Delhi High Court Questions Jurisdiction in Ambani ED Case - 2026-01-24

Delhi High Court Questions Jurisdiction in Ambani ED Case

In a significant development for corporate litigation under India's anti-money laundering regime, the Delhi High Court has raised serious doubts about its jurisdiction to entertain petitions filed by two Anil Ambani group companies challenging the Enforcement Directorate's (ED) provisional attachment of properties worth several thousand crores. Justice Purushaindra Kumar Kaurav, during a brief hearing, questioned why the proceedings should not be transferred to Mumbai, where the companies are registered, highlighting potential forum-shopping issues in high-stakes Prevention of Money Laundering Act (PMLA) cases. This jurisdictional hurdle comes amid an intensifying ED probe into alleged financial irregularities at Reliance Communications (RCOM) and its group entities, involving accusations of loan evergreening, fund diversion, and siphoning that have ballooned into non-performing assets (NPAs) exceeding ₹19,000 crore. As the case is listed for further hearing on January 30, legal observers are watching closely, given the parallels with broader Supreme Court scrutiny of investigative lapses in the same saga. This episode underscores the evolving tensions between regulatory enforcement and corporate defenses in India's financial crime landscape.

Background on the ED Probe

The roots of this controversy trace back to the turbulent financial history of the Reliance Anil Dhirubhai Ambani Group, particularly its telecom arm, RCOM. From around 2010-2012, amid the aggressive expansion in India's telecom sector, RCOM and affiliated entities raised thousands of crores in loans from a consortium of Indian banks, led by heavyweights like the State Bank of India (SBI). These borrowings, intended for infrastructure and operational needs, reportedly totaled over ₹31,000 crore between 2013 and 2017 alone. However, as market dynamics shifted—marked by intense competition, spectrum auctions, and mounting debts—the loans soured into massive NPAs.

By 2020, forensic audits commissioned by banks, including one by SBI, revealed systemic irregularities. Loans were allegedly misused through evergreening techniques, where fresh borrowings from one bank were used to repay dues to another, creating an illusion of financial health. Funds were diverted to related parties, routed through shell entities for obfuscation, and even invested in mutual funds or fixed deposits that were swiftly liquidated—actions in direct contravention of loan sanction terms. Five major banks eventually classified RCOM's accounts as fraudulent, with an outstanding principal of ₹19,694 crore as of the latest reports.

The ED entered the fray under Section 5(1) of the PMLA, 2002, which empowers the agency to provisionally attach properties believed to be proceeds of crime during an ongoing investigation. The attachments target assets linked to various Reliance group entities, including immovable properties and financial holdings valued at several thousand crores. The ED's investigation posits that these maneuvers not only inflated NPAs but also constituted money laundering, as the "proceeds of crime" from predicate offenses like bank fraud were layered through complex transactions.

This probe is part of a larger crackdown on corporate debt defaults from the pre-COVID era, where NPAs peaked at over ₹10 lakh crore in the banking sector. For legal professionals, the case exemplifies how PMLA's stringent provisions—requiring no prior conviction for attachments and allowing retention for up to 365 days—have become a potent tool for recovering public money lost to alleged white-collar crimes. However, it also raises questions about the breadth of "proceeds of crime," a concept upheld by the Supreme Court in Vijay Madanlal Choudhary v. Union of India (2022), which affirmed ED's wide latitude but left room for challenges on proportionality.

Delhi High Court Proceedings

The immediate flashpoint unfolded in the Delhi High Court, where Reliance Realty and Campion Properties Limited—both Mumbai-registered firms within the Ambani group—filed petitions seeking to quash or stay the ED's attachments. Represented by Senior Advocate Siddharth Aggarwal, the petitioners argued that the Delhi High Court holds jurisdiction, citing the cause of action arising from ED's actions and the agency's Delhi headquarters. They further contended a prima facie case on merits, asserting that the attachments are overreaching and lack direct linkage to laundering proceeds.

Justice Kaurav, however, was unimpressed. After a cursory hearing, he posed a pointed query: “Why should we entertain here? Why should it not go to Mumbai?” This reflects foundational principles under the Code of Civil Procedure (CPC), 1908, particularly Section 20, which vests jurisdiction in courts where the defendant resides or where the cause of action arises. Since the companies are incorporated and principally operate from Mumbai, the court indicated a preference for the Bombay High Court as the natural forum, potentially streamlining proceedings closer to the factual matrix.

The ED, through Advocates Zoheb Hossain and Vivek Gurnani, countered vigorously. They emphasized that the matter is already before the PMLA Adjudicating Authority (AA), a specialized quasi-judicial body tasked with confirming or vacating attachments post-provisional orders. "The petitioners should present their arguments before this authority," the ED's counsel urged, underscoring PMLA's self-contained mechanism that limits direct judicial interference at early stages. The ED reiterated its core allegation in court filings: “From around 2010-12 onwards, RCOM and its group companies raised thousands of crores from Indian banks, of which ₹19,694 crore still remains outstanding. These assets turned NPA, with five banks having declared RCOM’s loan accounts as fraud. ED investigation revealed that loans taken by one entity from one bank were utilized for repayment of loans taken by other entities from other banks, transfer to related parties, and investments in mutual funds, which was in contravention to the terms and conditions of the sanction letter of the loans.”

