Interim modification of user and occupation charges - effect of admission and rent agreements on interim measures - payment of arrears and future deposits as condition for non-coercive action - Rule 5(3) of the Prevention of Money Laundering (Taking Possession of Attached or Frozen Properties Confirmed by the Adjudicating Authority) Rules, 2013Interim modification of user and occupation charges - effect of admission and rent agreements on interim measures - Rule 5(3) of the Prevention of Money Laundering (Taking Possession of Attached or Frozen Properties Confirmed by the Adjudicating Authority) Rules, 2013 - Whether the interim order should be modified to require the owner of Flat No. CCE-151 to deposit monthly user/occupation charges equivalent to the admitted rent and to pay arrears. - HELD THAT: - The Tribunal found on record unconditional admissions by the owner and production of an unregistered rent agreement showing receipt of Rs. 55,000 per month for Flat No. CCE-151. The interim order of 19.06.2017 had directed deposit of a uniform lesser amount and had expressly permitted verification and modification. Applying Rule 5(3) of the Rules and in view of the admitted rental value, the Tribunal, without prejudice, directed that the appellant (owner of the flat) deposit Rs. 55,000 per month with the respondent from the date of confirmation of the Provisional Attachment Order after adjusting amounts already deposited under the interim order. The appellant was afforded eight weeks to pay arrears up to 31.12.2019 and directed to deposit current and future rents by the 7th of the following month. [Paras 13, 14]Interim order modified to require deposit of Rs. 55,000 per month as user charges for Flat No. CCE-151 with directions for arrears, schedule and future deposits.Interim modification of user and occupation charges - effect of admission and rent agreements on interim measures - payment of arrears and future deposits as condition for non-coercive action - Whether the interim order should be modified to require the owner of Flat No. CCE-141 to deposit monthly user/occupation charges equivalent to the admitted rent and to pay arrears. - HELD THAT: - The Tribunal recorded that the owner of Flat No. CCE-141 had executed an unregistered rent agreement and that the pleadings admitted a rental value of Rs. 65,000 per month. Although the appellants later alleged vacation and subsequent occupation by a family member, no proof of vacation date or family occupation was produced. Given the admitted rental value and the liberty previously granted to the respondent to seek modification, the Tribunal, without prejudice, directed the owner to deposit Rs. 65,000 per month with the respondent from the date of confirmation of the Provisional Attachment Order after adjusting amounts already deposited under the interim order. The owner was given eight weeks to pay arrears and ordered to deposit current and future rents by the 7th of the next month. [Paras 13, 15, 16]Interim order modified to require deposit of Rs. 65,000 per month as user charges for Flat No. CCE-141 with directions for arrears, schedule and future deposits.Final Conclusion: The review application is allowed insofar as the interim order dated 19.06.2017 is modified for the two specified flats: the respective admitted rents (Rs. 55,000 and Rs. 65,000 per month) are to be deposited from the date of confirmation of the Provisional Attachment Order (after adjustment of amounts already paid), arrears to be paid within eight weeks, and current/future rents to be deposited monthly by the 7th; subject to these directions, no coercive action shall be taken under the notice dated 09.06.2017.

Bonafide third party claimant - attachment under PMLA - provisional attachment order - alternative attachable property - overriding effect of PMLA - due diligence - jurisdiction of Appellate Tribunal under Section 26 PMLABonafide third party claimant - provisional attachment order - attachment under PMLA - due diligence - alternative attachable property - Validity of the confirmation of the Provisional Attachment Order in respect of properties mortgaged with the appellant banks who claim to be bonafide secured creditors. - HELD THAT: - The Tribunal applied the legal principles laid down by the Hon'ble Delhi High Court in Deputy Director, Directorate of Enforcement v. Axis Bank & Ors. and concluded that where a secured creditor (a bonafide third party claimant) had acquired its interest prior to the commission of the proscribed offence and had acted in good faith and with due diligence, the attachment under PMLA cannot defeat that lawful interest. The Tribunal found on the record that the banks had taken security prior to ECIR/FIR, had initiated recovery proceedings prior to provisional attachment, and there was no material on record to show that the mortgaged properties were acquired out of proceeds of crime or that the banks were complicit in money laundering. In that factual matrix, the PMLA attachment, though valid in form, must give way to the banks' lawful secured interest to the extent of their claim; absent prima facie evidence linking the mortgaged properties to proceeds of crime, the confirmation of the provisional attachment was unsustainable. The Tribunal further held that the appellate forum under Section 26 has jurisdiction to examine the validity of the confirmation of attachment so long as the attachment has not attained finality, and that the special court's exclusive adjudicatory role is confined to situations where the attachment has become final, confiscation has been ordered, or trial under Section 4 PMLA has commenced. Applying these principles to the facts, the Tribunal concluded that the Adjudicating Authority had not appreciated the law or material and that the provisional attachment as confirmed must be quashed in respect of the mortgaged properties. [Paras 34, 35, 38, 41]The confirmation of the Provisional Attachment Order is set aside insofar as it relates to the properties mortgaged with the appellant banks; the Provisional Attachment Order dated 29.03.2016 and the Adjudicating Authority's confirmation dated 22.09.2016 are quashed in respect of those properties.Jurisdiction of Appellate Tribunal under Section 26 PMLA - overriding effect of PMLA - special court - Scope of the Tribunal's jurisdiction to decide third party claims against attachment when remedies under the Act are not exhausted. - HELD THAT: - Relying on the Axis Bank decision, the Tribunal held that the appellate tribunal under Section 26 is vested with jurisdiction to examine and entertain challenges to confirmation of provisional attachment so long as such orders have not attained finality. The Tribunal rejected the contention that only the special court can entertain claims of third parties in all circumstances, noting that the special court's exclusive jurisdiction to adjudicate claims arises only where the confirmation has attained finality, confiscation has been ordered, or trial under Section 4 PMLA has commenced. Thus, the banks' appeals were maintainable before the Tribunal and the Tribunal was competent to adjudicate the legality of the confirmation of attachment. [Paras 20, 21, 37]The Appellate Tribunal has jurisdiction under Section 26 to adjudicate the legality of the confirmation of the provisional attachment in the present appeals because the attachment had not attained finality; the special court's exclusive adjudicatory role is not attracted at this stage.Final Conclusion: The appeals by the banks are allowed in part: the Adjudicating Authority's confirmation of the Provisional Attachment Order dated 22.09.2016 and the PAO dated 29.03.2016 are quashed insofar as they relate to the properties mortgaged with the appellant banks. The Tribunal exercised its jurisdiction under Section 26 PMLA to decide the claims of bonafide secured creditors in light of the Axis Bank principles; no order as to disposal of the properties is made in view of the High Court's clarificatory directions.

