PMLA Court Directs ED To Release Ajmera Group Assets To Authority Under Karnataka Depositor Protection Law

A Special PMLA Court in Bengaluru has recently directed the Enforcement Directorate (ED) to release properties and bank deposits attached in the Ajmera Group's money laundering case in favour of the Competent Authority appointed by the Karnataka Government. The order enables the authority to proceed in accordance with the state's depositor protection law.

The order was passed by Addl. City Civil and Sessions Judge Satish J. Bali.

The Competent Authority sought release of assets covered by an ED provisional attachment order issued on December 21, 2020. It pointed out that the Karnataka Government had already attached the firm's properties and bank accounts on February 15, 2019 under the Karnataka Protection of Interest of Depositors in Financial Establishments Act.

The court noted that the State's attachment preceded the ED's action.

Orders passed by the Special Court between 2019 and 2022 later made those attachments absolute.

The Competent Authority argued that the attached properties had already vested with it under the state law. It sought release of assets covered by the later ED attachment, including bank deposits of about ₹5.31 crore and immovable properties valued at about ₹2.91 crore.

The ED informed the court that it had no objection to release of the properties in favour of the Competent Authority. The accused persons also did not oppose the application.

After examining the provisions of the state law, the court observed that the legislation was enacted to safeguard the interests of depositors. It further noted that the Competent Authority is empowered to proceed against the properties of defaulting financial establishments.

“In view of the above said provisions discussed, it is quite clear that in order to repay the invested amount to the investors, the Competent Authority has got power to proceed as against the properties of the erring financial establishment, which is accused no.1 in this case,” the court observed.

The court further noted that the orders making the State attachment absolute had not been challenged. The appointment of the Competent Authority had also not been challenged.

The court held that it was necessary to direct the ED to release the properties covered by its December 2020 attachment order in favour of the Competent Authority. It accordingly allowed the application.

Advocate For Applicant (M/s Ajmera Groups Partnership): Sri Veeresh R. Budihal, Advocate