The Bombay High Court ruled that under Section 8(2) of PMLA, the ED must record a finding before freezing assets. This decision quashes the Enforcement Directorate's freeze on Rs. 100 crores belonging to Coda Payments, emphasizing the necessity for procedural adherence.
Bombay HC Quashes ED's Freeze on Coda Payments' Assets
The Bombay High Court has quashed the Enforcement Directorate's (ED) order to freeze Rs. 100 crores worth of assets belonging to Coda Payments. The ruling highlighted that the ED failed to fulfill its obligation under Section 8(2) of the Prevention of Money Laundering Act (PMLA), which mandates that the authority must record a finding regarding the property’s involvement in money laundering.
The court noted that the ED's failure to apply its mind to the specifics of the case resulted in an unlawful freeze of the assets. Section 8(2) of the PMLA not only requires consideration of various factors before making such determinations but also insists on an appropriate record of findings.
This decision reiterates the judicial expectation for compliance with statutory requirements in cases involving the freeze of assets, ensuring that due process is respected. Practitioners in the field of financial crimes and anti-money laundering will need to be vigilant about the procedural obligations under the PMLA when advising clients or acting on behalf of the ED.
Citations
- Coda Payments v. ED (2026) 1 BOM LR 302
