Telangana HC permits replacement of attached property with fixed deposit under PMLA Section

Telangana HC allowed an application for modification of interim order seeking replacement of attached immovable properties with fixed deposit under PMLA. The court distinguished the Hetero Drugs Limited case, noting it involved pending appeal against provisional attachment confirmation. Here, the Appellate Tribunal had already interfered with attachment orders and directed bank guarantee of Rs.192 crores while releasing other attachments. The applicant offered fixed deposit of Rs.1,36,91,285 as alternative security for the subject property, which the court accepted.

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Issues Involved:
1. Modification and/or vacation of the interim order dated 18.11.2019.
2. Substitution of attached immovable and movable properties with fixed deposits.
3. Return of Rs.14.29 crores along with interest.

Summary:

Issue 1: Modification and/or vacation of the interim order dated 18.11.2019

The three interlocutory applications were filed for modification and/or vacation of the interim order dated 18.11.2019 passed by the Court in I.A.No.2 of 2019 in C.M.S.A.No.15 of 2019. The Court had directed the maintenance of status quo as on 18.11.2019 until further orders. The opposite party, Deputy Director, Directorate of Enforcement, filed counter affidavits objecting to and seeking dismissal of the applications.

Issue 2: Substitution of attached immovable and movable properties with fixed deposits

In I.A.No.1 of 2021, the applicant sought to substitute the attached immovable property with a fixed deposit of Rs.1,36,91,285.00. In I.A.No.2 of 2021, the applicant sought to substitute the attached movable property (61,38,937 equity shares) with a fixed deposit of Rs.6,13,89,370.00. The Court noted that while there is no specific provision in the PMLA for substitution of attached properties, Rule 5(5) of the Prevention of Money Laundering (Taking Possession of Attached or Frozen Properties Confirmed by Adjudicating Authority) Rules, 2013 allows for accepting equivalent value of fixed deposits in certain cases. The Court found the applicant's prayer just and reasonable and allowed I.A. Nos.1 and 2 of 2021.

Issue 3: Return of Rs.14.29 crores along with interest

In I.A.No.3 of 2021, the applicant sought the return of Rs.14.29 crores along with interest, which was appropriated by the opposite party by encashing fixed deposits. The Court, considering the pending appeal, declined to issue any positive direction for the return of the amount at this stage and dismissed I.A.No.3 of 2021.

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