Restoration of appeal - condonation of delay - sufficient cause / inordinate delay - prejudice by laches and acquiescence - duty of vigilance by litigant/advocateRestoration of appeal - condonation of delay - sufficient cause / inordinate delay - prejudice by laches and acquiescence - duty of vigilance by litigant/advocate - Application for restoration of appeal dismissed for want of merit. - HELD THAT: - The Tribunal examined the application for restoration filed long after the appeal was dismissed for default and found multiple fatal defects. The restoration application was not filed by the appellant-company nor supported by any affidavit of the appellant; it was filed by an advocate who did not expressly state she acted on behalf of the appellant and no affidavit from the appellant was placed on record. There was an unexplained and inordinate delay of about 1350 days between dismissal and filing of the restoration application, and no separate application or prayer for condonation of that delay was made. The explanations offered (illness and subsequent death of the advocate's father and illness of her mother) were not substantiated by documentary evidence despite an undertaking to produce hospitalization records, and the asserted short-term non-availability of one counsel did not justify the prolonged inaction given that the appellant had engaged multiple advocates and the appeal was part-heard with repeated opportunities afforded by the Bench. The Tribunal applied the principles articulated by the Supreme Court on condonation of delay, observing that while a liberal, justice-oriented approach is appropriate, it must be exercised within reason and supported by bona fide, sufficient cause. In the present facts there was gross negligence and lack of adequate explanation for the prolonged dormancy, and the respondent had acquired rights and would be prejudiced by restoration. Applying these considerations, the Tribunal concluded that the applicant had not shown sufficient cause to condone the delay or to justify restoration. [Paras 21, 24, 25]Restoration application dismissed.Final Conclusion: The application for restoration of the appeal was dismissed for lack of merit: it was not filed by the appellant or supported by its affidavit, carried an unexplained and inordinate delay without any prayer for condonation, failed to produce supporting evidence for the reasons stated, and restoration would prejudice the respondent; accordingly the restoration is refused.

Status quo - symbolic or constructive possession - actual physical possession - power to take possession under Section 8(4) of the PMLA - provisional attachment and confirmation under Section 8(3) - attachment ceasing upon acquittal - proceeds of crime - taking possession of attached or frozen properties - Rule 5(2) of 2013 RulesStatus quo - balance of convenience - irreparable injury - Grant of interim relief in the form of a status quo order with conditions pending the appeal under PMLA - HELD THAT: - The Tribunal, on hearing the parties, found a prima facie case in favour of the appellant because the farm house is in occupation of family members and eviction would cause irreparable injury; accordingly the balance of convenience favours preservation of the existing position till the next date of hearing. The appellant undertook not to alienate the property and offered a fixed deposit equivalent to the attached value. The Tribunal therefore directed that attachment shall continue and that status quo be maintained in respect of the properties until further order, with prohibitions on transfer, creation of encumbrances and an express liberty to the respondent to verify the actual position.Status quo order granted till next date of hearing; attachment to continue; appellants prohibited from transferring or creating encumbrances; respondent permitted to verify and file a status report.Symbolic or constructive possession - actual physical possession - power to take possession under Section 8(4) of the PMLA - taking possession of attached or frozen properties - Rule 5(2) of 2013 Rules - Extent of interim possession that respondent may take and respondent's liberty to consider appellant's offer of deposit - HELD THAT: - Relying upon the High Court of Madras reasoning cited by the appellant concerning the distinction between symbolic/constructive possession and actual physical possession under Section 8(4) of the PMLA, the Tribunal permitted the respondent to take symbolic possession if not already taken and granted liberty to consider the appellant's offer to deposit an amount by way of fixed deposit as equivalent to the proceeds of crime. The respondent was also permitted to file its reply and to verify actual possession on the next date. The order preserves the respondent's ability to act under the Rules while restraining eviction or physical dispossession in the interim.Respondent allowed to take symbolic possession and to consider the appellant's deposit offer; respondent directed to file reply and may verify actual position of the property.Final Conclusion: Notice issued in the appeal; interim relief granted by way of status quo on the immovable properties subject to attachment (attachment to continue), with prohibitions on transfer or creation of encumbrances, liberty to the respondent to take symbolic possession and to verify the actual position, and liberty to consider the appellant's offer of a deposit; matter listed for further hearing.

Restoration of dismissed appeals - non-prosecution leading to dismissal - withdrawal of vakalatnama and duty to appoint substitute counsel - assessment of bona fides of explanation for non-appearance - sale of attached properties under PMLA as indicia of misconduct - judicial discretion in condonation/ restoration applicationsRestoration of dismissed appeals - non-prosecution leading to dismissal - withdrawal of vakalatnama and duty to appoint substitute counsel - assessment of bona fides of explanation for non-appearance - sale of attached properties under PMLA as indicia of misconduct - Restoration applications filed after dismissal for non-prosecution are not maintainable and are dismissed. - HELD THAT: - The Tribunal recorded that the advocate for the appellants had withdrawn his vakalatnama and the appellants were informed to make arrangements for representation; thereafter the matter was repeatedly listed over the next year with no appearance until dismissal for non-prosecution. Although restoration applications were filed within 17 days of dismissal, the surrounding facts - prolonged non-appearance by multiple appellants, the appellants' conduct including alleged sale of properties attached under PMLA, and the absence of contrary documentary evidence - led the Tribunal to conclude that the explanation lacked bona fides and that the appellants had not exercised the duty to arrange substitute counsel. The Tribunal applied the principle that judicial discretion in condonation or restoration must be exercised on objective scrutiny of the explanation and not on fanciful grounds, referring to the guiding approach of the Supreme Court. On these grounds the Tribunal found no justification to allow restoration and rejected the ROAs. [Paras 3, 4, 5, 6]All restoration applications dismissed.Final Conclusion: The Appellate Tribunal refused restoration of the appeals dismissed for non-prosecution, concluding that the appellants' conduct and the absence of a bona fide explanation (including attempted alienation of attached properties and failure to secure representation after withdrawal of vakalatnama) disentitled them to relief; all ROAs were dismissed.

