The Bombay High Court has quashed the Enforcement Directorate's freeze on ₹100 crore worth of assets belonging to Coda Payments, ruling that the ED did not comply with the mandatory provisions of the Prevention of Money Laundering Act.
Bombay HC Quashes ED's Freeze of Coda Payments' Assets
The Bombay High Court has quashed the Enforcement Directorate's (ED) order freezing ₹100 crore of assets belonging to Coda Payments. The court held that the ED failed to fulfill the necessary procedural requirements mandated by Section 8(2) of the Prevention of Money Laundering Act (PMLA) before taking such action.
As per Section 8(2), the ED must provide a detailed finding before freezing assets to demonstrate that the property in question is involved in money laundering activities. The court found that the ED did not adequately apply its mind to the circumstances surrounding the assets and consequently did not record the required findings.
This ruling emphasizes the necessity for regulatory agencies to adhere to statutory requirements when making stringent actions such as freezing assets. The court's decision not only restores Coda Payments' assets but also reinforces the legal framework intended to protect entities from arbitrary governmental actions.
Legal practitioners should take note of this judgment as it highlights the importance of compliance with procedural norms in law enforcement efforts against money laundering. Adequate documentation and statutory requirements should be emphasized in cases involving asset freezes under the PMLA.
Citations
- Coda Payments v. Enforcement Directorate (2026) 1 BCR 456
