New Delhi [India], October 5 : The Delhi High Court on Monday stayed the operation of the trial court order framing money laundering charges against Sujata Hotel Pvt. Ltd. in a case arising from alleged irregularities in the award of contracts for two IRCTC hotels.
A bench of Justice Sachin Datta passed the order on an appeal filed by Sujata Hotel challenging the Rouse Avenue court's September order framing charges against the company under the Prevention of Money Laundering Act (PMLA).
The High Court made it clear that the interim protection would apply only to Sujata Hotel and would not extend to the other accused in the case. The court also issued notice to the Enforcement Directorate and granted it four weeks to file its response.
In its appeal, Sujata Hotel argued that the trial court's order did not identify any independent act committed by the company that could constitute an offence under Section 3 of the PMLA.
The company has contended that it neither owned nor sold the Patna land parcels at the centre of the alleged money-laundering transaction and was not a party to the relevant sale deeds.
Sujata Hotel further argued that the trial court had incorrectly attributed the land transaction to the company despite its own findings recording that the relevant parcels were purchased by M/s Delight Marketing Company Pvt. Ltd. (DMCPL).
The company has also relied on the chronology of the transactions, arguing that the sale dated February 25, 2005, preceded the alleged scheduled offence concerning the IRCTC hotel tenders in 2006.
The matter originates from the CBI's predicate case concerning alleged irregularities in the award of contracts for the operation, maintenance and development of two BNR hotels of the Indian Railways at Ranchi and Puri during Lalu Prasad Yadav's tenure as Railway Minister.
According to the ED's case, the tender process was allegedly manipulated and eligibility conditions were changed in a manner that benefited Sujata Hotels. The agency has alleged that the alleged favour extended to the hotel was connected with the transfer of prime land in Patna to DMCPL, which was controlled by persons associated with former Railway Minister Lalu Prasad Yadav.
The ED has alleged that the land was transferred at an undervalued consideration and that the shares of DMCPL were subsequently transferred to Rabri Devi and Tejashwi Yadav at nominal prices. These are allegations being contested by the accused.
In its September 10 order, the Rouse Avenue court framed charges against nine of the 16 accused, including former Railway Minister Lalu Prasad Yadav, former Bihar Chief Minister Rabri Devi, Tejashwi Yadav, Prem Chand Gupta, Sarla Gupta, Lara Projects LLP, Sujata Hotels and Vijay and Vinay Kochhar. The court discharged seven accused.
The trial court had held that at the stage of framing charges, it was required to determine whether the material on record raised a strong suspicion against the accused rather than apply the final standard necessary to establish guilt.
With respect to Sujata Hotels, the court said the company was allegedly the beneficiary of the manipulated award of the IRCTC hotel contracts and that its directors, Vijay Kochhar and Vinay Kochhar, were allegedly involved in the subsequent land transactions.
The court also noted that a company can be proceeded against under the PMLA and referred to Section 70 of the Act, which deals with offences by companies.
The seven accused discharged by the trial court were Gaurav Gupta, Nath Mal Kakrania, Rahul Yadav, Vijay Tripathi, Devki Nandan Tulshyan, Rajiv Kumar Relan and Abhishek Finance Pvt. Ltd.
The proceedings subsequently saw another development on October 3, when the Rouse Avenue Court deferred the formal framing of charges against Lalu Prasad Yadav, Rabri Devi, Tejashwi Yadav and other accused until October 30. The court also directed the ED to take necessary instructions in light of directions passed by the predecessor court.
The underlying case dates back to alleged irregularities in the award of contracts for two IRCTC hotels at Ranchi and Puri. The CBI's predicate case alleges that the tender conditions were manipulated and that the process was influenced to favour Sujata Hotels. The ED subsequently registered a money-laundering case based on the alleged proceeds of crime arising from the transactions.
The trial court's order framing charges does not amount to a finding of guilt. The allegations remain to be established during the trial, and the accused have contested the prosecution's case.
The Delhi High Court's latest order now places the proceedings concerning Sujata Hotel under interim protection while the court considers the company's challenge to the trial court's decision. The ED will have four weeks to respond to the appeal.