In a strong rebuke to the Enforcement Directorate (ED), the Bombay High Court imposed exemplary costs of ₹1 lakh on the agency for its “malafide action” against a Mumbai-based developer. The Court also levied an additional ₹1 lakh penalty on the complainant, signaling its disapproval of the harassment inflicted on the developer through unjustified criminal proceedings under the Prevention of Money Laundering Act (PMLA).
Justice Milind Jadhav, presiding over the matter, emphasized the need for law enforcement agencies to operate strictly within the bounds of the law and avoid undue oppression. “A strong message needs to be sent to law enforcement agencies like the ED that they should conduct themselves within the parameters of law and that they cannot take the law into their own hands without application of mind and harass citizens,” he stated.
Case Background
The dispute originated in 2007 when the complainant entered into agreements with a developer to purchase commercial property and undertake renovation work to convert it into a residential hotel. Despite paying over ₹10 crores, delays in obtaining an Occupancy Certificate (OC) frustrated the complainant, who subsequently sought police intervention.
Initial complaints filed in 2009 were rejected by the police, deeming the issue a civil dispute. However, the complainant later approached a Metropolitan Magistrate’s Court, resulting in an FIR. The matter eventually attracted the ED’s scrutiny, with allegations that funds totaling ₹4.27 crore linked to the renovation were proceeds of crime under the PMLA.
Court’s Observations
Justice Jadhav dismissed the ED’s claims, criticizing the agency for vague and unfounded allegations. He highlighted that the essential elements of criminal intent, such as cheating, were absent in this case.
“The ED’s reliance on broad and unsupported claims—alleging preposterous submissions and arguments while using terminologies like layering and integrating funds as ‘proceeds of crime’—is a classic case of oppression in the garb of implementing PMLA,” he said.
The judge also noted that the developer’s actions aligned with standard practices in Mumbai’s real estate sector. “There is nothing which prohibits a Developer from entering into a Sale Agreement and allowing execution of a simultaneous Agreement for providing additional amenities/renovation in the same premises through another entity. This is how development in Mumbai City takes place,” he explained.
Signaling Accountability
In addition to penalizing the ED, the Court reprimanded the complainant for pursuing criminal proceedings without merit, emphasizing the need for accountability on all fronts.
“I am fully convinced that this is a fit case for imposition of exemplary costs on the Complainant and ED for invoking criminal action in the present facts and harassing the Developer with criminal action,” Justice Jadhav concluded.
Case: Rakesh Brijlal Jain vs State of Maharashtra – Available on LAWFYI.IO
