1. Appeal against confirmation of provisional attachment under PMLA — Property of separate entity acquired prior to alleged scheduled offence. (Para 1 , 2 , 3 )
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2025 Supreme(Online)(ATFP) 13097
APPELLATE TRIBUNAL FOR FORFEITED PROPERTY
V. Anandarajan, MEMBER
M/s Rangoli International Pvt. Ltd Luv Bhardwaj M/s SMC Logistics Pvt. Ltd. – Appellant
Versus
The Deputy Director Directorate of Enforcement Delhi – Respondent
FPA-PMLA-1402/DLI/2024
Advocates:
For the Appellants: Manohar Malik
For the Respondents: Chandra Prakash, Abhinav Kumar
For the Appellants: Manohar Malik
For the Respondents: Chandra Prakash, Abhinav Kumar
Legal Category Hierarchy
Table of Contents
2. Appellant argued property belonged to separate entity and predated offence. Respondent argued attachment as value of proceeds of crime and shell entity. (Para 4 , 5 , 6 )
3. Appeals dismissed — Confirmation of provisional attachment upheld — Appellant failed to prove legitimate sources. (Para 13 , 14 , 15 )
4. Can property of a separate legal entity be provisionally attached under PMLA for a scheduled offence committed by another entity?
Yes, if the entity is a shell company controlled by the same person involved in the scheduled offence, as the corporate veil can be pierced. (Para 7 )
5. Can property acquired prior to the commission of the scheduled offence be attached as proceeds of crime under PMLA?
Yes, under the second limb of the definition of 'proceeds of crime' – property of equivalent value can be attached even if acquired prior to the offence, when actual proceeds are not available. (Para 9 , 10 )
6. What is the burden of proof regarding sources of acquisition of attached property under Section 8(1) PMLA?
The noticee must explain the legitimate sources of income, earnings or assets out of which the property was acquired; failure to do so justifies confirmation of attachment. (Para 11 , 13 )
FINAL ORDER
25 .11.2025
1. Vide these appeals, the appellants have challenged the order of the Ld. Adjudicating Authority (AA) dated 11.06.2024 confirming the provisional attachment order made under section 5 (1) of the Prevention of Money Laundering Act, 2002, (PMLA) in Original Complaint No. (OC) No. 2166 of 2024, attaching the undermentioned property standing in the name of the appellant in Appeal No. FPA-PMLA-1404/DLI/2024, namely, M/s SMC Logistics Pvt. Ltd:
Entire Third Floor with terrace rights of free-hold Property No. 7 situated at Block-A, Safdarjung Enclave, New Delhi-110059.
2. The relevant facts briefly are that an FIR numbered as RCBD1/2016/E/0004 dated 24.05.2016 was filed by the CBI Banking Security and Bank Fraud Cell, New Delhi, against M/s Rangoli International Pvt. Ltd. (RIPL), Sh. Luv Bhardwaj and Sh. Ravi Bhola under sections 120 B read with Section 420 of the Indian Penal Code (IPC)1860, and Section 13(2) read with Section 13 (1) (e) of the Prevention of Corruption Act, 1988, (PC Act, 1988). The allegations were that RIPL had availed credit facilities amounting to Rs. 290 crores under a consortium of 11 banks with the Punjab National Bank as the lead bank, and the Canara Bank as a member of the consortium. The Canara Bank, Okhla Industrial Estate Branch, sanctioned packing credit and bill discounting facility (export credit facility) for Rs. 28.75 crores on 26.02.2013 along with additional funding under the Gold Card Scheme. The total liability as on 28.09.2015 was 35.62 crores. The credit facilities were secured against hypothecation of stock, book debts and collateral securities consisting of 8 immovable properties valued at Rs. 26.4 crores as on 03.01.2012. Personal guarantees of Sh. Luv Bhardwaj and Sh. Ravi Bhola, Directors of M/s RIPL were also provided, along with corporate guarantees from three group concerns of RIPL. The company’s accounts were later categorized as Non-Performing Assets (NPA) on 12.02.2014 and treated as ‘Fraud’ on 23.09.2015 based on internal investigation reports. The investigation reports highlighted various irregularities, including irregularities in bill discounting facilities extended to RIPL, non-submission of original purchase orders while availing packing credit facility, fabrication of figures regarding creditors to inflate purchases, sales and receivables, diversion of sale proceeds to HSBC Bank, a non-consortium member, unpaid bills returned by negotiating banks thereby raising doubts about genuineness of the transactions, stock audit deficiency and various other irregularities.
3. On receipt of the above information, the Directorate of Enforcement (ED) registered an Enforcement Case Information Report (ECIR No.18/DLZO/2020) dated 08.10.2020 and, thereafter, based on the investigations conducted under the PMLA, the Directorate issued a Provisional Attachment Order, (PAO No. 01/2024) dated 12.01.2024 under section 5 (1) provisionally attaching immovable properties to the tune of Rs. 60 lakh. Subsequent to the passing of the PAO, the respondents filed an Original Complaint (OC) before the Ld. Adjudicating Authority (AA) as per the requirement of law. The Ld. AA, vide its order dated 11.06.2024, confirmed the attachment of the subject property. Aggrieved by the said order of the Ld. AA, the appellants have filed the present appeals impugning said order on the grounds as discussed below.
4. The Appeal was argued by the counsel for the appellant only on two grounds. Firstly, it is stated that the property which has been attached is that M/s SMC Logistics Pvt. Ltd. and the same never belonged to M/s RIPL against which charges for Bank fraud and diversion of funds were levelled. M/s SMC Logistics was a separate entity against whom there were no charges. It is, however, admitted on facts that Sh. Bhardwaj was a Director in both M/s RIPL AND M/s SMC Logistics at the relevant time. Secondly, it is argued that the property was purchased on 03.05.2010, which is prior in time to the pe
