Provisional attachment under the Prevention of Money Laundering Act requires a nexus between the property and proceeds of crime, which was not established.

FPA-PMLA-1684/MUM/2024 SGS Infratech Ltd. … Appellant Versus The Deputy Director, Directorate of Enforcement, Mumbai … Respondent Advocates/Authorized Representatives who appeared For the Appellant : Mr. Arun Ku. Agarwal, Mr. Shubham Agarwal Ms. Aarohi Bhalla, Advocates For the Respondent : Mr. Ritesh Agarwal, Ms. Priyanshi Sharma, Advocates CORAM JUSTICE MUNISHWAR NATH BHANDARI : CHAIRMAN SHRI V. ANANDARAJAN : MEMBER

FINAL ORDER

30.05.2025 By this appeal under Section 26 of Prevention of Money Laundering Act , 2002, a challenge has been made to the order dated 1st August, 2024 passed by the Adjudicating Authority confirming the provisional attachment of the property in the hands of the appellant.

The counsel for the appellant submitted that respondent has provisionally attached the immovable property of the appellant which has no nexus to the FIR registered against the accused on 30.09.2019. The gist of FIR would reveal allegation of commission of offences by the accused under Section 409, 420, 465, 466, 471 read with 120 B IPC with Punjab and Maharashtra Cooperative Bank (PMC Bank).

The transaction of the appellant for making provisional attachment order has not been referred anywhere in the FIR or even in the ECIR. It has absolutely no nexus to allegation. The allegation of the PMC Bank was against many accused which include Mr. Waryam Singh (the Chairman of PMC Bank) and Mr. Sarang Wadhawan apart from Mr. Rakesh Kumar Wadhawan of M/s Housing Development & Infrastructure Private Ltd. (HDIL)

and other entities of HDIL for causing wrongful losses to the bank to the tune of Rs. 4,355 crores and corresponding gain to themselves and others.

The check period for the aforesaid was taken from 18.07.2011 to 9.01.2015.

The counsel for the appellant referring to the facts of the case submitted that an agreement was entered between the appellant and Mr. Rakesh Kumar Wadhawan of HDIL for sale of 50% share of the mall constructed in Pune. The agreement was executed in November, 2007 for a sum of Rs. 82 crores. The HDIL and its entities paid only Rs. 35.4 crores till October, 2010. They defaulted in making the remaining payment and accordingly on 28.12.2011, parties agreed to cancel the MoU/ agreement for sale of 50% share of the mall. The appellant returned a sum of Rs. 23.20 crores and retained Rs. 12.2 crores as per the agreement between the two parties. The transaction for sale of share of mall had taken place in the year 2007 with payment of Rs. 35.4 crores till October, 2010 well before the check period and therefore the payment by the HDIL for purchase of property had no nexus with the loan advanced by PMC Bank much subsequent to the MoU/ agreement of year 2007. The respondent has yet attached the property of the appellant of Rs. 13.20 crores without any nexus rather assuming forfeiture of Rs. 12.20 crores to be proceeds of crime, whereas the partial payment of Rs. 35.4 crores was made much prior to check period, thus, it was not out of the loan advanced by PMC Bank, thus, the Impugned Order calls for interference.

The counsel for the respondent contested the appeal and submitted that the FIR bearing no. 375/2019 dated 30.09.2019 contains serious allegation against Mr. Waryam Singh (Chairman of PMC Bank) apart from Mr. Sarang Wadhawan and Mr. Rakesh Kumar Wadhawan of M/s HDIL and others HDIL entities for a wrongful loss to the bank for a sum of Rs. 4,355 crores and according to the tracing the amount paid by Mr. Rakesh Kumar Wadhawan and HDIL entities, the attachment of the amount of Rs. 13.20 crores in the hands of the appellant has been made. The prayer was accordingly made not to cause interference in the Impugned Order.

We have considered the rival submissions of the party and perused the record. Before we deal with the rival arguments of the parties, it would be gainful to refer to the FIR lodged by the PMC Bank against the accused on

30.09.2019 which is quoted below:

“FIR No. 375 of 2019 dated 30.09.2019 based on a complaint filed by