2024 (5) TMI 1345 - HC - Money Laundering

Public Interest Litigation - allegations of money laundering and consequential loss to the public exchequer, by way of evasion of taxes - undervalued share transfer - HELD THAT - The Petitioner is seeking directions for investigation into the valuation of the sale of the shareholding held by Respondent No. 7 issued by Respondent No. 8 and subsequently transferred to Respondent No. 9. However, in view of the fact that the said transaction has been examined by the IT Department during the block assessment of Respondent No. 7 shows that the matter is within the knowledge of the authorities and considering the fact that no adverse proceedings have been initiated by the IT Department, it is opined that no further directions are required in this petition. Further, in view of the fact that an earlier petition in SH ANKUR GUPTA VERSUS THE UNION OF INDIA AND ORS 2022 (3) TMI 1599 - DELHI HIGH COURT and SLP ANKUR GUPTA VERSUS UNION OF INDIA ORS 2022 (8) TMI 1514 - SC ORDER filed by the same Petitioner against common Respondent No. 16 has been dismissed on the finding that the same is motivated, it is opined that entertaining the present PIL at the behest of the Petitioner does not advance the cause of justice and the objective behind entertaining a PIL. Petition dismissed.

Issues:
1. Allegations of money laundering and tax evasion against a group of companies and individuals.
2. Undervaluation of shareholding leading to loss to the public exchequer.
3. Petitioner seeking investigation by various authorities into the transactions of share allotment and transfer.
4. Respondent's defense based on previous legal proceedings and explanations regarding the transactions.
5. Court's decision on the merit of the PIL and need for further investigation.

Analysis:
1. The writ petition was filed as a Public Interest Litigation (PIL) under Article 226 of the Constitution, alleging money laundering and tax evasion by a group of companies and individuals. The petitioner sought directions for action against the respondents to investigate the transactions leading to loss to the public exchequer through undervalued share transfers.

2. The petitioner specifically highlighted the undervaluation of shareholding by Respondent No. 8 in favor of Respondent No. 7 and subsequent transfer to Respondent No. 9. The petitioner contended that these transactions were done to cause losses to the public exchequer. Despite being an asset-rich company, the shares of Respondent No. 8 were allegedly transferred at a value below market price.

3. The petitioner, a wholesale dealer, learned about these transactions through public information and sought investigation by Central Bureau of Investigation (CBI), Enforcement Directorate (ED), Income Tax Authorities, and Reserve Bank of India (RBI). The petitioner's representation to the Income Tax Department did not yield results, leading to the PIL for further action.

4. Respondent No. 7, 10, and 12 argued that the petition was motivated, citing a previous dismissed writ petition involving Respondent No. 16. They emphasized that the Income Tax Department had already investigated the impugned transaction, conducted block assessments, and found no grounds for adverse proceedings. Respondent No. 8's financial distress was also cited as a reason for the share transfer.

5. The court, after considering the arguments, held that no further directions for investigation were warranted. The court noted that the IT Department had already examined the transactions during block assessments and found no irregularities. Additionally, the court highlighted the dismissal of a previous petition by the same petitioner as motivated, indicating a lack of merit in entertaining the present PIL. Consequently, the court dismissed the petition along with pending applications, stating that it did not serve the cause of justice or the purpose of a PIL.

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