2025 Supreme(Online)(ATFP) 13101

APPELLATE TRIBUNAL FOR FORFEITED PROPERTY
Munishwar Nath Bhandari, Chairman, G.C. Mishra, Member
M/s. Mahesh Agro Pvt. Ltd. & Shri Mahesh Kumar – Appellant
Versus
The Deputy Director Directorate of Enforcement Delhi. – Respondent
FPA-PMLA-5371/DLI/2023 & FPA-PMLA-5372/DLI/2023

Provisional attachment under Section 5(1) PMLA is valid if there is reason to believe property is likely to be transferred; 'likely' does not require actual attempt. Value of attached property is determined as per date of acquisition, not current market value.

Headnote:(A) Prevention of Money-Laundering Act, 2002 - Sections 5(1), 5(1)(b), second proviso to Section 5(1), Section 2(1)(zb) (definition of value), Section 2(1)(u) (proceeds of crime), Section 26 - Indian Penal Code, 1860 - Sections 120-B, 420, 465, 467, 468, 471 - Prevention of Corruption Act, 1988 - Section 13(2) read with Section 13(1)(d) - Provisional attachment of property - Challenge to order confirming attachment - Grounds: (i) absence of recording of reasons to believe regarding apprehension of alienation by appellants; (ii) disproportionate value of attached property vis-à-vis proceeds of crime.

(B) Section 5(1) - Requirement of reasons to believe - The word 'likely' used in Section 5(1)(b) is significant; attachment does not presuppose actual transfer or alienation but its chances which always remain - The Tribunal held that reasons to believe for alienation or dealing with property need not be drawn only when action has been initiated; the legislature cautiously used 'likely' - In the instant case, the competent authority recorded that the property is likely to be concealed or dealt with if not attached immediately, and the use of the word 'likely' for all persons (including appellants) satisfied the requirement. (Paras 13-16)

(C) Section 2(1)(zb) - Value of property - The fair market value of any property is to be taken on the date of its acquisition or possession, not on the current market price on the date of attachment - The Tribunal held that the definition is unambiguous; it cannot be re-written by the court or tribunal - The appellants' reliance on an independent valuation report was not permissible in the absence of any provision allowing such assessment - The value of the attached property, taken as on the date of acquisition, was much lesser than the proceeds of crime in the hands of the appellants, and thus the second ground also failed. (Paras 17-18)

Facts of the case:
An FIR was registered by the CBI for offences including cheating and criminal conspiracy against a company and its directors for defrauding consortium banks of Rs.3269.42 crores. The Enforcement Directorate recorded an ECIR and investigated money laundering. During investigation, it was found that loan funds were diverted to shell entities operated by several persons, including the appellants. The respondents issued a Provisional Attachment Order on 07.06.2022 under Section 5(1) of the PMLA, which was confirmed by the Adjudicating Authority on 01.12.2022. The appellants challenged the order under Section 26, raising only two issues: lack of recorded apprehension of alienation, and disproportionate attachment.

Findings of Court:
The Tribunal examined the Provisional Attachment Order and found that the reasons to believe recorded by the competent authority, while mentioning a specific person's conduct, also used the word 'likely' for all persons including the appellants. The word 'likely' does not require actual transfer; it is sufficient that the property may be dealt with to frustrate proceedings. On the value issue, the definition of 'value' under Section 2(1)(zb) is clear and cannot be interpreted to mean current market value. The Tribunal also relied on its earlier decisions in Mayuri Mitra v. Directorate of Enforcement and Sanjay Jain v. Directorate of Enforcement.

Issues: 1. Whether the provisional attachment under the second proviso to Section 5(1) was invalid for want of specific reasons to believe regarding the appellants' intention to alienate the property? 2. Whether the attachment of property worth more than the proceeds of crime (as per current market valuation) was disproportionate and illegal?

Ratio Decidendi: The second proviso to Section 5(1) can be invoked when there is reason to believe that the property is likely to be concealed, transferred or dealt with so as to frustrate confiscation proceedings; the word 'likely' covers potential future action, not just actual attempts. The value of the attached property for the purpose of attachment is to be determined as per Section 2(1)(zb), i.e., fair market value on the date of acquisition or possession, not the current market price. The court cannot re-write the statutory definition.

Result: Appeals dismissed.