Issues: (i) whether the Enforcement Directorate had reasons to believe for passing the provisional attachment order and the Adjudicating Authority had sufficient basis to issue the show-cause notice; (ii) whether the Enforcement Directorate was required to conduct a separate investigation into the predicate offence or could confine itself to the offence of money laundering; (iii) whether properties purchased before the commission of the scheduled offence could nevertheless be attached as value thereof; and (iv) whether the properties of appellants who were not accused in the predicate offence could be attached.

Issue (i): whether the Enforcement Directorate had reasons to believe for passing the provisional attachment order and the Adjudicating Authority had sufficient basis to issue the show-cause notice.

Analysis: The statutory precondition for provisional attachment is the existence of reason to believe, based on material in possession, that a person is in possession of proceeds of crime and that such proceeds are likely to be concealed, transferred, or otherwise dealt with so as to frustrate confiscation. The record disclosed multiple bank accounts opened through forged documents, layered transactions, cash deposits, RTGS rotations, and witness statements supporting laundering activity. The complaint and material placed before the Adjudicating Authority were also found sufficient for issuance of notice.

Conclusion: The issue was decided against the appellants and in favour of the respondent.

Issue (ii): whether the Enforcement Directorate was required to conduct a separate investigation into the predicate offence or could confine itself to the offence of money laundering.

Analysis: The predicate offence remains for the police or other competent agency to investigate. The Enforcement Directorate is not a supervisory authority over that investigation and is not required to re-investigate the scheduled offence. Its role is confined to identifying prima facie material of the predicate offence, the quantum of proceeds of crime, the laundering trail, the layering or dissipation of such proceeds, and the connection of attached properties with the laundering process.

Conclusion: The issue was decided against the appellants and in favour of the respondent.

Issue (iii): whether properties purchased before the commission of the scheduled offence could nevertheless be attached as value thereof.

Analysis: The definition of proceeds of crime includes not only property derived from criminal activity but also the value of such property. Where the actual tainted property is not traceable or has been siphoned off, attachment may extend to property of equivalent value. On the facts, the laundered proceeds had been diverted and layered through multiple entities, justifying attachment of equivalent-value properties even if some assets were acquired earlier.

Conclusion: The issue was decided against the appellants and in favour of the respondent.

Issue (iv): whether the properties of appellants who were not accused in the predicate offence could be attached.

Analysis: The attachment power is not confined to persons named as accused in the scheduled offence. It extends to any person in possession of or involved with proceeds of crime. The statutory scheme is aimed at reaching such proceeds irrespective of the name in which they are held, subject to the person being connected with the proceeds of crime.

Conclusion: The issue was decided against the appellants and in favour of the respondent.

Final Conclusion: The attachment and confirmation order were sustained, and the appeals failed on all substantive issues.

Ratio Decidendi: Under the Prevention of Money-Laundering Act, attachment may be sustained on the basis of recorded reason to believe and material showing laundering activity, and it may extend to equivalent-value property and to property held by persons who are not accused in the predicate offence if such property represents or is connected with proceeds of crime.

ISSUES PRESENTED AND CONSIDERED

1. Whether a property provisionally attached as "value/equivalent" of proceeds of crime under the PMLA should be released after the ED subsequently confirms attachment of certain other properties as direct/indirect proceeds of crime.

2. Whether the pendency of a subsequent Adjudicating Authority order confirming attachment of other properties (alleged direct proceeds) mandates release of a property earlier attached as equivalent value when the total proceeds of crime exceed aggregate attachments.

3. Whether reliance on the proposition that "alternative/tenant" properties (attached as equivalent value) stand released upon attachment/confirmation of direct proceeds is sufficient to compel release where overall proceeds of crime remain substantially higher than total attachments.

4. Procedural scope: Whether an appellant's narrow focus on release (rather than challenging merits) affects the Tribunal's exercise of discretion under Section 26 PMLA.

ISSUE-WISE DETAILED ANALYSIS

Issue 1 - Release of property attached as "value/equivalent" after subsequent confirmation of other properties as direct/indirect proceeds

Legal framework: Attachment and confirmation under the Prevention of Money Laundering Act, 2002 permit provisional attachment of property as proceeds of crime or as equivalent/value where direct proceeds are not traceable; the Adjudicating Authority confirms attachment after consideration of material.

Precedent treatment: The appellant relied on a High Court exposition that properties attached as equivalent (alternative attachable properties) are to be treated as tenant properties and may be released when direct proceeds are found/attached. The Tribunal considered that precedent but did not apply it to mandate release in the facts of this matter.

Interpretation and reasoning: The Tribunal examined the quantum of alleged proceeds of crime (calculated at Rs. 743 Crore) and compared it to the aggregate value of all attachments made by the Enforcement Directorate (including the subsequently confirmed direct/indirect attachments). The total attachment value remained substantially lower than the total proceeds of crime. The Tribunal reasoned that where overall proceeds of crime significantly exceed total attachments, the mere fact that some properties have later been confirmed as direct/indirect proceeds does not automatically entitle the release of a property previously attached as equivalent/value.

Ratio vs. Obiter: Ratio - Where the aggregate attachment value (direct and equivalent attachments) is materially less than the quantified proceeds of crime, an application for release of a property attached as equivalent/value will not be allowed solely because some other properties were later confirmed as direct proceeds. Obiter - Observations on the treatment of "tenant" properties and the cited High Court view were considered but not treated as obliging release in such factual matrix.

Conclusions: The Tribunal denied release of the property attached as equivalent/value because the total proceeds alleged substantially exceeded total attachments; thus the ground of subsequent confirmation of other properties did not satisfy release criteria.

Issue 2 - Effect of aggregate quantum of proceeds of crime vis-à-vis aggregate attachments

Legal framework: PMLA contemplates attachment of proceeds of crime and allows enforcement authorities to attach properties whose value corresponds to proceeds when direct proceeds are not available in India; quantification of proceeds is material to determining sufficiency of attachments.

Precedent treatment: The Tribunal relied upon the submissions and investigation record to treat the quantification of proceeds as determinative for the release application; no authority was held to override an uncontested or sufficiently supported quantification that exceeds attachments.

Interpretation and reasoning: The Tribunal accepted the ED's calculation of proceeds (Rs. 743 Crore) derived from investigation (siphoning of FCCB funds and bogus purchases), and noted that total attachments (including the subsequently confirmed properties) were far less than that figure. Given this imbalance, the Tribunal concluded that permitting release of any attached property would frustrate the statutory scheme and the investigatory object of PMLA.

Ratio vs. Obiter: Ratio - When the quantified proceeds of crime exceed the total value of all attachments by a substantial margin, an application to release an attached property on the basis that alternative/direct properties were later attached should be refused. Obiter - Remarks that further quantification remains under investigation and that attachments may be reassessed at trial or in the Adjudicating Authority.

Conclusions: The Tribunal dismissed the release application and appeal because the overall confiscatable pool (proceeds) remained far greater than the sum total of attachments.

Issue 3 - Reliance on authority treating "alternative/tenant" properties and effect of subsequent direct-attach confirmations

Legal framework: Judicial pronouncements recognize the concept of alternative/tenant properties and permit attachment of equivalent value; courts have grappled with when such properties must be released if direct proceeds are later located and attached.

Precedent treatment: The Tribunal acknowledged the cited High Court decision explaining the concept of tenant/alternative properties. That authority was examined but not applied to produce the relief sought because factual thresholds (aggregate proceeds vs attachments) differed.

Interpretation and reasoning: The Tribunal observed that the legal proposition relied upon by the appellant does not automatically mandate release in every case where some direct proceeds are later attached. The decisive factor is whether the aggregate value of attachments satisfies the quantified proceeds of crime. Since the attachments remained insufficient to cover the alleged proceeds, the principle invoked by the appellant did not operate to require release.

Ratio vs. Obiter: Ratio - The applicability of precedents on "alternative" properties depends on factual parity between proceeds quantified and aggregate attachments; courts/tribunals need not release an equivalent-attached property where overall attachments are insufficient. Obiter - The Tribunal did not undertake a detailed overruling or distinction of the cited precedent beyond applying it factually.

Conclusions: Reliance on the High Court exposition did not entitle the appellant to release under the facts; the Tribunal distinguished the cited authority on the basis of insufficiency of total attachments relative to total proceeds.

Issue 4 - Procedural posture and scope of appeal where appellant limited its challenge to release

Legal framework: Appeals under Section 26 PMLA permit challenge to Adjudicating Authority orders; appellants may raise substantive and/or interlocutory reliefs (including release). The Tribunal retains discretion to decide reliefs on merits and in light of the record.

Precedent treatment: The Tribunal noted the appellant's strategic narrowing of arguments to seek release rather than contest the merits of attachment; this limited scope informed the Tribunal's assessment but did not preclude consideration of the ED's broader factual matrix.

Interpretation and reasoning: The Tribunal observed that the appellant did not press substantive merits of the original attachment order but confined submissions to the release claim based on subsequent confirmations. The Tribunal nonetheless examined the full quantification and investigative material submitted by the ED to determine whether release was appropriate.

Ratio vs. Obiter: Obiter - The Tribunal's observation that appellants remain free to raise all valid defenses at trial or before the Special Judge (PMLA) is permissive and procedural. Ratio - An appeal limited to seeking release can be decided against the appellant where the broader evidentiary picture (quantified proceeds v. total attachments) negates entitlement to interim or permanent release.

Conclusions: The appeal and related interlocutory application were dismissed; the Tribunal granted liberty to raise defenses before the Special Judge, preserving statutory and procedural rights without affecting substantive adjudication by the trial court.

ISSUES PRESENTED AND CONSIDERED

1. Whether the Adjudicating Authority rightly confirmed the Provisional Attachment Order (PAO) under the Prevention of Money Laundering Act, 2002 by treating specified immovable properties as proceeds of crime.

2. Whether the valuation of attached immovable properties for the purpose of attachment (valuation fixed at Rs. 5.40 Crores vs. claimed market value Rs. 10.21 Crores) was legally correct and consistent with the definition of "value" under the Act.

3. Whether limned admissions and statements (including statements recorded under Section 50(2) of the Act) and documentary material were sufficient to infer possession of proceeds of crime by the persons whose properties were attached.

4. Whether properties alleged to belong to certain appellants were mis-identified or otherwise incorrectly attached (including claims of prior sale/registered title and transfers after alleged fraud).

5. Whether failure by a claimant to disclose source of consideration in response to a notice under Section 8(1) of the Act disentitles the claimant to challenge attachment or supports confirmation of PAO.

ISSUE-WISE DETAILED ANALYSIS

Issue 1: Validity of confirmation of PAO treating immovable properties as proceeds of crime

Legal framework: The Adjudicating Authority may confirm provisional attachment where property is shown to be proceeds of crime or of equivalent value; attachment may follow investigation under the Act where predicate offences and laundering are alleged.

Precedent Treatment: The Tribunal considered standard principles of the Act (definition of proceeds, attachment for equivalent value) as applied by the Adjudicating Authority; no contrary precedent was invoked or overruled in the text.

Interpretation and reasoning: The Tribunal assessed the investigation material (ECIR, statements, charge-sheet and admitted facts) showing large-scale fraudulent loan sanctioning and siphoning of bank funds. The investigation linked specified loans and transfers to firms/partners controlled by the accused and showed amounts transferred to entities associated with the appellants. The Tribunal found that the appellants (notably those who had arranged land and entities receiving funds) were implicated sufficiently to justify attachment. The Tribunal emphasized that where proceeds of crime in cash/other forms are not available in the hands of the person, properties of equivalent value can be attached.

Ratio vs. Obiter: Ratio - confirmation of PAO justified where investigation and statements link person to receipt/possession of proceeds and equivalent-value attachment is permissible when proceeds are not available. Obiter - factual observations about conduct of specific co-accused and bank officers beyond what was strictly necessary to the legal conclusion.

Conclusions: The Tribunal upheld the Adjudicating Authority's confirmation of PAO as lawful on the basis of the material showing involvement of the appellants in laundering and receipt/possession of proceeds of crime.

Issue 2: Correctness of valuation of attached immovable properties

Legal framework: "Value" for attachment under the Act is determined in accordance with the statutory definition (valuation linked to consideration/price paid as per section defining "value").

