The Andhra Pradesh High Court has stayed the order of Enforcement Directorate, attaching the properties of Mahindra Satyam worth Rs 822 crore.
The Enforcement Directorate, probing the money laundering angle into the multi-billion Satyam Computer Services fraud, had attached the movable properties held by the IT services company two months ago. The ED attached Rs 822-crore worth fixed deposits in Andhra Bank, ING Vysya Bank, IDBI Bank and Bank of Baroda under the Prevention of Money-Laundering Act, 2002.
Consequently, the New Delhi Bench of the Adjudicating Authority had asked the IT firm to appear before it on December 10.
Contesting the ED’s claim, Satyam has challenged the order in the Andhra Pradesh High Court. Hearing the petition on Tuesday, the court had observed that the power of provisional attachment is a drastic power that had to be exercised sparingly and in exceptional circumstances.
“Provisional attachment of properties of a commercial entity can have far reaching consequences affecting the reputation and liquidity of the enterprise,” Justice Sanjay Kumar said, quoting an earlier observation of the Bench. “Such drastic powers (attachment) cannot be permitted to be exercised by statutory authorities when they do not take the care and caution to exercise the same within the fetters imposed by the law,” he said in the order today.
The exercise of jurisdiction by the ED and the Adjudicating Authority’s notice are found to be in “flagrant disregard of the legal provisions and cannot be permitted to operate, pending disposal of this writ petition,” the order, while issuing the stay order.
Vineet Nayyar, Chairman of Mahindra Satyam, maintained that the attachment of the company’s properties was not correct. “We (the Government appointed Board) had to borrow to pay salaries after the crisis hit the company. We received not a single rupee from the old management. If that is the situation then, how can they attach our money,” he had asked.