Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2025 Supreme(Online)(ATFP) 13027

APPELLATE TRIBUNAL FOR FORFEITED PROPERTY
V. Anandarajan, Member
Sh. C. Subramannapa Sh. S. Harish Smt. K. Vanaja Sh. K. Krishna Kishore Sh. K. Rangaswamy Sh. R. Mohan Kumar Sh. M. Keshwamurthy Sh. K. S. Jagdish Sh. Katta Subramanaya Naidu Sh. Jagdish Chandra Prakash Smt. K.S. Jalaja Smt. K.S. Indraja Sh. V. Suri Raju Smt. M. Soumya Smt. K. Sowbhagya – Appellant
Versus
The Deputy Director Directorate of Enforcement Bangalore – Respondent
FPA/PMLA-472/BNG/2013

Advocates:
For the Appellants/Petitioners: Rajeev Awasthi, Kirit J
For the Respondents: Nidhi Raman, Nikunj Bindal

Attachment under PMLA can survive even if some accused are discharged in the scheduled offence, as long as at least one accused remains pending in the predicate offence regarding the same proceeds of crime.

Headnote:(A) Prevention of Money Laundering Act, 2002 - Sections 5, 8 - Scheduled Offences - Attachment of property - Quashing/discharge of scheduled offence - Effect on PMLA proceedings - Principle that if a person is finally absolved of a scheduled offence (by discharge, acquittal, or quashing), no PMLA action can lie against that person - However, if at least one accused in the scheduled offence remains pending, attachment under PMLA can survive for all properties linked to the proceeds of crime - The sweep of attachment provisions applies to any person involved in proceeds of crime, not limited to accused in the scheduled offence. (Paras 24-33)

(B) The objective of PMLA is attachment and confiscation of proceeds of crime in whosoever's name they are held; hence, even if property is held by a person discharged or not accused in the scheduled offence, the property can remain attached as long as proceedings against an accused in the scheduled offence remain pending. (Paras 33-34, citing Byappanahalli Prabhakar Rddy Kumar v. Directorate of Enforcement)

Facts of the case:
Based on an FIR by the Lokayukta Police, a land acquisition scam allegedly involving a Minister, his son, and others was investigated. A charge-sheet for offences under the Prevention of Corruption Act and IPC was filed. The Enforcement Directorate registered an ECIR and provisionally attached various properties. The Adjudicating Authority confirmed the attachment. The Karnataka High Court quashed the scheduled offence proceedings against some accused (e.g., one co-accused) and discharged the Minister and another accused, but the son (principal figure) was not absolved. Subsequently, the Special Court under PMLA discharged most of the appellants based on the quashing/discharge, but granted liberty to the ED to revive the case if the Supreme Court rules otherwise. The ED filed appeals against the discharge orders. The appellants argued that since they were discharged in PMLA and the scheduled offence was quashed as to some, the attachment must fall.

Findings of Court:
The Tribunal held that the sole contention fails because one key accused (the son) remains accused in the scheduled offence. Relying on the Supreme Court's decision in Vijay Madanlal Choudhary, the court stated that a person finally absolved cannot be proceeded against, but the scheduled offence case is not quashed in its entirety; it continues against the son. Therefore, the attachment cannot be set aside. PMLA proceedings can continue against all persons linked to proceeds of crime as long as the scheduled offence remains pending against any accused.

Issues: (1) Whether attachment under PMLA can survive when some appellants have been discharged in PMLA proceedings and the scheduled offence has been quashed as to some but not all accused. (2) Whether the pendency of a Special Leave Petition against the quashing order affects the finality of the discharge.

Ratio Decidendi: Unless the scheduled offence is quashed in its entirety qua all accused, PMLA proceedings will not terminate. As long as a pending scheduled offence involves the same proceeds of crime, attachment can continue against all persons linked to those proceeds, regardless of their individual status in the predicate offence.

Result: All appeals dismissed. The attachment order stands.

FINAL ORDER

26.12.2025

These appeals have been preferred against the order passed in Original Complaint (OC) No. 158/2012, by the Ld. Adjudicating Authority (AA), whereby Provisional Attachment Order (“PAO”) No. 07/2012, was confirmed.