Precedent Treatment: The Tribunal applied the statutory definition of "value" under the Act to determine valuation for attachment; no contrary authority was relied upon.

Interpretation and reasoning: The appellants challenged valuation (claimed market value higher than value adopted). The Tribunal held that valuation was to be determined based on the amount of consideration on which property was purchased in view of the statutory definition of "value." The appellant's own written arguments admitted proceeds received and disputed only higher market valuation; the Tribunal treated the admitted amounts and record as determinative for the purpose of attachment valuation.

Ratio vs. Obiter: Ratio - valuation for attachment is to be determined by the statutory meaning of "value" (consideration), not by a broader asserted market valuation; admissions in pleadings/written arguments are material to valuation assessment. Obiter - commentary on other orders (bank account freezes, gold loan) not part of the present challenge.

Conclusions: The Tribunal found no fault with the Adjudicating Authority's valuation method and upheld the adopted valuation for attachment purposes.

Issue 3: Reliance on statements under Section 50(2) and other investigative material to establish possession/receipt of proceeds of crime

Legal framework: Investigative statements and admissions made under the Act, together with transaction records and other documents, form part of material to infer involvement in money-laundering and possession/receipt of proceeds.

Precedent Treatment: The Tribunal accepted the probative value of statements made under Section 50(2) as part of the investigative matrix corroborating transactions and conspiracy, without treating them as sole determinative evidence.

Interpretation and reasoning: The Tribunal reviewed multiple co-accused statements, banking transaction records, charge-sheet facts and admitted portions of appellants' written arguments. It concluded that statements by various loanees and participants implicated the appellants in a scheme to obtain loans by misusing documents, arranging land in others' names, and transferring funds to firms associated with the appellants. Where the appellant had effectively admitted receipt of specified amounts in written submissions, those admissions further supported the finding of proceeds in their hands.

Ratio vs. Obiter: Ratio - statements under Section 50(2), when part of a larger framework of corroborative documentary/investigative material, can legitimately be relied upon to uphold an attachment. Obiter - observations critiquing attempts to expand appellate arguments beyond oral submissions.

Conclusions: The Tribunal held that reliance on these statements and the totality of material was sufficient to conclude involvement in money laundering and possession of proceeds of crime by the appellants whose properties were attached.

Issue 4: Claims of mis-identification, prior sale and registered title - whether attachment was erroneous

Legal framework: Attachment may be set aside if the attached property demonstrably belongs to third parties and is not proceeds of crime; claimants must show title and, where required, sources of consideration.

Precedent Treatment: The Tribunal required claimants asserting independent title or mis-identification to produce documentary proof and, where a notice under the Act was issued, to comply with disclosure obligations.

Interpretation and reasoning: The Tribunal examined claims of registered sale deeds and asserted prior purchases. It found that several claimants had admitted associations or had failed to substantiate independent sources of consideration. In at least one instance, the Tribunal found evidence of a deliberate transfer scheme to place property in others' names to avoid attachment. Where claimants failed to disclose sources in response to statutory notice, their title claims were weakened. The Tribunal treated isolated claims of mis-identification or subsequent registered sale as insufficient where the investigative material suggested the transfers were part of a device to conceal proceeds.

Ratio vs. Obiter: Ratio - bona fide third-party ownership and documentation can defeat attachment only when supported by credible documentary proof and disclosure of lawful source; mere registered deeds are insufficient if the transaction is shown to be a device to evade enforcement and the claimant cannot explain source of funds. Obiter - detailed factual findings about individual transfers.

Conclusions: The Tribunal rejected mis-identification and prior-title challenges where unsupported by source-disclosure or where transfers appeared to be part of a scheme to defeat attachment; such appeals failed.

Issue 5: Effect of failure to disclose source under Section 8(1) of the Act

Legal framework: A notice under Section 8(1) seeks disclosure of source of property acquisition; failure to disclose may be treated adversely in assessing whether property is proceeds of crime.

Precedent Treatment: The Tribunal applied the statutory scheme that places an onus on those claiming the property to show legitimate source when required by notice.

Interpretation and reasoning: Where a claimant failed to satisfactorily disclose source of consideration for acquisition (notably the claimant who relied on a registered sale deed but failed to explain how he could furnish consideration), Tribunal treated non-disclosure as material against the claimant. The Tribunal noted that the notice serves to elicit proof of legitimate acquisition; absence of such proof supported the inference that the transfer was to save property from attachment.

Ratio vs. Obiter: Ratio - failure to disclose source in response to a statutory notice is a valid ground for denying relief from attachment and supports confirmation of PAO. Obiter - factual inferences about the claimant's means and the timing of transfers.

Conclusions: The Tribunal held that non-disclosure under Section 8(1) fatally undermined the appellant's challenge and justified continuation of the attachment.

Overall Conclusion

The Tribunal concluded that the Adjudicating Authority rightly confirmed the PAO: investigative material, admissions and statements sufficiently linked the appellants to receipt/possession of proceeds of crime; valuation for attachment was in accordance with the statutory definition; claims of mis-identification or prior title failed for want of corroborative proof and source-disclosure; and failure to comply with statutory disclosure obligations further supported confirmation. All appeals were dismissed.

Issues: (i) Whether the attachment of the appellant's property was sustainable on the ground that the loan funds were diverted and formed part of the proceeds of crime; (ii) Whether proceedings under the Prevention of Money Laundering Act could be interdicted because insolvency proceedings and moratorium were stated to be pending.

Issue (i): Whether the attachment of the appellant's property was sustainable on the ground that the loan funds were diverted and formed part of the proceeds of crime.

Analysis: The appellant's own pleadings showed sanction and disbursement of the loan in the relevant period, including disbursement on 24.09.2018, and the record disclosed further diversion of the borrowed amount for purposes other than the sanctioned project. The transfer of funds to another entity, the admitted utilisation of part of the amount for unrelated repayment, and the surrounding circumstances supported the finding that the money was diverted and that the attached shares represented value equivalent to the tainted funds. The challenge based on a later factual narrative was found inconsistent with the pleadings and record.

Conclusion: The attachment was held to be justified and the appellant's challenge on this issue failed.

Issue (ii): Whether proceedings under the Prevention of Money Laundering Act could be interdicted because insolvency proceedings and moratorium were stated to be pending.

Analysis: The mere initiation of insolvency proceedings or the existence of a moratorium was held not to bar action under the Prevention of Money Laundering Act where the object was to protect the proceeds of crime. The Tribunal treated the anti-money laundering statute as operating in its own sphere and held that, absent approval of a resolution plan or other final insolvency consequence affecting the property, attachment proceedings could continue.

Conclusion: The insolvency-based objection was rejected and did not prevent the impugned attachment.

Final Conclusion: The appeal did not succeed because the Tribunal affirmed the finding that the property was liable to attachment as proceeds of crime and that insolvency proceedings did not oust the enforcement action under the money-laundering .

Ratio Decidendi: Where the record supports diversion of tainted funds, property traceable to or representing those funds may be attached under the prevention of money laundering framework, and pending insolvency proceedings or moratorium do not by themselves bar such action.

ISSUES PRESENTED AND CONSIDERED

1. Whether a property acquired prior to or during the period of commission of scheduled offences can be treated as "proceeds of crime" within the meaning of Section 2(1)(u) of the Prevention of Money Laundering Act, 2002 and therefore be subject to provisional attachment (including attachment by value when actual tainted property is not traceable).

2. Whether, in circumstances where the actual proceeds of crime have "vanished" or are not traceable, attachment of untainted property of equivalent value (including property acquired prior to commission of the scheduled offence) is permissible under the second limb of the definition of "proceeds of crime".

ISSUE-WISE DETAILED ANALYSIS

Issue 1: Scope of "proceeds of crime" - whether property acquired prior to or during commission of scheduled offences falls within Section 2(1)(u)

Legal framework: Section 2(1)(u) defines "proceeds of crime" in three parts: (i) property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence; (ii) the value of any such property; and (iii) where such property is taken or held outside the country, then the property equivalent in value held within the country or abroad. The Explanation further clarifies inclusion of property directly or indirectly derived or obtained as a result of criminal activity.

Precedent treatment: The Tribunal analyzed a three-Judge apex decision which construed the definition expansively, particularly para treating the second limb as extending to value-equivalent property even where proceeds are not traceable. The Tribunal contrasted High Court decisions that read the definition narrowly (treating only tainted property) and upheld the Delhi High Court's decision characterizing three categories: tainted property, and two categories of "untainted" or "deemed tainted" property attachable as equivalent in value, subject to safeguards.

Interpretation and reasoning: The Tribunal held that the definition must be read in three limbs; to ignore the middle limb ("the value of any such property") would render it redundant and frustrate the legislative purpose of preventing dissipation of proceeds and protecting victims. The second limb permits attachment of untainted property of equivalent value when tainted property is not available, vanished or siphoned off. The Tribunal relied on the purposive interpretation to prevent circumvention by immediate dissipation of proceeds post-offence, and on precedent that requires an assessment (even tentative) of the wrongful gain before confirming attachment of untainted property. The Tribunal rejected narrower readings that would restrict attachment to only property directly traceable to the crime.

Ratio vs. Obiter: Ratio - the three-limb interpretation of Section 2(1)(u) is substantive: (a) first limb covers property obtained directly/indirectly from criminal activity; (b) second limb permits attachment of property equivalent in value where actual tainted property is not available; (c) the second limb is not confined to cases where property is outside India. Observations distinguishing certain High Court decisions and emphasizing the purposive impact of the second limb are ratio in support of this construction. Obiter - commentary on strategic misuse by accused and some comparative remarks about third-party bona fides as discussed in other decisions are ancillary.

Conclusion: Property acquired during the currency of the scheduled offence can fall within the first limb as directly/indirectly derived from criminal activity; property acquired prior to the scheduled offence may nevertheless be attachable under the second limb as "value of any such property" if the tainted proceeds are not available or have been siphoned off, subject to statutory safeguards and an assessment of illicit gain.

Issue 2: Permissibility and safeguards for attaching untainted property of equivalent value when proceeds are not traceable

Legal framework: Attachment powers under the Act operate only in respect of "proceeds of crime" as defined; the second and third limbs permit proceeding against untainted or equivalent-value property where tainted property cannot be traced. The Tribunal referred to the requirement of some assessment of the value of wrongful gain and established safeguards for third parties as articulated in precedent.

Precedent treatment: The Tribunal relied on authoritative decisions (including a three-Judge apex ruling and detailed High Court analyses) that (i) recognized the "deemed tainted" or "alternative attachable" categories, (ii) insisted on an assessment of illicit gain before confirming attachment of untainted property, and (iii) preserved bona fide third-party interests acquired for valid consideration. It rejected High Court authorities that would nullify the second limb or confine its application to property held outside India.

Interpretation and reasoning: The Tribunal reasoned that where proceeds of crime have been quantified and found to be not traceable in the accused's possession, enforcement agencies may provisionally attach property of equivalent value to secure victim interests and statutory objectives. The Tribunal emphasized that attachment of equivalent-value property requires at least a tentative quantification of wrongful gain and that such attachment is a means to preserve the recovery potential pending trial. The Tribunal also noted that attachment of equivalent-value untainted property must respect established safeguards (assessment of illicit gain; protection of bona fide third-party rights), drawing on the analytical framework applied in prior decisions.

Ratio vs. Obiter: Ratio - confirmation that, consistent with Section 2(1)(u), attachment of untainted property of equivalent value is permissible when tainted proceeds are not available, provided there is an assessment of illicit gain and protection of third-party bona fides. Obiter - examples or hypotheticals about siphoning off proceeds and policy considerations, while persuasive, serve illustrative purposes rather than novel legal propositions.

Conclusion: Attachment of untainted property of equivalent value is permissible where the proceeds of crime are vanished or not traceable; such attachment must be predicated on an assessment (even if tentative) of the wrongful pecuniary gain and must observe safeguards for bona fide third-party interests.

Application to the present facts and final conclusion

Legal reasoning applied: The Tribunal found the period of commission of scheduled offences undisputed and that proceeds had been quantified with the appellant alleged to have received a specified sum which was not available (vanished). The flat attached was purchased during the currency of the offences and thus could be captured by the first limb; even if argued otherwise, the second limb would permit attachment by value where proceeds are not traceable.

