Bombay HC quashes money laundering case of ED against Jet Airways Founder Naresh Goyal, wife – Times of India
MUMBAI: In a win for founder chairman of Jet Airways Naresh Goyal and his wife Anita Goyal, Bombay high court on Thursday quashed a money laundering case filed by the Enforcement Directorate (ED) against them and all pending proceedings in it.
In January the HC bench of Justices Revati Mohite Dere and Prithviraj Chavan had restrained the ED from taking any coercive steps against the Goyal couple while hearing their plea to quash the Enforcement Case Information Report (ECIR) dated February 20, 2020, the probe and proceedings as being illegal and contrary to law. On Thursday after hearing the rejoinder to ED’s opposition, Justice Dere and Chavan held in his favour and quashed the proceedings under the Prevention of Money Laundering Act (PMLA) against them. The reasoned order will follow.
Goyals’ case was that the ECIR no longer survives as it has no basis since there is no prior offence against them as required after the MRA Marg police station in Mumbai closed an alleged cheating case filed on February 18, 2020 by a travel agent against them.
For Naresh Goyal, senior counsel Ravi Kadam and Karan Kadam and for the wife, senior counsel Aabad Ponda, relied on and cited Supreme Court Judgments including Vijay Chaudhary versus Union of India of 2022 and ED vs Obulapuram Mining Company of 2017 to submit that proceedings under PMLA are not sustainable once the predicate—underlying offence—has been quashed or dispose of in favour of the accused.
The Goyals had petitioned the HC late last year to quash the ECIR and all proceedings. The matter was heard for the first time on January 17 when the ED counsel sought time and this month through its counsel Hiten Venegaonkar argued that the ECIR was a “private’’ document and cannot be quashed and that the registration of an FIR in an underlying offence is not a sine qua non for initiating proceedings under PMLA and ED can approach the local police to seek registration of a ‘scheduled offence’ at a later stage if it comes across any evidence to that effect in course of its enquiry in a given case.
The ED reply said in its probe into the 2020 ECIR it was revealed that the State Bank of India had filed a ‘fraud Monitoring Return’ alleging a fraud worth Rs 1591 crore by Jet Airways by allegedly availing credit facilities by overstating assets and that SBI has made a formal complaint with Central Bureau of Investigation (CBI) to register an FIR.
But without an existing predicate (underlying) offence, the ECIR based on that underlying FIR will have to be quashed, submitted Kadam and Ponda, citing the PMLA mandate and findings given by two Delhi high court judgments in Harish Fabiani led group matter quashed a 2021 ECIR registered by the ED against IndiaBulls Housing Finance Ltd and others under FIR lodged at the Wada police in Palghar Maharashtra where the HC had last September after closure of the FIR and also EMTA Coal case.
Advocate Ameet Naik whose law firm was representing the Goyals later said, “We have, while preparing for the matter in our research not come across any Bombay high court ruling which has set aside an ECIR case of the ED, the Delhi high court had.’’
Under the PMLA Act, once there is an underlying First Information Report (FIR) registered against a person for specific criminal activities, most of which are under the Indian Penal Code—labelled as ‘scheduled offences’ which including cases of cheating, forgery, criminal breach of trust, criminal conspiracy, misappropriation, waging war against government of India, tax evasion, counterfeiting, extortion, dacoity and more—leading to ‘proceeds of crime’ valued at Rs 30 lakhs or more , the ED can register an offence of money laundering.
Akbar Travels (India) Pvt Ltd (ATIPL) had filed a cheating FIR against the Goyals with the Mumbai police and two days later the ED on February 20, 2020 registered its ECIR under the Prevention of Money Laundering Act (PMLA) and also commenced investigation under Foreign Exchange Management Act (FEMA).
The cheating case FIR had alleged that every year JetAirways and ATIPL had a deal where the airline fixed targets for business and paid a commission to ATIPLE and in 2018-19 the agent did business worth over Rs 900 crores and was due to get Rs 46 crore which it did not receive the amount and was “cheated’’ as the company did not disclose it was in ‘financial crisis’ and assured it would pay.
Their counsel submitted that there is no predicate offence as required for ED to investigate its case. They argued that the complaint lodged with the MRA Marg Police Station, Mumbai has resulted in filing of a ‘C’ Summary Report (closure report as being neither true nor false) by the police. They submitted that even the protest petition filed by the ED was rejected and the rejection has been upheld by the HC in December 2020, as well as the Supreme Court.