Provisional attachment under PMLA - bonafide third party claimant - alternative attachable property (deemed tainted property) - due diligence in acquisition of security interest - jurisdiction of appellate tribunal under Section 26 PMLA - special court jurisdiction where attachment has attained finality - overriding effect of PMLA over other enactmentsProvisional attachment under PMLA - bonafide third party claimant - alternative attachable property (deemed tainted property) - Validity of confirmation of the provisional attachment vis-a -vis a secured creditor who acquired its interest prior to the commission of the scheduled offence - HELD THAT: - Applying the principles summarised by the High Court in the Axis Bank decision, the Tribunal held that where a third party (here, the appellant bank) acquired its interest in the property prior to the criminal activity and is a bonafide claimant, the PMLA attachment cannot defeat the third party's lawful charge to the extent of its claim. The Tribunal found on the record that the appellant's security interest and enforcement steps under SARFAESI/DRT predated the ECIR and PAO, that there is no material showing the property was acquired from proceeds of crime, and that the bank's due diligence was not impugned. Consequently the Adjudicating Authority's confirmation of the PAO as to the secured property was quashed and set aside. [Paras 27, 31, 37, 39, 40]The confirmation of the provisional attachment order in respect of the secured property held by the appellant is quashed and set aside.Jurisdiction of appellate tribunal under Section 26 PMLA - special court jurisdiction where attachment has attained finality - Whether the Appellate Tribunal is empowered to adjudicate the appellant bank's claim before the attachment attains finality or the Special Court takes cognizance for trial/confiscation - HELD THAT: - Relying on the Axis Bank decision, the Tribunal held that the Special Court's exclusive jurisdiction to adjudicate third party claims arises only where the order confirming attachment has attained finality, confiscation has been ordered, or trial under Section 4 PMLA has commenced. Until remedies under the Act are exhausted, the Appellate Tribunal, as the forum of first appeal under Section 26, is competent to examine the legality of the confirmation of the PAO and determine the bonafides and legitimacy of a third party secured creditor's claim. The Tribunal therefore exercised its appellate jurisdiction to decide the present challenge to the confirmation order. [Paras 20, 21, 22, 36]The Appellate Tribunal has jurisdiction to adjudicate the appellant's claim against the confirmation of the provisional attachment prior to finality; the Tribunal will decide the validity of the confirmation under Section 26.Due diligence in acquisition of security interest - bonafide third party claimant - Whether the appellant bank was a bonafide third party and had exercised due diligence when taking the security interest - HELD THAT: - On the record the Tribunal found that the bank's security interest traces to an agreement to mortgage (29.03.2007) and a tripartite agreement (18.07.2007), enforcement steps under SARFAESI were initiated in 2009 and recovery proceedings culminated in a DRT recovery certificate in 2015, all predating the ECIR and provisional attachment. The Enforcement Directorate did not show material to impugn the bank's bonafides or its exercise of due diligence in sanctioning the loan. The Tribunal therefore accepted that the appellant is a bonafide third party claimant and a victim of fraud by the borrower, not complicit in the alleged money laundering. [Paras 16, 17, 31, 32, 33]The appellant bank is held to be a bonafide third party claimant that exercised due diligence; its claim to the secured property is legitimate and not vitiated by proceeds of crime.Final Conclusion: The appeal is allowed. The Adjudicating Authority's order confirming the provisional attachment dated 02.08.2017 is quashed insofar as it relates to the secured property held by the appellant bank; the provisional attachment in respect of that property is set aside. The Tribunal proceeds under Section 26 to adjudicate the validity of PAOs and protect the rights of bonafide third party secured creditors, subject to any rights of the parties to approach the Special Court where attachment has attained finality.

Summary order. Appeal dismissed for non-prosecution as the appellant and no authorised representative or counsel appeared despite multiple dates.

Provisional attachment - Confirmation of provisional attachment order - De-freezing of bank accounts - Proceeds of crime - Scope and limited jurisdiction of appellate tribunal to review PAO/confirmation - Admissibility/relevance of additional documents on interim applicationAdmissibility/relevance of additional documents on interim application - The application to place on record the letter dated 13.05.2019 was inadmissible and rejected as irrelevant to the interim relief sought. - HELD THAT: - The Tribunal examined the additional document (letter dated 13.05.2019) filed with IA No. MP-PMLA-6383/MUM/2019 and found that the contents relied upon in the interim application (threat of termination of the tender within one week unless payments were made) were not supported by that letter. The Tribunal therefore held the document to be irrelevant to the appellant's contention and refused to take it on record, dismissing the application for filing additional documents. [Paras 4]Application to place the additional document on record is rejected.Provisional attachment - Confirmation of provisional attachment order - De-freezing of bank accounts - Scope and limited jurisdiction of appellate tribunal to review PAO/confirmation - The appellant's prayer for de-freezing the amount transferred by the State Government (subsequent to the PAO) was beyond the scope of the present appeal and could not be granted; the Tribunal declined to order release of amounts not covered by the PAO/its confirmation. - HELD THAT: - The Tribunal noted that the confirmed provisional attachment related specifically to Rs. 5,53,401/- lying in six bank accounts as per the PAO and its confirmation order. The appellant sought release of a sum deposited by the State Government into an account which, as conceded by the respondent during hearing, had not been attached under the PAO. The Tribunal emphasised its limited jurisdiction to examine the legality and propriety of the impugned PAO and its confirmation; it could not direct de-freezing of amounts that were not part of the PAO or the confirmation order. On this basis the Tribunal rejected the interim relief seeking de-freezing of the subsequently deposited funds and disposed of the ad-interim application. [Paras 6, 7, 8, 9]Prayer for interim de-freezing of the State-transferred amount is rejected as beyond the scope of the appeal; ad-interim relief is refused and the applications are disposed of.Final Conclusion: The application to place the additional document on record is rejected as irrelevant. The interim prayer to de-freeze funds deposited after the Provisional Attachment Order is refused because those funds are not covered by the PAO or its confirmation and the Tribunal lacks jurisdiction in the present appeal to order their release; both applications are disposed of.

Validity of notice under Section 8(4) of PMLA - prima facie case for interim stay - irreparable injury - balance of convenience - attachment as value equivalent to proceeds of crime - constructive and legal possession by Enforcement Directorate - maintenance of status quo - deposit of rent during interim stayValidity of notice under Section 8(4) of PMLA - The common notice issued under Section 8(4) of PMLA dated 03.09.2019 is in accordance with the prescribed format and there is no irregularity or illegality in its issuance. - HELD THAT: - The Tribunal examined the language of the notice vis-a -vis the prescribed format and found no material difference. The contention that the notice was invalid for non-conformity with the format was rejected. The Tribunal therefore held that the notice is valid and issued in accordance with Section 8(4) read with the relevant rules; no defect was found that would vitiate the notice at this interlocutory stage.The challenge to the validity of the Section 8(4) notice is rejected; the notice is held valid.Prima facie case for interim stay - irreparable injury - balance of convenience - Whether the appellants are entitled to interim relief in respect of the first floor occupied by the appellants' son and family. - HELD THAT: - The Tribunal found that material placed by the appellants (electricity bills, identity cards, hospital identity records and other documents) was unrebutted by the respondent and supported the appellants' claim that the son, who is a medical practitioner, resides on the first floor. The property was admittedly purchased prior to the alleged predicate offence and there is no allegation of the appellant's involvement in the predicate offence or money laundering. Applying the tests for interim relief, the Tribunal concluded that there is a prima facie case, the balance of convenience favours protecting the occupier, and that physical dispossession would cause irreparable injury not compensable in money.Operation of the impugned order and the Section 8(4) notice is stayed in respect of the first floor occupied by the appellants' son and family; status quo to be maintained till the next date of hearing.Deposit of rent during interim stay - maintenance of status quo - Whether the appellants are entitled to stay of operation of the notice in respect of the ground floor then let out on rent and on what conditions. - HELD THAT: - The Tribunal accepted that the ground floor was rented out and that the appellant received rent. The appellants failed to establish irreparable injury in respect of the rented floor that could not be compensated monetarily. In balancing convenience and protecting the revenue interest, the Tribunal ordered conditional interim relief: the appellants were permitted to continue receiving benefit subject to depositing the rent receipts (arrears and future rent) with the Enforcement Directorate in an interest-bearing account/FDR, with specified timelines and deposit of rent up to the expiry of the tenancy. The Tribunal also restrained the appellants from creating third-party rights and directed handover of physical possession of the rented floor after the tenancy period.Stay of the notice in respect of the ground floor granted only subject to payment of rent into an interest-bearing account as directed, non-extension of the tenancy beyond permitted period and subsequent handover of possession as ordered.Attachment as value equivalent to proceeds of crime - constructive and legal possession by Enforcement Directorate - Whether the attachment of the property continues and what is the status of possession. - HELD THAT: - The Tribunal observed that the property has been attached as value equivalent to proceeds of crime and noted precedent of the High Court of Madras regarding possession. It held that the attachment shall continue and, in line with the cited authority, the legal and constructive possession of the property would lie with the Enforcement Directorate until further orders. Subject to the interim stays granted in respect of the first floor and conditional stay for the ground floor, no coercive action shall be taken till the next date of hearing.Attachment to continue; legal and constructive possession remains with the Enforcement Directorate; coercive action stayed subject to the interim directions given.Balance of convenience - Liberty to the respondent to enquire into market rent and seek enhancement. - HELD THAT: - The Tribunal permitted the respondent to make necessary enquiries regarding market rent of the rented portion and to file an application for enhancement of rent if required, thereby preserving the respondent's right to seek adjustment of the financial interest pending adjudication.Respondent granted liberty to investigate market rent and file appropriate application for enhancement.Final Conclusion: The Tribunal upheld the validity of the Section 8(4) notice but granted limited interim relief: stay of the notice in respect of the first floor occupied by the appellants' son and family; conditional stay in respect of the rented ground floor subject to deposit of rent and other directions; attachment of the property continues and legal/constructive possession remains with the Enforcement Directorate pending further orders.

