The Bombay High Court has set aside an appellate tribunal’s April order for continuing the Enforcement Directorate (ED)’s provisional attachment of assets worth ₹25 crore belonging to Pune businessman Avinash Bhosale and others, as part of its money-laundering probe related to the allegedly suspicious transactions in 2018 between Yes Bank and Dewan Housing Finance Limited (DHFL).
The court on Wednesday said it found no basis for the continuation of the attachment, as all involved transactions were legal and could not be considered as proceeds of crime in the case.
On April 1, the tribunal under the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act continued the provisional attachment of a Pune land parcel attached for the value of Rs. 14.65 crore under the title of Samit Realty Private Limited and a plot in Nagpur, valued at ₹15.52 lakh, in the name of Bhosale’s wife, Gauri.
Bhosale, Gauri and Samit Realty Private Limited challenged the tribunal’s order on the continuation of the attachment. The ED opposed their plea for the release of the attached properties.
Bhosale was named as an accused in the ED’s third supplementary charge sheet in the Yes Bank–DHFL case initiated in 2020.
In its October 2022 charge sheet, ED alleged that proceeds of crime worth ₹3,983 crore originated from YES Bank, wherein the monies were sanctioned and disbursed to DHFL during April-June 2018 against investments including DHFL’s debentures and grant of loans. The ED alleged that proceeds of crime worth ₹164 .64 crore were received by Bhosale and/or his entities (Nibhodh Realty) and through transactions related to consultancy and ABIL Dairy, which received ₹25 crore.
The high court referred to these transactions and said each was an independent transaction with an independent corporate entity and none of them is, by any stretch of imagination, illegal. “We find there is no nexus between them,” said the court, setting aside the appellate tribunal’s order.
“We find no basis for the continuation of the attachment of the said two properties by the Appellate Tribunal. Having concluded that all the transactions were legal transactions and could not be construed as proceeds of crime, we find no basis for continuing the attachment of the properties.”
The court cited ED’s allegations related to Yes Bank’s transactions involving investment and loans to DHFL. It added that the receipt of these monies by DHFL, whether as an investment or as a loan from YES Bank, cannot be faulted in law. The court said that they were official banking transactions and cannot be construed as proceeds of crime.
The court said subsequent disbursement by DHFL to other legal entities cannot be construed as illegal transactions either, as they too are recognised lawful transactions. “The entire basis of the investigation therefore proceeds on erroneous hypothesis, and the transactions cannot be treated as illegal, as alleged by the ED,” the court said.
The court cited ED’s contention that in July 2018, DHFL allegedly lent ₹600 crore to DOIT Urban Ventures, allegedly the family entity of Yes Bank’s founder Rana Kapoor, by way of a kickback. It added that this contention is wholly unfounded.
“A loan transaction cannot, in the first place, be termed as a kickback, and there is no basis for such an allegation. A loan transaction may be extended with or without appropriate security, and it is entirely for the lender, in its own commercial wisdom, to decide whether to lend monies to an individual or entity.”