In response, Justice Kaurav directed the petitioners to file brief notes on maintainability—the legal threshold for the court's competence to hear the plea. No interim relief was granted, and the matter is adjourned to January 30, 2024 (noting the sources' reference to 2025 appears typographical, aligned with current timelines). This procedural step could prove pivotal; if maintainability is rejected, the petitioners may face refiling in Mumbai, incurring delays and costs in a case where time is critical under PMLA's attachment timelines.

Related Supreme Court Developments

Parallel to the Delhi HC proceedings, the Supreme Court has injected another layer of oversight into the Reliance saga. In a public interest petition filed by former Union Secretary E.A.S. Sarma, seeking judicial monitoring of the investigations, a Bench led by Chief Justice Surya Kant and Justice Joymalya Bagchi directed the CBI and ED to file detailed status reports on their probes into RCOM's financial misconduct. The plea, argued by Advocate Prashant Bhushan, contends that the agencies' efforts have been "slow and incomplete," despite loan write-offs exceeding ₹1.5 lakh crore and forensic evidence dating back to 2020.

Bhushan highlighted the CBI's FIR, registered only in August 2023 (sources note 2025, likely a error), which focuses narrowly on a subset of irregularities without implicating public servants or addressing offshore diversions potentially violating FEMA. A five-year delay between SBI's 2020 audit and the complaint filing raises "prima facie inference of institutional complicity," the petition argues. Solicitor General Tushar Mehta defended the government's stance, noting an existing criminal case, but the Court accepted the request for reports—potentially in sealed cover if probes are ongoing—with follow-up after 10 days.

The SC also issued fresh notices to Anil Ambani and group entities, granting time for appearance. This intervention echoes precedents like the coal scam cases, where judicial supervision ensured comprehensive probes. For the Ambani matter, it could amplify pressure on the ED's Delhi actions, indirectly influencing the HC's jurisdictional calculus by emphasizing national-level accountability.

Legal Analysis

At its heart, this case pivots on the interplay between PMLA's specialized regime and general civil jurisdiction principles. Under PMLA, challenges to attachments typically route through the AA, with appeals to the Appellate Tribunal and High Courts under Sections 17(4) and 26. However, direct High Court petitions under Article 226 invoke constitutional jurisdiction for urgent relief, often on grounds of arbitrariness or violation of natural justice. The Delhi HC's skepticism here aligns with a line of authorities stressing "ordinary residence" for corporate plaintiffs—deemed the registered office under Companies Act, 2013—potentially invoking the principle of forum non conveniens to avoid overburdening benches.

Critically, the ED's attachments under Section 5(1) require a reasonable belief in laundering proceeds, a low threshold post-Vijay Madanlal, but challengable if disproportionate. The allegations of circular transactions and shell routing fit neatly into laundering predicates like IPC Sections 420 (cheating) and 120B (conspiracy), tied to bank frauds under the Indian Penal Code. Yet, the five-year investigative lag flagged in the SC petition invokes Article 21's right to speedy trial, potentially weakening ED's case if delays are deemed malafide.

Jurisdictional transfers, though rare, have precedents; for instance, the Bombay HC's handling of DHFL fraud probes due to the promoter's base. If transferred, it could expedite resolution via the AA in Mumbai, but at the cost of perceived centralization in Delhi for national agencies. Legal practitioners must navigate this by meticulously pleading cause of action—e.g., ED summons issued in Delhi—to bolster territorial claims, while anticipating ED's pushback on parallel forums.

Implications for Corporate Litigation and Enforcement

For the legal community, this unfolding drama signals a tightening noose on legacy corporate NPAs, particularly in sectors like telecom and infrastructure hit by the 2010s debt binge. Banks, still grappling with ₹4-5 lakh crore in unresolved NPAs, may leverage PMLA more aggressively, viewing attachments as recovery adjuncts to Insolvency and Bankruptcy Code (IBC) proceedings—RCOM is already under CIRP.

Jurisdictional flux could reshape forum strategies: Corporates may prefer state high courts for familiarity, while agencies advocate specialized tribunals to curb dilatory tactics. The SC's oversight directive sets a template for PILs in mega-frauds, compelling accountability from probes that often meander through inter-agency silos. This might spur legislative tweaks, like clearer PMLA venue rules, amid criticisms of ED's "fishing expeditions."

Broader justice system impacts include enhanced transparency via status reports, mitigating perceptions of selective enforcement—especially in high-profile cases like Ambani's, which dwarf smaller probes. For white-collar defense lawyers, the emphasis is on early AA interventions and forensic rebuttals to demonstrate non-laundering intent. Ultimately, it reinforces that judicial scrutiny remains a bulwark against overreach, ensuring enforcement aligns with constitutional due process.

Conclusion

The Delhi High Court's jurisdictional interjection in the Anil Ambani ED case, coupled with Supreme Court prodding, marks a critical juncture in India's battle against corporate financial crimes. As January 30 approaches, the maintainability notes will clarify if Delhi remains the arena or yields to Mumbai, but the underlying probe's revelations—loan evergreening, diversions, and NPA escalations—promise lasting ripples. For legal professionals, this is a clarion call to master PMLA's nuances amid jurisdictional mazes, ensuring robust defenses in an era of heightened regulatory vigilance. With public funds at stake, the quest for accountability must balance swift enforcement with fair play, lest it erode trust in the system.