Coal Scam: Court Rules Attempt to Acquire Crime Proceeds Not Money Laundering

A Delhi court has recently dismissed the chargesheet against Adhunik Corporation Limited (ACL) and its 2 directors in a coal scam case filed by the Enforcement Directorate (ED).

Special Judge Arun Bhardwaj, in his December 23 order, ruled that an attempt to acquire proceeds of crime or anticipation of undue benefits cannot be classified as money laundering.

The case pertains to the New Patra Para coal block in Odisha. According to the ED, the accused’s family members and group companies injected ₹50.37 crore as share capital into ACL, anticipating undue benefits from criminal activities related to the scheduled offence.

The ED claims these funds were infused with the expectation that ACL would receive the coal block as a result of this illegal activity.

Judgement

Judge Bhardwaj noted that, according to the ED, the alleged undue benefits were not yet realized and were only “anticipated.” The judge clarified that until such benefits were obtained, there were no proceeds of crime to launder. He emphasized that an “attempt to acquire proceeds of crime” or anticipation of benefits does not fall under the definition of money laundering.

The judge further pointed out that the infusion of funds began even before the alleged conspiracy in the predicate offence, and the investors were primarily family members and group companies of the accused.

He observed that these investments were not directly linked to the coal block allocation, as the investors were already involved in ACL before the allocation occurred.

The court also noted that investments continued even after the coal block’s potential deallocation was suggested. Consequently, the court held that the funds infused by the accused’s family and group companies could not be considered “proceeds of crime” under the Prevention of Money Laundering Act (PMLA).

Additionally, the judge referred to a Delhi High Court ruling, stating that a coal block allocation, in itself, does not constitute proceeds of crime. Given the lack of sufficient evidence, the judge concluded that no money laundering offence had occurred under Section 3 of the PMLA, and thus, the charges could not be pursued further.

The accused were previously convicted in a related corruption case for conspiracy and cheating the government in the coal block allocation. They were sentenced to 4 years in prison, but their sentence was stayed by the Delhi High Court after they appealed the conviction.

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