A special court in Ahmedabad designated under the Prevention of Money Laundering Act (PMLA) has discharged Vadodara-based Diamond Power Infrastructure Ltd (DPIL) from a money laundering case filed by the Enforcement Directorate (ED). The case was linked to an alleged bank fraud amounting to Rs 2,654 crore. The discharge came after the company came under new management following the completion of the Insolvency and Bankruptcy Code (IBC) process and the suspension of its former promoters.
Background of the Case
DPIL, a manufacturer of power transmission and distribution equipment, was discharged from the second supplementary prosecution complaint filed by the ED in 2018. The ED's case originated from a First Information Report (FIR) registered by the Central Bureau of Investigation (CBI) on March 26, 2018. The CBI alleged offences including cheating, forgery, criminal conspiracy, and corruption related to loans obtained from a consortium of 11 banks. The CBI further alleged that DPIL diverted and misused the loan funds. Following the CBI case, the ED charged the company and its then promoters, including Managing Director Amit Bhatnagar and five members of his family, under the PMLA.
Arguments for Discharge
While seeking discharge, DPIL argued that after insolvency proceedings under the IBC, a resolution plan was approved by the National Company Law Tribunal (NCLT) in June 2022. Control of the company was transferred to the new management in September 2022. The company submitted that the current management had no connection with the earlier directors accused of wrongdoing. It also claimed immunity under Section 32A of the IBC, which protects the corporate debtor from prosecution for offences committed prior to the resolution plan. Additionally, DPIL cited a 2024 order of the Gujarat High Court through which the company was discharged from the scheduled offence (the CBI case) and earlier PMLA chargesheets filed in connection with the same matter.
ED's Opposition
The ED opposed the plea, contending that criminal liability under the PMLA survives a change in management. The agency argued that the company itself played a central role in laundering the proceeds of crime. It also noted that issues concerning the interplay between the PMLA and the IBC remain pending before the Supreme Court, and therefore the company should not be discharged.
Court's Decision
After hearing both sides, Special Judge K M Sojitra allowed the company's application for discharge. The court relied on the High Court's discharge of DPIL from the scheduled offence filed by the CBI. It noted that the High Court order had been challenged but had attained finality. The court stated: "Applicant — accused No. 1 — M/s Diamond Power Infrastructure Ltd is hereby discharged from the offences registered vide ECIR No. ECIR/AMZO/03/2018 by the opponent/complainant — Directorate of Enforcement for the offence of money laundering under Section 3 and punishable under Section 4 of the Prevention of Money Laundering Act, 2002."
Ongoing Proceedings
The trial under the PMLA against the former promoters of DPIL is still pending. The court's decision applies only to the company itself, not to the individuals previously involved.
