The Bombay High Court on Tuesday struck down a decade-long money-laundering case linked to the Maharashtra Sadan scam against real estate developers Krishna Shantaram Chamankar, his brother Prasanna, and their partnership firm KS Chamankar Enterprises.
A division bench of Justices A.S. Gadkari and Rajesh S. Patil ruled that proceedings under the Prevention of Money Laundering Act (PMLA) cannot continue once the accused have been discharged from the predicate offence.
The money-laundering proceedings stemmed from a 2015 FIR registered by the Anti-Corruption Bureau (ACB), Mumbai, over alleged irregularities in contracts for the construction of the Maharashtra Sadan in Delhi, the High Mount Rest House in Malabar Hill, and the Regional Transport Office building in Bandra. KS Chamankar Enterprises had been awarded the contracts.
The Enforcement Directorate (ED) registered two Enforcement Case Information Reports (ECIRs) in 2015 and filed a charge sheet in 2016 against the Chamankars.
In July 2021, however, a special ACB court discharged the developers, holding that the projects were executed in line with contractual terms and that there was no evidence to sustain allegations of wrongdoing. The ACB did not challenge the discharge order.
The Chamankars petitioned the high court, contending that once the predicate offence was set aside by a competent criminal court, there was no foundation for continuing money-laundering charges. They emphasised that PMLA proceedings cannot exist in isolation.
The ED opposed the plea, maintaining that PMLA proceedings could continue independently and that its 2016 charge sheet remained valid despite the discharge.
Rejecting the ED’s arguments, the bench held that the money-laundering case was entirely based on the ACB’s 2015 FIR. With the discharge order having attained finality, the ECIRs and subsequent charge sheet stood unsustainable.
“The order discharging the petitioners from the predicate offence has attained finality. Therefore, the ECIRs and charge sheet filed by the Enforcement Directorate against them cannot be sustained,” the bench observed.
Accordingly, the court quashed the ECIRs and charge sheet, bringing to an end proceedings that had lingered for nearly a decade.
