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APPELLATE TRIBUNAL FOR FORFEITED PROPERTY
Narendra Achyutrao Korde & Smt. Anjali Yashwantrao Thombare and Rahul Ashok Rajurkar
FPA-PMLA-4868/MUM/2022 & FPA-PMLA-5176/MUM/2022
(A) Prevention of Money Laundering Act, 2002 - Sections 2(1)(u), 5, 8, 24, 26 - Indian Penal Code, 1860 - Sections 120B, 420, 467, 468, 471 - Prevention of Corruption Act, 1988 - Section 13(2) read with 13(1)(d) - Provisional attachment - Confirmation of attachment within 180 days - COVID-19 period exclusion - Definition of proceeds of crime - Three limbs - Property acquired prior to crime may be attached as equivalent value if proceeds not traceable - Burden of proof on person whose property is attached - Admission of use of crime proceeds for loan repayment.
(B) Appeal - Joint appeal not maintainable - Only one appellant remained after order of Tribunal - Other appellants did not file separate appeals.
Facts of the case:
A complaint was lodged by a bank against two companies and their directors for cheating and criminal conspiracy involving bill discounting without sanctioned limits, resulting in losses of over Rs.76 crores. FIR was registered by CBI. The Enforcement Directorate recorded ECIR and provisionally attached properties including a bungalow purchased by two appellants in 2017 using alleged friendly loan from an accused company, and a property purchased by another appellant in 2012 (prior to crime) but where loan repayment was said to be from crime proceeds. The Adjudicating Authority confirmed the attachment. Other properties were later released by Special Court; only two properties remained under appeal.
Findings of Court:
The Tribunal held that (i) the property purchased in 2017 using loan from an accused company, even if repaid, remained proceeds of crime because the source of repayment was unexplained and the appellants failed to discharge their burden under Section 24; (ii) the property acquired prior to crime (2012) could still be attached as equivalent value under the second limb of Section 2(1)(u) if the actual proceeds of crime were not traceable, and this was supported by binding precedent including the Supreme Court in Vijay Madanlal Choudhary and Delhi High Court in Axis Bank; (iii) the appellant’s admission that loan for that property was repaid using proceeds of crime further justified attachment; (iv) the confirmation order passed on 22.08.2022 for provisional attachment dated 21.02.2022 was within 180 days after excluding the COVID period from 15.03.2020 to 28.02.2022 as per Supreme Court order in Suo Motu Writ Petition No.3/2020, and thus did not cease under Section 5(3). The Tribunal referred to judgments of Telangana High Court and Delhi High Court supporting this exclusion.
Issues: (1) Whether the property purchased in 2017 out of a friendly loan from an accused company could be considered proceeds of crime when the loan was repaid? (2) Whether a property acquired prior to commission of the scheduled offence can be attached under the PMLA? (3) Whether the confirmation of provisional attachment beyond 180 days was invalid due to non-exclusion of COVID-19 period?
Ratio Decidendi: The definition of 'proceeds of crime' under Section 2(1)(u) has three limbs; the second limb allows attachment of property of equivalent value even if the property was acquired prior to the crime, provided the actual proceeds of crime are not traceable. The COVID-19 period from 15.03.2020 to 28.02.2022 stands excluded for computing the 180-day period under Section 5(3) as per the Supreme Court's suo motu order, which covers termination of proceedings. The burden of proof under Section 24 lies on the person whose property is attached to show it is not proceeds of crime.
Result: Appeals dismissed. The impugned order confirming provisional attachment was upheld. Keywords: proceeds of crime, equivalent value property, prior acquisition, COVID-19 limitation exclusion, 180-day period, burden of proof, money laundering, PMLA, bill discounting fraud, attachment of property, friendly loan repayment, judicial interpretation of definition.
FINAL ORDER
17.12.2025
This order would address two appeals separately preferred by Narendra Achyutrao Korde bearing Appeal No. 4868/MUM/2022 and Smt. Anjali Yashwantrao Thombare and Rahul Ashok Rajurkar bearing Appeal No. 5176/MUM/2022. The Appeal No.4868/MUM/2022 was initially preferred jointly by three appellants. However, the appeal aforesaid finally remained only on behalf of Narendra Achyutrao Korde in reference to the order dated 31.07.2023 passed by this Tribunal. The other two appellants did not maintain separate appeals because the joint appeal was not maintainable.
2. The appeals have been preferred under Section 26 of the Prevention of Money Laundering Act, 2002 (in short `the Act of 2002’) to challenge the order dated 22.08.2022 passed by the Adjudicating Authority confirming the Provisional Attachment Order dated 21.02.2022. The impugned order was passed against many defendants. However, this order would address the issues raised by the present appellants leaving other defendants who are not before the Tribunal to challenge the impugned order.
Brief facts of the case:
3. The facts on record shows a written complaint lodged by Shri Arun Kumar, Zonal Manager of Andhra Bank, Mumbai against M/s NIPKO Engineering Services Pvt. Ltd. (M/s NESPL), M/s Signet Products Pvt. Ltd. (M/s SPPL), Shri Narendra Achyutrao Korde, Director of both M/s NESPL and M/s SPPL, Mrs. Vaidehi Narendra Korde, Director of both the companies named above. The allegations against the companies were for the commission of offence of cheating with criminal conspiracy and accordingly an FIR was registered by the CBI, ACB, Pune Branch on 30.09.2018 for the offence under Section 120-B and Section 420, 467, 468 and 471 IPC and Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988. It was alleged that the companies, namely, M/s NESPL and M/s SPPL opened current accounts in Andhra Bank, Andheri Branch, Mumbai on 14.07.2016. Those companies were not enjoying any type of sanctioned credit limit with the branch, however, they submitted usance bills to the branch for the purpose of acceptance by the purported buyers and collection on due dates. After acceptance by the buyers, both the companies requested the bank for discounting and accordingly, the request was accepted despite the fact that the companies were not having any sanctioned limits. It was also alleged that the said bills were not backed by the letter of credit/LCs. The bills were discounted beyond the discretionary powers of the bank officials and thereby in connivance of the bank officials the crime was committed.
4. The branch had discounted 32 bills of M/s NESPL totaling Rs.62.62 crores and 14 bills for a sum of Rs.27.27 Crores. 18 bills for a sum of Rs.35.38 Crores could not be realized on due dates. Similarly, the branch had discounted 35 bills of M/s SPPL totaling Rs.68.79 Crores out of which 16 bills of Rs.31.18 crores got realized and 19 bills for a sum of Rs.37.61 Crores were not realized on due dates and became NPA. The companies thus cheated the financial institution and accordingly after registration of the FIR, the investigation was conducted by the CBI/ACB. The respondents thereupon recorded ECIR finding predicate offence alleged to have been committed by the accused. The role of appellants, Narendra Achyutrao Korde and Rahul Ashok Rajurkar was found in commission of crime along with many others. The respondents accordingly attached certain properties finding it to be out of proceeds of crime and others for value equivalent to the proceeds.
5. At this stage, it would be necessary to indicate that during the pendency of the appeals, certain properties under provisional attachment and later confirmed by the Adjudicating Authority were released by the Special Court and accordingly now there remains only two properties in the hands of the appellants named above. Accordingly, we would be addressing the issues in reference to the properties now remains, out of which o
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