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“This depreciation accelerates with each passing year, and the resale value drops substantially. After some years, most vehicles lose a significant part of their original value, making them less economically viable to maintain or sell”, the court highlighted.
The Delhi High Court, recently, allowed the Directorate Of Enforcement to auction the 26 luxury vehicles owned by Leena Paulose and her husband. Leena had approached the court seeking to overturn the order of the Trial Court allowing the sale of luxury vehicles. The court noted that the sale of seized vehicles under controlled conditions aims to preserve or potentially enhance the value through conversion into interest-bearing fixed deposits.
The bench of Justice Swarana Kanta Sharma held, “The Directorate of Enforcement is directed to keep the entire amount generated from sale of cars in question in an ‘interest bearing’ fixed deposit”.
Per the FIR, Leena Paulose posed as a high-ranking government official and extorted approximately Rs. 200 crores. During interrogation, Paulose stated that significant funds were utilized for lavish interior decorations at her property, financed by her husband. A total of twenty-six vehicles were identified as proceeds of criminal activities and were retained for investigation under the PMLA.
Representing Paulose, Advocate Wills Mathews argued that she suffered from depression and memory loss due to over 16 months of solitary confinement. Despite this, she recalled purchasing two cars in 2018—a Rolls Royce Ghost and a Brabus—asserting these were acquired long before the alleged offences and hence not proceeds of crime. It was further argued that while she remembered renting three cars, including a Bentley Bentayga, she could not recall details of the others.
Special Counsel Zoheb Hosain, representing ED, notified the court that the Additional Sessions Judge had authorized the auction of 17 out of the 26 seized cars after following due process. It was clarified that auctions were conducted in two rounds, resulting in the sale of 17 cars for approximately Rs. 20.39 crores.
The court recorded that ED followed due process as outlined in the PMLA and its associated rules of 2013. Importantly, the court noted that Leena Paulose did not contest procedural compliance or challenge the validity of the relevant rules during the proceedings.
The court noted that per Rule 4(2) of the PMLA Rules, movable properties such as vehicles could be sold if they were susceptible to natural decay or if the cost of maintenance exceeded their value. Such sales required permission from either the Special Court or the Adjudicating Authority, with resulting proceeds mandated to be deposited in specified financial institutions.
“This Court is further of the opinion that vehicles are inherently subject to natural decay and depreciation over a period of time, which significantly impacts their value and functionality. With the passage of time, vehicles undergo wear and tear”, the bench added.
Furthermore, the court noted that such an approach seeks to protect the interests of both the accused, who will receive monetary compensation upon acquittal, and the investigating agency, ensuring that the value of seized assets will be maintained regardless of the duration of legal proceedings.
Previously, Leena's bail application was rejected by the court. Justice Dinesh Kumar Sharma stated that the case was deemed highly sensitive, and it was apparent that Leena was allegedly involved in an offence under the Maharashtra Control of Organised Crime Act (MCOCA).
Case Title: Leena Paulose v Directorate Of Enforcement (2024:DHC:5155)
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