Provisional attachment - lapse of attachment for failure to file prosecution complaint within statutory period - continuance of attachment under Section 8(3)(a) of PMLA - proceeds of crime - effect of interim stay by High Court on filing prosecution complaintLapse of attachment for failure to file prosecution complaint within statutory period - continuance of attachment under Section 8(3)(a) of PMLA - Attachment lapsed because the Enforcement Directorate did not file the prosecution complaint within ninety days from the adjudicating authority's confirmation order, entitling the appellant to set aside of the attachment. - HELD THAT: - The adjudicating authority's confirmation of provisional attachment dated 13.09.2018 continued only for the period permitted by law. Section 8(3)(a) provides that such attachment shall continue during investigation for a period not exceeding ninety days or during the pendency of proceedings before a court. No proceedings under the PMLA were pending in a court within ninety days of the impugned order. The prosecution complaint was filed on 03.05.2019, well after the ninety-day period expired in December 2018 and before the statutory extension to 365 days. A legal right therefore accrued to the appellant when the complaint was not filed within the statutory ninety days, and the attachment could no longer be sustained. On that basis the Tribunal set aside the adjudicating authority's confirmation and the provisional attachment order in respect of the property. The Tribunal expressly did not go into the merits of the underlying allegations and noted that if the property forms part of any subsequent prosecution complaint the appellant may approach the Special Court for appropriate orders. [Paras 10, 11, 12, 14]Attachment set aside as lapsed for non-filing of prosecution complaint within ninety days; impugned order and PAO vacated.Effect of interim stay by High Court on filing prosecution complaint - provisional attachment - The interim order of the High Court in W.P. (C) No. 8356/2018 did not prohibit the Enforcement Directorate from filing the prosecution complaint and did not stay implementation in a manner that prevented filing within ninety days for the appellant who was not a party to that writ petition. - HELD THAT: - An interim order dated 10.08.2018 in a writ petition by third parties directed that orders, if any, shall not be implemented and that provisional attachment shall continue to be operative; it did not expressly or impliedly bar the ED from filing prosecution complaints. The appellant was not a party to that writ petition. Consequently, the respondent cannot rely on that interim order as a justification for failing to file the prosecution complaint within the statutory ninety-day period. The Tribunal rejected the respondent's contention that the High Court stay operated to extend the period for filing the complaint in the appellant's case. [Paras 13]High Court's interim order did not excuse or extend the period for filing the prosecution complaint in respect of the appellant.Final Conclusion: The appeal is allowed: the adjudicating authority's confirmation of provisional attachment and the P.A.O. are set aside because the prosecution complaint was not filed within the statutory ninety-day period; the Tribunal did not adjudicate the merits of the underlying allegations and observed that appropriate relief before the Special Court may be sought if the property is included in any prosecution complaint.

Lapse of provisional attachment for want of pending PMLA proceedings at the time of confirmation - requirement of a prosecution complaint under section 45 to sustain confirmation under section 8(3)(a) (pre amendment) - prospective operation of statutory amendment - independence of PMLA proceedings from underlying scheduled offence trial for purposes of attachmentLapse of provisional attachment for want of pending PMLA proceedings at the time of confirmation - requirement of a prosecution complaint under section 45 to sustain confirmation under section 8(3)(a) (pre amendment) - Whether the confirmation of provisional attachment dated 22.09.2016 was valid where no prosecution complaint under section 45 PMLA was pending at that time - HELD THAT: - The Tribunal applied the statutory scheme of section 8(3)(a) as it stood prior to the 2018 amendment and held that continuation of a confirmation order contemplates the existence of pending PMLA proceedings (i.e. a prosecution complaint under section 45) at the time of confirmation. Reliance was placed on the Tribunal's earlier reasoning in S.V. Srinivas (noted in the judgment) and on principles of statutory construction showing that the confirmation of attachment cannot subsist in the absence of the PMLA complaint pending before the Special Court. Factual chronology showed that the provisional attachment was confirmed on 22.09.2016 but the prosecution complaint under section 45 was filed only on 11.06.2018. In view of the absence of PMLA proceedings on the date of confirmation, the Tribunal held that the attachment had lapsed and therefore directed release of the attached properties without entering upon the merits of the underlying allegations. [Paras 28, 34, 36, 37, 48]The confirmation order dated 22.09.2016 was ineffective for want of pending PMLA proceedings on that date; the attachments stood lapsed and are released.Prospective operation of statutory amendment - independence of PMLA proceedings from underlying scheduled offence trial for purposes of attachment - Whether subsequent amendments to section 8(3)(a) could retrospectively validate the 2016 confirmation - HELD THAT: - The Tribunal examined the sequence of legislative changes to section 8(3)(a) and the notification bringing the 2018 amendment into force on 19.04.2018. It held that the 2018 amendment was substantive and prospective in effect and thus could not be applied retrospectively to revive an attachment that had lapsed under the unamended provision as on 22.09.2016. The Tribunal therefore declined to apply the post 2016 amendments to validate the earlier confirmation and observed that the question of merits of the underlying allegations remained open and unaffected. [Paras 29, 37, 39, 46, 47]The statutory amendments are prospective and do not validate the confirmation of 22.09.2016; the lapse of attachment cannot be cured retrospectively.Final Conclusion: Appeals allowed; attachments released because confirmation could not lawfully continue in the absence of PMLA proceedings at the time of confirmation. Proceedings on the scheduled offence complaints continue unimpaired and will be decided on merits.

