Delhi Court remands Ambience mall owner to ED Custody for fraudulent siphoning of funds

Read order: Directorate of Enforcement v. Raj Singh Gehlot

LE Staff

New Delhi, July 30, 2021: A Delhi Court has remanded prominent real estate developer Raj Singh Gehlot to custody of the Enforcement Directorate (ED) for his custodial interrogation for criminal conspiracy and siphoning off a bank loan sanctioned for construction of a hotel.

While explaining that the concept of locus standi is alien to criminal law, ASJ Dharmender Rana observed that the decision of a separate investigating agency probing the predicate offence cannot be an impediment upon the powers of arrest of the Investigating Officer (IO) in the instant case.

ASJ Rana said the money siphoned off by the accused as a result of criminal conspiracy qualifies as ‘proceeds of crime’ and hence set him to ED custody. 

Gehlot, who is the owner of the Ambience Mall, was accused of allegedly criminally conspiring and siphoning off a loan sanctioned to M/s AHPL (in which he was one of the directors) by a consortium of banks led by J&K Bank, Ansal Plaza, Delhi for construction of a hotel. 

He was alleged to have connived with bank officials to transfer the money and siphoned it off through a complex web of shell companies and his associates. 

The counsel for the accused contested the remand and argued that none of the banks came forward with a complaint as the banks were not aggrieved, and hence a custodial interrogation of the accused is not desirable. 

Gehlot’s counsel also argued that no offence of money laundering in the case was made out as not only the hotel had been constructed by the accused out of the loan amount in question but also he could explain each and every penny spent by him.

On the other hand, the counsel on behalf of the ED submitted that the siphoned off money as a result of the criminal conspiracy qualified as “proceeds of crime” and the accused was directly involved in the activity. Opposing the argument that no complaint has been lodged by the banks, the counsel highlighted that the bank officials had themselves conspired with the accused.

After hearing the arguments of both sides, ASJ Rana observed that custodial interrogation is warranted owing to the very intricate nature of the offence of money laundering. 

The court noted that statements recorded in the case by the investigating officer reflected that the payments were made by Gehlot for services never rendered and material never supplied. 

The court further found from the intimation of the IO in a statement recorded, u/s 50 of PMLA, of Bank Manager of J&K Bank from where it surfaced that the amount was released to the accused in deviation of rules. 

Therefore, ASJ Rana concluded that the money siphoned off by Gehlot as a result of criminal conspiracy qualifies as ‘proceeds of crime’ and hence set him to ED custody.