A mere agreement to sell an immovable property does not confer ownership; adherence to procedural mandates of the Prevention of Money Laundering Act is necessary for valid attachment of properties linked to proceeds of crime.

JUDGMENT :

(PER: HON'BLE MR. JUSTICE VENKATESH NAIK T)

1. This appeal is filed by the appellant/Directorate of Enforcement under Section 42 of the Prevention of Money Laundering Act, 2002 (for short, 'PMLA, 2002') to set aside the judgment dated 06.08.2019 passed by the Appellate Tribunal, New Delhi, under the PML Act, 2002, in MP-PMLA- 4917/MUM/2018(U.A), MP-PMLA-4918/MUM/2018 (Stay) and FPA-PMLA-2532/MUM/2018.

2. The brief facts of the case are that, the CBI - BS & FC has registered the FIR No. RC BSM 2015 E 0006 dated 29.07.2015 against Sri Vijay Mallya, M/s. Kingfisher Airlines Ltd., and unknown officers of IDBI and others for showing undue favour to M/s. Kingfisher Airlines Ltd. (for sake of brevity, "M/s. KAL") in the matter of sanction and disbursement of short-term loans (STL) to the tune of Rs.150 Crores, Rs.200 Crores and Rs.750 Crores, respectively, despite weak financials, negative net worth and low credit rating of the borrower Company and despite the fact that the Company, viz., M/s. KAL, being a new client, did not satisfy the norms stipulated in the corporate loan policy of the bank.

3. The officials of the IDBI Bank Ltd., M/s. KAL and its officials conspired among themselves and got sanctioned and disbursed term loans aggregating to Rs.750 Crores to M/s. KAL without conducting due diligence and M/s. KAL had diverted the funds, thereby putting the IDBI Bank to a wrongful loss of Rs.750 Crores.

4. The FIR revealed that M/s. KAL was a company promoted and incorporated by Sri Vijay Mallya in the year 2003 and was a fully owned subsidiary company of M/s. UB (Holdings) Ltd., Bengaluru. Sri Vijay Mallya was the chairman and CEO of M/s. KAL. Later, a significant portion of the aforementioned funds which was sanctioned and disbursed by IDBI Bank Ltd., were transferred by M/s. KAL to their bank account held with various other banks, which were then further transferred to other accounts of M/s. KAL. The said loan amounts were utilised for the purposes other than the declared ones. Similarly, a major portion of funds transferred were shown to be utilised for foreign remittances towards lease rentals, purchase of aircraft parts, etc., which had gone outside the country and paid into the bank account of M/s. KAL in London.

5. Hence, the CBI-BS & FC filed an FIR under Section 409 read with 120B of Indian Penal Code, 1860, and 13(2) read with Section 13 (1)(d) of the Prevention of Corruption Act, 1988.

6. Based on the scrutiny of the facts of the said case, the appellant, Enforcement Directorate, has registered a case bearing No.ECIR/MBZO/03/2016 dated 25.01.2016, for investigating into the offence of money laundering, if any, in terms of the PMLA, 2002. The offence under Section 120 (B) of IPC , 1860 and Section 13 (2) read with (1)(d) of the Prevention of Corruption Act, 1988, falls under scheduled offences covered by paragraphs 1 and 8 of Part-A of Schedule to the PMLA, 2002.

7. During the course of invest