In January the HC bench of Justices Revati Mohite Dere and Prithviraj Chavan had restrained the ED from taking any coercive steps against the Goyal couple while hearing their plea to quash the Enforcement Case Information Report (ECIR) dated February 20, 2020, the probe and proceedings as being illegal and contrary to law. On Thursday after hearing the rejoinder to ED’s opposition, Justice Dere and Chavan held in his favour and quashed the proceedings under the Prevention of Money Laundering Act (PMLA) against them. The reasoned order will follow.
Goyals’ case was that the ECIR no longer survives as it has no basis since there is no prior offence against them as required after the MRA Marg police station in Mumbai closed an alleged cheating case filed on February 18, 2020 by a travel agent against them.
For Naresh Goyal, senior counsel Ravi Kadam and Karan Kadam and for the wife, senior counsel Aabad Ponda, relied on and cited Supreme Court Judgments including Vijay Chaudhary versus Union of India of 2022 and ED vs Obulapuram Mining Company of 2017 to submit that proceedings under PMLA are not sustainable once the predicate—underlying offence—has been quashed or dispose of in favour of the accused.
The Goyals had petitioned the HC late last year to quash the ECIR and all proceedings. The matter was heard for the first time on January 17 when the ED counsel sought time and this month through its counsel Hiten Venegaonkar argued that the ECIR was a “private’’ document and cannot be quashed and that the registration of an FIR in an underlying offence is not a sine qua non for initiating proceedings under PMLA and ED can approach the local police to seek registration of a ‘scheduled offence’ at a later stage if it comes across any evidence to that effect in course of its enquiry in a given case.
The ED reply said in its probe into the 2020 ECIR it was revealed that the State Bank of India had filed a ‘fraud Monitoring Return’ alleging a fraud worth Rs 1591 crore by Jet Airways by allegedly availing credit facilities by overstating assets and that SBI has made a formal complaint with Central Bureau of Investigation (CBI) to register an FIR.
But without an existing predicate (underlying) offence, the ECIR based on that underlying FIR will have to be quashed, submitted Kadam and Ponda, citing the PMLA mandate and findings given by two Delhi high court judgments in Harish Fabiani led group matter quashed a 2021 ECIR registered by the ED against IndiaBulls Housing Finance Ltd and others under FIR lodged at the Wada police in Palghar Maharashtra where the HC had last September after closure of the FIR and also EMTA Coal case.
Advocate Ameet Naik whose law firm was representing the Goyals later said, “We have, while preparing for the matter in our research not come across any Bombay high court ruling which has set aside an ECIR case of the ED, the Delhi high court had.’’
Under the PMLA Act, once there is an underlying First Information Report (FIR) registered against a person for specific criminal activities, most of which are under the Indian Penal Code—labelled as ‘scheduled offences’ which including cases of cheating, forgery, criminal breach of trust, criminal conspiracy, misappropriation, waging war against government of India, tax evasion, counterfeiting, extortion, dacoity and more—leading to ‘proceeds of crime’ valued at Rs 30 lakhs or more , the ED can register an offence of money laundering.
Akbar Travels (India) Pvt Ltd (ATIPL) had filed a cheating FIR against the Goyals with the Mumbai police and two days later the ED on February 20, 2020 registered its ECIR under the Prevention of Money Laundering Act (PMLA) and also commenced investigation under Foreign Exchange Management Act (FEMA).
The cheating case FIR had alleged that every year JetAirways and ATIPL had a deal where the airline fixed targets for business and paid a commission to ATIPLE and in 2018-19 the agent did business worth over Rs 900 crores and was due to get Rs 46 crore which it did not receive the amount and was “cheated’’ as the company did not disclose it was in ‘financial crisis’ and assured it would pay.
Their counsel submitted that there is no predicate offence as required for ED to investigate its case. They argued that the complaint lodged with the MRA Marg Police Station, Mumbai has resulted in filing of a ‘C’ Summary Report (closure report as being neither true nor false) by the police. They submitted that even the protest petition filed by the ED was rejected and the rejection has been upheld by the HC in December 2020, as well as the Supreme Court.
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