Karnataka High Court Dismisses Money Laundering Allegations Against Sammaan Capital
The Karnataka High Court has nullified the Enforcement Directorate’s (ED) proceedings under the Prevention of Money Laundering Act (PMLA) against Sammaan Capital Limited, a non-banking finance company previously known as India Bulls Housing Finance Ltd. This decision came following a lack of substantial action from the ED, as noted by Justice M. Nagaprasanna.
During the hearing, ED counsel Anuparna Bordoloi acknowledged that the agency was neither advancing its investigation in the Enforcement Case Information Report (ECIR) nor taking any decisive action against Sammaan Capital. Justice M. Nagaprasanna expressed concern over the prolonged pendency, remarking, “Why should it remain on their heads? We will close it. They are NBFCs, when will you take action? If the ED is soft-pedalling it, then there is no pedal at all.”
The case originated from five First Information Reports (FIRs) filed against Sammaan Capital between 2017 and 2021. Based on these FIRs, the ED initiated an ECIR under the PMLA. However, the High Court found that in two cases, closure reports (B-reports) had already been accepted by lower courts. In two other FIRs, police investigations did not implicate Sammaan Capital due to insufficient evidence. The fifth FIR saw a B-report submitted in 2022, but the court has yet to accept it due to the complainant’s repeated absence.
Justice Nagaprasanna emphasized that the lower court’s delay in accepting the B-report should not justify the continuation of the ED’s proceedings. The court declared the proceedings a “nullity,” effectively clearing Sammaan Capital of the charges.
In the judgment, the court referenced the Supreme Court’s stance, noting that while the Apex Court has not specifically addressed the outcomes of B-report acceptances, such acceptance effectively concludes the proceedings and discharges the accused of alleged offenses.
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The judgment underscores a critical point: without foundational predicate offenses from the FIRs, the ED lacks grounds to continue its case against Sammaan Capital. “On these factors and in the light of the law laid down in the case of Vijay Madanlal Choudhary, the proceedings under the PMLA initiated by the ED cannot be permitted to continue as the foundation has gone, the superstructure cannot remain,” the court ruled.
Representing Sammaan Capital, Senior Advocates Prabhuling Navadgi and Dhyan Chinnappa, alongside Advocates Chintan Chinnappa, Laksh Khanna, and Venkatesh Kamath, successfully argued for the case’s dismissal.
