Fraudulent Coal Block Allocation Can Be Treated As Property: Delhi High Court

The Delhi High Court has ruled that if a coal block is allotted through deceit or false representation, the allocation itself can be considered "property" under the Prevention of Money Laundering Act (PMLA).

The order allows the Enforcement Directorate (ED) to treat such allocations and the profits arising from them as proceeds of crime.

A division bench of Justices Anil Kshetarpal and Harish Vaidyanathan Shankar overturned a previous single-judge decision from 2022 which had stated that an allocation letter did not amount to property. The court said that when an allocation gives the holder rights to obtain a mining lease and extract coal, it carries measurable economic value. If those rights are gained dishonestly, they fall under the definition of property in the PMLA.

The ruling came in connection with the Chotia coal block case, which was allotted to Prakash Industries Limited (PIL) in 2003. Investigators had alleged that the company made false claims to obtain the allocation and later benefited financially by diverting extracted coal. The ED had attached some of the firm's assets in 2021 on suspicion that the money earned through the coal sales was used to buy immovable properties.

The court also noted that profits or gains made from such illegally obtained rights are to be treated as "proceeds of crime" and that the agency is empowered to attach or value such property under the law.

The judgment expands how "property" is interpreted under the money-laundering framework, covering both tangible assets and rights that hold financial value. Legal experts believe the verdict strengthens the ED's authority to probe fraudulent allotments in natural resource and infrastructure cases.