The High Court of Judicature at Bombay has formally set aside the provisional attachment of properties valued at ₹25 crore belonging to entities associated with businessman Avinash Bhosale, delivering a significant blow to the Enforcement Directorate’s (ED) ongoing investigation. A division bench comprising Justice A. S. Gadkari and Justice Kamal Khata ruled that the agency had failed to demonstrate any credible link between the identified assets and the alleged "proceeds of crime" under the Prevention of Money-Laundering Act (PMLA), 2002. The court’s order allows the appeal filed by Bhosale and his related corporate entities, effectively terminating the attachment of a 6,143.71-square-metre land parcel in Pune and a 20,200-square-metre tract in Nagpur.

The legal dispute centered on the validity of a 2026 order by the Appellate Tribunal in New Delhi, which had upheld the provisional attachment of these properties. The ED had contended that the assets were acquired using funds derived from a larger ₹3,983 crore financial irregularity involving YES Bank and the Dewan Housing Finance Corporation Limited (DHFL). According to the central agency, these funds were laundered through various investment and consultancy channels. However, the High Court’s judgment dismantled this narrative, noting that the investigation’s core premise relied on characterising standard banking transactions as criminal activity.

Examining the Nexus of Transactions

The court conducted a granular review of the financial relationships between Bhosale’s companies, including Nibhodh Realty, and other entities such as DHFL and individual borrowers like Sanjay Chhabria. The ED had alleged that approximately ₹164.64 crore reached Bhosale’s firms as kickbacks or illegal transfers. The judges were particularly critical of the agency's failure to provide a logical framework connecting these receipts to the funds disbursed by YES Bank in 2018.

In its detailed analysis of the debenture subscription agreements from 2014, the court observed that the repayments and investments managed by Bhosale’s firms were independent commercial activities. After reviewing the specific ledger entries and interest calculations, the bench found that the ED’s allegations were inconsistent with the actual financial records. The judges emphasized that the funds were part of legitimate business contracts, and the agency failed to articulate how these payments—many of which predated the YES Bank loan disbursements—could be classified as illegal proceeds under PMLA provisions.

"We are unable to comprehend, nor has the learned Special Counsel for the ED been able to explain, how official bank transaction(s) between a Bank and a Corporate entity, carried out in the usual course of business, could be construed as proceeds of crime and thereby constitute the offence of money laundering ," the bench noted. By identifying these transactions as independent and lawful, the court determined that the foundational requirement of a " scheduled offence " connecting the property to criminal activity was entirely absent in the case records presented by the prosecution.

Independent Business Agreements Under Scrutiny

The High Court further scrutinized the consultancy agreements and dairy business sales that the ED had flagged as potential conduits for money laundering. In the case of ABIL Dairy, the agency had claimed that a payment received in 2019 was an illicit transfer. The court dismissed this claim as groundless, noting that the transaction was part of a broader agreement initiated in 2016, with 50% of the consideration already paid years before the alleged offences. The bench found that the passage of time and the existence of a prior contractual obligation rendered the ED's theory of a kickback unsustainable.

Furthermore, the court addressed the agency’s allegations regarding loan disbursements made by DHFL to third parties, which the ED had suggested were kickbacks. The judges held that a loan, regardless of the security provided or the nature of the recipient, constitutes a commercial arrangement within the lender's professional discretion. Without concrete evidence to prove otherwise, characterizing a standard loan as an illegal kickback was deemed a "bald statement" lacking legal substance or factual support. The court maintained that the ED’s case proceeded on an "erroneous hypothesis" that attempted to paint all downstream disbursements from DHFL as inherently tainted simply because the source funds were under scrutiny.

Final Ruling and Procedural Outcome

The bench concluded that the evidentiary threshold required for maintaining an attachment under the PMLA was not met. The court’s findings suggest that the investigation relied on broad assumptions rather than demonstrable links between the specific properties and the alleged criminal activities. The judicial rejection of the ED’s claims highlights the necessity of proving a direct nexus before the state can move to forfeit assets belonging to individuals or corporate entities.

"Having concluded that all the transactions were legal transactions and could not be construed as proceeds of crime , we find no basis for continuing the attachment of the properties," the court stated in its concluding order. Consequently, the High Court allowed the appeal filed by Avinash Bhosale and the related corporate appellants, while simultaneously dismissing the cross-appeal filed by the Enforcement Directorate . This ruling restores the rights of the owners over the contested properties and provides a definitive resolution to the provisional attachment order, marking a significant setback for the government’s efforts to maintain control over these assets during the pendency of the wider investigation. The case now serves as a cautionary precedent regarding the requirement for the state to establish clear evidence before linking private commercial transactions to money laundering offences.