Facts in brief

2. The brief facts of the case are that based on a complaint received by them, the Lokayukta Police, Bangalore registered an FIR and an investigation was carried out. Based on the findings from the investigations conducted, the Karnataka Lokayukta Police filed a charge- sheet bearing No. 04/2011, dt. 07-07-2011 u/s 173 of the Cr. PC before the Court of the XXIII Additional City Civil & Sessions Judge & Special Judge for Lokayukta Cases, Bangalore.

3. A perusal of the Charge Sheet revealed that during November, 2004, Sh. Katta Subramanya Naidu, his son Sh. K.S. Jagadish @ Jagadish Naidu, and Sh. S.V. Srinivas hatched a criminal conspiracy and floated a company by name M/s ITASCA Software Development Pvt Ltd. with Sh. S.V Srinivas, as the Managing Director. Even though Sh. Katta Jagadish was not a Director of M/s ITASCA, he purchased two Demand Drafts, i.e., a DD bearing No. 333163 dt. 02/12/2006 from the Karnataka Bank Ltd., Indira Nagar Branch, Bangalore for Rs. 3,00,000/- in favour of the Karnataka Industrial Area Development Board (KIADB), and another DD bearing No: 737185 dt. 23.08.2006 for Rs.3,00,000/- in favour of Karnataka Udyog Mitra (KUM) and submitted the same along with a sketchy proposal to the KIADB for approval and, thereby, proceeded further in a criminal conspiracy. They sought acquisition of 325 acres of land in Bandikodigenahalli, a village bordering Bangalore and adjacent to the international airport for setting up a Software Park with the intention to secure wrongful gain.

4. It is alleged that Sh. Katta Subramanya Naidu, who was then the Minister of Medium & Large scale Industries, Govt. of Karnataka, misused his official position to commit irregularities in the process of land acquisition by his son, Sh. K.S. Jagadish, and in furtherance of the said conspiracy, joined hands with S/Sh. Jagaiah and Venkaiah and floated a partnership firm by name M/s INDU Builders & Developers to obtain 'Consent Letters' from the land owners as per procedure.

5. One Sh. Basavapurnaiah, Chairman UTL, with an intention to make illegal gain, joined hands with S/Sh. Katta Subramanya Naidu, K.S. Jagadish, S.V. Srinivas, Jagaiah and Venkaiah in the land acquisition process for M/s ITASCA. Sh. Basavapurnaiah also joined M/s ITASCA Software Park Pvt. Ltd as one of the Directors by pumping in an amount of Rs 280,19,66,525/- into its bank accounts with Axis Bank, Malleshwaram & Axis Bank, Basaveshwarnagar. He also transferred Rs. 37 cr. into the Karnataka Bank a/c of M/s INDU Builders & Developers from their account. Further, from M/s ITASCA company, an amount of Rs. 50 cr. was transferred to M/s INDU Builders & Developers’ bank account. Thus, Rs. 87 cr. came into the bank account of M/s INDU Builders & Developers. The alleged beneficiaries of this amount were the Minister, Sh. Katta Subramanya Naidu, and his son Sh. Katta Jagadish @ K. S. Jagadish. In addition, Sh. S.V. Srinivas directly issued cheques of M/s ITASCA to K.S. Jagadish as illegal gratification.

6. In view of the above findings, the Karnataka Lokayukta filed a charge-sheet alleging that the accused had committed offences under various sections of the Indian Penal Code, including Sections 120B , 420, and 471 of the IPC as well as provisions of the Prevention of Corruption Act, 1988, namely, Sections 7, 8, and 13(2) read with 13(1)(d). As these were scheduled offences under the Prevention of Money Laundering Act (PMLA), an ECIR/07/BZO/2011-AD-MNT dated 11.08.2011 was registered by the Directorate.

7. As part of the ED’s investigation, the statements of bank accounts of the companies and the individuals involved in this case were scrutinized and statements were recorded.

8. A Provisional Attachment Order (PAO) dt. 25.09.2012 was passed b

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