The Bombay High Court on Tuesday imposed costs of ₹1 lakh on the Enforcement Directorate (ED) for its 'malafide action' in a case involving a developer and his business dealings [Rakesh Brijlal Jain v State of Maharashtra]..Justice Milind Jadhav expressed strong disapproval of ED's handling of the case and emphasized the necessity for such agencies to operate within the confines of the law and not harass citizens, stressing that due process must be followed to avoid undue oppression."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," the Court said..The Court made these observations while quashing the 'process' issued against a Mumbai based developer in August 2024 by a special court under the Prevention of Money Laundering Act (PMLA). The case began in 2007 when the complainant entered into agreements with a developer for the purchase of a commercial property in a high-profile Mumbai project and for renovation work to transform it into a residential hotel/ guest house. The complainant paid over ₹10 crores for both the property and the renovation work but delays in obtaining an Occupancy Certificate (OC) caused significant frustration. .Despite this, the complainant’s initial complaints to the police were rejected with authorities concluding that there was no cognizable offense and it was mainly of civil nature. In June 2009, after his first complaint was dismissed, the complainant approached the Malad Police Station with a second grievance, only to face rejection once more. The police insisted that the issue was civil in nature. The complainant then turned to the Metropolitan Magistrate's Court in December 2009, which prompted the registration of an FIR by Vile Parle police..The case later attracted the attention of the ED which accused the developer of money laundering under PMLA.The ED alleged that funds received by one of the developer’s associated companies—₹4.27 crore in total—were proceeds of crime, stemming from fraudulent activities tied to the renovation contract.During the court hearings, the defense insisted that the matter was a civil dispute with no criminal intent, pointing out that the police had already found no wrongdoing. In contrast, the ED continued to push its allegations of money laundering despite the lack of a formal criminal case.Justice Jadhav expressed clear frustration with the ED’s handling of the matter. He pointed out that in this case, none of the essential elements of cheating were present and the developer had acted in a manner consistent with how development projects typically unfold in Mumbai. "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 in the same premises through another entity. This is how development in Mumbai City takes place," the judge explained..Furthermore, Justice Jadhav criticized the ED for its vague and unfounded allegations which relied heavily on broad and unsupported claims. Merely by alleging preposterous submissions and arguments and using terminologies and definitive words like layering and integrating funds to be ‘proceeds of crime’ without application of mind is a classic case of oppression in the garb of implementation of PMLA, the judge said."It is seen that conspiracy of money laundering is a three staged process, it is hatched in secrecy and executed in darkness. The present case before me is a classic case of oppression in the garb of implementation of PMLA," the Court stated.The judge made it clear that the ED had exceeded its authority and harassed the parties involved. As a result, he imposed costs of ₹1 lakh on the agency, signaling his strong stance against misuse of power by law enforcement. The Court also imposed ₹1 lakh cost on the complainant for the harassment. "I am fully convinced that this is a fit case for imposition of exemplary costs on the Complainant and ED for invoking criminal action in the present facts and harassing the Developer with criminal action," Justice Jadhav reiterated, underscoring the importance of accountability for state authorities..Senior Advocate Kevic Setalvad along with advocate Jehan Lalkaka instructed by advocate Bhavesh Thakur appeared for accused Rakesh Brijlal Jain.Additional Public Prosecutor D S Krishnaiyer appeared for the State.Advocate Shriram Shirsat along with advocates Karishma Raje and Shekhar Mane appeared for ED. .[Read Order]