Provisional attachment - first proviso of Section 5(1) of the PMLA - possession under Section 8(4) read with Rule 5(1) of the 2013 Rules - proceeds of crime - predicate/scheduled offence requirement - finality of income tax assessment - Section 23 rebuttable presumptionPossession under Section 8(4) read with Rule 5(1) of the 2013 Rules - provisional attachment - Lawfulness of the Enforcement Directorate's taking of physical possession of the attached immovable property - HELD THAT: - The Tribunal found that after confirmation of a provisional attachment order the Director (or authorised officer) may take possession but must do so in the manner prescribed. Rule 5(1)-(2) mandates issuance of a notice to the Registrar and, where the property is occupied by the owner, a ten day eviction notice before forcible eviction and taking of possession with assistance of local authorities. In the present case possession was taken before the eviction notice period had run and the notice of possession was served only after possession was taken. The action of taking complete physical possession (100%) contrary to the procedure in Rule 5 and the statutory prescription was held to be arbitrary and contrary to mandatory provisions of the Act and Rules. On that basis the Tribunal directed immediate restoration of possession to the appellants. [Paras 21, 22]Possession taken by the respondent is contrary to mandatory provisions and is restored to the appellants forthwith.First proviso of Section 5(1) of the PMLA - predicate/scheduled offence requirement - proceeds of crime - finality of income tax assessment - Section 23 rebuttable presumption - Validity of the provisional attachment confirmed by the Adjudicating Authority under the first proviso to Section 5(1) of the PMLA and related merits - HELD THAT: - The Tribunal examined whether the preconditions for attachment under the first proviso to Section 5(1) were satisfied. The respondent admitted that the appellants were neither named in the FIR/ECIR nor charge sheeted and that no report under Section 173 CrPC or complaint by an authorised investigating agency had been made against the appellants. The Tribunal emphasised that the first proviso limits attachment under Section 5(1) to situations where a report/complaint has been forwarded or filed in respect of the scheduled offence; absent such predicate/scheduled offence proceedings, the substratum for 'proceeds of crime' does not exist. The Tribunal also noted that the Income tax assessment for the relevant transactions attained finality with a finding of genuineness and that the respondent had not invoked or relied upon Section 23 presumptions before the Adjudicating Authority. On merits, having found the reason to believe for attachment unsustainable in light of absence of scheduled offence proceedings and the final IT assessment, the Tribunal held that the provisional attachment as confirmed could not be sustained and quashed the attachment subject to a conditional deposit to meet the limited allegation. [Paras 9, 25, 31, 45, 46]Provisional attachment confirmed by the Adjudicating Authority is quashed; appellants to deposit the alleged proceeds sum within two months (with liberty to move for modification on proof of genuineness).Final Conclusion: The appeal is partly allowed: the respondent's physical possession of the property is set aside and restored to the appellants for breach of the prescribed procedure; the confirmed provisional attachment is quashed on merits for failure to satisfy the first proviso of Section 5(1) and related requirements, subject to the conditional deposit ordered by the Tribunal.

Provisional attachment under Section 5(1) of PMLA - confirmation under Section 8(2) of PMLA - proceeds of crime - equivalent value - separate legal entity of holding and subsidiary - indemnity bond as condition for releaseProvisional attachment under Section 5(1) of PMLA - confirmation under Section 8(2) of PMLA - proceeds of crime - indemnity bond as condition for release - Validity of the three Provisional Attachment Orders/Adjudicating Authority confirmations insofar as they attach movable investments of 63 Moons Technologies Ltd. - HELD THAT: - The Tribunal examined the sufficiency of material relied upon by the Enforcement Directorate and the Adjudicating Authority and balanced the competing facts: (i) that investigation and criminal proceedings under the scheduled offences and PMLA are continuing and certain interim restraints (CLB/NCLT/EOW) operate against 63 MTL; (ii) that only a limited sum (admitted Rs. 84 crores) had been traced/received by 63 MTL from NSEL and deposited in court; (iii) that no clear money trail beyond that sum had been demonstrated to have been received by 63 MTL as proceeds of crime at the time of confirmation of the PAOs; and (iv) the hardship which a continuing attachment would cause to a listed company with thousands of shareholders and employees. Weighing these factors, the Tribunal found it appropriate to quash the provisional attachment insofar as it affected the movable investments (DEMAT holdings) of 63 MTL, but only on protective conditions aimed at preserving the Directorate's ability to secure restitution if future investigation establishes further transfers or proceeds: (a) 63 MTL and Jignesh Shah & family are restrained from alienating assets until final order; and (b) shareholders (Jignesh Shah and family) to furnish an indemnity bond and undertaking for the face value of the attached investments, with liberty to ED to attach further amounts if later traced to 63 MTL. The Tribunal therefore modified the impugned confirmations and directed release of the movable investments subject to the specified conditions. [Paras 119, 120]Provisional attachments and their confirmations quashed in respect of 63 Moons Technologies Ltd.'s movable investments, subject to restraint and furnishing of an indemnity bond and undertaking as specified; liberty granted to ED to pursue further attachment if investigation traces additional proceeds.Proceeds of crime - equivalent value - separate legal entity of holding and subsidiary - Challenges by NSEL to the Adjudicating Authority's characterisation of NSEL's gross receipts as 'proceeds of crime' and to confirmation of PAOs affecting the parent company's assets. - HELD THAT: - The Tribunal recorded and considered NSEL's submissions that (i) substantial parts of NSEL's gross receipts arose from non exchange or legitimate service activities; (ii) defaulted settlement liabilities were traceable principally to the 24 defaulting trading members rather than to NSEL or its holding company; and (iii) the Adjudicating Authority had relied unduly on regulatory findings and a prima facie approach without adequately weighing material placed on record. Notwithstanding these contentions, the Tribunal did not grant the relief sought by NSEL to set aside the confirmations in their entirety. The Tribunal observed the ongoing state of investigation, the findings and material placed before it (including statements and forensic reports), and the Supreme Court's observations on the factual matrix, and concluded that it could not presently give a complete exoneration to the persons and entities implicated; consequently, the appeals by NSEL did not succeed in overturning the attachments as regards the broader investigation and recovery process. The final order therefore left the Adjudicating Authority's confirmations effectively intact in respect of the broader attachment scheme while trimming relief only as to the specific movable investments of 63 MTL on the protective conditions already recorded.Appeals by NSEL challenging the confirmations were not allowed to the extent of obtaining a full release; the Tribunal retained the broader attachment framework while granting the limited conditional relief in favour of 63 MTL.Final Conclusion: The appeals are partly allowed: the Tribunal modified the Adjudicating Authority's confirmations by quashing the provisional attachment insofar as it affected the movable investment (DEMAT) holdings of 63 Moons Technologies Ltd., subject to interim restraints and the furnishing of an indemnity bond and undertaking; the broader attachment and investigation remit concerning NSEL, the defaulters and proceeds of crime remains undisturbed and may be further acted upon if subsequent investigation traces additional proceeds to 63 MTL.