Conclusion: The challenge that property acquired prior to commission of crime cannot be attached was rejected. On the facts (purchase during the period of offence and quantified vanished proceeds), provisional attachment of the property to the stated value was upheld and the appeal dismissed.

Issues: Whether, after approval of a resolution plan and change in control of the corporate debtor, a provisional attachment order passed under the money laundering law prior to such approval ceases to operate by virtue of Section 32A of the Insolvency and Bankruptcy Code, 2016.

Analysis: Section 32A was read as drawing a distinction between immunity from prosecution under sub-section (1) and the bar against action against the property of the corporate debtor under sub-section (2). The protection in sub-section (1) was held to operate only subject to the statutory conditions, including approval of the resolution plan and the absence of abetment or conspiracy by the incoming management. Sub-section (2) was understood to bar fresh action against the corporate debtor's property after approval of the resolution plan, but not to nullify a provisional attachment already passed before such approval. The statutory language was treated as clear, and it was held impermissible to rewrite the provision to retrospectively erase a valid pre-approval attachment order.

Conclusion: The challenge to the provisional attachment order and its confirmation was rejected. The prior attachment was held to remain unaffected, and Section 32A(2) was held not to invalidate it merely because the resolution plan was approved later.

1. ISSUES PRESENTED AND CONSIDERED

• Whether there existed 'reason to believe' for issuing the Show Cause Notice under Sections 5 and 8 of the Prevention of Money Laundering Act (PMLA), and whether absence of such reason vitiates the proceedings.
• Whether properties of appellants can be attached as proceeds of crime despite appellants not being accused in any predicate offence and absence of quantification of proceeds of crime.
• Whether properties acquired prior to the commencement of PMLA can be attached under the Act.
• Whether adjudication by a single judge bench of the Chairperson of the Adjudicating Authority violates Section 6(5)(a) & (b) of PMLA, rendering the proceedings coram non-judice.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (i): Existence and communication of 'reason to believe' under Sections 5 and 8 of PMLA

Legal Framework and Precedents: Section 5(1) of PMLA empowers provisional attachment of property if there is 'reason to believe' that it is proceeds of crime. Section 8(1) requires issuance of Show Cause Notice to the person whose property is attached. The Madras High Court held that Section 5 does not mandate communication of reasons before provisional attachment. The Bombay High Court emphasized that the authority must show substantial probable cause to believe the property is proceeds of crime at provisional attachment stage, with burden of proof shifting to the noticee under Section 24.

Court's Interpretation and Reasoning: The Tribunal found that reasons to believe were elaborately discussed in the Provisional Attachment Order and the impugned order. The allegations, FIRs, ECIR, statements under Section 50 PMLA, and numerous sale deeds raised strong presumption of money laundering. The Tribunal distinguished language of Sections 5(1) and 8(1), noting that Section 8(1) does not require reasons to be recorded in writing or communicated. The grounds stated in the Show Cause Notice based on the original complaint and relied material sufficed.

Key Evidence and Findings: Multiple FIRs against the main accused for heinous crimes, investigation reports, non-filing or limited filing of Income Tax Returns by family members, and acquisition of numerous high-value properties disproportionate to declared income.

Application of Law to Facts: The Tribunal applied the settled principles that the initial attachment requires only 'reason to believe' and not proof beyond reasonable doubt. The detailed documentation and investigation materials satisfied this threshold.

Treatment of Competing Arguments: The appellants' contention that reasons were not communicated and thus proceedings were vitiated was rejected based on statutory interpretation and judicial precedents.

Conclusion: No violation of Sections 5 and 8 of PMLA occurred; the Show Cause Notice and attachment order were validly issued.

Issue (ii): Attachment of properties of persons not accused in predicate offences and absence of quantification of proceeds of crime

Legal Framework and Precedents: The Supreme Court in Vijay Madanlal Choudhary clarified that Section 5(1) applies to any person involved in activities connected with proceeds of crime, not limited to accused in predicate offences. Burden lies on the person to prove legitimate sources under Section 24 PMLA.

Court's Interpretation and Reasoning: The Tribunal held that absence of the appellants' names as accused in predicate offences does not preclude attachment of their properties if involved in laundering proceeds of crime. The appellants failed to demonstrate legitimate income sources for acquisition of extensive properties.

Key Evidence and Findings: The main accused's family members filed limited or no income tax returns despite holding properties worth crores. Statements revealed involvement in illicit businesses and property transactions funded by illegal proceeds. The appellants admitted association with the main accused and involvement in property transactions funded by illicit income.

Application of Law to Facts: The Tribunal applied the principle that properties held by persons connected to proceeds of crime can be attached irrespective of their status as accused in predicate offences. The presumption of illicit origin of assets stood unrebutted.

Treatment of Competing Arguments: The appellants' argument that they were bonafide purchasers and not accused was rejected based on evidence and binding precedent.

Conclusion: Properties attached were rightly held to be proceeds of crime or acquired from such proceeds; attachment was valid.

Issue (iii): Attachment of properties acquired prior to the commencement of PMLA

Legal Framework and Precedents: The Supreme Court in Vijay Madanlal Choudhary held that the definition of 'proceeds of crime' includes property equivalent in value to proceeds of crime, even if original proceeds are not directly traceable or situated outside India. The legislative intent is to enable recovery of proceeds regardless of temporal acquisition.

Court's Interpretation and Reasoning: The Tribunal relied on the Supreme Court's interpretation that attachment of property equivalent in value is permissible when original proceeds are siphoned off or unavailable. The layering and diversion of proceeds to group companies justified attachment of properties acquired prior to PMLA.

Key Evidence and Findings: Evidence showed proceeds were diverted and layered through various entities; properties held were of equivalent value to proceeds of crime.

Application of Law to Facts: The Tribunal applied the broad definition of proceeds of crime to uphold attachment of properties irrespective of acquisition date.

Treatment of Competing Arguments: The appellants' contention that pre-PMLA acquisitions cannot be attached was rejected as contrary to legislative intent and Supreme Court authority.

Conclusion: Attachment of properties acquired prior to PMLA's commencement is valid if they represent proceeds of crime or equivalent value.

Issue (iv): Validity of single judge bench of Chairperson of Adjudicating Authority under Section 6(5)(a) & (b) of PMLA

Legal Framework and Precedents: Section 6(5)(a) & (b) of PMLA contemplates adjudication by a bench comprising Chairperson and one or two members. Section 6(7) allows transfer to a two-member bench depending on case peculiarity.

Court's Interpretation and Reasoning: The Tribunal held that the statutory scheme does not mandate a two-member bench in every case. The Chairperson alone can decide matters unless the nature of the case necessitates a larger bench. The impugned order by the Chairperson sitting singly was therefore not coram non-judice.

Key Evidence and Findings: No procedural irregularity or statutory violation was found in constitution of the bench.

Application of Law to Facts: The Tribunal interpreted the legislative intent as flexible, allowing single-member adjudication unless complexity demands otherwise.

Treatment of Competing Arguments: The appellants' claim of violation of Section 6(5) was rejected as an erroneous interpretation of the provision.

Conclusion: The single judge bench adjudication was valid and did not vitiate the proceedings.

ISSUES PRESENTED AND CONSIDERED

1. Whether a monetary penalty under Section 13 (for contraventions of Chapter) can be imposed for each individual transaction/instance of non-furnishing or delayed furnishing of information under Section 12 read with Rule 8 of the Prevention of Money Laundering (Maintenance of Records) Rules, 2005, or must be limited to a penalty per reporting month.

2. The legal effect and scope of the phrase "for each failure" in Section 13 read with Rule 8(4) - whether "each failure" refers to each transaction, each monthly report, or each day of delay.

3. Whether mens rea (deliberate, contumacious or dishonest conduct) is a necessary element before imposing civil penalties under the Act and Rules, and the extent to which judicial discretion permits withholding penalty despite established contraventions.

4. Whether penalty under Section 12A (for non-furnishing of information called for by FIU/authorities) was rightly imposed where the respondent produced a reply/return (letter dated 26.12.2018) asserting no detection of counterfeit notes for specified years.

ISSUE-WISE DETAILED ANALYSIS

Issue 1 - Penalty per transaction vs. per monthly report

Legal framework: Section 12(1)(b) imposes duty on reporting entities to furnish prescribed information to the Director (FIU). Rule 3 lists transaction categories to be maintained; Rule 8(1) requires furnishing information "every month ... by the 15th day of the succeeding month." Section 13(2)(d) empowers the Director to impose monetary penalty "not less than ten thousand rupees but may extend to one lakh rupees for each failure."

Precedent treatment: The Tribunal relied on its prior order (Noida Commercial Co-operative Bank Ltd.) and surveyed appellate authority holdings distinguishing criminal/quasi-criminal penalty principles (Hindustan Steel) from civil regulatory penalties (SEBI precedents) to conclude civil liability is attracted on proof of contravention.

Interpretation and reasoning: The Tribunal construed "each failure" in Section 13 as capable of referring to failure to furnish information in respect of each transaction falling within Rule 3 categories. It read Rule 8(4) as clarifying that a delay of each day or each day in rectifying a mis-reported transaction constitutes a separate violation, thereby supporting a granular approach to counting failures. The Tribunal emphasized that Rule 7(3) and Rule 8(1) together impose an ongoing duty to detect and report specified transactions, and where the record shows non-reporting of 54 FICN/CCR instances, those constitute discrete failures attracting penalty per instance.

Ratio vs. Obiter: Ratio - Where a reporting entity fails to furnish information in respect of discrete transactions specified under Rule 3, each such non-furnished transaction may constitute a separate "failure" for imposition of penalty under Section 13 read with Rule 8(4). Obiter - Discussion distinguishing Hindustan Steel and analogous authority on mens rea provides context but is not the sole legal basis for this specific construction.

Conclusion: Penalty was lawfully imposed for each of the 54 non-reported forged/counterfeit currency transactions at the statutory minimum per failure; imposition of Rs. 5,40,000 (54 × Rs. 10,000) was not illegal on the ground urged.

Issue 2 - Meaning and application of "each failure" and Rule 8(4)

Legal framework: Section 13(2)(d) (penalty "for each failure") and Rule 8(4) (delay of each day or delay in rectifying mis-reported transaction constitutes separate violation).

Precedent treatment: The Tribunal relied on its prior consideration which interpreted "each failure" in light of Rule 8(4) to permit counting failures at the transactional level and to treat defective reporting as non-reporting.

Interpretation and reasoning: The Tribunal reasoned that Rule 8(4) demonstrates legislative intent to treat delays and rectification failures cumulatively and individually. The term "transaction" (Rule 2(h)) is broad - includes deposit, withdrawal, exchange or transfer - and thus each transaction falling under Rule 3 can be the subject of an independent reporting obligation. The Tribunal rejected the appellant's contention that only a per-month penalty could be imposed, observing that multiple reportable transactions across different months may each represent a separate failure.

Ratio vs. Obiter: Ratio - Reading Section 13 together with Rule 8(4) permits imposition of penalty calibrated to each reportable transaction or each day's default as appropriate; defective electronic filing that results in rejection equates to non-compliance for counting failures. Obiter - Comment that counting each day's delay could produce larger penalties (and the impugned penalty was comparatively moderate) is explanatory.

Conclusion: The Tribunal's construction gives effect to Rule 8(4); counting 54 separate non-reported transactions for penalty purposes complies with statutory scheme.

Issue 3 - Requirement of mens rea and judicial discretion to withhold penalty

Legal framework: Section 13 confers authority to impose penalties; no express mens rea requirement is present in Sections 12, 12A or 13 or in the Rules for civil penalties. Authorities dealing with civil/regulatory penalties (SEBI jurisprudence) hold mens rea unnecessary where statute imposes strict reporting obligations.

Precedent treatment: The Tribunal reviewed Hindustan Steel (criminal/quasi-criminal context requiring consideration of mens rea) and subsequent SEBI-related precedents that decline a mens rea requirement for civil regulatory penalties. The Tribunal followed the latter line, distinguishing Hindustan Steel as inapposite.

