Hyderabad: Telangana High Court on Monday dismissed a writ appeal filed by the Enforcement Directorate questioning the two months time given by a single judge to Karvy Realty to reply to an ED notice.
ED had issued a show-cause notice to Karvy Realty under the PMLA (Prevention of Money Laundering Act) after the ED counsel argued that PMLA does not allow any such time for the accused as the adjudicating authority is under an obligation to pronounce a decision within 180 days on the attachments made by the ED authorities.
A bench of chief justice Ujjal Bhuyan and justice N Tukaramji, however, opposed their view and said the time granted by the courts can be excluded from the 180-day time limit.
“Moreover, even the two months given by the single judge is getting expired in the next week. There is no point in intervening at this stage,” the bench said while dismissing the ED appeal.
Karvy’s betrayal
In November 2020, Karvy Stock Broking Ltd (KSBL), from its pool account, allegedly took hundreds of shares from dormant accounts. Dormant accounts are those that have been inactive for many years.
With the help of POA, Karvy took the shares and presented them as a security to the banks such as ICICI bank, HDFC bank, Indusbank etc. The loan money obtained from the banks did not go to the dormant accounts but instead was invested in Karvy’s real estate business.
Karvy clearly violated market regulations. It defaulted Rs 2,300 crore of as many as 95,000 dormant client accounts.
When the issue came to light, SEBI barred Karvy from taking any new clients and further trading.
The Enforcement Directorate (ED) comes into play
In July 2022, ED identified additional assets and provisionally attached properties in the form of lands, buildings, shareholdings, cash, foreign currency and jewellery worth Rs 110 crore under the PMLA, 2002, in the alleged money laundering case investigation against Karvy Stock Broking Ltd (KSBL) and its chairman Comandur Parthasarathy and others.
The ED had previously attached assets worth Rs 1984.84 crore in the same case C Parthasarathy and Group CFO G Hari Krishna were arrested by ED.
The ED investigation revealed that V. Mahesh, MD of KDMSL, senior official and KMP of the Karvy group is a close associate of C Parthasathy and he actively assisted and planned the execution of money laundering operations.
In order to safeguard the proceeds of crime from alienation, ED has identified and attached and seized movable assets totalling to Rs 110.70 crore. Thereby total attachment of Rs 2095 crore has been done in this case.
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