Attachment under Section 5 of PMLA - Provisional attachment - Bonafide third party claimant - Secured creditor's charge/encumbrance - Priority of enforcement by secured creditor vis-a -vis PMLA attachment - Coexistence of PMLA and Insolvency Code - Adjudication under Section 8 of PMLASecured creditor's charge/encumbrance - Bonafide third party claimant - Priority of enforcement by secured creditor vis-a -vis PMLA attachment - Whether immovable properties mortgaged to banks prior to the alleged commission of scheduled offences are liable to remain subject to PMLA attachment or whether the secured creditors' charge must be satisfied first and the attachment restricted to the surplus value. - HELD THAT: - The Tribunal applied the principle that a bona fide third party claimant who acquired interest prior to the commission of the alleged criminal activity cannot have its lawful security interest defeated merely by an attachment under PMLA. Where a secured creditor had created and registered a charge and initiated enforcement proceedings in accordance with law prior to the PMLA attachment, the attachment remains operative but must give way to satisfaction of the secured creditor's charge; only the value in excess of the secured claim is available for PMLA purposes. The Adjudicating Authority failed to demonstrate material showing that the charges were created to defeat PMLA or that the secured creditors were privy to money laundering, and the properties were shown to have been acquired and charged before the alleged offences. [Paras 31, 32, 33, 34]The charge/encumbrance of the secured creditors survives the PMLA attachment; the attachment is restricted to the extent of surplus value beyond the secured creditors' claims and the impugned order confirming attachment is set aside in respect of the appellants' mortgaged properties.Attachment under Section 5 of PMLA - Adjudication under Section 8 of PMLA - Whether the Adjudicating Authority applied its mind and recorded reasons sufficient to justify confirmation of provisional attachment. - HELD THAT: - The Tribunal found that the Adjudicating Authority's order and the show cause material did not disclose any reasoning to show a 'reason to believe' that the appellants were in possession of proceeds of crime or that the secured interests were tainted. The Adjudicating Authority did not examine the banks' case or the replies, and its order lacked application of mind and requisite analysis under Sections 5 and 8 of PMLA. [Paras 37]The Adjudicating Authority's confirmation of attachment is vitiated by want of reasoned application of mind and is set aside in respect of the appellants.Coexistence of PMLA and Insolvency Code - Priority of enforcement by secured creditor vis-a -vis PMLA attachment - Whether the Resolution Professional and the Committee of Creditors, acting under the Insolvency and Bankruptcy Code, can seek release of attached assets to pursue CIRP and resolution plans. - HELD THAT: - The Tribunal recorded that a Resolution Professional represents the collective interest of creditors and that the object of the Insolvency Code is maximisation of asset value for stakeholders. Where attachment impedes the CIRP and the secured creditors (as members of the CoC) have lawful charges created prior to alleged offences, the relief to release assets for the CIRP is appropriate subject to preservation of secured creditors' rights and availability of surplus value for PMLA. The Tribunal noted the affidavits and authorisations enabling the RP/CoC to prosecute the appeal. [Paras 28, 29, 30]The appeal by the Resolution Professional and the Committee of Creditors for release of the attached assets is entertained and allowed to the extent necessary to enable the CIRP, while preserving the secured creditors' legal rights.Final Conclusion: The impugned order confirming provisional attachment insofar as it affects the mortgaged properties and rights of the secured creditors/Resolution Professional is set aside and the provisional attachment quashed, subject to satisfaction of the secured creditors' charges and preservation of any excess value for PMLA purposes; no costs.

Money-laundering - proceeds of crime - attachment under PMLA - provisional attachment - appeal under Section 26 of PMLAProceeds of crime - money-laundering - provisional attachment - attachment under PMLA - Whether House No. M-4/9, DLF Phase II, Gurgaon was acquired from proceeds of crime and therefore liable to attachment under PMLA. - HELD THAT: - The Tribunal examined the timing and sequence of payments for the property vis-a -vis the core transactions relied upon by the respondent. The purchase was finalised in September 2009 with two instalment payments on 25 September 2009 and 29 October 2009. The Citibank Custodian Account said to be the source of proceeds and central to the fraud was opened on 27 October 2009 and, on the material on record, had no transactions prior to November 2009. The respondent did not produce bank statements or other evidence to establish that funds constituting the proceeds of the scheduled offences were used to make the payments for this house prior to the opening of the custodian account or that the property was acquired from tainted funds. The appellant was not charge sheeted, was not an accused in the criminal proceedings, and no objectionable transactions were detected in her accounts. On the basis of the material placed before it, the Tribunal concluded there was no reason to believe, on the facts proved, that the property was purchased from proceeds of crime or was involved in money laundering. [Paras 34, 41]The provisional attachment of House No. M-4/9, DLF Phase II, Gurgaon is set aside and the attachment is released insofar as this property is concerned; the appellant is liberty to move the Special Court for release of the property in accordance with the provisions of Section 8 of the Act.Final Conclusion: Appeal allowed insofar as release of the specific property M-4/9, DLF Phase II, Gurgaon; attachment set aside for that property and appellant directed to approach the Special Court under the statutory procedure for formal release. No costs.

Provisional attachment - attachment under PMLA - proceeds of crime - release on deposit/undertaking - no prosecution under scheduled offenceProvisional attachment - release on deposit/undertaking - attachment under PMLA - Whether the immovable property provisionally attached under PMLA could be released to the appellant on the basis of the appellant's undertaking and the post-dated cheques placed on record. - HELD THAT: - The Tribunal recorded the appellant's detailed undertaking and the filing of original post-dated cheques as proof of willingness to deposit the alleged proceeds. Relying on that undertaking and the cheques placed on record, the Tribunal set aside the adjudicating authority's confirmation of the attachment and directed release of the immovable property, subject to the condition that the property shall remain under attachment until the entire alleged proceeds are received by the respondent and the cheques are encashed. The Registrar was authorised to permit the respondent to obtain the original cheques from the record. The order conditions the release on actual receipt/encashment and not merely on the undertaking. [Paras 2, 21, 22, 23, 24]Impugned order confirming provisional attachment modified: property to be released to appellant only after the respondent receives the entire alleged proceeds by encashment of the post-dated cheques; attachment continues until then.Proceeds of crime - no prosecution under scheduled offence - Whether the appellant had been prosecuted or charge-sheeted under any scheduled offence in respect of the underlying Rose Valley investigations. - HELD THAT: - The Tribunal noted that no case under any scheduled offence had been filed against the appellant before any Court and that the proceedings and attachment arose from investigations and the case instituted against the Rose Valley Group and its chairman. The Tribunal further recorded that the appellant and his family members were not at any time involved directly or indirectly in running any Ponzi scheme or collection of deposits from the public and that the appellant is a real estate developer. These findings informed the Tribunal's exercise of discretion in accepting the appellant's undertaking and permitting conditional release. [Paras 4, 5, 11, 23]The Tribunal observed that the appellant has not been charge-sheeted or prosecuted under any scheduled offence; that background influenced acceptance of the undertaking and conditional modification of the attachment order.Final Conclusion: The Tribunal modified the adjudicating authority's order: the confirmed attachment was set aside subject to the appellant's undertaking and deposit mechanism; the immovable property shall be released only after the respondent receives the entire alleged proceeds by encashment of the post-dated cheques, and the attachment shall continue until such payment is received. No costs were awarded.

