The Delhi High Court recently allowed the sale of 26 luxury cars of Sukesh Chandrasekar observing that the cars are subject to natural decay and depreciation.

These cars were attached and in possession of the Directorate of Enforcement (ED) in a money laundering case linked to the Rs 200 crores extortion case.

Justice Swarana Kanta Sharma in a recent judgement dismissed the petition moved by Leena Maria Paulose, wife of Sukesh challenging the order permitting the sale of the cars.

The High Court has directed the ED to keep the entire amount generated from the sale of the cars in question in an 'interest bearing' fixed deposit.

"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," Justice Swarna Kanta Sharma said.

"Further, storing a vehicle in a container warehouse, as in the present case, for a long period of time results in decay since if a car is left stationary for years, several issues can compromise its condition. Environmental factors such as weather conditions also contribute to this decay, causing issues such as rust and corrosion," the High Court said in a judgement passed on July 12.

"Rust, in particular, can severely damage a vehicle's structure and all other components," Justice Sharma said.

The bench said that the mechanical components of a vehicle also suffer from decay, requiring frequent and expensive maintenance to keep the vehicle operational, especially in the present case, where the vehicles involved are 26 high-end luxury cars such as Rolls Royce, Ferrari, Range Rover, etc.

''The upkeep and maintenance of the same is also expensive. In container warehouses, the care and protection cars require, from environmental onslaughts and decay due to rusting, cannot be ensured,'' the bench added.

The depreciation of vehicles is also a well-recognized phenomenon in the automobile industry. From the moment a car is driven out of the showroom, its value begins to decrease. 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 High Court said that therefore, there is no merit in the argument that the sale of seized vehicles in this case is against the mandate of Section 8(6) of PMLA. Needless to say, as per Section 8(6), if the accused persons, in this case, are found not guilty of the offence of money laundering, they would be entitled to receive the amount generated from selling the movable property i.e. cars in the present case, which the Directorate of Enforcement is obliged to keep deposited in the nearest Government Treasury or branch of the State Bank of India or its subsidiaries or in any nationalised bank in fixed deposit.

Petitioner Leena Maria Paulose had moved a petition for quashing and setting aside of orders dated December 20, 2022, and February 15, 2023, passed by the trial court.

A total of 26 luxury and high-end cars were found and seized by the respondent, which was prima facie found to have been purchased out of the "proceeds of crime" generated out of the criminal activities of Sukesh Chandrasekhar.

On the other hand, the case of the respondent that since the 26 luxury cars were liable to speedy and natural decay and since the expenses of maintenance of the said vehicles were likely to exceed their value and cause unnecessary burden upon the exchequer, an appropriate application was moved before the learned ASJ seeking permission under Rule 4(2) of Prevention of Money Laundering (Taking Possession of Attached or Frozen Properties Confirmed by Adjudicatory Authority), Rules 2013, for the sale of vehicles in question, in accordance with the procedure prescribed under the said rule. The same was allowed by the learned ASJ vide impugned order dated December 20, 2022.

It is the specific case of the respondent that the 26 cars in question, which are expensive and luxury cars, are those movable properties that are subject to natural decay or the expense of their maintenance is likely to exceed their value. No argument has been addressed on behalf of the petitioner that the vehicles in question are not subject to natural decay.