In a landmark judgment balancing corporate rights and social responsibility, the Bombay High Court (HC) has directed the Enforcement Directorate (ED) to deposit half of the interest accrued on ₹46.5 crore with the Armed Forces Battle Casualties Welfare Fund, while returning the principal amount to Shapoorji Pallonji & Company Ltd (SPCL). The order underscores the court’s acknowledgment of the sacrifices of Indian soldiers and the urgent need to support their families.

The bench, comprising Justices A S Gadkari and R R Bhonsale, passed the directions while dismissing the ED’s appeal against a 2019 order of the Appellate Tribunal, which had set aside the attachment of assets worth ₹141.5 crore belonging to SPCL.

Background of the Case

The dispute traces back to payments made by SPCL between 2005 and onwards to Nilesh Thakur and his associated companies for the purchase of 900 acres of land in Alibaug and Pen, at a rate of ₹30 lakh per acre.

The ED contended that these payments constituted “proceeds of crime” under the Prevention of Money Laundering Act (PMLA), in connection with a disproportionate assets case filed against Thakur, a public servant.

SPCL, however, argued that the payments were part of a legitimate land purchase agreement, properly recorded as advance payments in its income tax records. The company also noted that Thakur was on unsanctioned leave for nearly four years during the period in question and was not engaged in any public duties when these transactions occurred.

In January 2019, the PMLA Appellate Tribunal accepted SPCL’s submissions and ordered the release of the attached assets, ruling that the funds could not be classified as proceeds of crime. The ED subsequently filed an appeal against this order, which led to a stay and the deposit of ₹46.5 crore with the HC pending final resolution.

High Court’s Judgment

In its final order dated December 23, 2025, a copy of which has been recently made available, the Bombay High Court upheld the tribunal’s decision, ruling that the principal sum should be returned to SPCL.

However, the HC also took the opportunity to direct that 50% of the interest accrued on the deposited amount should be credited to the Armed Forces Battle Casualties Welfare Fund. The court emphasized that the decision was made in recognition of the sacrifices of Indian soldiers and the urgent need to support their families and widows.

“There is an urgent and pressing need to provide for the families and widows of the soldiers who have lost their lives on the battlefield and in protecting the borders of the nation,” the bench observed.
“We therefore, deem it fit to transfer 50 per cent of the interest accrued to the Armed Forces Battle Casualties Welfare Fund. We do this in a manner and with an object of balancing the equities.”

The court highlighted the hardships faced by families of deceased soldiers and framed the interest transfer as a measure of social responsibility without affecting SPCL’s legitimate financial rights.

Significance of the Ruling

This order is notable for its dual focus:

1. Protecting corporate rights: SPCL’s challenge to the ED’s attachment was upheld, affirming that legitimate commercial transactions, properly documented and unrelated to any wrongdoing by a public servant, cannot be classified as proceeds of crime under PMLA.
2. Supporting social welfare: By directing a portion of the accrued interest to the Armed Forces welfare fund, the court emphasized that corporate and financial disputes can be resolved while also contributing to the welfare of those who have served the nation.

The case also reflects the court’s pragmatic approach in balancing competing equities: ensuring that SPCL is not unfairly penalized while simultaneously addressing a pressing public interest—supporting families of armed forces personnel who lost their lives in service.

Next Steps

Following the order, the ED is required to calculate and deposit half of the interest earned on the ₹46.5 crore with the armed forces welfare fund. The principal amount is to be returned to SPCL without further delay.

The judgment may also set a precedent for similar cases where interest accrued on deposited funds during legal disputes can be partially diverted to social causes, especially in matters of national importance like armed forces welfare.

The ruling reinforces the principle that while regulatory and investigative agencies play a vital role in curbing financial crimes, their powers must be exercised with respect for lawful commercial transactions and social equity.

In the words of the High Court, the order seeks to balance legal equity with moral responsibility, ensuring that corporate entities are not unduly burdened while families of soldiers receive tangible support for their sacrifices.