Profits from inflated shares are proceeds of crime, says HC

The Delhi high court has ruled that profits earned from trading shares whose value was artificially inflated through fraud constitute “proceeds of crime” under the Prevention of Money Laundering Act (PMLA) and can therefore be attached by the Enforcement Directorate.

- Shruti Kakkar

A division bench of justices Anil Kshetarpal and Harish Vaidyanathan Shankar delivered the verdict on Monday, setting aside a single judge's January 2023 ruling that had quashed the ED’s provisional attachment order against Prakash Industries Limited (PIL) and its group company, Prakash Thermal Power Limited (PTPL) — entities that were caught in the coal block allocation irregularities controversy of 2012.

The case stems from investigations that began after PIL's fraudulent acquisition of the Fatehpur coal block in Chhattisgarh, one of 214 coal blocks whose allocations the Supreme Court cancelled in September 2014 after finding them illegal and arbitrary.