Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Online)(ATFP) 345

APPELLATE TRIBUNAL FOR FORFEITED PROPERTY
Balesh Kumar, Member, Rajesh Malhotra, Member
N. K. Proteins Ltd. – Appellant
Versus
Deputy Director, Directorate of Enforcement, Mumbai – Respondent
FPA-PMLA-2780/MUM/2019|FPA-PMLA-2781/MUM/2019|FPA-PMLA-2782/MUM/2019|FPA-PMLA-2783/MUM/2019

Advocates:
For the Appellants/Petitioners: S. Vasudevan, Mahendra Singh, Reeshika Agarwal
For the Respondents: Aditya Singla

Retention of seized property under the statute remains valid during the pendency of proceedings before a court. A nexus between the property and criminal activity is sufficient to justify retention; the individual need not be a named accused in the primary complaint.

Headnote:(A) Prevention of Money Laundering Act, 2002 - Sections 3, 5, 8, 17, 18, 20 - Investigation into financial fraud - Seizure and retention of properties - Validity of retention order - Pendency of prosecution complaint before a court justifies continued retention of seized assets - It is not a mandatory requirement for a person to be a named accused in the prosecution complaint for the retention of their property to continue, provided the property is identified as involved in money laundering. (Paras 13, 14, 15, 17)

(B) Interpretation of Statutes - Adjudicatory power of the Authority - Power under Section 8(3) provides for retention of property seized or frozen under the statute - Courts are not empowered to rewrite or reframe statutory provisions; judicial activism cannot be invoked to set at naught the legislative intent when the provision is clear and unambiguous. (Paras 55, 62, 63)

Facts of the case:
Authorities conducted search and seizure operations involving cash and vehicles during an investigation into an alleged financial fraud. The affected parties challenged the resulting retention orders, contending that no supplementary complaints were filed against them, that property was already extensively attached, and that formal retention orders were not supplied. The adjudicating authority dismissed these challenges, leading to the current appeal.

Findings of Court:
The court held that retention continues during the pendency of any proceedings relating to an offence under the statute before a court. It clarified that the Adjudicating Authority has the power to order the retention of properties irrespective of the completion of a supplementary complaint within a fixed timeframe, as long as the investigation is active and court proceedings are pending.

Issues: The main issues were whether retention of seized property is sustainable in the absence of a supplementary complaint against specific individuals, whether prior attachments limit the power of further seizure, and whether the Adjudicating Authority's power to retain property is limited by the failure to issue specific retention orders under the statute.

Ratio Decidendi: The court established that the statutory framework authorizes the continued retention of seized properties throughout the pendency of relevant court proceedings and that the nexus to money laundering, not the named status of an individual as an accused, is the governing principle for the exercise of seizure and retention powers.

Result: Appeals dismissed.

Table of Content
1. overview of nsel fraud, fir/ecir registration, and provisional attachment of assets. (Para 1 , 2 , 3)
2. appellants contend procedural lapses in scn issuance, lack of retention orders, and challenge to the inclusion of non-accused parties. (Para 4 , 5)
3. respondent argues legality of search, nexus between fraud and assets, and validity of pendency of proceedings. (Para 6 , 7 , 8 , 9 , 10 , 11)
4. adjudication of property retention under section 8(3) and section 17/18 during the pendency of prosecution complaints. (Para 12 , 13 , 14 , 15)
5. evaluation of bogus commodity transactions as 'proceeds of crime' and the necessity of continued retention for investigation. (Para 16 , 17)
6. examination of conflicts between section 20 and section 8, rejecting the interpretation that specific procedural steps invalidate retention. (Para 18 , 19)
7. requirement of 'reasons to believe' for adjudication and prima facie satisfaction for show cause notices. (Para 20 , 21)
8. burden of proof under section 24 pmla lies with appellants to show assets are untainted; failure leads to dismissal. (Para 22 , 23)

