Correctness Of Allegations Can’t Be Examined: Allahabad High Court Refuses To Quash ED’s Investigation Against Sahara’s Cooperative Societies
The Allahabad High Court said that there is no ground to interfere in the proceedings under the PMLA in exercise of the inherent powers of the Court under Section 482 CrPC.
Justice Subhash Vidyarthi, Allahabad High Court, Lucknow Bench
The Allahabad High Court has refused to quash investigation by the Directorate of Enforcement (ED) against cooperative societies of M/s Sahara India.
The Lucknow Bench was hearing a Petition filed by the cooperative societies under Section 482 of the Criminal Procedure Code, 1973 or Section 528 of the Bharatiya Nagarik Suraksha Sanhita (BNSS).
A Single Bench of Justice Subhash Vidyarthi observed, “The aforesaid facts prima facie make out commission of offence of cheating by the petitioners so as to warrant their trial for the offence. Correctness of the allegations cannot be examined by this Court in exercise of its inherent powers and that will be done by the trial Court after the parties have been given opportunity to lead evidence in support of their respective case. Therefore, I am unable to accept this contention of the learned Counsel for the petitioner.”
The Bench said that there is no ground to interfere in the proceedings under the PMLA in exercise of the inherent powers of the Court under Section 482 CrPC.
Senior Advocate Vikram Chaudhary, Advocates Nadeem Murtaza, Amrendra Nath Tripathi, B.M. Tripathi, Ram Sajan Yadav, Sanjeev Kumar Mishra, and Parth Anand appeared for the Petitioners, while Additional Solicitor General (ASG) S.V. Raju, Special Counsel Zoheb Hossain, Retainer Counsel Rohit Tripathi, and Advocate Ankit Khanna appeared for the Respondents.
Case Background
The Petition before the Court sought quashing of entire proceedings of search and seizure conducted by the ED at the Petitioners’ offices at Lucknow and other locations, in pursuance of an authorization order issued by the Deputy Director, ED. The ED had registered an ECIR (Enforcement Case Information Report) against the Petitioners and unknown others stating that an FIR was lodged under Sections 294, 506, 406, 409, 417, 420, 120-B, and 34 of the Indian Penal Code, 1860 (IPC). The ED enlarged and extended the scope of investigation against various companies of SAHARA Group and issued summons for production of documents, records and books of accounts relating to the issue of OFCDs (Optionally Fully Convertible Debentures) by companies of the group.
In July 2024, the Deputy Director, ED issued different letters of authorization for search, seizure and freezing under sub section (1) and sub section (1-A) and Section 17 of the Prevention of Money Laundering Act, 2002 (PMLA). The letters directed the Authorized Officer to conduct search and seize or freeze any record of property which is considered relevant for the purposes of proceeding under the Act as per the procedure specified in Rule 4. This was under challenge before the High Court.
Reasoning
The High Court in the above context of the case, noted, “As BUDS Act specifically states that the Act shall be in addition to, and not in derogation of, the provisions of any other law, it is obviously in addition to the provisions contained in the Penal Code. Therefore, merely because an act makes out commission of an offence under the BUDS Act, it cannot be said that although the act is punishable as an offence under IPC also, the offender cannot be prosecuted for commission of the offence punishable under IPC. Therefore, I find no force in the second submission of the learned Counsel for the petitioner.”
The Court added that the maturity amount paid during a year by M/s Sahara India on behalf of all entities is always less than the deposits received by it meaning thereby that the maturity amount was always paid from the new deposits received.
“The petitioners have not instituted any contempt proceedings alleging violation of the order dated 28.02.2025 passed by this Court. … Firstly, the petitioners have failed to make out violation of the interim order dated 28.02.2025 and secondly, violation of an interim order would not make out a ground for quashing of the entire proceedings under PMLA against the petitioners”, it said.
The Court observed that there is no illegality in continuance of proceedings under PMLA against the Petitioners.
Accordingly, the High Court dismissed the Petition.
Cause Title- M/S Humara India Credit Cooperative Society Ltd. Thru. its Dir. Dhananjay Subramanium and 3 others v. The Directorate of Enforcement (Ed) Deptt. of Revenue Thru. Direct. and 3 others (Neutral Citation: 2025:AHC-LKO:65238)
Appearance:
Petitioners: Senior Advocate Vikram Chaudhary, Advocates Nadeem Murtaza, Amrendra Nath Tripathi, B.M. Tripathi, Ram Sajan Yadav, Sanjeev Kumar Mishra, Parth Anand, and Sheeran Mohiuddin Alavi.
Respondents: ASG S.V. Raju, Special Counsel Zoheb Hossain, Retainer Counsel Rohit Tripathi, and Advocate Ankit Khanna appeared for the Respondents.
