Court grants relief to 8 companies linked to businessman Hari Shankar Tibrewal

In a recent landmark judgment, the Chhattisgarh High Court (HC) has granted relief to eight companies linked to businessman Hari Shankar Tibrewal. The HC order directed the Enforcement Directorate (ED) to consider a mechanism to preserve the value of their attached share portfolio worth Rs 424 crore during the pendency of proceedings under the Prevention of Money Laundering Act (PMLA).

The ruling draws an important distinction between preserving ownership of an attached asset and preserving its value. As enforcement agencies increasingly attach listed shares and other market-linked financial instruments in economic offence investigations, the judgment could influence how such assets are managed during prolonged legal proceedings.

The order was passed on petitions filed by Dream Achiever Consultancy Services Pvt. Ltd., Discovery Buildcon Pvt. Ltd., Forest Vincom Pvt. Ltd., Brilliant Investments Consultant Pvt. Ltd., Ability Ventures Pvt. Ltd., Ability Smartech Pvt. Ltd., Ability Games Ltd. and Savarna Bhumi Vanijya Pvt. Ltd., whose demat accounts and securities were attached by the ED as part of the agency’s investigation linked to the alleged Mahadev Online Book betting case.

The companies did not challenge the attachment itself. Instead, they argued that the attached assets consisted largely of listed shares whose value remained exposed to market fluctuations. Given the potentially lengthy nature of PMLA proceedings, they contended that a prolonged freeze could lead to significant erosion in the value of the portfolio, defeating the objective of asset preservation.

The HC found merit in the argument that preserving market-linked securities involves not only retaining control over the assets but also safeguarding their economic value.

While refraining from expressing any view on the merits of the underlying money laundering allegations, the court observed that the purpose of attachment is to preserve assets that may ultimately be subject to adjudication. In the case of listed securities, however, preservation cannot be viewed solely through the lens of attachment, as their value is inherently linked to market movements.

Accordingly, the court permitted the companies to submit a proposal to the ED identifying securities that may be liquidated and suggesting suitable investment avenues for the proceeds. The ED has been granted liberty to seek advice from independent SEBI-registered experts before taking a decision.

Importantly, the court has not ordered the release of any attached assets. Any liquidation, if approved by the ED, would be carried out under the agency’s supervision. The sale proceeds would remain in an escrow or custodial account controlled by the ED and may be deployed in low-risk regulated instruments, including government-backed securities and debt-oriented investment products.

The court further clarified that any interest, dividends, gains or appreciation arising from such investments would continue to remain subject to the outcome of the ongoing PMLA proceedings. The companies would have no right to withdraw, utilise or otherwise exercise control over the funds.