New Delhi [India], September 1 (ANI): The Appellate Tribunal under SAFEMA and PMLA has set aside the order confirming attachment of properties worth about Rs 3.93 crore belonging to M/s Jharkhand Ispat Pvt Ltd, holding that the Enforcement Directorate's case that the company generated "proceeds of crime" through investments linked to a coal-block allocation was fundamentally contradictory and had evolved over time.
Member V Anandarajan, in the final order dated August 31, 2026, allowed the company's appeal against the July 24, 2019 order of the Adjudicating Authority and set aside the impugned order qua Jharkhand Ispat.
The company was represented by advocates Arshdeep Singh Khurana and Simran Khurana, while the Directorate of Enforcement was represented by advocate Rajendra Singh Rana.
The case arose from an ECIR registered by the ED in 2014 following a CBI case concerning alleged misrepresentation by Jharkhand Ispat and its directors in connection with the allocation of the North Dhadu Coal Block.
The CBI had alleged that the company falsely represented the extent of land it had acquired and its existing production capacity to secure a favourable recommendation for allocation of the coal block. The company and two of its directors, Ram Swaroop Rungta and Ram Chandra Rungta, were subsequently convicted by the Special CBI Court under Sections 120-B and 420 IPC.
According to the ED, Jharkhand Ispat subsequently received Rs 25 crore as Share Application Money (SAM) between 2004 and 2009. The agency treated this amount as proceeds of crime, alleging that the investments were attracted because of the coal-block allocation obtained through misrepresentation.
The ED had earlier attached properties worth Rs 19.73 crore and subsequently attached five more properties valued at approximately Rs 3.93 crore. The properties covered by the present appeal comprised 25.54 acres of land at Mauja-Hesla, Ramgarh, according to the order.
The Tribunal noted that the present attachment arose from the same ECIR involved in its earlier judgment dated September 6, 2019, in which Jharkhand Ispat was also an appellant.
In that earlier case, the Tribunal had found that the company had received Rs 1.70 crore even before the coal-block allocation on January 13, 2006. It had also noted that statements recorded by the ED under Section 50 of the PMLA indicated that investors had invested because of the company's growth potential and prospects, and not because of the coal-block allocation.
The Tribunal observed that there was nothing on record to show that the investors had been invited to invest on the basis of the coal-block allocation or its possible allocation. It further noted that the company was already a running concern before the 2006 allocation and continued its manufacturing operations and profits even after the coal block was de-allocated.
The Tribunal also referred to its November 28, 2024 judgment in M/s Pawanjay Steel and Power Ltd & Anr v Deputy Director, Directorate of Enforcement, where similar facts concerning coal-block allocation and subsequent investments had been considered.
Justice Anandarajan noted that the ED initially alleged that investor companies had been induced to invest because of the coal-block allocation. However, the statements recorded by the ED itself did not support that allegation.
The ED subsequently took the position that several investor companies were actually front companies controlled by the directors of Jharkhand Ispat.
"If the investor companies were fronts for the Directors of the appellant company," the Tribunal observed, "then, they would have been fully aware of the underlying facts and could not have been deceived into making the investment decision."
The Tribunal further said that, if the companies were indeed fronts controlled by Jharkhand Ispat's directors, no public funds could be said to have been involved in the investments.
The ED then argued that some of the investor entities were NBFCs which had taken money from the public. However, the Tribunal noted that no details regarding the extent of public investment in those companies had been placed on record and there was no complaint or FIR from any member of the public alleging fraud or misappropriation. (ANI)
PMLA Tribunal sets aside property attachment against Jharkhand Ispat; Says ED's case was "fundamentally contradictory"