Interpretation and reasoning: The Tribunal held that penalties under the PMLA framework are civil in nature and attracted upon establishment of contravention; the subjective intention of the reporting entity is irrelevant unless statute requires mens rea. While statutory discretion exists, it must be exercised judicially; when contraventions are established and represent systemic or continuous non-compliance, imposition of penalty is appropriate and not to be lightly replaced by mere warnings.

Ratio vs. Obiter: Ratio - In the absence of an express mens rea requirement, civil penalties under the Act and Rules follow proof of contravention; discretion not to impose penalty is to be exercised only after weighing relevant circumstances and cannot be routine relief to persistently non-complying entities. Obiter - Observations on the undesirable consequence of treating venial or technical breaches the same as systemic non-compliance clarify proportionality concerns.

Conclusion: Mens rea is not required for imposing penalties under the Act and Rules; given continuous contraventions and delayed corrective action, imposition of penalty was not disproportionate or outside discretionary bounds.

Issue 4 - Penalty under Section 12A where a response/return was filed

Legal framework: Section 12A requires furnishing information called for by FIU/authorities; failure attracts penalty under Section 13. Procedural fairness requires the adjudicating authority to consider documentary replies demonstrating compliance.

Precedent treatment: No separate precedent was necessary; the Tribunal applied record review and statutory fairness principles.

Interpretation and reasoning: The record contained the appellant's letter dated 26.12.2018 replying to the FIU letter of 31.10.2018 and asserting no counterfeit currency detected for specified years. The Tribunal found that the Director overlooked this on-record response when imposing two penalties of Rs. 1,00,000 each under Section 12A. Where documentary proof of the specific response exists and is on record, the finding of contravention under Section 12A cannot be sustained.

Ratio vs. Obiter: Ratio - Penalty under Section 12A cannot be sustained where the reporting entity produces on record the information specifically called for and the adjudicator erroneously ignores such documentary compliance. Obiter - None.

Conclusion: The penalties imposed under Section 12A were vacated because the required information had been furnished and was on record; the impugned order was modified to set aside that portion of the penalty while upholding penalties for the proven transaction-level non-reporting.

ISSUES PRESENTED AND CONSIDERED

1. Whether retention of frozen bank accounts under the Prevention of Money Laundering Act, 2002 is justified where the noticee is alleged to be a recipient of proceeds of crime routed through related corporate entities and fails to satisfactorily disclose sources under Section 8(1) of the Act.

2. Whether mere receipt of commission or being on payroll, without further incriminating material, is sufficient to sustain freezing/retention of bank accounts as proceeds of crime pending trial.

3. Whether the existence of an alleged Ponzi / money-circulation / fraudulent MLM scheme and demonstrated money trails between entities (including sham purchases and routing to family-controlled concerns) justify retention of bank accounts of persons and firms found to be common links or ultimate beneficiaries.

ISSUE-WISE DETAILED ANALYSIS

Issue 1 - Legal framework for retention of frozen bank accounts under the Act of 2002

Legal framework: The Act empowers search and seizure under Section 17(1) and permits issuance of notices under Section 8(1) requiring disclosure of source of acquisition of property; retention of frozen assets is permissible where proceeds of crime are shown or reasonable grounds exist to believe the assets are proceeds of crime.

Precedent treatment: The judgment does not expressly cite or apply external precedents; the Court proceeded on the statutory scheme and facts of investigation.

Interpretation and reasoning: The Tribunal examined the investigative findings - FIRs, ECIR, search results, bank trails and inter-company transfers - and treated compliance (or lack thereof) with Section 8(1) disclosures as central. Failure to satisfactorily disclose source of funds when formally noticed permitted the inference that funds are tainted. Corroboratory material (ITR analysis showing commission income rather than product sales, recovered incriminating material at premises, routing of funds through related companies and family members, sham purchases) reinforced the statutory grounds for retention.

Ratio vs. Obiter: Ratio - Where formal notice under Section 8(1) is served and the noticee fails to disclose satisfactory sources for funds appearing in bank accounts, and investigative material shows money-trail linking the accounts to proceeds of an alleged scheduled offence, retention of frozen bank accounts is justified pending trial. (This is applied as the operative rule.)

Conclusion: Retention of the frozen bank accounts was justified on statutory grounds given the investigative findings and the appellants' failure to disclose legitimate sources under Section 8(1).

Issue 2 - Sufficiency of receipt of commission or payroll status as a basis for retention

Legal framework: The Act targets proceeds of crime; mere receipt of income is not ipso facto proceeds of crime unless linkage to predicate offence or money-laundering transaction is established. However, statutory notice and investigation can establish such linkage.

Precedent treatment: No precedent was invoked or distinguished in the text; assessment proceeded on evidence of linkage between payments and the alleged criminal scheme.

Interpretation and reasoning: The Tribunal rejected the contention that being paid commission or being on a payroll alone precludes retention. It relied on corroborative documentary evidence (ITR showing income classified as commission, pattern of payments totaling significant sums, routing through accused companies, and apparent benami / family-controlled entities) and material recovered in search. The Court treated the appellants' receipt of large commissions, when combined with other incriminating facts and their failure to explain sources, as sufficient to establish reasonable grounds to treat the account balances as proceeds of crime for retention purposes.

Ratio vs. Obiter: Ratio - Receipt of commission or payroll remuneration, when contextualized by money trails, sham transactions, recovery of incriminating material and inability/unwillingness to explain sources after notice under Section 8(1), can constitute sufficient basis to retain frozen bank accounts as proceeds of crime pending trial. (Not an absolute rule; fact-dependent application.)

Conclusion: The fact of commission/payroll alone did not protect the accounts; the cumulative evidence and non-disclosure justified retention.

Issue 3 - Effect of demonstrated modus operandi, sham purchases and inter-company routing on treatment of bank accounts

Legal framework: Proceeds of scheduled offences include property derived from criminal activity; tracing and forensic accounting that demonstrate routing of illicit funds through front companies or sham transactions form the evidentiary basis for freezing/retention under the Act.

Precedent treatment: No prior authority was relied upon; the Court applied statutory principles to the investigative record.

Interpretation and reasoning: The Tribunal relied on the recorded modus operandi: creation of hype, misrepresentation, sham product purchases, creation and misuse of user credentials, fictitious deliveries and 30-day refund misrepresentations; forensic findings (Regional MCA inspection reporting Ponzi operations and scale of fraud); routing of funds from the primary accused company to the appellants' corporate and personal accounts (including transfers through companies and family members); and usage of the appellants' entities as conduits. The presence of these interconnected elements, together with recovered incriminating material and ITR inconsistencies, supported the inference that the appellants' accounts contained proceeds of the alleged money-circulation scheme and were subject to retention pending adjudication/trial.

Ratio vs. Obiter: Ratio - Where investigation demonstrates a coherent modus operandi and traceable flows of funds from an alleged money-circulation/Ponzi scheme into accounts of related persons or family-controlled entities (including sham purchases and fictitious invoicing), such accounts may be lawfully retained as containing proceeds of crime until trial resolves the allegations. (Fact-driven legal conclusion.)

Conclusion: The demonstrated modus operandi and money-trail furnished sufficient justification for retention of the frozen bank accounts; the Tribunal found no merit in the appellants' contention that the accounts were merely recipients of legitimate commission.

Cross-reference and cumulative assessment

All three issues converge on a common factual and legal axis: statutory notice under Section 8(1), investigatory findings demonstrating routing of funds from the primary accused entity into the appellants' accounts via sham transactions and family-controlled conduits, recovery of incriminating material and failure to explain sources. The Tribunal treated these elements cumulatively to uphold retention of the frozen accounts; each element reinforced the others and the collective weight satisfied the statutory threshold for retention pending trial.

Disposition

Given the foregoing reasoning and conclusions, the appeals challenging retention of the frozen bank accounts were dismissed for lack of merit.

Issues: (i) Whether the appellant company is an independent company and has no link/connection with M/s Biotor Industries Ltd. and its directors; (ii) Whether the properties held by the appellant (sr. nos. 9 & 11) purchased prior to the alleged fraud cannot be attached as proceeds of crime or as equivalent value; (iii) Whether the conditions for provisional attachment under Section 5(1) of the PMLA, 2002 (including reason to believe and risk of concealment/alienation) were satisfied.

Issue (i): Whether the appellant company is an independent company and has no link/connection with M/s Biotor Industries Ltd. and its directors.

Analysis: The record shows the same individuals were directors of the appellant and M/s Biotor Industries Ltd. up to and during the period when proceeds of crime were generated; subsequent resignations and share transfers to relatives were found to be unexplained and consistent with a strategy to shield liabilities. The appellants did not establish receipt of consideration for share transfers or other facts sufficient to rebut the connection with the alleged criminality.

Conclusion: In favour of Respondent.

Issue (ii): Whether properties acquired prior to the alleged offence period (sr. nos. 9 & 11) are immune from attachment or may be attached as equivalent value.

Analysis: The definition of "proceeds of crime" includes the value of any such property and permits attachment of property of equivalent value where the actual tainted property cannot be traced. Authorities and prior decisions were applied to conclude that when proceeds have been siphoned off and cannot be located, properties of equivalent value may be attached subject to statutory safeguards. The attached properties' aggregate value was found to be less than the identified proceeds of crime; tracing the actual tainted property was not possible.

Conclusion: In favour of Respondent.

Issue (iii): Whether the conditions of Section 5(1) PMLA (reason to believe and likelihood of concealment/transfer) for provisional attachment were met.

Analysis: Multiple FIRs, charge sheets and investigative material showed large-scale fraud and generation of proceeds of crime. Evidence of attempted disposal/public notice for the appellant's property and the pattern of transfers supported a recorded reason to believe and risk of alienation. The statutory proviso permitting immediate attachment where non-attachment would frustrate proceedings was held to be engaged on the material placed on record.

Conclusion: In favour of Respondent.

Final Conclusion: The appeal is dismissed and the provisional attachments confirmed; the decision upholds the Directorate's attachment of the subject properties as authorized under the Prevention of Money Laundering Act, 2002.

Ratio Decidendi: Where proceeds of crime cannot be traced because they have been siphoned off or layered, property of equivalent value may be provisionally attached under Sections 2(1)(u) and 5(1) of the Prevention of Money Laundering Act, 2002, provided there is a recorded reason to believe and material demonstrating risk of concealment or transfer.

Issues: (i) Whether certain movable and immovable properties (including fixed deposit receipts) are proceeds of crime or property of equivalent value and therefore liable to confirmation of provisional attachment under the Prevention of Money Laundering Act, 2002; (ii) Whether failure to serve the notice required by the second proviso to Section 8(1) of the Prevention of Money Laundering Act, 2002 vitiates confirmation of the provisional attachment; (iii) Whether acquittal of a person in the predicate/scheduled offence necessarily requires setting aside of attachment or precludes continuation of PMLA proceedings against related properties.

Issue (i): Whether the properties and FDRs impugned in the appeals are proceeds of crime or property equivalent in value and thus liable to attachment under PMLA.

Analysis: The Tribunal examined documentary evidence, ledger/diary entries seized by investigative agencies, statements under Section 50 of PMLA, patterns of cash payments and use of family/company structures to park assets. The Court applied the three-limbed definition of "proceeds of crime" in Section 2(1)(u) and precedent recognising: (a) tainted property directly/indirectly derived from scheduled offences; (b) property of equivalent value where proceeds are not traceable; and (c) the need to consider layering, use of third parties, and adequacy of explanations or lawful source documentation. The Tribunal weighed the presence of cash transactions, unexplained remittances/loans, diary corroboration and failures to explain the lawful source of funds. It also considered decisions clarifying safeguards for bona fide third-party interests and the need for tentative assessment of illicit gains where required.

Conclusion: In the appeals examined on these facts, the Tribunal held that the preponderance of evidence and lack of satisfactory lawful-source explanations justified confirmation of provisional attachments; those appeals are dismissed insofar as attachment confirmation is sustained.

Issue (ii): Whether the impugned confirmation of provisional attachment is vitiated for failure to serve the notice required by the provisos to Section 8(1) of PMLA on a person holding property on behalf of another or on all joint holders.

