Coal Scam: Delhi Court Rules Attempt To Acquire Proceeds Not Money Laundering

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A Delhi court has declined to take cognizance of a charge sheet filed by the Enforcement Directorate against Adhunik Corporation Limited and its two directors in a coal scam case, ruling that attempting to acquire proceeds of crime or anticipating undue benefits can’t be classified as money laundering.

In its December 23 ruling, Special Judge Arun Bhardwaj granted relief to ACL and its directors, Mahesh Kumar Agarwal and Nirmal Kumar Agarwal, in the case linked to the New Patra Para coal block in Odisha.

The ED had alleged that the accused’s family members and group companies had invested ₹50.37 crore in ACL under the guise of share capital, anticipating “undue benefit” from the criminal activities related to a scheduled offence lodged by the CBI, which resulted in the allotment of the coal block.

Judgement

The judge noted that according to the ED’s own statements, the accused were “anticipating” benefits from criminal activities that had not yet materialized. “Therefore, as per the complainant (ED), the undue benefits were yet to be derived or obtained and were only anticipated,” the judge said. He clarified that since no proceeds of crime had yet been realized, an attempt to acquire such proceeds or the anticipation of benefits did not meet the definition of money laundering.

The judge further emphasized that the infusion of capital began before the alleged conspiracy was hatched, and no investor directly linked their investment to the coal block allocation. The investments came from family members and group companies, not from external parties influenced by the coal block allocation, which was key in ruling out the presence of “proceeds of crime.”

He also noted that these investments continued even after the coal block’s de-allocation was imminent, following the Inter-Ministerial Group’s recommendations, and after a show cause notice was issued in November 2010.

As a result, the judge concluded that these investments did not fall under the “proceeds of crime” definition as per the Prevention of Money Laundering Act (PMLA). Citing the Delhi High Court’s stance, the judge noted that simply receiving a coal block allocation does not automatically constitute proceeds of crime.

The court ultimately stated, “No offence of money laundering under Section 3 of PMLA is made out,” and declined to proceed with the complaint.

Previously, the accused were convicted in a related corruption case by the CBI for conspiring to cheat the government in the allocation of the coal block. They were sentenced to four years in prison, but their sentence was stayed by the Delhi High Court pending appeals.