Karnataka High Court Quashes ED Proceedings Against Sammaan Capital
In a significant legal development, the Karnataka High Court has set aside proceedings initiated by the Directorate of Enforcement (ED) against Sammaan Capital, formerly known as Indiabulls Housing Finance Limited (IHFL), in a money laundering case. This decision follows a detailed rehearing of the matter, identified as Sammaan Capital v Directorate of Enforcement.
The High Court, presided over by Justice M Nagaprasanna, had initially indicated its intent to quash the proceedings last week. However, the decision was revisited on August 17 after it emerged that there were related proceedings pending before the Supreme Court concerning IHFL that had not been disclosed earlier.
In his ruling, Justice Nagaprasanna referenced an affidavit filed by the ED, which clarified that the Supreme Court proceedings were unrelated to the current Enforcement Case Information Report (ECIR) under review by the Karnataka High Court. The judge noted, “The learned senior counsel for the petitioners, Prabhuling Navadgi and Dhyan Chinnappa, submitted that the Supreme Court matter and its directions do not pertain to the present case.” Justice Nagaprasanna added that any confusion was not due to counsel but was a result of the court’s own oversight.
ASG Aravind Kamath’s Submissions
Additional Solicitor General (ASG) Aravind Kamath, representing the ED, informed the court that the Supreme Court proceedings were connected to a separate fraud case involving Indiabulls and Yes Bank. Kamath emphasized that the ED’s actions against Sammaan Capital were based on offences registered specifically in Karnataka. He stated, “The present crimes are founded on predicate offences, which have now been closed.”
Last week, the High Court had signaled its intention to dismiss the proceedings against Sammaan, noting that four out of five predicate offences had concluded without convictions. The fifth offence involved a police closure report that was yet to be accepted due to the complainant’s repeated non-appearance in lower court.
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Justice Nagaprasanna remarked, “The crimes in question rest on the predicate offences, which are now resolved. The court has followed the Supreme Court’s ruling in Vijay Madanlal Choudary v Union of India and thus annulled the proceedings against the petitioner.”
Clearing the Path Forward
Before signing the order, Justice Nagaprasanna sought to ensure his conscience was clear regarding the Supreme Court proceedings involving IHFL. He stated, “I just wanted to clear my conscience.” Senior Advocate Prabhuling Navadgi, representing Sammaan Capital, affirmed that the proceedings pertained to IHFL’s founder-director, Sameer Gehlaut, and were not connected to Sammaan Capital itself. Sammaan Capital’s legal team also included Senior Advocate Dhyan Chinappa, along with Advocates Chintan Chinnappa, Laksh Khanna, and Venkatesh Kamath.
This decision by the Karnataka High Court marks a pivotal moment in the context of regulatory proceedings, underscoring the importance of thorough legal scrutiny and the need for clarity in complex legal matters.
