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On Friday, the Supreme Court declined to hear the Enforcement Directorate’s appeal of the Telangana High Court’s decision allowing YS Bharathi Reddy, the wife of Andhra Pradesh Chief Minister Jagan Mohan Reddy, to exchange the property that the ED had attached for a fixed deposit. In a corruption case involving Bharathi Cement, the property had been attached by ED under the Prevention of Money Laundering Act, 2002.
A division bench of Justices Abhay S. Oka and Sanjay Karol rejected ED’s request on the grounds that the challenged judgement made it apparent that what was attached was not the profits of crime:
“In the impugned orders, a finding has been recorded that the property which was attached was not what was acquired from the proceeds of the crime. This finding is not disputed by the petitioner. Moreover, it is not the case of the petitioner that the value of the attached property mentioned in the impugned orders is incorrect. In view of this, we decline to entertain the SLPs and the same are disposed of” The Court’s order was a mandate.
The ED’s argument, according to Additional Solicitor General SV Raju in court, is that the property that has been attached cannot be replaced by another piece of property. “There is a finding recorded that these are not proceeds of the crime,” Justice Oka questioned the ASG over this matter. What exactly do you have against this? According to the case’s facts, ASG Raju retorted, the order might be accurate. He bowed and said, “But your lordship may say that in case of proceeds of crime it may not be a precedent.”
When the price of the shares is unknown, Justice Oka questioned Senior Advocate Niranjan Reddy, the attorney for Bharathi Reddy, on how they were able to make fixed deposits for the face value of the shares.
In his testimony before the court, Reddy stated, “If the proceeds of crime are not immediately located, they will assign a comparable value. This value will be the amount for which the attachment was made because these shares are not the proceeds of crime. Reddy asked the Telangana High Court for permission to use a different sum than that which was intended to be attached to and taken from her. In exchange for 61,38 937 equity shares of M/s. Sandur Power Company Private Limited valued at Rs. 10 apiece, she had given a fixed deposit of Rs. 1,36,91,285 in the case of one property and Rs. 6,13,89,370 in the case of another. The Karnataka High Court had granted her request on the grounds that the items the ED had attached were not the actual proceeds of the crime.
“Even in the preliminary attachment order, it was made plain that the attached property’s worth was equal to the proceeds of crime. In other words, even according to the attaching authority, the property that was attached had not been purchased with the proceeds of crime, the High Court had noted.
