Rupdarshi Textiles Pvt. Ltd. & Anr. Vs Deputy Director (Calcutta High Court)
Calcutta High Court has dismissed an appeal by Rupdarshi Textiles Pvt. Ltd. and one of its shareholders, ruling that an immovable property owned by the company is a “proceeds of crime” and can be subjected to investigation by the Enforcement Directorate (ED). The appellants had sought to have the property and all proceedings against them dropped, arguing they were not involved in an alleged bank fraud committed by the company’s former shareholders and were not recipients of any proceeds of crime.
The case involves a property that Rupdarshi Textiles Pvt. Ltd. had owned since 2009. The property was mortgaged with a bank by the company’s erstwhile shareholders, the Baid family, to obtain credit facilities. The ED is investigating allegations that the Baid family committed fraud on the bank and absconded. The present shareholders acquired a majority stake in the company in 2012, claiming to have purchased the shares from the Baid family through cash transactions.
The court, after reviewing the evidence, found sufficient material to place the appellants under investigation. It noted that the cash payments for the share transfers were of a quantum that violated the provisions of the Income Tax Act. The court also observed a significant disparity between the property’s value when it was mortgaged (over ₹1 crore) and the low consideration paid for the company’s shares (approximately ₹15 lakh). The court concluded that the property, having been utilized for the purpose of committing a crime—namely, obtaining credit facilities that were never repaid—is a “proceeds of crime” itself. The court stated that the share transfer was part of a money laundering process to extract the property from the ED’s investigation. The appeal was dismissed, affirming the ED’s right to continue its investigation.
