ABDULLAH ALI BALSHARAF Vs. DIRECTORATE OF ENFORCEMENT

JUDGEMENT

(1.) The petitioners are citizens of Saudi Arabia and have filed the present petition, inter alia, impugning the directions issued by officers of the respondent no. 1 (Enforcement Directorate) resulting in withholding of the proceeds of equity shares sold by the petitioners on the platform of respondent no.2 (Bombay Stock Exchange - hereafter "BSE"). The petitioners also impugn the order dated 22.03.2018 passed by the Enforcement Directorate prohibiting any debit transaction in the Demat Accounts (Account Nos. 1201910103642803 and 1201910103642797) maintained by the petitioners with respondent no.3 (hereafter "SMC"). The aforementioned Demat Accounts are maintained in the name of petitioner nos. 1 and 2 respectively and they hold 78,38,330 equity shares of M/s Khushi Ram Behari Lal Ltd. (hereafter "KRBL Ltd.") in those Demat Accounts. Whilst the impugned order dated 22.03.2018 - a copy of which was handed over by learned counsel of the Enforcement Directorate during the course of hearing - indicates that 35,88,330 equity shares are held by petitioner no.1 and 42,50,000 equity shares are held in the Demat Account in the name of petitioner no.2; the petitioners state that 42,50,000 equity shares are held by petitioner no.1 and 35,88,330 equity shares are held by petitioner no.2.

(2.) In addition to the 78,38,330 equity shares of KRBL Ltd. held by the petitioners in the aforementioned Demat Accounts (Account Nos. 1201910103642803 and 1201910103642797 maintained with SMC), the petitioners also held certain further shares in KRBL Ltd., which were sold in January and February 2018. These included 65,00,000 equity shares of KRBL Ltd. that were sold by the petitioners (32,50,000 equity shares of KRBL Ltd. each) through BSE on 12.02.2018. The said transactions were effected around 1:55 PM to 2:07 PM on the said date. The said shares were removed from the Demat Accounts of the petitioners and were delivered to the BSE (the clearing system of BSE). The counter parties (purchasers of shares) had also remitted the sale consideration to the BSE to effect the settlement through its clearing system. However, on 13.02.2018 at 05:37 p.m., the Deputy Director of the Enforcement Directorate sent an email, inter alia, restraining any transaction in respect of the sale of 65,00,000 shares sold by the petitioners. The said email also enclosed therewith a letter dated 13.02.2018 restraining and stopping the transactions pertaining to the transfer of equity shares of KRBL Ltd. owned by the petitioners under the provisions of Section 102 Cr.P.C. read with Section 65 and Section 2 (1)(na) of the Prevention of Money Laundering Act, 2002 (hereafter "PMLA"). The BSE was directed not to transfer the shares in question without permission of the Enforcement Directorate or the competent authority.

(3.) Thereafter, the officers of the Enforcement Directorate issued a series of instructions, which in effect reversed the sale transaction entered into by the petitioners in respect of 64,94,891 equity shares of KRBL Ltd. However, the concerned officer permitted the sale transaction pertaining to a small fraction of the shares of KRBL Ltd. (5109 in number) sold by the petitioners, to go through. The sale consideration for the said shares amounting to Rs. 30,35,006.90 was released by the BSE to the account of SMC (the petitioners' broker) and was thereafter frozen by the orders passed by the Enforcement Directorate.