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Ex-IAS Couple Money Laundering Case: Madhya Pradesh High Court orders Status Quo on ED's Order Attaching two Disputed Properties

By Deeksha Sinha Deeksha Sinha      Mar 28, 2022      0 Comments      1,557 Views
Money Laundering Case Madhya Pradesh High Court

Case Title: M/S Faith Cricket Club v. Directorate Of Enforcement 

The Madhya Pradesh High Court, Jabalpur, has ordered status quo on an attachment order issued by the Enforcement Directorate for attachment of properties, purported "proceeds of crime" in a money laundering case registered against ex-IAS couple late Arvind Joshi and Tinu Joshi in 2010.

The whole controversy is related to the criminal investigation conducted by ED against the Joshis (IAS Couple of 79 batch of MP Cadre) under Section 13(1)(e) & 13(2) of the Prevention of Corruption Act, 1988 and Section 109 r/w Section 120B IPC, for possession of movable/ immovable assets disproportionate to their known sources of income. The FIR against them involved scheduled offences in terms of Section 2(1)(y) of PMLA.

The 'proceeds of crime' worked up to Rs. 41 Crore (approx.) which is 3151.32% more than their known sources of income. The couple was sacked in 2014. ED had started its probe into the couple's assets in December 2021.

The present proceedings were instituted by a firm namely M/s Faith Cricket Club, which claimed to have entered into a partnership agreement with the Joshi couple's parents. Based on this agreement, M/s Faith Cricket Club was set up to carry out sports-related activities such as cricket, outdoor & indoor stadiums, coaching centres, etc. Further, it is claimed that the senior Joshis brought in two immovable properties to the firm's assets, as part of their capital contributions.

Thereafter, it is claimed that in the year 2021, the senior Joshis retired from the partnership business and gave the said immovable properties to M/s Faith Cricket Club in terms of a mutual agreement. 

Thus, it is the case of the Petitioner that the order of ED, attaching the aforementioned two properties as "proceeds of crime" of the ex-IAS couple vide Provisional Attachment order dated 26.03.2021, passed u/s 5 of the PMLA, 2002 is bad in law.

In the present writ proceedings, the firm has impugned the order of Adjudicating Authority which confirmed the provisional attachment.

The counsel for the petitioner argued that the Adjudicating Authority while confirming the order passed under Section 8(3) of PMLA, failed to pass a speaking order for rejecting the application preferred by it under proviso to Section 8(2) of PMLA.

Section 8(2) provides that the Adjudicating Authority shall, after following procedure prescribed therein, record a finding whether all or any of the properties referred to in the notice are involved in money-laundering. Provided that if the property is claimed by a person, other than a person to whom the notice had been issued, such person shall also be given an opportunity of being heard to prove that the property is not involved in money-laundering.

This opportunity was not granted to the firm, the Petitioner's counsel contended.It was further argued that on the above said two pieces of land, a Cricket Academy is being run by petitioner-a partnership firm. Further, he submitted that in the absence of any Appellate Authority being functional under Section 25 PMLA, the petitioner is left remediless, and therefore, is constrained to invoke writ jurisdiction.

Accordingly, the Court has directed the Union to file a reply on the short issue as mechanical dismissal of intervention application of M/s Faith Cricket Club by the Adjudicating Authority.

The Bench of Justice Sheel Nagu and Justice Maninder S Bhatti ruled,

"Till next date of hearing, status- quo in regard to possession over the said property shall be maintained by the parties with the condition that property in question shall neither be alienated nor any third party right would be created."

The court has listed the matter in the week commencing on 11.04.2022.

Counsels for Petitioner: Shri Manish Datt, Senior Counsel with Shri Jasmeet Singh, Shri Akshay Khandelwal and Shri Saif Ali.

Counsel for Respondent: Shri J.K. Jain, A.S.G

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