misappropriation of money or property by any of the parties to the transactions and there were no proceeds of crime involved. The HC noted that the subject property (two floors of commercial premises) stood delivered to the complainant before occupation certificate (OC).

“Hence, the case of ED based on the alleged crime recorded by Vile Parle police station is completely misconceived. In the present case, once it is established that there is no offence under Sections 406,418 and 420 IPC, then the question of money laundering under Section 3 of PMLA does not arise,” the judge noted.

“It is seen that the conspiracy of money laundering is a three-staged process, it 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 added

The court directed the complainant in the case Gul Achhra and ED to pay Rs. 1 lakh to law libraries in the high court premises within four weeks. The high court also cancelled ED’s attachment of two flats and garage purchased by Jain and allowed his plea.

After the lawyer representing the ED sought a stay on the operation of the verdict to challenge the same before the Supreme Court, the high court accepted the request and stayed the same for four weeks.