REGULATORY · INDIA
Special court refuses ED prosecution complaint against Rathi Steel
Change
A special court refused to take cognisance of the ED's PMLA prosecution complaint against Rathi Steel and ordered detachment of properties attached by the ED.
Why it matters
The court declined to take cognisance of the Enforcement Directorate's prosecution complaint under the Prevention of Money Laundering Act. The court ordered detachment of all properties attached by the ED. The court found the allocation letter did not confer a direct financial benefit because no mining lease was executed and no coal was extracted. The court held the ED cannot treat subsequent commercial transactions, including a ₹3.08 crore share receipt, as proceeds of crime absent a demonstrable nexus with the scheduled offence; the accused had earlier been convicted by a CBI judge in 2016.
Implications
- • Attachment orders on Rathi Steel assets must be lifted and detached from ED control.
- • ED investigators must demonstrate a nexus between the scheduled offence and specific transactions before treating those transactions as proceeds of crime.
- • Asset‑recovery units cannot rely on allocation letters alone to justify seizures without evidence of conversion into economic gain.
Who is affected
- • Anti‑money‑laundering investigators (Enforcement Directorate)
- • Asset recovery and enforcement units
- • Corporate legal and compliance teams of mining and resource companies
- • Prosecutors handling scheduled offences and PMLA cases
Source
Topics
Law & Public Safety Court Rulings Compliance Criminal Justice