Madras HC refuses to quash money laundering case against VGN Developers

The Madras HC has refused to quash a money laundering case against VGN Developers, over the purchase of a prime property for allegedly lesser value, in connivance with bank officials

The Madras High Court, on October 4, 2019, refused to quash a money laundering case filed by the Enforcement Directorate (ED), against real estate firm VGN Developers Private Limited, related to the purchase of a prime property in Chennai for allegedly lesser value in connivance with other accused, including officials of a bank, in 2007. “We do find adequate materials, including documents, available. Therefore, this court cannot invoke Section 482 of the CrPC, to quash the proceedings at this stage,” a bench of justices MM Sundresh and RMT Teekaa Raman held.

It dismissed a petition from the company and its managing director D Pratish, seeking quashing of the proceedings against them, initiated by the ED under the Prevention of Money Laundering Act (PMLA) before the Principal Sessions Judge Court. Rejecting the argument that the ED case needed to be quashed, as a CBI case for the same charges had been closed earlier, the bench said Section 24 of the PMLA places the burden of proof on a person charged with an offence of money laundering. As a result, either an authority or a court shall presume that such proceeds of crime were involved in money laundering, until the contrary was proved. Hence, investigation by the CBI and the ED was totally distinct and different, it said. It directed the lower court to expedite the trial and dispose of the case within nine months.

According to the ED case, the company had, in March, 2007 purchased a land in Chennai’s Guindy from the State Bank of India for a lesser value in a private deal, in connivance with the other accused, including bank officials, whereas it would have fetched a higher value in a public auction. The deal resulted in huge loss to the government and was done through illegal gratification, the agency alleged. Later the property was mortgaged with the bank for a higher value, the ED submitted. It was alleged that though a bid for the property was made for Rs 298 crores, the public auction was later withdrawn. Thereafter, a decision was made by the SBI and a consortium of lenders, to explore the private treaty and the petitioner VGN made an offer of Rs 272 crores.

 

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