• Regulatory
• 2 min read

In relief for Avinash Bhosale, Bombay HC says ₹25 crore received by his firm ABIL not proceeds of crime

The Bombay High Court delivered a significant verdict in favor of builder Avinash Bhosale, ruling that the Rs 25 crore he received in 2019 is not indicative of crime as suggested by the Enforcement Directorate. The court annulled the provisional seizure of properties associated with Bhosale, affirming the legality of his company's financial transactions while drawing a clear line between lawful business and suspected money laundering.

The HC set aside the provisional attachment of Rs 25 crore over two properties by Appellate Tribunal under the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 (SAFEMA). The attachment pertains to a 6,143 sq mtr Pune plot in Samit Realty’s name worth Rs 15 crore and a 20,000 sq mtr Nagpur plot worth Rs 15 crore in Gauri Bhosale’s name. The ED also filed an appeal saying the properties cannot be released.

A division bench of Justices AS Gadkari and Kamal Khata allowed Bhosale’s appeal and dismissed ED’s plea for appeal. ED’s case was that proceeds of crime amounting to Rs 3,983 crore originated from YES Bank through investments and disbursements to Dewan Housing Finance Corporation Limited (DHFL), including investments in bonds and non-convertible debentures. ED has alleged proceeds of crime to the tune of Rs 164.64 crore received by Bhosale and his entities: Nibhodh Realty, Consultancy and ABIL Dairy (ABIL). ED alleged that Rs 25 crore was received by ABIL from Chhabria in 2019 and it constitutes proceeds of crime. The HC said that it is inconceivable that a payment made under an agreement for sale of a dairy business, executed in 2016 along with the first payment, can be linked to proceeds of crime because the balance amount was paid three years later.

The HC, after hearing Bhosale’s senior counsel Aabad Ponda and ED special counsel Prashant Mishra, said it was “unable to comprehend”, nor has ED explained “how official bank transaction(s) between a bank and a corporate entity, carried out in the usual course of business, could be construed as proceeds of crime and thereby constitute the offence of money laundering.’’

The HC said money received by DHFL, whether as an investment or as a loan from YES Bank, “cannot be faulted in law”. “These are official banking transactions and cannot be construed as proceeds of crime,’’ said the HC and said, consequently, neither can the subsequent transaction made by DHFL of these funds.

The HC viewed each transaction as an independent transaction with an independent corporate entity, and “none of them is, by any stretch of the imagination, illegal,’’ it said. HC said, “We find there is no nexus between them.’’