Court Clears SPCL of Money Laundering Allegations, Orders Partial Interest to Benefit Armed Forces Welfare Fund
In a significant judgment delivered on December 23, 2025, the Bombay High Court dismissed the appeals filed by the Union of India against the Appellate Tribunal's decision in a case involving allegations of money laundering against Shapoorji Pallonji and Co. Pvt. Ltd. (SPCL). The court upheld the Tribunal's decision to release properties attached by the Enforcement Directorate (ED), ruling that the funds in question were not proceeds of crime under the Prevention of Money Laundering Act, 2002 (PMLA).
The appeals arose from transactions dating back to 2007-2009, where SPCL advanced Rs. 141.50 crores to entities associated with Nilesh Thakur for land acquisition. The ED contended that these funds were linked to criminal activities involving Nilesh's brother, Nitesh Thakur, a former government official. However, the court found no evidence connecting the funds to criminal activity or a scheduled offence under the PMLA.
The court emphasized that for assets to be classified as proceeds of crime, they must be derived from criminal activity related to a scheduled offence. It noted that the transactions were legitimate business dealings, reflected in SPCL's accounts, and not tainted as alleged by the ED.
The court also addressed the interest accrued on the funds, directing that 50% of the interest be returned to SPCL and the remaining 50% be donated to the Armed Forces Battle Casualties Welfare Fund (AFBCWF). This decision aims to balance private and public interests, acknowledging the sacrifices of Indian soldiers.
The judgment reiterates the principle that criminal liability cannot be applied retrospectively, as offences under the Prevention of Corruption Act became scheduled offences under the PMLA only after June 1, 2009. The court concluded that the ED's attachment orders were misplaced, lacking a valid legal basis.
This verdict marks a significant victory for SPCL, reinforcing the integrity of its business practices and clarifying legal interpretations of proceeds of crime under the PMLA. The judgment also underscores the judiciary's role in ensuring fair application of the law and protecting legitimate business activities from unfounded allegations.
Bottom Line:
Proceeds of crime under the Prevention of Money Laundering Act (PMLA) must involve property derived from criminal activity relatable to a scheduled offence. Without evidence of such derivation or connection, the property cannot be treated as proceeds of crime.
Statutory provision(s): Prevention of Money Laundering Act, 2002 Sections 2(u), 2(y), 3, and 8(8)
Union of India v. Shri Nilesh J. Thakur, (Bombay)(DB) : Law Finder Doc Id # 2837247