Analysis: The Tribunal reviewed the statutory requirement that where a notice specifies property as held by a person on behalf of another, a copy must be served on that other person, and where property is held jointly, notice must be served on all holders. The certified title documents and the show-cause record were examined to verify service. Where the Adjudicating Authority failed to serve the requisite notice on a joint owner/recorded owner, the statutory defect was found to be material.

Conclusion: The Tribunal allowed the appeal concerned and set aside the confirmation of provisional attachment for the property where the mandatory notice under the second proviso to Section 8(1) was not served.

Issue (iii): Whether acquittal in the predicate/scheduled offence automatically nullifies PMLA attachment or bars continuation of PMLA proceedings in relation to attached properties.

Analysis: The Tribunal analysed the effect of acquittal in the scheduled offence on PMLA proceedings, applying Section 2(1)(u) and binding authority that the definition contains three limbs including property of equivalent value. The Tribunal noted that PMLA proceedings may continue where the scheduled offence persists in law or where the accused remains implicated in laundering activities; acquittal of some accused in the scheduled offence does not ipso facto defeat attachment if PMLA proceedings remain justified on available material. The Tribunal also considered precedents delineating protections for bona fide third-party interests and the circumstance where attachment may be maintained pending PMLA adjudication despite acquittal in the predicate offence.

Conclusion: Acquittal in the scheduled offence does not automatically invalidate provisional attachment in PMLA proceedings; attachment may be sustained where the statutory tests and supporting material justify continuation of PMLA action.

Final Conclusion: On the applications of Section 2(1)(u), Section 3, Section 5(1) and Section 8(1) of the Prevention of Money Laundering Act, 2002 and the assessed evidentiary record, the Tribunal dismissed a majority of the appeals confirming provisional attachments while allowing the appeal in respect of a property where statutory notice requirements were not complied with; overall the batch of appeals is partly allowed and partly dismissed.

Ratio Decidendi: Where investigative material (including corroborative diary entries, statements and unexplained cash or remittance flows) fails to establish a lawful source for challenged assets, such assets may be treated as proceeds of crime or as property equivalent in value under Section 2(1)(u) of the Prevention of Money Laundering Act, 2002; conversely, procedural non-compliance with mandatory notice provisions of Section 8(1) vitiates confirmation of provisional attachment in respect of the affected property.

1. Whether the properties attached by the Enforcement Directorate (ED) under the Prevention of Money Laundering Act (PMLA), 2002, are proceeds of crime and liable for confiscation.

2. Whether the provisions of the Insolvency and Bankruptcy Code (IBC), 2016, override or prevail over the provisions of the PMLA, 2002, in respect of the attached properties of a company undergoing liquidation.

3. Whether the properties attached are already mortgaged to banks and thus not liable for attachment under PMLA due to absence of risk of concealment or transfer.

4. Whether the liquidator of a company under liquidation can seek release or auction of attached properties to satisfy the claims of secured and unsecured creditors.

5. Whether the Enforcement Directorate has sufficiently demonstrated, with evidence, that the attached assets are derived from proceeds of crime as defined under Section 2(1)(u) of the PMLA.

6. The applicability and effect of Section 71 of PMLA and Section 238 of IBC concerning conflicts between the two statutes.

Issue 1: Whether the attached properties are proceeds of crime under PMLA and liable for attachment

Relevant Legal Framework and Precedents:

- Section 2(1)(u) of the PMLA defines "proceeds of crime" as any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to scheduled offences.

- The PMLA empowers the ED to attach properties believed to be proceeds of crime pending adjudication.

Court's Interpretation and Reasoning:

- The investigation revealed that the accused persons, including directors and employees of the company, conspired to misappropriate substantial funds (over Rs. 338 crores) from various banks by creating bogus bills, invoices, and opening fictitious accounts (Village Level Aggregators - VLAs).

- The loans obtained on the basis of fabricated documents were diverted through circular transactions and misappropriated, constituting scheduled offences under PMLA.

- The ED identified 31 properties linked to the accused persons and attached them as value equivalent to the proceeds of crime.

Key Evidence and Findings:

- FIRs and charge sheets filed by CBI and other agencies established criminal conspiracy, cheating, forgery, and use of false documents to obtain loans fraudulently.

- Statements under Section 50 of PMLA and property valuations by registered government valuers corroborated the connection between the properties and the alleged proceeds of crime.

Application of Law to Facts:

- The properties, though some are in the names of group companies or individuals associated with the accused, are shown to have been acquired or financed through the proceeds of the fraudulent transactions.

- The properties' acquisition timelines, loan cycles, and financial transactions indicate their derivation from the criminal activity.

Treatment of Competing Arguments:

- The appellants contended the properties were acquired prior to the commission of scheduled offences and financed by legitimate bank loans, thus not proceeds of crime.

- The Court observed that the loans were obtained fraudulently by misrepresentations and bogus documentation, which taints the properties financed thereby.

Conclusions:

- The Court upheld the attachment of the properties under PMLA, finding sufficient evidence that the properties are proceeds of crime or value equivalent thereto.

Issue 2: Whether IBC provisions override PMLA provisions in respect of attached properties of a company under liquidation

Relevant Legal Framework and Precedents:

- Section 71 of PMLA states that its provisions shall have effect notwithstanding anything inconsistent in any other law.

- Section 238 of IBC similarly provides that its provisions shall have effect notwithstanding anything inconsistent in other laws.

- The Supreme Court in a recent decision in a related matter (Sterling Biotech Ltd.) held that a company sold in liquidation under IBC on a clean slate basis extinguishes prior claims.

Court's Interpretation and Reasoning:

- Both statutes contain non-obstante clauses asserting supremacy over other laws, creating a conflict without explicit saving clauses.

- The Court reasoned that in case of such conflict, the provisions of the later enacted statute (IBC, 2016) will prevail over the earlier (PMLA, 2002).

- The Court recognized the rights of secured creditors under IBC and the role of the liquidator in satisfying claims through asset realization.

Key Evidence and Findings:

- The company is under liquidation as per an order dated 31.12.2018.

- The properties attached under PMLA are also mortgaged to banks, secured creditors under IBC.

Application of Law to Facts:

- The Court permitted the liquidator to apply for auction of the attached properties under Section 8(7) of PMLA, with an undertaking to deposit excess proceeds in Fixed Deposit Receipts (FDR) pending conclusion of the PMLA trial.

- This approach balances the interests of secured creditors under IBC and the enforcement of PMLA proceedings.

Treatment of Competing Arguments:

- The appellants argued that IBC has overriding effect and PMLA attachment should yield to liquidation process.

- The ED contended PMLA is a special statute and its provisions prevail under Section 71.

- The Court reconciled the conflict by allowing auction under supervision, preserving rights of both parties.

Conclusions:

- The Court held that the liquidator may realize the value of attached properties to satisfy creditors under IBC, with safeguards for PMLA proceedings.

- The provisions of IBC and PMLA must be harmoniously construed, with the latter's attachment not impeding the liquidation process unduly.

Issue 3: Whether properties already mortgaged to banks can be attached under PMLA

Relevant Legal Framework and Precedents:

- Under PMLA, properties can be attached if they are proceeds of crime or value equivalent.

- SARFAESI Act provisions allow banks to take possession of mortgaged properties upon default.

Court's Interpretation and Reasoning:

- The appellants contended that since properties were mortgaged and taken possession of by banks prior to attachment, there was no risk of concealment or alienation.

- The Court noted the properties were mortgaged but acquired through proceeds of crime, thus liable for attachment under PMLA notwithstanding existing mortgages.

- The Court acknowledged the banks' status as victims of fraud and secured creditors but emphasized that attachment under PMLA is independent of mortgage status.

Key Evidence and Findings:

- Possession under SARFAESI Act was taken on 15.11.2011, prior to PMLA attachment in 2017.

- The loans on the properties were obtained fraudulently.

Application of Law to Facts:

- The Court held that mortgage does not preclude attachment under PMLA if the properties are proceeds of crime.

Treatment of Competing Arguments:

- The appellants argued for release of properties to satisfy secured creditors.

- The Court balanced this by allowing auction under supervision with proceeds deposited pending trial.

Conclusions:

- Mortgaged properties can be attached under PMLA if they are proceeds of crime, but realization of value for creditors is permissible under controlled conditions.

Issue 4: Whether the liquidator can seek release or auction of attached properties to satisfy creditor claims

Relevant Legal Framework and Precedents:

- IBC provides for liquidation and realization of assets to satisfy creditor claims.

- PMLA allows attachment pending adjudication but does not preclude disposal under supervision.

Court's Interpretation and Reasoning:

- The Court recognized the liquidator's role to realize assets for distribution among secured and unsecured creditors.

- To balance interests, the Court permitted the liquidator to apply under Section 8(7) of PMLA for auction of attached properties.

- Excess proceeds from auction are to be deposited in FDR with the ED, to be released after trial conclusion.

Key Evidence and Findings:

- The company is under liquidation and owes substantial amounts to banks and other creditors.

Application of Law to Facts:

- The Court's order facilitates creditor recovery while safeguarding the ED's interest in the PMLA proceedings.

Treatment of Competing Arguments:

- The appellants sought release of properties for liquidation.

- The ED sought to maintain attachment pending trial.

- The Court's solution accommodates both concerns.

Conclusions:

- The liquidator is authorized to seek auction of attached properties with conditions ensuring protection of PMLA claims.

Issue 5: Whether ED demonstrated with evidence that attached assets are proceeds of crime

Relevant Legal Framework and Precedents:

- PMLA requires identification of proceeds of crime based on investigation and evidence.

Court's Interpretation and Reasoning:

- The ED produced FIRs, charge sheets, statements, and property valuations linking the properties to the fraudulent loan transactions.

- The chain of transactions, bogus bills, and misuse of authority by company officials established the criminal origin of funds used to acquire properties.

Key Evidence and Findings:

- Multiple FIRs and charge sheets by CBI and other agencies.

- Statements under Section 50 of PMLA.

- Valuation reports of properties in question.

Application of Law to Facts:

- The Court found the evidence sufficient to establish that the properties are proceeds of crime or value equivalent.

Treatment of Competing Arguments:

- The appellants challenged the sufficiency of evidence and contended properties were acquired legitimately.

- The Court found the ED's evidence credible and persuasive.

Conclusions:

- The attachment of properties under PMLA was justified based on the evidence presented.

Issue 6: Interpretation of Section 71 of PMLA and Section 238 of IBC concerning conflicts between statutes

Relevant Legal Framework and Precedents:

- Section 71 of PMLA states its provisions prevail notwithstanding inconsistencies with other laws.

- Section 238 of IBC similarly provides its provisions prevail notwithstanding inconsistencies with other laws.

- Absence of saving clauses creates a legal conflict.

Court's Interpretation and Reasoning:

- The Court noted that both statutes contain non-obstante clauses asserting supremacy, but neither contains an express saving clause for the other.

- The Court applied the principle that in case of conflict between two statutes with identical non-obstante clauses and no saving provisions, the later enacted statute prevails.

- IBC, being enacted in 2016, is later than PMLA, enacted in 2002.

Key Evidence and Findings:

- Supreme Court's recent decision in Sterling Biotech Ltd. case supports the primacy of IBC in liquidation matters.

Application of Law to Facts:

- The Court reconciled the conflict by allowing liquidation processes under IBC to proceed with safeguards to protect PMLA interests.

Treatment of Competing Arguments:

- The ED relied on Section 71 of PMLA to assert its primacy.

- The appellants relied on Section 238 of IBC for overriding effect.

- The Court balanced both by recognizing the later enactment and practical necessity to satisfy creditors.

Conclusions:

- The provisions of IBC prevail over PMLA in respect of liquidation and realization of assets, subject to protection of PMLA claims through judicial supervision.

ISSUES PRESENTED AND CONSIDERED

1. Whether a Provisional Attachment Order (PAO) confirmed under Section 8(3)(a) of the Prevention of Money Laundering Act, 2002 ("the Act") continues beyond 365 days where investigation is not completed within that period.

2. Whether the pendency of "proceedings relating to any offence under this Act before a court" (the second limb of Section 8(3)(a)) is triggered by (a) sending a copy of the ECIR to the Special Court, (b) filing of a bail application, or (c) only by filing of a Prosecution Complaint and cognizance by the Court.

