PMLA court discharges DPIL in Rs 2,654 cr bank fraud case

Ahmedabad: A special PMLA court in Ahmedabad discharged Vadodara-based Diamond Power Infrastructure Ltd (DPIL) from a money laundering case filed against it and its former promoters by the Enforcement Directorate (ED) in connection with the alleged Rs 2,654-crore bank fraud. This came after the company came under new management following the Insolvency and Bankruptcy Code (IBC) process and the suspension of its previous promoters.

DPIL is a power transmission and distribution equipment manufacturer.

The company was discharged from the second supplementary prosecution complaint filed by the ED in 2018. The ED case stemmed from a CBI FIR registered on March 26, 2018, alleging offences including cheating, forgery, criminal conspiracy and corruption in relation to loans obtained from a consortium of 11 banks. The CBI alleged that DPIL diverted and misused funds. Following the CBI case, the ED charged the company and its then promoters — managing director Amit Bhatnagar and five members of his family.

While seeking discharge from the case, DPIL argued that after insolvency proceedings under the Insolvency and Bankruptcy Code (IBC), a resolution plan was approved by the National Company Law Tribunal (NCLT) in June 2022 and control of the company passed to the new management in Sept 2022. The company submitted that the present management had no connection with the earlier directors accused of wrongdoing. It also claimed immunity under Section 32A of the IBC.

The company further cited a 2024 order of the Gujarat high court, through which DPIL was discharged from the scheduled offence and the earlier PMLA chargesheets filed in connection with the same case.

The ED opposed the plea, contending that criminal liability under the Prevention of Money Laundering Act (PMLA) survives a change in management and that the company itself played a central role in laundering the proceeds of crime. It also argued that issues concerning the interplay between the PMLA and the IBC remain pending before the Supreme Court.

After the hearing, special judge K M Sojitra allowed the company's application for discharge. It relied on the High Court's discharge of DPIL from the scheduled offence filed by CBI, and noted that the High Court order was challenged and it has attained finality. The court said, "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."

The trial under the PMLA against the former promoters is pending.