2025 (1) TMI 991 - AT - Money Laundering

Schedule B properties cannot be segregated from purchased floors as common areas are integral to property enjoyment

M/s. United Spirits Ltd., M/s United Breweries Ltd., BMM Construction & Projects Pvt. Ltd., Mr. Ravishankar Keerthapati Ramaraju Versus The Deputy Director Directorate of Enforcement, Mumbai

M/s. United Spirits Ltd., M/s United Breweries Ltd., BMM Construction & Projects Pvt. Ltd., Mr. Ravishankar Keerthapati Ramaraju Versus The Deputy ... 1. ISSUES PRESENTED and CONSIDEREDThe legal judgment primarily revolves around the following core issues:Whether the attachment of properties under the Prevention of Money Laundering Act, 2002 (PMLA) was justified.Whether the appellants have legitimate claims to the properties that were attached as part of the proceedings under PMLA.Whether the common areas and amenities associated with the properties can be separately attached or alienated.Whether the appellants who entered into agreements to purchase units have any rights or claims despite the properties being under liquidation.2. ISSUE-WISE DETAILED ANALYSISIssue 1: Justification of Property Attachment under PMLALegal Framework and Precedents: The attachment of properties was conducted under Section 26 of the PMLA, which allows for the attachment of properties involved in money laundering activities.Court's Interpretation and Reasoning: The court considered the allegations of fraud and money laundering involving significant funds, which justified the provisional attachment of properties to prevent further dissipation.Key Evidence and Findings: The court relied on the findings from the preliminary inquiry and the FIR registered by the CBI, which indicated the misuse and diversion of funds by Kingfisher Airlines Ltd. and its associates.Application of Law to Facts: The court applied the provisions of PMLA to confirm the attachment, given the prima facie evidence of money laundering activities.Treatment of Competing Arguments: The appellants argued against the attachment, highlighting their legitimate business operations and ownership rights, but the court found the attachment justified pending further investigation.Conclusions: The attachment was upheld as a necessary measure to secure the proceeds of crime and prevent further laundering activities.Issue 2: Legitimate Claims to Attached PropertiesLegal Framework and Precedents: The appellants sought to challenge the attachment based on their ownership and purchase agreements.Court's Interpretation and Reasoning: The court acknowledged the appellants' claims but emphasized the need for due process under the liquidation proceedings.Key Evidence and Findings: Sale deeds and agreements to sell were presented as evidence of ownership and purchase intentions.Application of Law to Facts: The court considered the appellants' arguments but deferred to the ongoing liquidation process for final resolution.Treatment of Competing Arguments: The court balanced the appellants' claims with the overarching need to resolve the liquidation and attachment issues comprehensively.Conclusions: The court allowed the appellants to pursue their claims through the appropriate liquidation proceedings.Issue 3: Attachment of Common Areas and AmenitiesLegal Framework and Precedents: The attachment of common areas was contested based on property rights associated with individual units.Court's Interpretation and Reasoning: The court recognized that common areas are integral to the enjoyment of individual units and cannot be separately attached.Key Evidence and Findings: Sale deeds explicitly included rights to common areas and amenities, supporting the appellants' arguments.Application of Law to Facts: The court found that the attachment of common areas was not permissible without affecting the rights of individual unit owners.Treatment of Competing Arguments: The court sided with the appellants, emphasizing the indivisibility of common areas from unit ownership.Conclusions: The attachment of common areas was deemed inappropriate, and the appeals were allowed in this regard.Issue 4: Rights of Purchasers with Agreements to SellLegal Framework and Precedents: The appellants who entered into agreements to sell sought recognition of their rights despite the liquidation status.Court's Interpretation and Reasoning: The court acknowledged the agreements but highlighted the necessity of pursuing claims through the liquidation process.Key Evidence and Findings: Agreements to sell and partial payments were presented as evidence of the appellants' intentions and actions.Application of Law to Facts: The court deferred the resolution of these claims to the appropriate liquidation proceedings.Treatment of Competing Arguments: The court balanced the appellants' claims with the procedural requirements of liquidation.Conclusions: The appeals were disposed of with directions to pursue claims through the liquidation process.3. SIGNIFICANT HOLDINGSVerbatim Quotes: 'The attachment of common areas and amenities is not permissible as they are integral to the enjoyment of individual units and cannot be separately alienated.'Core Principles Established: The indivisibility of common areas from unit ownership was a key principle upheld by the court.Final Determinations: Appeals concerning common areas were allowed, while claims related to agreements to sell were directed to be pursued through liquidation proceedings.The judgment highlights the complexities involved in property attachment under PMLA, balancing the enforcement of anti-money laundering laws with the protection of legitimate property rights. The court's decision underscores the importance of due process in liquidation and attachment proceedings, ensuring that all parties' rights are adequately considered and protected.