3. Whether the period of an interim order passed by a higher court restraining "coercive action" is to be excluded from computation of the 365-day investigation period under the Explanation to Section 8(3)(a), and, relatedly, whether an interim order that does not clearly restrain filing of a Prosecution Complaint can justify filing the complaint beyond 365 days without causing lapse of the PAO.

ISSUE-WISE DETAILED ANALYSIS

Issue 1 - Continuation of PAO where investigation not completed within 365 days

Legal framework: Section 8(3)(a) provides that, where the Adjudicating Authority confirms attachment, such attachment shall continue during investigation for a period not exceeding 365 days or the pendency of proceedings relating to any offence under the Act before a court; an Explanation permits exclusion of any period during which investigation is stayed by a court.

Interpretation and reasoning: The Tribunal reads the two temporal alternatives conjunctively as intended by the legislature: if the Adjudicating Authority confirms attachment, continuation beyond confirmation requires either completion of investigation within 365 days or the existence of pendency of court proceedings. The 365-day limit is a substantive legislative condition for continuation of attachment absent genuine pendency of prosecutorial proceedings; allowing extension without either would frustrate legislative purpose.

Precedent Treatment: The Tribunal considered an interim order of the apex court in a separate matter but treated it as a factual proposition for exclusion only if it restrains investigation; no precedent was followed, distinguished or overruled on the interpretive point.

Ratio vs. Obiter: Ratio - PAO cannot continue beyond 365 days where investigation is not completed and no qualifying court proceedings are pending on the 365th day. Obiter - discussion of prosecutorial conduct where complaint filed after 365 days under facts of this case.

Conclusion: Where investigation was not completed within 365 days and no qualifying court proceedings were pending on the 365th day, the confirmed PAO ceases to operate on expiry of the 365-day period.

Issue 2 - What constitutes "pendency of the proceedings relating to any offence under this Act before a court"

Legal framework: The operative phrase in Section 8(3)(a) and related provisions in Section 44 dealing with cognizance by Special Court and the initiation of proceedings (complaint, cognizance, and subsequent treatment) inform when court proceedings are to be regarded as pending.

Interpretation and reasoning: The Tribunal rejects the respondent's expansive construction that pendency is triggered by sending a copy of the ECIR to the Court or by filing a bail application. The Tribunal holds that "proceedings" for the purpose of Section 8(3)(a) commence with filing of a Prosecution Complaint and taking of cognizance by the competent court; prior actions (sending ECIR, bail applications) do not, by themselves, amount to pendency of proceedings because no court material or complaint resides with the Court until the complaint is filed. Reliance is placed on Section 44 which contemplates cognizance on complaint by the authorized authority and describes the complaint as initiating the court's jurisdiction under the Act.

Precedent Treatment: The Tribunal relies on statutory scheme rather than case law; prior practice or submissions suggesting bail filings or ECIR transmission create pendency are expressly rejected as frustrating the statutory 365-day safeguard.

Ratio vs. Obiter: Ratio - Pendency of proceedings under Section 8(3)(a) means pendency following filing of a Prosecution Complaint and cognizance; mere transmission of ECIR or filing of bail application is insufficient. Obiter - practical observations on case diaries and routine court practice in bail applications.

Conclusion: For continuance of attachment beyond 365 days, there must be pendency of court proceedings arising from a filed Prosecution Complaint and cognizance; incidental filings or transmissions do not satisfy Section 8(3)(a).

Issue 3 - Exclusion of period of interim order and filing of Prosecution Complaint during such interim order

Legal framework: Explanation to Section 8(3)(a) excludes from computation any period during which the investigation is stayed by any court under any law; separate principles govern interpretation of interim orders restraining "coercive action."

Interpretation and reasoning: The Tribunal emphasizes that exclusion under the Explanation applies only where there is a court-ordered stay of investigation. An interim order restraining "coercive action" must, on its face or by necessary implication, restrain the filing of the Prosecution Complaint or investigation steps for exclusion to apply. Where a prosecuting authority files a Prosecution Complaint during the currency of an interim order that is said to restrain coercive action, and there is no discernible prohibition on filing the complaint, the fact of filing indicates either that the interim order did not restrain filing or that the authority treated it as not restricting such filing; consequently, the Explanation cannot be invoked to exclude the interim period from the 365-day computation in such circumstances.

Precedent Treatment: The Tribunal considered the text of the apex court's interim order in the related matter and analyzed its scope factually; no controlling precedent altered the statutory interpretation.

Ratio vs. Obiter: Ratio - Period of interim order is excluded from the 365-day computation only if the court order actually stays the investigation (or otherwise restrains the prosecutorial step whose delay is sought to be excused); mere existence of an interim order restraining unspecified "coercive action" does not automatically suspend the 365-day clock unless it clearly affects filing of the Prosecution Complaint. Obiter - observations on prosecutorial knowledge and conduct where complaint is filed during alleged restraint.

Conclusion: The Explanation applies only where investigation is stayed by court order; if a Prosecution Complaint is filed during an interim order that does not in substance or effect stay the investigation or bar filing, the interim period cannot be excluded and the PAO may lapse if 365 days elapse with no qualifying pendency.

Cross-references and Practical Effect

Where an Adjudicating Authority confirms a PAO, continuity beyond 365 days requires either completion of investigation within that period or qualified pendency of court proceedings originating from a filed Prosecution Complaint and cognizance. Attempts to treat procedural acts short of complaint filing (ECIR transmission, bail applications) as constituting pendency are rejected. Exclusion of interim judicial restraint from the 365-day computation is permissible only where the order in fact stays investigation or otherwise bars the prosecutorial act; otherwise the PAO lapses on expiry of 365 days.

Issues: (i) Whether the attached properties needed to be released for want of any independent investigation by ED with respect to the predicate offence; (ii) Whether the attached properties needed to be released as the alleged predicate offences were committed during 1998 to 2002, prior to the coming into operation of PMLA; (iii) Whether there was no reason to believe on the part of ED under section 5(1) of PMLA that the appellants were in possession of proceeds of crime likely to be concealed or transferred; (iv) Whether the attached properties needed to be released as they were not acquired directly or indirectly from proceeds of crime; (v) Whether the property at 97-D Eastern Avenue Sainik Farms, New Delhi needed to be released on the plea that Aditi Chaturvedi was its owner and was not served notice in the attachment proceedings; (vi) Whether the jewellery attached as proceeds of crime could be treated as stridhan.

Issue (i): Whether the attached properties needed to be released for want of any independent investigation by ED with respect to the predicate offence.

Analysis: The relevant inquiry under PMLA is confined to the existence of a scheduled offence, the generation of proceeds of crime, their laundering, and the trail or layering of such proceeds. ED is not a supervisory agency over the police or CBI and cannot re-investigate the predicate offence or substitute its own conclusion on that offence, though it may examine the material for money-laundering purposes and point out apparent gaps brought to its notice during investigation.

Conclusion: The issue is decided against the appellants and in favour of Respondent ED.

Issue (ii): Whether the attached properties needed to be released as the alleged predicate offences were committed during 1998 to 2002, prior to the coming into operation of PMLA.

Analysis: The relevant date for the offence of money-laundering is the date on which the tainted property is projected as untainted or is otherwise dealt with as proceeds of crime, not merely the date of the scheduled offence. Money-laundering is a distinct and continuing offence, and attachment under PMLA is not barred merely because the predicate conduct pre-dated the enactment, where the laundering activity continued thereafter.

Conclusion: The issue is decided against the appellants and in favour of Respondent ED.

Issue (iii): Whether there was no reason to believe on the part of ED under section 5(1) of PMLA that the appellants were in possession of proceeds of crime likely to be concealed or transferred.

Analysis: The record disclosed material linking the appellants and their group entities to diversion and siphoning of loan funds, and the attached assets were found to be within the reach of the proceeds derived from the fraud. The statutory conditions for provisional attachment, including the apprehension that the property may be concealed, transferred, or dealt with so as to frustrate confiscation proceedings, were held to be satisfied.

Conclusion: The issue is decided against the appellants and in favour of Respondent ED.

Issue (iv): Whether the attached properties needed to be released as they were not acquired directly or indirectly from proceeds of crime.

Analysis: The definition of proceeds of crime includes not only the tainted property itself but also the value of such property. Where the actual tainted property is not traceable, attachment of property of equivalent value is permissible. The Tribunal relied on the settled interpretation that equivalent-value attachment can be invoked when the proceeds have been dissipated or are unavailable.

Conclusion: The issue is decided against the appellants and in favour of Respondent ED.

Issue (v): Whether the property at 97-D Eastern Avenue Sainik Farms, New Delhi needed to be released on the plea that Aditi Chaturvedi was its owner and was not served notice in the attachment proceedings.

Analysis: The claimed ownership was not supported by proof of independent source of funds or bank records showing legitimate payment. The Tribunal treated the transaction as a sham arrangement made to shield the property after the bank fraud. It left open the appellant's liberty to pursue her claim before the competent PMLA court if a genuine title claim is established.

Conclusion: The issue is decided against the appellants and in favour of Respondent ED.

Issue (vi): Whether the jewellery attached as proceeds of crime could be treated as stridhan.

Analysis: No documentary evidence was produced to establish the jewellery as stridhan. In the absence of proof, the claim could not be accepted and was left to be tested, if necessary, in the trial proceedings.

Conclusion: The issue is decided against the appellants and in favour of Respondent ED.

Final Conclusion: The Tribunal upheld the attachment and confirmation proceedings under PMLA and found no merit in the appeals. The dismissal was accompanied by a direction that coercive steps against the properties be restrained until conclusion of the criminal trials, except in exceptional circumstances.

Ratio Decidendi: Under PMLA, ED may proceed against property of equivalent value where the actual proceeds of crime are unavailable, and the offence of money-laundering is a distinct continuing offence whose commission depends on the laundering activity, not merely on the date of the predicate offence.

1. ISSUES PRESENTED and CONSIDERED

• Whether the properties attached under the Prevention of Money Laundering Act (PMLA), 2002, specifically the funds in the bank account of M/s R K Emporium, constitute proceeds of crime linked to demonetized currency and money laundering activities.
• Whether the appellant, whose proprietorship is M/s R K Emporium, can be held liable under PMLA despite not being named as an accused in the FIR or charge sheet filed by the Delhi Police Crime Branch.
• Whether the transactions between M/s R K Emporium and firms allegedly controlled by accused persons are genuine business transactions or mere paper entries used for money laundering.
• Whether the prior exoneration of the appellant in proceedings under the Prevention of Black Money Act (PBPT), 1988, and dismissal of the appeal filed by the Initiating Officer in that case, precludes confirmation of attachment under PMLA on the same facts.
• Whether the payments received by M/s R K Emporium from M/s RK International and M/s Virgo International were out of demonetized currency or legitimate business proceeds.
• Whether the impugned order confirming the provisional attachment under PMLA should be set aside based on the above considerations.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Whether the attached properties constitute proceeds of crime under PMLA linked to demonetized currency and money laundering

Legal Framework and Precedents: The Prevention of Money Laundering Act, 2002, empowers the Enforcement Directorate (ED) to provisionally attach properties that are proceeds of crime under section 5(1) and confirm such attachment under section 8(3). The Act contemplates investigation of money laundering offenses linked to predicate offences such as those under the Indian Penal Code and the Prevention of Corruption Act.

Court's Interpretation and Reasoning: The ED's investigation revealed a money trail involving demonetized currency amounting to approximately Rs. 38 Crores, with an additional commission of 35%, totaling about Rs. 51 Crores. Multiple provisional attachment orders (PAOs) cumulatively attached properties and proceeds of crime amounting to Rs. 49.11 Crores. The attached funds in the Kotak Mahindra Bank account of M/s R K Emporium were attributed to accused persons involved in the money laundering scheme.

Key Evidence and Findings: The investigation uncovered forged documents used to open bank accounts, criminal conspiracy to deposit demonetized currency in non-home branch accounts, and acceptance of illegal gratification by a public servant (Branch Manager). The transactions between shell firms and M/s R K Emporium were scrutinized, and searches at premises linked to accused persons yielded no evidence of genuine business activity.

