HC allows auction of Paonta firm’s assets but with a rider

Vijay Arora
Shimla, September 17

The HP High Court today issued a notice to the Enforcement Directorate (ED) on a petition filed by the state government challenging the provisional order passed by ED attaching the assets worth over Rs 288 crore of the Paonta Sahib-based Indian Technomac Company Limited (ITCL) in a money laundering case.

While issuing notice, a division Bench comprising Chief Justice V Ramasubramanian and Justice Anup Chitkara has allowed the auction of the properties to be held on September 19 with a rider that the same will not be confirmed till further orders and listed the matter for further hearing on September 23.

Passing this order, the court observed, “It appears that extensive advertisements for the sale of movable and immovable properties of the company in question have been issued by the state government and the auction is scheduled to be held on September 19. Therefore, without prejudice to the rights of both the parties we allow the auction to proceed on September 19, but it shall not be confirmed till further orders.”

The state government had challenged the order of the ED mainly on two grounds that the state had been permitted by the Company Court to proceed with the sale after rejecting the application for stay moved by the Enforcement Directorate and the order of attachment of the assets of the company passed by the Deputy Director of Enforcement under Section 5(1) of the Prevention of Money Laundering Act (PMLA), is also violative of the provisions of the PMLA.

After hearing the contention of the state, the court observed, “It is true that the application of the ED for stay of sale was rejected by the Company Court, it is also nevertheless true that the Company Court could not have and it did not in fact prevent the ED from invoking the provisions of the PMLA. Therefore, it cannot be contended that the ED had lost its right under the Act by virtue of the orders of the Company Court. But at the same time, the order of the Company Court directing the sale of the properties, has also not been challenged by anyone. Therefore, interdiction of the sale, in any manner, may tantamount to annulling the orders of the Company Court, without the same being challenged in any Forum.”

The Company Court, while hearing a company petition, rejected the application filed by the ED for seeking stay on the proceedings in a case pertaining to auction of the properties of the company till completion of the investigation to identify the generated Proceeds of Crime and role of persons under the PMLA.

Thereafter, the Company Court headed by Justice Tarlok Singh Chauhan has approved the sale notice submitted by the state Excise & Taxation Department for the sale of assets of the properties of the company through auction. In the meantime, the ED passed a provisional order attaching assets of the Indian Technomac Company Limited in a money laundering case. Aggrieved from this order, the state government had approached the high court seeking quashing of the same.