The Madras High Court sent a notice last week to Enforcement Directorate in regards to a petition filed by mining baron J Sekar Reddy seeking to quash a pending case again him under the provisions of the Prevention of Money Laundering Act, 2002 .
Reddy is currently out on bail in a case involving the seizure of demonetised bank notes work Rs 99 crore, new notes worth Rs. 34 crore as well as a 127-kg gold bar, all seized in December 2016 from properties owned by him and his associates.
The presiding judge Justice M S Ramesh has sent out the notice to the Assistant Director, Enforcement Directorate (ED). The response to the notice is to be filed within two weeks.
No Basis For Case According to Reddy
Reddy’s lawyer submitted that ED’s case relied largely on investigation carried out by other agencies. He argued that no offence has been made out against Reddy hence making the case illegal and void.
The counsel further pointed out that the entire case was based on the FIR registered by the CBI which was using the information provided by the Income Tax Department. According to the petition, the case filed by the ED was without jurisdiction, premature and was ultra vires of the provisions contained in the Prevention of Money Laundering Act.
Reddy’s petition further noted that the CBI is yet to identify the bank officials possibly involved and failed also to file charges with respect to conversion of the scrapped currency notes into new denomination notes. The petition noted that ED had filed verbatim the FIR prepared by CBI.
Conversion Of Old Currency Into New Not Illegal
Reddy stated that he had not carried out conversion of old currency notes into new adding that in any case such conversion was no an offence under law. Further Making a prima facie conclusion that the conversion of the demonitized notes to new notes with the help of the bank had occureed, the only major evidence would be the presence of serozled notes
Further despite several rounds of verifications carried out by the CBI of the seized currency, no serialized notes were found, which confirmed that the seized money was actually lawful business income earned by the petitioner.
In a statement to the IT Department, Reddy had accounted for the cash and so there was no basis to allege that he had converted unaccounted case to new denomination notes with the help of bank officials. Given this, he has demanded that the case against him filed by ED be quashed.