The Allahabad High Court, led by Justice Subhash Vidyarthi, held that the correctness of allegations cannot be tested under Section 482 CrPC, dismissing Sahara’s plea to quash the Enforcement Directorate’s money laundering investigation.
The Allahabad High Court declined to dismiss the investigation by the Directorate of Enforcement (ED) concerning cooperative societies associated with M/s Sahara India.
The Lucknow Bench reviewed a petition filed by the cooperative societies under Section 482 of the Criminal Procedure Code, 1973, and Section 528 of the Bharatiya Nagarik Suraksha Sanhita (BNSS).
Justice Subhash Vidyarthi, sitting on a Single Bench, noted,
“The aforesaid facts prima facie make out commission of offence of cheating by the petitioners so as to warrant their trial for the offence. Correctness of the allegations cannot be examined by this Court in exercise of its inherent powers and that will be done by the trial Court after the parties have been given opportunity to lead evidence in support of their respective case. Therefore, I am unable to accept this contention of the learned Counsel for the petitioner.”
The Bench stated that there was no basis to interfere with the ongoing proceedings under the Prevention of Money Laundering Act (PMLA) while exercising the court’s inherent powers under Section 482 of the CrPC.
Section 482 of the Code of Criminal Procedure (CrPC) gives the High Courts inherent powers to ensure justice and prevent misuse of the legal process.
Senior Advocate Vikram Chaudhary, along with Advocates Nadeem Murtaza, Amrendra Nath Tripathi, B.M. Tripathi, Ram Sajan Yadav, Sanjeev Kumar Mishra, and Parth Anand represented the Petitioners.
Meanwhile, Additional Solicitor General S.V. Raju, Special Counsel Zoheb Hossain, Retainer Counsel Rohit Tripathi, and Advocate Ankit Khanna appeared for the Respondents.
The petition sought to quash the entire proceedings related to the search and seizure conducted by the ED at the Petitioners’ offices in Lucknow and other locations, following an authorization order issued by the Deputy Director of the ED.
The ED had registered an Enforcement Case Information Report (ECIR) against the Petitioners and unknown others, indicating that an FIR was filed under various sections of the Indian Penal Code, 1860 (IPC), including Sections 294, 506, 406, 409, 417, 420, 120-B, and 34.
In July 2024, the Deputy Director of the ED issued several letters of authorization for search, seizure, and freezing under subsections (1) and (1-A) of Section 17 of the PMLA.
These letters instructed the Authorized Officer to conduct searches and seize or freeze any relevant records as specified in Rule 4.
This challenge was presented to the High Court.
In light of the case context, the High Court remarked,
“As BUDS Act specifically states that the Act shall be in addition to, and not in derogation of, the provisions of any other law, it is obviously in addition to the provisions contained in the Penal Code. Therefore, merely because an act makes out commission of an offence under the BUDS Act, it cannot be said that although the act is punishable as an offence under IPC also, the offender cannot be prosecuted for commission of the offence punishable under IPC. Therefore, I find no force in the second submission of the learned Counsel for the petitioner.”
The Court further noted that the total maturity amount paid by M/s Sahara India each year across all entities was consistently lower than the deposits received, indicating that the maturity payments were always sourced from new deposits.
The Court pointed out,
“The petitioners have not instituted any contempt proceedings alleging violation of the order dated 28.02.2025 passed by this Court. … Firstly, the petitioners have failed to make out violation of the interim order dated 28.02.2025 and secondly, violation of an interim order would not make out a ground for quashing of the entire proceedings under PMLA against the petitioners.”
It concluded that there was no illegality in the continuation of the PMLA proceedings against the Petitioners.
Consequently, the High Court dismissed the petition.
Case Title: M/S Humara India Credit Cooperative Society Ltd. Thru. its Dir. Dhananjay Subramanium and 3 others v. The Directorate of Enforcement (Ed) Deptt. of Revenue Thru. Direct. and 3 others (Neutral Citation: 2025:AHC-LKO:65238)