ED’s PMLA case in Coastal Energen matter dropped; Adani-led resolution may face fresh challenge

In a new twist to the Coastal Energen corporate insolvency resolution case, wherein Adani group along with DAIT have emerged as the successful resolution applicant, a special court in Chennai has dropped proceedings in a money laundering case filed by the Directorate of Enforcement (ED) against entities linked to the Coastal Energen after the predicate CBI FIR was quashed by the Delhi High Court. The XIII Additional Special Court for CBI Cases, Chennai, in an order dated April 28, 2026, held that proceedings under the Prevention of Money Laundering Act (PMLA) could not continue once the scheduled offence ceased to exist.

The ED case arose from an ECIR registered in January 2018 against promoter Ahmed Buhari and others after the Central Bureau of Investigation booked them in a case involving alleged supply of sub-standard coal to state-run NTPC Limited. According to the order, the CBI had registered FIR No. RC 221/2018/E-0003 on January 22, 2018 under IPC provisions relating to cheating and conspiracy, along with provisions of the Prevention of Corruption Act, against Buhari and others.

The ED subsequently initiated proceedings under the PMLA through ECIR/CEZO-I/01/2018 dated January 31, 2018 and filed a complaint against Buhari and six others. The Delhi High Court, however, quashed the predicate CBI FIR on September 16, 2025 in proceedings initiated by Buhari, citing closure of a connected FIR.

Following this, the Madras High Court separately quashed PMLA proceedings against accused persons Ahmed A.R. Buhari (A1), Precious Energy Holdings Ltd (A6) and Mutiara Energy Holdings Ltd (A7) through orders passed between October 2025 and March 2026.

The Chennai special court noted that the issue was settled by the Supreme Court’s ruling in Vijay Madanlal Choudhary vs Union of India, which held that if a scheduled offence is quashed or the accused is discharged, money laundering proceedings cannot survive independently.

Relying on the apex court judgment, the special court dropped proceedings against the remaining accused — Coastal Energy Pvt Ltd (A2), Coastal Energen Private Limited (A3), Coal & Oil Company DMCC, Dubai (A4) and Coal & Oil Company LLC, Dubai (A5).

The court, however, granted liberty to the ED to revive the PMLA proceedings if the predicate offence is restored in future, citing the Supreme Court’s 2023 ruling in Deputy Director, Directorate of Enforcement vs Emta Coal Ltd & Ors.

Coastal Energen CIRP

The development comes amid an ongoing insolvency resolution process at Coastal Energen, which operates a thermal power plant in Tamil Nadu. In September 2024, the Supreme Court allowed a consortium of Dickey Alternate Investment Trust (DAIT) and Adani Power Limited to continue operating the plant while hearing challenges to the approved resolution plan.

The apex court restored the status quo prevailing before the National Company Law Appellate Tribunal’s September 6, 2024 order that had stayed the Chennai bench of the National Company Law Tribunal’s approval of the consortium’s Rs 3,500-crore resolution plan.

The resolution plan had been challenged by former promoter Ahmed Buhari, who alleged irregularities in the bidding and approval process. Buhari had contended that Adani Power obtained a “back-door entry” into the process through DAIT after its own expression of interest was rejected by the resolution professional for delayed submission.

Under the approved resolution plan, financial creditors were slated to receive Rs 3,335 crore, amounting to 28.52% recovery against admitted claims of Rs 11,678 crore, while operational creditors were to receive Rs 4.64 crore. The plan also earmarked Rs 109 crore towards insolvency resolution process costs.

The committee of creditors had approved the plan with a 100% voting share. The resolution proposal envisaged implementation through a special purpose vehicle, Moxie Power Generation Ltd, incorporated in Chennai in January 2024.

Also See: SC allows Adani Power, DAIT to operate Coastal Energen plant