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Delhi High Court Reinstates ED Attachment, Rules Illicit-Origin Market Gains Are Proceeds of Crime

The ruling clarifies that market gains traceable to misrepresentation remain tainted under the PMLA, allowing the ED’s ₹122.74 crore attachment to proceed to adjudication.

Overview

  • Justices Anil Kshetarpal and Harish Vaidyanathan Shankar set aside a January 2023 single-judge order and allowed the Enforcement Directorate’s appeal.
  • The court held that appreciation or profits from bribe-derived or fraud-based investments remain tainted as proceeds of crime under Section 2(1)(u) of the PMLA.
  • The provisional attachment of about ₹122.74 crore against Prakash Industries and its group company stands as a temporary measure pending adjudication.
  • The bench linked alleged misrepresentation over the Fatehpur coal block to a share price rise from ₹31 to ₹254.60 and undue gains of roughly ₹118.75 crore from preferential share sales.
  • The judgment stressed PMLA’s multi-tier process and found writ interference at the provisional stage improper, reiterating money laundering as a continuing offence.