This Order disposes of the Appeals Nos. FPA-PMLA-2780/MUM/2019 filed by M/s N. K. Proteins Ltd., FPA-PMLA-2781/MUM/2019 filed by Shri Nilesh K. Patel, FPA-PMLA-2782/MUM/2019 filed by Shri Priyam Patel, and FPA-PMLA-2783/MUM/2019 filed by M/s N. K. Industries Ltd. against the Order dated 14.11.2018 (Impugned Order) passed by the Ld. Adjudicating Authority (AA) under the Prevention of Money Laundering Act, 2002 (PMLA) in the Original Application No. 236/2018 (OA) dated 28.06.2018. Cash amounts of Rs. 5,00,000/- & Rs. 12,00,000/- and 42 vehicles & 10 cars were seized for which the OA No. 236/2018 was filed, so as to continue with the seizure and retention. The Impugned Order allowed the retention and freezing.

2. Ld. Counsel for the Appellants submitted that in 2013, a FIR No. 216 of 2013 dated 30.09.2013 was registered by Mumbai Police against National Spot Exchange Limited (hereinafter referred as NSEL) and various defaulting parties. Subsequently, an ECIR was registered by the Respondent Directorate against various parties including the Appellants. The Appellant Company M/s. N. K. Proteins Ltd. was incorporated on 27.03.1992 under the Companies Act, 1956. Mr. Nimish K. Patel is the Chairman and Managing Director of the Appellant Company with Mr. Nilesh Patel as its Managing Director. The Appellant Company has been, inter alia, engaged in the business of edible oil refining and marketing of the same in the domestic market. The Appellant's group company, M/s N.K. Industries Limited (hereinafter referred to as 'NKIL) was incorporated on 19.08.1987 under the Companies Act, 1956. Mr. Nimish K. Patel is also the Chairman & Managing Director of NKIL with Mr. Nilesh Patel as its Managing Director. NKIL was, inter alia, engaged in the business of manufacturing of castor oil and its derivatives. The said FIR was registered based on the complaint filed by Shri Pankaj Ramnaresh Saraf, Director of M/s Vostok Far East Securities Pvt. Ltd., acting for himself and on behalf of similarly placed so called other investors, on grounds that he was allegedly cheated by NSEL by creating a false impression of being a proper spot exchange with correct risk management systems in order to induce him to trade on the spot exchange. He inter alia alleged that the certified warehouses of the NSEL lacked capacity and some of them had no stocks. Thus, it is alleged in FIR that the genuine investors were defrauded of their investments by way of misappropriation of investor's money from the fact that NSEL allowed trading on commodities by sellers, without ensuring goods of appropriate quantity and quality are stored in the Exchange-controlled warehouses which resulted in thousands of investors trading in non-existent goods.

3. Ld. Counsel for the Appellants submitted that pursuant to the investigation done by the Mumbai Zonal Office of the ED in ECIR, three Provisi

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2026 Supreme(Online)(ATFP) 345

APPELLATE TRIBUNAL FOR FORFEITED PROPERTYBalesh Kumar, Member, Rajesh Malhotra, MemberN. K. Proteins Ltd. – AppellantVersusDeputy Director, Directorate of Enforcement, Mumbai – RespondentFPA-PMLA-2780/MUM/2019|FPA-PMLA-2781/MUM/2019|FPA-PMLA-2782/MUM/2019|FPA-PMLA-2783/MUM/2019

Retention of seized property under the statute remains valid during the pendency of proceedings before a court. A nexus between the property and criminal activity is sufficient to justify retention; the individual need not be a named accused in the primary complaint.

APPELLATE TRIBUNAL FOR FORFEITED PROPERTY
Balesh Kumar, Member, Rajesh Malhotra, Member
N. K. Proteins Ltd. – Appellant
Versus
Deputy Director, Directorate of Enforcement, Mumbai – Respondent
FPA-PMLA-2780/MUM/2019|FPA-PMLA-2781/MUM/2019|FPA-PMLA-2782/MUM/2019|FPA-PMLA-2783/MUM/2019