In early July 2026, Justice Subhash Vidyarthi of the Allahabad High Court at Lucknow quashed money-laundering proceedings and a summoning order against Tulsiani Construction and Developers Ltd. and its directors (2026:AHC-LKO:43154). The predicate FIR, under Sections 409 and 420 IPC, came from a bank complaint about housing loans to four buyers in a delayed project. The ED registered an ECIR, attached several properties, and filed a complaint under Sections 3 and 4 PMLA. The Special Judge took cognizance and issued summons.
What was decided
The Court held that the words “or the value of such property” in Section 2(1)(u) PMLA do not reach a flat bought in 2012, about ten years before the 2022 FIR and not acquired from proceeds of crime. It said the ED “had no authority to attach the Flat that had been acquired in the year 2012”.
The Court found that the trial court had issued summons mechanically, without dealing with the written objections. The loan accounts had been settled with the bank: two were closed with no-dues certificates, one under a one-time settlement, and one was regular. On those facts the dispute was essentially civil, and criminal law was being “weaponised”. It added that “statutory criminal machinery cannot be used as a recovery agent”. The ED had also counted settled amounts and sums from cases already quashed when working out the proceeds of crime. Finding no prima facie case under Sections 3 and 4, the Court set aside the summoning order and quashed the proceedings.
Why it matters
Developers in Lucknow, Noida and Greater Noida often face bank or buyer complaints that start as delivery or repayment disputes. This judgment helps them argue that a settled commercial dispute should not become a PMLA prosecution, and that property bought long before the alleged offence cannot be attached as its “value” without a proper basis.
It also confirms that a summoning order must deal with the accused’s objections and cannot be a formality.
Practical points
- Keep title documents and payment records showing when and with what funds each property was acquired.
- Settlement letters, no-dues certificates and one-time settlement papers are relevant in both PMLA and predicate proceedings.
- Check how the ED has worked out the proceeds of crime. Settled or quashed amounts should not be counted.
- Quashing petitions are now filed under Section 528 BNSS, which replaces Section 482 CrPC.
Sources: Verdictum, 9 Jul 2026; Law Trend, 3 Jul 2026.
For a confidential discussion on ED/PMLA matters, see ED and PMLA Defence.
General legal information only; not legal advice or solicitation.
