Mumbai: The Bombay High Court on Tuesday imposed exemplary costs of Rs 1 lakh each on the Enforcement Directorate (ED) and a complainant for initiating a false criminal case against a developer. The court criticised the ED for overstepping its legal boundaries and harassing citizens without sufficient evidence.
Justice Milind Jadhav, delivering the judgment, emphasized that central agencies like the ED must act within the law and not take matters into their own hands. “I am compelled to levy exemplary costs because a strong message needs to be sent to the Law Enforcement Agencies like ED that they should conduct themselves within the parameters of law and that they cannot take law into their own hands without application of mind and harass citizens,” Justice Jadhav remarked in a detailed 60-page judgment.
He further noted that the practice of money laundering involves deliberate acts aimed at personal gain, which was not the case here.
The case involved a dispute between a developer and a purchaser who had entered into agreements for the renovation and sale of two floors in a building in Malad. The developer failed to deliver the premises on time, prompting the purchaser to file complaints.
Initially, the Malad Police Station dismissed the matter as a civil dispute, but the complainant approached a Magistrate, leading to an FIR being lodged. The ED then became involved, claiming that the developer’s actions amounted to money laundering by using proceeds from the alleged fraud to purchase properties in Andheri.
However, the court found that the actions of the ED and the complainant were baseless and amounted to malicious prosecution. “In the facts of this case none of the ingredients of cheating are present. There is nothing which prohibits a developer from entering into a Sale Agreement and allowing execution of a simultaneous Agreement for providing additional amenities/renovation,” said Justice Jadhav. The judge observed that this was a standard business practice in Mumbai and could not be construed as criminal.
The court concluded that the ED and the complainant had wrongfully initiated criminal proceedings. As a result, the ED’s attachment of properties purchased by the developer was cancelled. The complainant and the ED were directed to pay Rs 1 lakh each to the High Court libraries as costs.
On ED’s request, the HC stayed the judgment’s implementation for four weeks to permit the agency to appeal.