Application of Law to Facts: Based on the investigation, the ED concluded that the funds in M/s R K Emporium's account were proceeds of crime, linked to the laundering of demonetized currency. The Adjudicating Authority confirmed the provisional attachment accordingly.

Treatment of Competing Arguments: The appellant contended that the payments were legitimate business transactions and not linked to demonetized currency. The ED maintained that the transactions were paper entries to park illicit funds.

Conclusion: The Adjudicating Authority initially upheld the attachment, finding sufficient nexus between the funds and proceeds of crime under PMLA.

Issue 2: Whether the appellant can be held liable under PMLA despite not being named as an accused in the FIR or charge sheet

Legal Framework and Precedents: Under PMLA, attachment and prosecution can be independent of criminal proceedings under the IPC or other statutes. The Act focuses on proceeds of crime and their recovery, not necessarily requiring the person to be an accused in predicate offences.

Court's Interpretation and Reasoning: The ED argued that absence of the appellant's name in the FIR or chargesheet does not absolve him from liability under PMLA, given the specific allegations and evidence linking the appellant's account to proceeds of crime. The appellant relied on his exoneration in PBPT proceedings to contest this.

Key Evidence and Findings: The appellant's account received funds transferred from firms controlled by accused persons. Statements under section 50 PMLA and investigation findings indicated that the appellant had limited knowledge of the source and nature of these transactions.

Application of Law to Facts: The Court noted that PMLA's scope includes attachment based on proceeds of crime regardless of criminal charges against the person. However, the genuineness of transactions and nexus to proceeds of crime must be established.

Treatment of Competing Arguments: The appellant emphasized prior exoneration and lack of criminal charges; the ED stressed the independent scope of PMLA and evidence of suspicious transactions.

Conclusion: The Court acknowledged the legal position but proceeded to examine the nature of transactions to determine if the attachment was justified.

Issue 3: Whether transactions between M/s R K Emporium and firms controlled by accused persons were genuine or paper entries

Legal Framework and Precedents: Genuine business transactions are not proceeds of crime under PMLA. The burden lies on the ED to establish that transactions were sham or intended to launder proceeds.

Court's Interpretation and Reasoning: The appellant claimed the transactions were legitimate supplies of goods, supported by invoices and goods consignment receipts (GCRs). The ED highlighted absence of substantive proof of supply and suspicious circumstances such as lack of knowledge of the firms' proprietors and non-supply of goods within reasonable time.

Key Evidence and Findings: Bank statements showed payments received on 08.11.2016 from M/s Yashawini Exports to M/s RK International and Virgo International, with subsequent transfers to M/s R K Emporium on 12.11.2016. The appellant could not identify the agent who placed orders. Invoices and GCRs were produced, with minor discrepancies such as a wrongly mentioned registration number. Searches at premises yielded no evidence of goods or documents corroborating the alleged supplies.

Application of Law to Facts: The Court found that the payments to M/s RK International and Virgo International predated the demonetization announcement (which was at 8:00 PM on 08.11.2016), indicating these payments were not from demonetized currency. The appellant's account transactions were consistent with legitimate business dealings supported by invoices and GCRs. Minor errors in documentation did not undermine the genuineness of transactions.

Treatment of Competing Arguments: The ED argued the transactions were paper entries to park illicit funds. The appellant rebutted by demonstrating the timing of payments, existence of invoices, and prior exoneration in PBPT proceedings.

Conclusion: The Court concluded that the transactions were genuine business transactions and not proceeds of demonetized currency or money laundering.

Issue 4: Effect of prior exoneration under PBPT proceedings on the present attachment under PMLA

Legal Framework and Precedents: The Prevention of Black Money Act (PBPT), 1988, and PMLA, 2002, are distinct statutes with different objectives and procedures. However, findings under one may be relevant to proceedings under the other if based on the same facts.

Court's Interpretation and Reasoning: The appellant relied on the Adjudicating Authority's exoneration under PBPT and dismissal of the appeal by this Tribunal in PBPT proceedings, contending that the present attachment under PMLA on the same facts is unjustified.

Key Evidence and Findings: The Tribunal noted that the appellant was exonerated in PBPT proceedings by order dated 25.03.2019 and the appeal filed by the Initiating Officer was dismissed on 30.01.2025. The appellant submitted these orders and argued for consistency in findings.

Application of Law to Facts: The Court acknowledged the distinction between the statutes but recognized the relevance of prior findings on the genuineness of transactions and absence of illicit proceeds. The Tribunal noted that the ED failed to distinguish the present case from the PBPT proceedings effectively.

Treatment of Competing Arguments: The ED contended that PMLA proceedings are independent and not bound by PBPT findings. The appellant emphasized the identical facts and prior exoneration.

Conclusion: The Court accepted the appellant's contention that the prior exoneration under PBPT and dismissal of appeal weigh heavily against confirmation of attachment under PMLA in the present case.

Issue 5: Whether the payments to M/s R K Emporium were out of demonetized currency or legitimate business proceeds

Legal Framework and Precedents: Proceeds of demonetized currency converted into legitimate currency are proceeds of crime under PMLA. The timing and source of payments are crucial in determining the nature of funds.

Court's Interpretation and Reasoning: The Tribunal examined bank statements showing that M/s RK International and Virgo International received payments from M/s Yashawini Exports on 08.11.2016 during banking hours before demonetization announcement at 8:00 PM. Subsequently, these firms transferred funds to M/s R K Emporium on 12.11.2016.

Key Evidence and Findings: The timing of payments indicated that the funds were not demonetized currency. Invoices and GCRs corroborated the supply of goods. The appellant's explanation regarding the agent and business dealings was accepted despite minor gaps.

Application of Law to Facts: Since the payments to the supplier firms predated demonetization, and the subsequent transfer to M/s R K Emporium was consistent with business transactions, the funds were not proceeds of demonetized currency.

Treatment of Competing Arguments: The ED argued the transactions were part of laundering demonetized currency. The appellant rebutted with documentary evidence and timing analysis.

Conclusion: The Court held that the payments were legitimate business proceeds and not demonetized currency proceeds, undermining the basis for attachment.

Issue 6: Whether the impugned order confirming attachment under PMLA should be set aside

Court's Interpretation and Reasoning: Considering the genuineness of transactions, timing of payments, prior exoneration under PBPT, and lack of evidence linking the appellant's account to proceeds of demonetized currency, the Tribunal found no justification for confirming the attachment.

Conclusion: The appeal was allowed; the impugned order confirming provisional attachment was set aside, and consequences to follow accordingly.

Issues: (i) whether the amount received by the appellant from the project company in relation to the land transaction concerning Survey No. 343/13 could be treated as proceeds of crime and the attachment sustained; (ii) whether the amount retained by the appellant after cancellation of the 9-acre sale transaction could be attached as value equivalent to proceeds of crime, including in respect of property acquired prior to the scheduled offence.

Issue (i): whether the amount received by the appellant from the project company in relation to the land transaction concerning Survey No. 343/13 could be treated as proceeds of crime and the attachment sustained.

Analysis: The agreement relied upon for a higher consideration was found to be defective because it was not signed on all pages by all parties and bore signatures inserted much later. The subsequent sale deed showed a lower consideration, and the later document could not override the completed sale deed. On that basis, the excess amount received over the registered sale consideration was treated as money passed on from the alleged tainted funds of the project company.

Conclusion: The attachment was upheld and the appellant's objection on this transaction failed.

Issue (ii): whether the amount retained by the appellant after cancellation of the 9-acre sale transaction could be attached as value equivalent to proceeds of crime, including in respect of property acquired prior to the scheduled offence.

Analysis: The Tribunal held that Section 2(1)(u) of the Prevention of Money Laundering Act, 2002 encompasses not only property derived from criminal activity but also the value of such property. Where proceeds of crime are not available, attachment of property of equivalent value is permissible, and this may extend to property acquired earlier if it is proceeded against as alternative attachable property. The cancellation of the transaction did not justify retention of the balance amount, and the addendum relied upon did not displace the attachment already made to secure the victim's interest.

Conclusion: The attachment of the equivalent value amount was valid and the appellant's challenge failed.

Final Conclusion: The impugned attachment order was sustained in full and the appeal was dismissed.

Ratio Decidendi: For the purposes of Section 2(1)(u) of the Prevention of Money Laundering Act, 2002, proceeds of crime include not only directly or indirectly derived property but also property attached as equivalent value when the tainted asset is unavailable, and such attachment may extend to otherwise legitimate property used as alternative attachable property to protect the victim's interest.

ISSUES PRESENTED AND CONSIDERED

1. Whether the Provisional Attachment Order ceased to have effect because the Adjudicating Authority confirmed it after 180 days under Section 5(3) of the Prevention of Money-Laundering Act, 2002, taking into account the period affected by COVID-19.

2. Whether statements recorded under Section 50(2) and (3) of the Act, including those recorded while the deponent was in custody, are inadmissible or incapable of grounding confirmation of provisional attachment.

3. Whether immovable properties acquired prior to the commission of the scheduled offence can be provisionally attached as "proceeds of crime" or as property of equivalent value when the direct proceeds are not traceable.

4. Whether the materials on record (statements and documents) suffice to sustain confirmation of the provisional attachment to the extent of the properties identified.

ISSUE-WISE DETAILED ANALYSIS

Issue 1 - Effect of Delay beyond 180 Days and Applicability of COVID-19 Limitation Exclusions

Legal framework: Section 5(1)-(3) (attachment, forwarding material to Adjudicating Authority, and cessation after 180 days) of the Prevention of Money-Laundering Act, 2002 prescribes a maximum 180-day period for provisional attachment to continue absent confirmation; provisos allow exclusion of period when proceedings are stayed by High Court and prescribe related procedural steps.

Precedent treatment: The Tribunal applied the Supreme Court's orders in the Suo Motu limitation proceedings (extending/excluding limitation from 15.03.2020 to 28.02.2022) and subsequent elucidations (including Prakash Corporates) and relied on High Court decisions (including Telangana High Court reasoning) that held those orders applicable to compute statutory outer limits where a statute prescribes termination/outer limits of proceedings.

Interpretation and reasoning: The Court distinguished between (a) protection of commencement of remedies (institution of proceedings) that the Suo Motu orders primarily sought to secure, and (b) statutory timelines that operate as termination or outer limits (such as the 180-day ceiling in Section 5(3)). It accepted authorities holding that where a statute prescribes a maximum period within which an action must be completed, the period affected by COVID-19 is to be excluded in computing that maximum. The Tribunal reasoned that the Suo Motu orders were meant to safeguard litigants from being barred by limitation and their scope was expanded to include exclusion for termination limits; consequently, the period from 15.03.2020 to 28.02.2022 is excluded while computing the 180 days under Section 5(3).

Ratio vs. Obiter: Ratio - exclusion of the COVID-affected period applies to computation of the 180-day outer limit under Section 5(3) where the Supreme Court's orders expressly exclude periods for termination/outer limits of proceedings; Obiter - commentary distinguishing urgency of personal liberty (S. Kasi) from property-related timelines.

Conclusion: The Tribunal rejected the appellants' contention of lapse under Section 5(3) because the intervening COVID-19 period is excluded; the confirmation was not time-barred.

Issue 2 - Admissibility and Reliance on Statements under Section 50(2) & (3)

Legal framework: Section 50(2) and (3) of the Act permit recording of statements of persons during investigation; general evidentiary principles govern admissibility and weight, with safeguards against statements made under duress.

Precedent treatment: The Tribunal followed prior practice that statements recorded under Section 50 provisions are admissible and can be read against the deponent; absence of allegation of coercion or duress undermines an attack on admissibility.

Interpretation and reasoning: The Tribunal noted no allegation that statements were recorded under coercion or harassment, no contemporaneous complaint of unfair recording, and that the appellant's recorded statements contained admissions (relations with directors, entries in software, sums received by group entities). Co-accused statements corroborated the investigative narrative. Accordingly, reliance on those statements to found provisional attachment was permissible.

Ratio vs. Obiter: Ratio - statements under Section 50(2)/(3) are admissible and may be relied upon unless shown to be recorded under duress; Obiter - amplification of the probative value where statements are corroborated by documents and other witnesses.

Conclusion: The challenge to the use of Section 50 statements failed; the Adjudicating Authority properly considered those statements as admissible material supporting attachment.

