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2025 Supreme(Online)(ATFP) 13343
APPELLATE TRIBUNAL FOR FORFEITED PROPERTY
Partha Chakraborti Soma Chakraborti Priyasha Chakraborti – Appellant
Versus
The Deputy Director Directorate of Enforcement Kolkata – Respondent
FPA-PMLA-816/KOL/2024
Section 8(1) of PMLA does not require the Adjudicating Authority to record reasons in writing or serve them; only subjective satisfaction is needed. Courts cannot add procedural requirements not in the statute.
Headnote:(A) Prevention of Money Laundering Act, 2002 - Sections 5(1), 8(1) - Provisional Attachment Order - Show-cause notice - Requirement of recording reason to believe - The Adjudicating Authority under Section 8(1) is not mandated to record reasons in writing or to serve a copy of such reasons to the noticee; the provision only requires that the Authority have reason to believe before issuing the notice. This is distinct from Section 5(1) which expressly requires reasons to be recorded in writing. The judgments of the Delhi High Court in J.K. Tyre and Industries Ltd. (2021 SCC Online Del 4836) and the Telangana High Court in Vanpic Ports Private Limited (2022 SCC Online TS 1793) were considered; however, the latter does not require recording of reasons in writing under Section 8(1). The former’s operation was stayed by the Supreme Court. The Madras High Court in G. Gopalakrishnan (MANU/TN/2019) held that the absence of recording reasons under Section 8(1) is not fatal, especially when the show-cause notice itself mentions that reasons were recorded and can be obtained from the Registry. Courts cannot rewrite statutory provisions or add procedural requirements not contemplated by the legislature. (Paras 16-30)
(B) Appeal - Scope - Arguments beyond pleadings - The Tribunal declined to consider factual issues raised orally without supporting pleadings or documents, holding that appeals must be decided based on pleadings and documents on record; legal issues can be raised even if not pleaded, but factual issues require proper foundation. (Paras 8-12)
Facts of the case:
An FIR was registered by CBI in 2017 for offences under IPC (sections 120B, 406, 420) against a company and its directors, including one of the appellants, for inducing public investment and misappropriation. ECIR was recorded in 2021 under PMLA. Investigation revealed collection of over Rs.87 crores from public, with outstanding amount of Rs.59 crores. A provisional attachment order was passed attaching properties worth Rs.6.31 crores. The Adjudicating Authority confirmed the PAO by order dated 26.02.2024. The appellants challenged the confirmation, primarily arguing that the show-cause notice under Section 8(1) was issued without recording reasons to believe and without providing a copy thereof.
Findings of Court:
The Tribunal examined Section 8(1) and held that the provision does not require reasons to be recorded in writing or to be served. The show-cause notice in the case specifically stated that reasons were recorded and a copy was enclosed, with an option to obtain a certified copy from the Registry. The Tribunal disagreed with the Delhi High Court’s interpretation in J.K. Tyre (which imposed a requirement of independent reasons in writing) as that would amount to rewriting the statute, which courts cannot do. The Telangana High Court’s judgment in Vanpic Ports was distinguished as it only required the Adjudicating Authority to have its own reason to believe, not to record it in writing. Consequently, the only argument raised was rejected, and the appeals were dismissed.
Issues: Whether the Adjudicating Authority must record reasons in writing and serve a copy under Section 8(1) of PMLA before issuing a show-cause notice; whether failure to do so vitiates the proceedings.
Ratio Decidendi: Section 8(1) of PMLA does not mandate recording of reasons in writing or communication thereof to the noticee. The condition precedent is that the Adjudicating Authority must have reason to believe, but the statute does not prescribe a formal recording or service. Courts cannot read into the statute additional procedural requirements. The provisional attachment order and the complaint provide sufficient basis for the Authority’s satisfaction, and any initial infraction under Section 5(1) can be cured during adjudication under Section 8(1). (Paras 24-30)
Result: Appeals dismissed.
ORDER
24.09.2025
These appeals have been filed to challenge the order 26.02.2024 passed by the Adjudicating Authority confirming the Provisional Attachment Order (‘PAO’) dated 20.09.2023.
Brief facts of the case:
2. The fact on records shows that an FIR was registered by CBI, EO-IV, Kolkata on 13.06.2017 for the offences under Section 120B, 406 and 420 of Indian Penal Code, 1860. The FIR was for schedule offences, thus, ECIR was recorded by the respondent on 31.03.2021.
3. The allegation in the complaint lodged by Shri Souvik Chowdhury to the Judicial Magistrate led to registration of the case dated 19.04.2014 for the offence under Sections 420, 406 and 120B of the IPC following the Supreme Court order in WP (Civil) No. 401/2013. The CBI, EO-IV, Kolkata accordingly registered the FIR on 13.06.2017. The FIR was registered mainly against M/s Chakra Infrastructure Ltd. and its Directors, including Shri Partha Chakraborti. It is a fact that several cases were registered thereupon by the State Police involving similar allegations of inducing the public to invest in different schemes floated by the Company and subsequently misappropriating the funds of the investors. M/s Chakra Infrastructure Ltd. was, otherwise, to operate as Real Estate Developers as per the Memorandum of Association. It could have been even in the construction. However, the Company deviated from the objectives stated in Memorandum of Association and collected deposits from the public through agents after promising high-interest rates ranging from 13.4% to 78.5%. The agents were provided huge commissions to collect funds after giving assurances that their investments is secured out of Company’s mortgage properties worth of Rs.10 Crores.
4. After recording of the ECIR, the investigation was conducted by the respondent where the statements under Section 50(2) and Section 50(3) of the Prevention of Money Laundering Act, 2002 ( in short “the Act of 2002”) were recorded. The investigation revealed that Shri Partha Chakraborti, Director of the Company was main figure behind Chakra Group. He devised a plan with a criminal intent to lure the general public for investing in various schemes offered by his entities. The scheme included recurring deposits, fixed deposits, hotel bookings and plot bookings, among others. The Chakra Group led by M/s Chakra Infrastructure Ltd. collected funds of Rs.87,10,98,390/- from the public and outstanding amount without the interest component was found to be Rs.59,15,06,590/-.
5. It was found that the land acquisition remained on under- valued price and Shri Partha Chakraborti acquired land measuring 41 decimal at Tarapith, Rampurhat, District Birbhum for a sum of Rs.1.27 lakh which amounted to Rs.7.10 per sq. ft. However, when gifting the land to his daughter, he showed its value to be of Rs.1,75,46,785/-. The inflated value represents the proceeds of crime, otherwise, the value should have been at actual basis and not of Rs.1,75,46,785/-. The appellant, Shri Partha Chakraborti also acquired two parcels of land, one measuring 41 decimal and other measuring 29 Satak. Those parcels of land were purchased for a sum of Rs.1.27 Lakh and Rs. 1 Lakh. Subsequently, the land was gifted. The investigation was taken up in reference to the affairs of the Company and the accused and accordingly provisional attachment order was passed to attach the properties worth of Rs.6,31,41,644/-.
Arguments of the Ld. Counsel for the appellants:
6. Ld. Counsel for the appellants submitted that there is no evidence to cause the PAO against the appellants, rather, they were innocent, yet the Adjudicating Authority confirmed the PAO based on surmises and conjectures.
7. Ld. Counsel for the appellants, further, submitted that while causing notice under Section 8(1) of the Act of 2002, the respondent did not furnish the reason to believe while it is mandated. In the light of the aforesaid, the proceedings vitiated and thereby not only the PAO but the subsequent order passed by th
