Shrenik Suresh Seth vs The Deputy Director Directorate of Enforcement Kolkata

Headnote:(A) Prevention of Money Laundering Act, 2002 - Section 8(2) and proviso - Section 8(8) - Interpretation of 'claim' - A person making a claim under proviso to Section 8(2) is not required to prove perfect title; it is sufficient to establish a claim to the property - The Adjudicating Authority is obliged to give opportunity of being heard to such claimant to prove that property is not involved in money-laundering - Distinction between claim under Section 8(2) and legitimate interest under Section 8(8) - The authority cannot reject an impleadment application at threshold without considering the claim, even if title disputes exist. (Paras 21-23, 25, 30-31)

(B) Revenue records and possession - Possession and due diligence may establish a claim even if title is contested - The mere pendency of regularization application or cancellation of prior sale does not automatically negate the claim. (Paras 22, 27-28)

Facts of the case:
The appellant filed an impleadment application before the Adjudicating Authority under PMLA claiming that a property belonging to him was wrongfully attached in proceedings against a company. The appellant traced his title through a chain of transfers, including a cancellation of an earlier sale by the Divisional Commissioner, subsequent sales by the heirs of the original owner, and his own purchase in 2020. The Adjudicating Authority rejected the application holding that ownership disputes are for civil courts and that the appellant's title was defective due to the cancellation order and pending regularization. The appellant appealed.

Findings of Court:
The Appellate Tribunal held that the appellant had adequately established a 'claim' within the meaning of the proviso to Section 8(2). The appellant was in possession, had purchased for consideration, and had conducted due diligence. The fact that the title may be disputed does not deprive him of the right to be heard. The Adjudicating Authority erred in shutting him out without issuing notice. The appeal was allowed, and the AA was directed to issue notice and allow participation.

Issues: (i) Whether the appellant had a 'claim' under the proviso to Section 8(2) of PMLA entitling him to notice and hearing? (ii) Whether the Adjudicating Authority could reject the impleadment application at the threshold on grounds of defective title?

Ratio Decidendi: The word 'claim' in the proviso to Section 8(2) does not require a perfect or undisputed title. Any person who asserts an interest in the attached property, supported by prima facie evidence such as possession, purchase, and due diligence, is entitled to notice and an opportunity to prove that the property is not involved in money-laundering. The Adjudicating Authority cannot refuse to entertain such a claim merely because the title is contested or because civil court jurisdiction exists.

Result: Appeal allowed. The impugned order of the Adjudicating Authority is set aside. The Adjudicating Authority is directed to issue notice to the appellant under Section 8(2) and allow him to participate in the adjudication proceedings. No order as to costs.

Legal Category Hierarchy

1. Appeal against order of Adjudicating Authority under PMLA, 2002 rejecting impleadment application by claimant to attached property. (Para 4 , 5 )

2. Whether a mere claim suffices under Section 8(2) proviso or requires legitimate interest; no perfect title needed vs. legitimate interest required. (Para 7 , 14 )

3. Appeal allowed; Adjudicating Authority directed to issue notice under Section 8(2) and allow participation in adjudication proceedings. (Para 31 , 32 )

4. What constitutes a 'claim' under the proviso to Section 8(2) of PMLA?

A claim does not require perfect title; a person with a bona fide connection to the property, such as possession and purchase chain, is entitled to notice and hearing. (Para 22 , 23 , 25 , 27 )

5. Can the Adjudicating Authority reject an impleadment application at the threshold without issuing notice under Section 8(2)?

No, the authority must follow the statutory due process and cannot shut out a claimant without hearing, regardless of the eventual outcome. (Para 25 , 30 )

6. Is a third-party claimant required to establish 'legitimate interest' for notice under Section 8(2)?

The threshold for notice under Section 8(2) is lower than for restoration under Section 8(8); a legitimate interest based on possession and purchase chain suffices. (Para 21 , 22 , 23 , 27 )

FINAL ORDER

09.09.2025

The present appeal arises from the order of the Adjudicating Authority (“AA”) established under the Prevention of Money Laundering Act, 2002 (“PMLA, 2002”) dated 04.07.2025 in Impleadment Application (IA No. 195/2025) filed in Original Complaint (“OC”) No. 253/2025.

2. The brief facts of the matter are that an impleadment application was filed by the appellant herein before the Ld. AA seeking intervention in OC No. 253/2025. It was pleaded in the said application that a piece of immovable property belonging to the applicant (appellant before this Appellate Tribunal) had been wrongfully included and attached in the proceedings initiated against M/s Aamby Valley Ltd. (previously, Sahara India Commercial Corporation Ltd.) under the provisions of the PMLA, 2002. The facts placed by the appellant before the Ld. AA with regard to the subject property are reproduced below for the sake of convenience: as below:

“1. We state that originally, one Laxman Ramji Dabhade ("said Laxman") was the absolute owner and seized and possessed of and/or otherwise well and sufficiently entitled to all that piece and parcel of land bearing Gat / Survey No. 142 admeasuring-1-92-6 Hectare (equivalent to- 4-Aeres-32.6-Gunthas) situate, lying-and being at Village Kumbheri Taluka Mulshi, District Pune and within the limits of Mulshi Panchayat Samiti and within the Registration and Sub-Registration District of Mulshi ("Larger Property") which inter alia includes the said Property.

