Amanecer Green Pvt. Ltd. Vs Deputy Director (Appellate Tribunal under SAFEMA)
Bona Fide Court-Sanctioned Buyer Entitled to Release of PMLA-Attached Property; Attachment Can Follow Sale Consideration Lying with Court: SAFEMA Tribunal
The Appellate Tribunal under SAFEMA has directed the release of a power plant purchased by a bona fide buyer through court-supervised proceedings, while permitting the Enforcement Directorate to seek attachment of the ₹6.95 crore sale consideration lying with the Court Receiver as a substitute for the property.
Background
Several FIRs were registered against M/s Garvit Innovative Promoters Ltd., its promoter and associated persons in connection with the alleged “BIKEBOT” investment fraud. Investors were allegedly induced to invest ₹62,100 per bike on the assurance of monthly rent, EMI payments and bonuses.
Following the registration of approximately 25 FIRs, the Enforcement Directorate recorded an ECIR and provisionally attached several properties as proceeds of crime or properties of equivalent value.
One of the attached assets was a 6 MW biomass power plant, together with approximately seven acres of land, buildings and machinery situated at Nashik, Maharashtra. The property belonged to M/s Envirotech Pvt. Ltd., also referred to as M/s Mars.
Subsequent Purchase of Attached Property
The appellant, M/s Amanecer Green Pvt. Ltd., entered into an agreement dated December 17, 2020, to purchase the power plant for ₹10.17 crore. The agreement stipulated that, in case of default by the seller, the purchase price would stand reduced to ₹9 crore.
Before executing the agreement, the appellant issued a public notice inviting objections to the proposed transaction. No objection was received.
When the seller failed to execute the sale deed, the appellant commenced arbitration proceedings. An arbitral award dated October 19, 2022, directed the sale of the property to the appellant for ₹9 crore.
The seller unsuccessfully challenged the award under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996. Its appeal was dismissed by the Bombay High Court on September 4, 2024, and the Supreme Court subsequently dismissed its special leave petition on December 9, 2024.
Thereafter, the Bombay High Court appointed a Court Receiver to execute the sale deed. The appellant deposited the outstanding consideration of ₹6,95,62,552, following which the property was registered in its name.
Crucially, the seller did not disclose the prior PMLA attachment to the appellant, the Arbitral Tribunal, the Bombay High Court or the Supreme Court.
Appellant’s Contentions
The appellant argued that it was neither involved in the scheduled offence nor a recipient of any proceeds of crime. It had purchased the property bona fide, following extensive litigation and pursuant to orders passed by constitutional courts.
It offered a practical solution: the Enforcement Directorate could proceed against the ₹6.95 crore deposited with the Court Receiver instead of continuing the attachment of the power plant.
ED’s Objection
The Enforcement Directorate opposed the appeal on the ground that the PAO had been passed on July 20, 2020, whereas the agreement for sale was executed subsequently on December 17, 2020.
According to the ED, the property belonged to an accused company and had been attached for the value of the proceeds of crime. A subsequent agreement or transfer, therefore, could not defeat the prior attachment.
Tribunal’s Findings
The Tribunal found that the circumstances demonstrated a bona fide transaction on the appellant’s part.
The appellant had issued a public notice before entering into the agreement, pursued arbitration when the seller defaulted and ultimately obtained the property through a sale deed executed by a Court Receiver appointed by the Bombay High Court.
The Tribunal particularly disapproved of the conduct of M/s Mars, which had suppressed the attachment from all concerned parties. It did not disclose the attachment during the arbitration, the proceedings before the Bombay High Court or even the proceedings before the Supreme Court.
Considering these peculiar facts, the Tribunal held that the appellant, being a bona fide purchaser through a court-supervised process, was entitled to release of the property.
At the same time, the Tribunal protected the ED’s interest by granting it liberty to seek release and attachment of the ₹6,95,62,552 lying with the Court Receiver. Since this amount would otherwise have been payable to the seller, it could effectively substitute the attached property.
Accordingly, the Tribunal:
- directed the release of the biomass power plant, land, buildings and machinery from attachment;
- permitted the ED to take appropriate steps concerning the ₹6.95 crore lying with the Court Receiver; and
- clarified that the attachment of the remaining properties would remain unaffected.
Author’s Comments
The ruling adopts an equitable solution that protects both the innocent purchaser and the Enforcement Directorate’s legitimate claim over property representing the proceeds of crime.
The decision does not establish that every purchaser acquiring property after a PAO is automatically protected. Relief was granted because of a rare combination of circumstances: the appellant had conducted public due diligence, obtained an arbitral award, succeeded through several rounds of litigation and acquired title through a Court Receiver appointed by the High Court.
The seller’s deliberate suppression of the attachment was also decisive. Allowing the attachment to continue against the power plant would have penalised a purchaser who had acted transparently and obtained title under judicial supervision.