Reason to believe - second proviso to Section 5(1) of the Prevention of Money Laundering Act - provisional attachment under PMLA - recording reasons in writing - priority of secured creditor - reverse burden of proof and foundational facts - seizure and retention under Section 17 PMLA - notice under Section 8(1) PMLASecond proviso to Section 5(1) of the Prevention of Money Laundering Act - reason to believe - recording reasons in writing - provisional attachment under PMLA - Validity of the provisional attachment passed under the second proviso to Section 5(1) PMLA in the absence of separately recorded reasons to believe. - HELD THAT: - The second proviso to Section 5(1) PMLA requires that an officer (not below Deputy Director) must have and record in writing independent 'reasons to believe' that immediate attachment is necessary because non-attachment is likely to frustrate proceedings. The Tribunal found that no separate reasons to believe were recorded at the stage contemplated by the proviso and that the provisional attachment order contains a substantively cut and paste narration of investigative material without an independent application of mind. The proviso is an exception to the general rule and carries additional checks; therefore invocation without complying with the statutory requirement of recording independent reasons renders the attachment unlawful. The Tribunal emphasized that reasons to believe must be recorded in writing, reflect honest and reasonable application of mind and cannot be concealed from the person concerned in a manner contrary to principles of fair procedure. Consequentially, attachments effected by invoking the proviso without the prescribed recording cannot be sustained. [Paras 15, 25, 31, 33, 38]Provisional attachment effected by invoking the second proviso to Section 5(1) PMLA without recording separate reasons to believe is unsustainable and liable to be set aside in so far as it fails that mandatory requirement.Priority of secured creditor - provisional attachment under PMLA - notice under Section 8(1) PMLA - Whether fixed deposits held as margin for bank guarantees and subject to the bank's charge could be provisionally attached and whether the Adjudicating Authority erred in confirming attachment against banks that are secured creditors. - HELD THAT: - The Tribunal examined the position of the banks as secured creditors holding exclusive charge over the fixed deposits/margin money for bank guarantees. It held that where there is no material to show nexus or knowledge of proceeds of crime by the bank, the bank's priority as a secured creditor must be respected and the Adjudicating Authority must apply its mind under Section 8(1) before issuing notice. The Tribunal found absence of requisite 'reason to believe' placed on record by the Enforcement Directorate, that the Adjudicating Authority did not adequately consider the bank's secured status, and that the banks were not shown to have any link with money laundering. On that basis the Tribunal set aside the confirmation of attachment insofar as it related to the banks and held that the banks' appeals must be allowed. [Paras 47, 48, 51, 52, 57]Attachments in respect of the banks' fixed deposits/margin money cannot be sustained; the appeals by the banks are allowed and the impugned order set aside insofar as it affects them.Seizure and retention under Section 17 PMLA - reason to believe - Requirement to record reasons to believe at the stage of search and seizure under Section 17 and the effect of non recording. - HELD THAT: - The Tribunal observed that separate reasons to believe were required to be recorded prior to search and seizure under Section 17(1) and that in the present case such reasons were not recorded or produced. The absence of those recorded reasons was treated as a further infirmity in the prosecution's case and as indicative of non compliance with mandatory procedural safeguards. The Tribunal noted that retention orders had been previously made by the Adjudicating Authority but stressed that recording of reasons is mandatory and its absence vitiates the exercise of statutory power. [Paras 6, 12, 25, 31]Non recording of the required reasons to believe at the stage of search/seizure under Section 17 is a material irregularity and undermines the validity of the actions taken under that provision.Reverse burden of proof and foundational facts - provisional attachment under PMLA - Extent of prosecution's obligation to establish foundational facts before shifting any evidentiary burden to the accused under PMLA. - HELD THAT: - The Tribunal reiterated that presumptions or reverse burdens in statutes like PMLA are permissible only after the prosecution establishes foundational facts on the basis of material. The Enforcement Directorate must first make out a prima facie case of money laundering (placement/layering) supported by material and recorded reasons; only then can any presumptive shift in burden operate. The Tribunal found that the ED had not established such foundational facts on the record presented before it and that conflicting figures produced by investigative agencies (CBI v. ED) further necessitate testing in trial. [Paras 39, 41, 42, 54, 55]Prosecution must establish foundational facts by evidence and recorded reasons before any reverse burden or presumption can be invoked; absence of such foundation weakens the case for attachment and any shift of burden.Provisional attachment under PMLA - Final administrative outcome as to quantum to be secured and release of the remainder of attached properties. - HELD THAT: - While setting aside attachments in part, the Tribunal accepted that CBI's charge sheet material supports a recoverable sum limited to the quantified loss relied upon in those proceedings. The Tribunal directed that appellants be secured to the extent of the amount found recoverable on the material relied upon (as recorded in the adjudicatory material) and ordered release of the remaining attached properties. The Tribunal clarified that its decision is interlocutory to the criminal trial and does not preclude adjudication of criminal liability on merits at trial. [Paras 59, 60]The appellants (other than the banks) are to be secured to the extent of the amount identified in the adjudicatory/CBI material (the quantified recoverable sum); the remainder of attachments is released; appeals partly allowed and impugned orders modified.Final Conclusion: The Tribunal held that invocation of the second proviso to Section 5(1) PMLA without separately recorded reasons to believe and without an independent application of mind is invalid; attachments effected on that basis could not be sustained. The appeals of the banks were allowed and their challenged attachments set aside on the basis of their secured creditor status and absence of any demonstrated nexus with proceeds of crime. In respect of other appellants the Tribunal partly allowed the appeals, securing only the quantifiable recoverable amount as per the adjudicatory/CBI material and directing release of the remainder, while leaving criminal liability to be determined at trial.

Non-application of mind - Provisional attachment under PMLA - Supply of "reasons to believe" - Confirmation of provisional attachment - Remand for fresh adjudication - Hearing of reply under Section 8(1) of the PMLA - Decision by Member (Law) within stipulated timeNon-application of mind - Provisional attachment under PMLA - Confirmation of provisional attachment - Impugned order confirming the Provisional Attachment Order set aside for failure to apply independent mind and for absence of legally cogent reasons. - HELD THAT: - The Tribunal found that the Provisional Attachment Order, the original complaint and the Adjudicating Authority's order reproduced material from the CBI chargesheet verbatim, indicating that the author of the PAO and the AA had not applied independent judicial mind. The impugned order merely reproduced pleadings without addressing or deciding the detailed issues raised in the appellant's reply. In light of the absence of assigned reasons and legally cogent findings, the Tribunal concluded that the impugned order was vitiated and could not stand. [Paras 9, 11]Impugned order set aside; appeal allowed on ground of non-application of mind.Remand for fresh adjudication - Hearing of reply under Section 8(1) of the PMLA - Decision by Member (Law) within stipulated time - Whether the matter should be remanded for fresh adjudication and the directions to be given for such adjudication. - HELD THAT: - Rather than adjudicating the substantive controversies which were inadequately considered below (including contentions as to reasons to believe, formation of opinion, and other factual and legal defences raised in the reply), the Tribunal remanded the matter to the Adjudicating Authority for fresh adjudication. The AA was directed to consider the reply filed to the notice under Section 8(1) of the Act, hear the parties on all issues raised, and decide the matter on merits. The Tribunal granted a specific timeline and designated the Member (Law) to decide the matter, thereby confining its intervention to correcting the procedural/legal infirmity and ensuring a reasoned decision on the merits by the AA. [Paras 11, 12, 13]Matter remanded to the Adjudicating Authority for fresh adjudication after hearing the parties and considering the reply; to be decided by the Member (Law) within six months from 21.10.2019; parties to appear on 21.10.2019.Final Conclusion: The appeal is allowed; the impugned order confirming the provisional attachment is set aside for want of application of mind and inadequate reasons, and the matter is remanded to the Adjudicating Authority for fresh, reasoned adjudication after hearing the parties and considering the reply, to be decided by the Member (Law) within six months from 21.10.2019.

