Telangana High Court on Tuesday directed the Enforcement Directorate, Hyderabad, authorities to release the two pieces of lands belonging to Vodarevu and Nizampatnam Ports and Industrial Corridor (Vanpic) project which were attached by it in a case registered under Prevention of Money Laundering Act.
Pronouncing verdict in a Civil Miscellaneous Second Appeal filed by Vanpic project, a bench of Chief Justice Ujjal Bhuyan and Justice Surepalli Nanda said the ED Appellate Tribunal was correct in holding that the ED Adjudicating Authority’s confirmation of the attachment of properties “suffered from fundamental flaws”. The AT erred in relegating Vanpic project to the Special Court to seek release of the attached property.
This amounted to AA abdicating its authority and allowing an illegality to continue, the judgement said. Vanpic is a special purpose vehicle conceptualised between the AP government and the government of Ras al Khaimah, one of the emirates of United Arab Emirates. To execute the project, it acquired 13,221.69 acres of land, which included assigned and patta lands.
ED, Hyderabad, officials registered Enforcement Case Investigation Report (ECIR) in 2011 under PMLA based on a criminal case registered by CBI. The CBI case was registered following a direction from the HC to investigate into allegations of investments in the form of bribes in companies controlled by Y.S. Jaganmohan Reddy, son of the then Chief Minister Y.S. Rajasekhara Reddy. Based on CBI charge-sheet (no. 9 in the quid pro quo cases against Mr. Jaganmohan Reddy), the ED attached the two pieces of land admeasuring 561.1996 acres and 855.7130 acres in Prakasam district of AP.
Challenging this, Vanpic project moved the ED AT which held that prima facie there was no quid pro quo. However, the AT directed continuance of the property attachment order and instructed the Vanpic to approach the PMLA Special Court.
The bench said that the ED Joint Director (while exercising power under section 5 (1) of PMLA to attach properties) failed to record his “reason to believe” that the company was in possession of proceeds of crime which were the attached properties. The reason to believe is sine qua non for provisional attachment of a property, said the bench in the verdict.
The bench also said that findings of the AT and the provisional property attachment order by the adjudicating authority were not consistent. The AT observed that the show cause notice for attachment of property was issued in a mechanical manner without application of mind, the bench pointed out.