Court’s Decision
The Delhi High Court dismissed interim applications filed by the daughters of a key accused in the Religare Finvest Limited fraud case, seeking de-freezing of bank accounts and movable assets worth approximately Rs. 15 crores in total. The Court held:
“Mere invocation of educational need, without presenting a concrete, detailed, and credible plan backed by documentation, cannot justify the sweeping relief they seek.”
The Court concluded that no substantial or persuasive material was provided to justify the release of such significant sums, especially when Rs. 90 lakhs were already available in unfrozen accounts sufficient to cover documented tuition needs.
Facts
The applicants, daughters of the main accused in FIR No. 50/2019 registered by the Economic Offences Wing, Delhi, for offences under Sections 409, 420, and 120B IPC, challenged the continued freezing of their movable assets and bank accounts under Section 17(1A) of the Prevention of Money Laundering Act, 2002 (PMLA). The freezing arose from an ECIR registered by the Enforcement Directorate (ED) in 2019 following allegations of misappropriation of Rs. 1,260 crores from Religare Finvest Ltd. through unsecured loans routed to promoter-controlled entities. Among the assets traced were proceeds from a London property sold for GBP 8 million in 2021.
The applicants approached the Court under Section 151 CPC during pendency of appeals filed under Section 42 of the PMLA challenging the Appellate Tribunal’s dismissal of their earlier appeals against the Adjudicating Authority’s confirmation of the asset freeze.
Issues
- Whether the applicants had established a justifiable need for immediate access to the frozen assets to meet educational and living expenses.
- Whether the continuation of the freezing orders, despite the applicants not being accused in the predicate offence or PMLA proceedings, was warranted.
Petitioner’s Arguments
The applicants submitted that they required approximately Rs. 5 crores each (Rs. 15 crores in total) to cover higher education costs (such as MBA or postgraduate studies abroad) and daily sustenance. They emphasized:
- They were not named as accused in the predicate FIR or in the ECIR.
- The alleged proceeds of crime were from 2016–2018, whereas many of their assets, including inherited artworks, predated 2016.
- The freezing since 2022 had created severe financial and professional hardship.
- Their bank accounts had no connection to the alleged criminal activity and had not been included in any PMLA complaints, even after three years.
Respondent’s Arguments
The ED argued that:
- A similar plea had been raised before the Appellate Tribunal but was not pressed.
- Two of the three applicants had failed to submit any credible documentary evidence showing active admission or enrollment in educational institutions.
- One applicant had shown an offer letter but did not detail the program fees or submit relevant confirmations.
- Rs. 90 lakhs was already available in six unfrozen bank accounts, sufficient to meet the Rs. 30 lakh tuition requirement of the only applicant who had partially substantiated her educational plans.
- Allowing access to frozen funds at this stage would undermine the PMLA proceedings, especially since the properties had been confirmed as proceeds of crime under Section 8(3) PMLA.
Analysis of the Law
The Court refrained from delving into complex legal questions around the definition of “proceeds of crime” under Section 2(1)(u) PMLA, deciding instead to adjudicate the applications based on facts and materials placed on record.
The Court emphasized that interim reliefs cannot be granted merely on generalized assertions of financial need without compelling, documented justification. It further noted the principle that interim decisions should not pre-empt the final adjudication of appeals, especially when the Appellate Tribunal’s order confirming the freezing was under challenge.
Precedent Analysis
No specific judgments were cited or relied upon in the reasoning of the Court. However, the Court reiterated settled principles of interim relief jurisprudence — that interim directions should not result in rendering the main appeal infructuous or prejudge the merits.
Court’s Reasoning
The Court observed that only one applicant had demonstrated any partial documentary basis for her educational needs, and even in that case, the Rs. 90 lakhs in unfrozen accounts were sufficient. For the remaining two, there was a complete absence of evidence such as test scores, confirmed admission, or proof of tuition requirements.
“None of the Applicants has provided any substantial or persuasive material justifying why each… would require access to almost Rs. 5 crores.”
On the issue of living expenses, the Court found that two applicants were “well-educated and gainfully employed professionals,” making the claim of urgent financial need unconvincing.
“No plausible, compelling, or urgent necessity has been demonstrated to warrant the release of such large sums.”
Conclusion
The Court held that the applications lacked merit. It found the claims to be vague, unsupported by credible documentation, and failed to rebut factual assertions made by the ED.
Accordingly, all three applications stood dismissed.
Implications
The decision underscores the High Court’s cautious approach in granting interim relief under the PMLA framework. It reinforces the necessity for applicants to produce detailed and verifiable evidence of financial hardship and purpose-specific need before frozen assets — potentially tied to proceeds of crime — can be released. The Court’s emphasis on not undermining the main appeal through interim orders sets a precedent for similarly situated applicants facing asset freezes.