Provisional attachment - Proceeds of crime - Money laundering under Section 3 PMLA - Statements recorded under Section 50 PMLA - Show cause notice under Section 8(1) PMLA - Adjudicating Authority's duty to record reasons - Benefit derived from allocationProvisional attachment - Adjudicating Authority's duty to record reasons - Validity of the Provisional Attachment Order and confirmation thereof by the Adjudicating Authority - HELD THAT: - The Tribunal held that the Adjudicating Authority confirmed the provisional attachment by relying on material and reasons that went beyond the record before it and beyond the reasons recorded by the Enforcement Directorate in the PAO/Original Complaint. The Adjudicating Authority supplied new justifications (including speculative possibilities of disposal/transfer of the running unit and presumed conduct of directors) which were not the ED's stated grounds and were not supported by material on record. The show-cause process and the impugned confirmation therefore suffered from non application of judicial mind and absence of adequate recorded reasons. On merits the Tribunal found the confirmation unsustainable and set aside the impugned order confirming provisional attachment. [Paras 56, 57, 58, 62]Impugned order confirming provisional attachment set aside for lack of adequate reasons and for relying on materials beyond the recordStatements recorded under Section 50 PMLA - Proceeds of crime - Whether the Adjudicating Authority was justified in disbelieving or reinterpreting the Section 50 statements of investor witnesses - HELD THAT: - The Tribunal held that the statements recorded under Section 50 PMLA were duly signed and affirmed and constituted judicial proceedings; the Adjudicating Authority erred in disbelieving those statements without any material basis. The AA impermissibly read materials beyond the record to conclude that investors were allured by coal allocation; it could not rewrite or reinterpret the Section 50 statements absent contradictory evidence. The Tribunal concluded that the AA's disbelief of those statements lacked factual foundation. [Paras 39, 40, 41, 61]Adjudicating Authority's disbelieving of Section 50 statements held to be unjustifiedMoney laundering under Section 3 PMLA - Proceeds of crime - Benefit derived from allocation - Whether the investments (Share Application Money) constituted proceeds of crime and whether money laundering as defined under Section 3 PMLA was established - HELD THAT: - The Tribunal found that there was no material before the Adjudicating Authority to show that investors invested on the basis of any allurement relating to coal allocation or that the company had derived benefit from the coal block. No mining activity or extraction occurred and the allocation had been de allocated and subsequently cancelled by the Supreme Court; the company operated and made profits both before and after allocation/de allocation. The Tribunal observed that mere commercial allurement or business expectation cannot be equated with money laundering absent actual derivation or use of proceeds of crime. On the available record the ED had not established that the SAM represented tainted proceeds or that Section 3 PMLA offences had been made out for the purpose of sustaining attachment. [Paras 42, 43, 44, 45, 46]Findings that SAM/ investments were proceeds of crime or that money laundering was established were not sustainedShow cause notice under Section 8(1) PMLA - Adjudicating Authority's duty to record reasons - Sufficiency and validity of the Show Cause Notice issued under Section 8(1) PMLA - HELD THAT: - The Tribunal held that the Show Cause Notice reproduced statutory language and employed an 'or' construction that evidenced non application of mind, failing to communicate a definitive belief as to whether an offence under Section 3 PMLA had been committed or whether the person was in possession of proceeds of crime. The notice did not satisfy the mandatory statutory requirements of Section 8(1) as interpreted by the Tribunal, thereby undermining the procedural foundations for confirmation of attachment. [Paras 52, 53]Show Cause Notice held to be vague and deficient for lack of clear reasonsFinal Conclusion: The Tribunal allowed the appeals, set aside the Adjudicating Authority's order confirming provisional attachment and found that the ED/Adjudicating Authority had not established that the share application money constituted proceeds of crime or that money laundering under Section 3 PMLA was made out; the confirmation was invalid for relying on material beyond the record and for defective reasoning and show cause procedure

Seizure and retention of documents under section 17 of PMLA - recording of reasons to believe before seizure - requirement of application of mind by adjudicating authority - de-freezing / release of frozen bank instruments and insurance policiesSeizure and retention of documents under section 17 of PMLA - recording of reasons to believe before seizure - Validity of the impugned order permitting retention of documents seized from the appellant's premises in light of the statutory requirement to record reasons to believe and the appellant's specific reply. - HELD THAT: - The Tribunal found that the Adjudicating Authority's order allowing retention of seized documents did not deal with or consider the appellant's specific reply that the seized FDs and insurance policies belonged to her parents and represented lawful retirement proceeds. The record shows no finding that the seized instruments were proceeds of crime or that the appellant had derived those funds. The adjudicating authority also did not place on record or discuss the "reasons to believe" required under Section 17(1) prior to seizure. For these reasons the Tribunal concluded that the impugned order was passed without proper application of mind and without considering material defence submitted by the appellant, rendering the retention order unsustainable as regards the appellant's property. [Paras 10, 11, 12]Impugned order set aside insofar as it authorises retention of the appellant's records; order passed without application of mind and without considering the appellant's reply.De-freezing / release of frozen bank instruments and insurance policies - requirement of application of mind by adjudicating authority - Relief to be granted in consequence of setting aside the retention order in respect of the FDs and LIC policies identified as belonging to the appellant's parents. - HELD THAT: - The Tribunal, while not expressing any opinion on the merits of the underlying investigation or on other seized documents, directed immediate de-sealing / de-freezing of the LIC policies and fixed deposits described in the record in favour of the appellant because those instruments were shown to belong to her parents and the adjudicating authority had not found them to be proceeds of crime nor had it considered the appellants' material. The Tribunal clarified that this direction does not constitute an adjudication on merits as to other persons or other documents. [Paras 12]The LIC policies and fixed deposits belonging to the appellant's parents shall be de-sealed / de-frozen forthwith; no expression of opinion on merits of the underlying investigation or other seized documents.Final Conclusion: The appeal is allowed to the extent indicated; the Adjudicating Authority's order retaining the appellant's parentally held FDs and insurance policies is set aside for want of application of mind and failure to consider the appellant's reply, and those specific instruments are directed to be de sealed / de frozen immediately, without prejudice to the ongoing investigation or other parties.