2. The Sub-Divisional Officer, Haveli, Pune Division vide its order bearing no. 1158/1991 dated November 6, 1991 converted the tenure of the Larger Property from Class II (New Tenure) to Class I (Old Tenure) and permitted the said Laxman to sell and transfer the Larger Property in favour of one Rajdeo Singh Pratap Singh alias Ramdev Pratap Singh ("the said Rajdeo Singh") subject to the terms and conditions contained therein.

3. Pursuant to the aforesaid sale permission, the said Laxman by and under a Sale Deed dated December 4, 1991 ("Sale Deed of 1991"), registered with the Sub-Registrar of Assurances at Mulshi under Serial No. 511 of 1992 on February 14, 1992, sold, transferred, conveyed and assigned the Larger Property in favour of the said Rajdeo Singh for the consideration of Rs. 42,460 (Rupees Forty Two Thousand Four Hundred and Sixty Only), The Sale Deed of 1992 records that this consideration amount of Rs. 42,460/ (Rupees Forty Two Thousand Four Hundred and Sixty Only) has been paid by said Rajdeo Singh to the said Laxman. A copy of the said Sale Deed of 1991 is enclosed herewith as Annexure "B".

4. The said Rajdeo Singh died intestate on October 14, 1993 leaving behind him his only son MR. PRABHUNATH SINGH ("said Prabhunath") as, his his only heir and legal representative under the law by which he was gov by which he was governed at the time of his death which is further evidenced and confirmed by the Heirship Certificate dated April 12, 2023 issued by Tahsildar of Ballia Fikadeori. A copy of the said Heirship Certificate dated April 12, 2023 is enclosed herewith-as Annexure "C".

5. We state that the sale in favour of the said Rajdeo Singh under the Sale Deed of 1991 was in violation of the Maharashtra land laws and therefore, the Divisional Commissioner, Pune vide its order dated September 28, 1999 cancelled various sale deeds executed for the properties of the Company including the Sale Deed of 1991 ("Cancellation Order"). A copy of the said Cancellation Order is enclosed herewith as Annexure "D".

6. Since all the mutation entries and the earlier sale transactions of the Company. were cancelled by the Commissioner, Pune Division, after the demise of the said Laxman on February 28, 1997, the names of the following heirs and legal representatives came to be recorded in the revenue records records of the said Property:

Son : Pandurang Laxman Dabhade;

Daughter : Yamuna Mohan Pawar, and

Wife : Parvatibai Laxman Dabhade.

The aforesaid varasnond recorded vide Mutation

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2025 Supreme(Online)(ATFP) 13362

APPELLATE TRIBUNAL FOR FORFEITED PROPERTY
Shrenik Suresh Seth – Appellant
Versus
The Deputy Director Directorate of Enforcement Kolkata – Respondent
FPA-PMLA-980/KOL/2025

Under PMLA Section 8(2) proviso, a claimant need only establish a claim, not perfect title; possession and purchase suffice for notice and hearing.

Legal Category Hierarchy

Table of Contents

4. What constitutes a 'claim' under the proviso to Section 8(2) of PMLA?

5. Can the Adjudicating Authority reject an impleadment application at the threshold without issuing notice under Section 8(2)?

6. Is a third-party claimant required to establish 'legitimate interest' for notice under Section 8(2)?

2025 Supreme(Online)(ATFP) 13362

APPELLATE TRIBUNAL FOR FORFEITED PROPERTYShrenik Suresh Seth – AppellantVersusThe Deputy Director Directorate of Enforcement Kolkata – RespondentFPA-PMLA-980/KOL/2025

Under PMLA Section 8(2) proviso, a claimant need only establish a claim, not perfect title; possession and purchase suffice for notice and hearing.

Legal Category Hierarchy

Table of Contents

4. What constitutes a 'claim' under the proviso to Section 8(2) of PMLA?

5. Can the Adjudicating Authority reject an impleadment application at the threshold without issuing notice under Section 8(2)?

6. Is a third-party claimant required to establish 'legitimate interest' for notice under Section 8(2)?

Cases Referred (1)

APPELLATE TRIBUNAL FOR FORFEITED PROPERTY
Shrenik Suresh Seth – Appellant
Versus
The Deputy Director Directorate of Enforcement Kolkata – Respondent
FPA-PMLA-980/KOL/2025