Issue 3 - Attachment of Property Acquired Prior to the Scheduled Offence ("Proceeds of Crime" / Equivalent Value)

Legal framework: Definition of "proceeds of crime" (Section 2(1)(u)) contains multiple limbs: (i) property derived/obtained directly or indirectly by criminal activity; (ii) the value of any such property (attachment of property of equivalent value); (iii) property equivalent in value held within country/abroad where property is taken or held outside country. Section 5 permits attachment of proceeds or property of equivalent value where proceeds are not available.

Precedent treatment: The Tribunal relied on binding Supreme Court authority and High Court reasoning (including Axis Bank and Vijay Madanlal Choudhary discussions) that interpret Section 2(1)(u) as comprising three distinct limbs and permitting attachment of untainted property of equivalent value when tainted proceeds are not traceable; it rejected authorities construing the definition narrowly so as to render the middle limb redundant.

Interpretation and reasoning: The Tribunal held that giving effect to the second limb is necessary to prevent accused from rendering tainted proceeds untraceable and defeating enforcement. The statutory purpose (preventing laundering and securing victim interests) and precedents mandate that property acquired prior to the offence can be attached as equivalent value where proceeds have been siphoned off or are not available, subject to safeguards protecting bona fide third-party rights and the primacy of attempting to attach actual proceeds first.

Ratio vs. Obiter: Ratio - properties acquired prior to commission of scheduled offences can be attached as property of equivalent value under Section 2(1)(u) where proceeds are not traceable, provided statutory safeguards and assessment of equivalence are observed; Obiter - commentary on policy rationale and rejection of narrower readings that would nullify the second limb.

Conclusion: Attachment of pre-offence properties was permissible in principle; accordingly, attachment of properties in this matter could be sustained because (i) proceeds in the accused's hands were not fully traceable, and (ii) the Adjudicating Authority attached properties of equivalent value after consideration of available material.

Issue 4 - Sufficiency of Record to Confirm Attachment to the Extent Ordered

Legal framework: Confirmation requires prima facie material showing reason to believe proceeds of crime exist and are liable to attachment; investigative records, statements, balance sheets and valuations relevant to quantification and nexus.

Precedent treatment: The Tribunal referenced principles requiring an initial assessment or tentative valuation to justify attachment of deemed tainted property and that enforcement should first attempt to attach directly traceable proceeds.

Interpretation and reasoning: The Tribunal found that the record contained incriminating documents seized in searches, ECIR, FIR, recorded statements (including admissions of receipt/transfer of large sums by group entities), and financial statements indicating substantial deposits and loans that were advanced to 13 entities connected to the accused and remained unpaid. The appellant failed to produce contrary documentary evidence displacing the inference of siphoning/vanishing of proceeds. The attached immovable properties' aggregate market valuation corresponded to the attached amount (approx. Rs.84.40 crores) though the Tribunal noted that proceeds in accused's hands might exceed attached amount.

Ratio vs. Obiter: Ratio - where investigative material and admissions establish a prima facie case of diversion of depositor funds to associated entities and inability to repay, confirmation of provisional attachment of identified properties of equivalent value is supportable; Obiter - emphasis on necessity of attempting to trace actual proceeds first and protection of bona fide third-party interests.

Conclusion: The material on record was sufficient to sustain confirmation of provisional attachment as made; the appellants' arguments on insufficiency and on specific lower quantum (e.g., only Rs.10 crores relating to a loan to spouse) did not displace the prima facie case. Appeals were dismissed.

Issues: (i) Whether the attached property, though not traced as the direct or indirect proceeds of crime, could be attached as the value of such proceeds under the definition of proceeds of crime. (ii) Whether the statutory conditions for provisional attachment were satisfied. (iii) Whether the predicate offences, as scheduled offences, could be applied retrospectively for the purpose of money-laundering proceedings. (iv) Whether the appellant's property could be retained in attachment even though the appellant was not named as an accused in the criminal case or the prosecution complaint.

Issue (i): Whether the attached property, though not traced as the direct or indirect proceeds of crime, could be attached as the value of such proceeds under the definition of proceeds of crime.

Analysis: The definition of proceeds of crime was treated as wide enough to cover not only property derived or obtained from criminal activity relating to a scheduled offence, but also the value of such property. Where the actual tainted property is not available or traceable, attachment of equivalent-value property is permissible. The reasoning relied on the statutory definition and binding authority recognising that a person cannot defeat the Act by dissipating the actual proceeds and retaining other assets.

Conclusion: The issue was decided against the appellant and in favour of the Revenue.

Issue (ii): Whether the statutory conditions for provisional attachment were satisfied.

Analysis: The material collected in investigation was held sufficient to form the requisite reason to believe that proceeds of crime were involved and that non-attachment would frustrate confiscation proceedings. The order also treated the case as one where the second proviso to the attachment provision was attracted on the facts, because the property was liable to be dealt with in a manner defeating the Act's object.

Conclusion: The issue was decided against the appellant and in favour of the Revenue.

Issue (iii): Whether the predicate offences, as scheduled offences, could be applied retrospectively for the purpose of money-laundering proceedings.

Analysis: The relevant consideration was held to be the date on which the proceeds are projected as untainted and dealt with in a manner connected with money-laundering, not merely the date of the underlying scheduled offence. Money-laundering was treated as an independent and continuing offence, so later inclusion or notification of the predicate offence did not assist the appellant where the laundering activity continued thereafter.

Conclusion: The issue was decided against the appellant and in favour of the Revenue.

Issue (iv): Whether the appellant's property could be retained in attachment even though the appellant was not named as an accused in the criminal case or the prosecution complaint.

Analysis: The attachment power was held not to be confined to persons named as accused in the scheduled offence or in the complaint under the Act. The decisive question was whether the property represented proceeds of crime or their value and was held by a person connected with the laundering process. The absence of the appellant's name as an accused did not prevent attachment of the property.

Conclusion: The issue was decided against the appellant and in favour of the Revenue.

Final Conclusion: The attachment order was upheld and the appeal failed on all substantive grounds, leaving the impugned confirmation of attachment intact.

Ratio Decidendi: Under the Prevention of Money Laundering Act, attachment may extend to property of equivalent value where the actual proceeds of crime are unavailable, and such attachment can be sustained against a person not named as an accused if the property is connected with the laundering process and the statutory prerequisites for provisional attachment are met.

1. Whether the appellants, not named in the original FIR but implicated during investigation, can have their bank accounts frozen and records retained under the Prevention of Money Laundering Act, 2002 (PMLA).

2. Whether the seizure of documents, digital devices, and freezing of bank accounts of the appellants was justified given the facts and evidence collected during investigation.

3. Whether the settlement between the appellant and the company regarding alleged misappropriation of funds affects the ongoing investigation and seizure/freezing orders under PMLA.

4. Whether the appellants' involvement in money laundering and receipt of proceeds of crime was sufficiently established to warrant continuation of the impugned order.

5. Whether the appellants were entitled to operate their bank accounts during the period of freezing and under what conditions.

Issue 1: Legitimacy of freezing bank accounts and retention of records against appellants not named in the original FIR

- The legal framework under Section 17(1) and 17(4) of the Prevention of Money Laundering Act, 2002 empowers the Adjudicating Authority to seize and retain records and freeze bank accounts where proceeds of crime are involved.

- The original FIR named the Managing Director and unknown persons for offences including cheating and criminal breach of trust involving investor funds. The appellants were not named initially.

- Investigation revealed that the appellants, particularly the ex-Director heading Sales and Marketing, were involved in misappropriation and diversion of funds collected from investors.

- The Court noted that multiple FIRs were lodged by investors/home-buyers against the company and that the appellants' role emerged during investigation, supported by statements and audit findings.

- The appellants' bank accounts and records were seized/frozen based on incriminating evidence including digital devices, documents, and bank statements showing receipt and diversion of funds.

- The Tribunal held that being unnamed in the original FIR does not preclude seizure/freezing if investigation reveals involvement and proceeds of crime linked to the appellants.

- Conclusion: Freezing of bank accounts and retention of records against appellants was legally justified under PMLA given the evidence discovered during investigation.

Issue 2: Justification of seizure of documents and freezing of bank accounts

- The investigation uncovered a modus operandi involving collection of cash against company policy, issuance of fake manual cash receipts by unauthorized persons, deletion of computer-generated receipts, and depositing cheques in personal and related accounts.

- The Chartered Accountant's statement detailed siphoning off Rs. 126 Crores by the sales team headed by the appellant, including use of multiple bank accounts in the names of the appellant, family members, and associated entities.

- Search operations at residential and office premises of the appellants yielded incriminating documents and digital devices, supporting the allegations.

- The Court found that the seized bank accounts and documents were directly linked to proceeds of crime and money laundering activities.

- The appellants failed to rebut the evidence or provide legitimate explanations or documentation for the funds received and properties acquired.

- The Tribunal emphasized that seizure and freezing were necessary to prevent dissipation of assets and to preserve evidence for prosecution.

- Conclusion: Seizure of documents and freezing of bank accounts were warranted and proportionate measures under the circumstances.

Issue 3: Effect of settlement between appellant and company on the ongoing investigation and seizure/freezing orders

- The appellant had entered into a settlement with the company regarding an FIR filed by the company alleging misappropriation of Rs. 40 Crores, resulting in transfer of properties to the company.

- The Tribunal distinguished this internal settlement from the ongoing investigation initiated on FIRs lodged by investors/home-buyers alleging cheating and non-delivery of flats.

- The settlement was held to have no bearing on the claims of investors or on the investigation under PMLA, which is independent and focused on proceeds of crime.

- The settlement was viewed as an attempt to layer proceeds of crime and did not absolve the appellant from liability or involvement in money laundering.

- Conclusion: The settlement did not affect the validity of the seizure/freezing orders or the investigation against the appellants.

Issue 4: Sufficiency of evidence establishing appellants' involvement in money laundering and receipt of proceeds of crime

- The internal audit and investigation revealed Rs. 126 Crores siphoned off by the sales team led by the appellant.

- Evidence included unauthorized collection of cash, issuance of fake receipts, manipulation of accounting records, and deposit of customer cheques into personal and related accounts.

- The appellant and family members acquired multiple properties disproportionate to their declared incomes, indicating laundering of proceeds.

- Bank account analysis showed deposits from customers' cheques in the appellant's and relatives' accounts, including proprietary concerns controlled by the appellant.

- The Tribunal found the evidence credible and unrebutted, establishing a prima facie case of money laundering and receipt of proceeds of crime by the appellants.

- The respondent's submission that a prosecution complaint would be filed against the appellants further supported the findings.

- Conclusion: Evidence sufficiently established appellants' involvement in money laundering and justified continuation of seizure and freezing measures.

Issue 5: Entitlement of appellants to operate bank accounts during freezing and conditions thereof

- The Tribunal recognized that freezing bank accounts should not exceed the amount involved as proceeds of crime.

- An order was passed permitting the appellants to operate their bank accounts subject to maintaining a balance not exceeding the amount identified as proceeds of crime.

- This balanced the need to prevent dissipation of illicit funds while allowing appellants limited access for legitimate purposes.

- Conclusion: Conditional operation of bank accounts during freezing was appropriate and upheld.

Issues: Whether the attachment of the appellant's demat shares, purchased from funds received from the entity alleged to be involved in laundering proceeds of crime, was liable to be interfered with.

Analysis: The Tribunal found that the underlying company was involved in large-scale diversion of funds through sham transactions and that the appellant, though claiming to be a Data Entry Operator, had received Rs. 48 lakhs without any credible explanation for its lawful receipt or use. The record showed that the amounts were not used for the stated medical purpose but were instead diverted to purchase shares of the same company, and a part of those shares had been sold. On these facts, the Tribunal held that the shares represented property traceable to proceeds of crime and that the attachment was justified.

Conclusion: The attachment of the demat shares was upheld and the appeal was dismissed.

Final Conclusion: The Tribunal confirmed that property acquired from unaccounted funds linked to proceeds of crime can be retained under attachment, and no interference was warranted with the impugned order.

Ratio Decidendi: Property purchased with funds traceable to proceeds of crime, when lacking a credible lawful explanation, is liable to attachment under the money-laundering regime.