Importantly, the Tribunal did not extinguish the ED’s claim. It merely shifted the focus of attachment from the operational asset in the purchaser’s hands to the identifiable sale proceeds still lying under the control of the Court. The order thus reinforces the principle that, where substitution is practically possible, PMLA proceedings should target the value payable to the accused rather than cause disproportionate prejudice to a demonstrably bona fide third-party purchaser.
FULL TEXT OF THE JUDGMENT/ORDER OF APPELLATE TRIBUNAL UNDER SAFEMA
By this appeal filed under Section 26 of the Prevention of Money Laundering Act, 2002 (in short “the Act of 2002”), a challenge has been made to the order dated 14.01.2021 passed by the Adjudicating Authority confirming the Provisional Attachment Order (“PAO”) dated 20.07.2020.
Brief facts of the case:
2. It is a case where number of FIRs were registered with the Uttar Pradesh Police for the offence under Sections 406, 420, 467, 468, 471 and 506 of the Indian Penal Code, 1860 against M/s Garvit Innovative Promoters Ltd. and its promoter, Shri Sanjay Bhati and other Directors. The FIRs were registered on the complaints of many individual persons in respect to the alleged offences of fraud and forgery of valuable securities etc. It was for the deeds of the promoters of M/s Garvit Innovative Promoters Ltd. apart from other Directors, namely, Shri Rajesh Bhardwaj, Shri Karan Pal Singh, Shri Sachin Bhati, Shri Vinod Kumar and other associates/ related persons. Finding registration of around 25 FIRs in different police stations, the respondent recorded ECIR finding an offence under Section 3 of the Act of 2002.
3. The accused were found involved in commission of offence by floating a scheme of ‘BIKEBOT” where a customer can invest in 1, 3, 5 or more bikes upon paying Rs.62,100/- per bike which would be maintained and operated by the company and the investors would get monthly rent, EMI @ Rs.9765/- per month (for one year) and bonuses in case of investment in multiple bikes. The accused failed to pay the assured amount to the investors and therefore they felt cheated, in the hands of the accused, thus, lodged an FIR. On the recording of ECIR by the respondent, a separate investigation was caused. The properties in the hands of the accused were provisionally attached finding to be the proceeds of crime.
Arguments of Ld. Counsel for the appellant:
4. Ld. Counsel for the appellant submitted that out of many properties under attachment, the present appeal has been filed for the property of a 6 MW non-conventional/biomass energy power plant along with the land, building and plant machinery situated at Gat Nos. 85/1, 85/2, 86/2 and 91 admeasuring about 7 acres within the Revenue limits of Shilapur Taluk Nashik, Maharashtra. The appellant is not involved in commission of crime or even recipient of the proceeds, rather, it is alleged to be a victim in the hands of one of the accused who agreed to sell the property in question. An Agreement for Sale was executed on 17.12.2020 between Amanecer Green Pvt. Ltd. & M/s Envirotech Pvt. Ltd. ( in short “M/s Mars”) where M/s Mars agreed to sell the property referred to above for a consideration of Rs.10,17,00,000/-. It is with the further agreement that in case of default by M/s Mars, the purchase of the property would be on a reduced consideration of Rs. 9 Crore. There were various other conditions in the Agreement for Sale which was executed after a Pubic Notice in the leading newspapers was published calling for the objection.
5. M/s Mars defaulted in execution of Sale Deed in terms of the agreement and thereby the appellant initiated the Arbitration proceedings which led to Arbitral Award dated 19.10.2022 awarding the sale of the property to the appellant for a total consideration of Rs.9 Crore. M/s Mars invoked Section 34 of the Arbitration and Conciliation Act, 1996 to challenge the Arbitral Award and on remaining unsuccessful, an appeal under Section 37 of the Arbitration and Conciliation Act, 1996 was filed before the High Court of Bombay. The High Court of Bombay dismissed the appeal in the hands of M/s Mars vide its order dated 04.09.2024. M/s Mars preferred an SLP before the Apex Court, which was also dismissed vide order dated 09.12.2024. M/s Mars did not disclose about the provisional attachment of the property either at the time of execution of the Agreement for Sale or subsequently at any stage till the matter was decided by the Apex Court after initiation of the arbitration proceedings and award as a consequence thereof.
6. It is stated that the appellant deposited the balance consideration of Rs. 6,95,62,552/- before the High Court of Bombay, which appointed a Court Receiver vide its order dated 12.11.2024 for registration of Sale Deed in favour of the appellant. The Sale Deed was thereupon executed pursuant to the order of the High Court of Bombay. A factum of order of provisional attachment in question was not disclosed by the seller even at this stage. The appellant, thus, purchased the property bona fidely and now affected by the impugned order. Hence, the present appeal has been preferred. It is with the statement that the amount lying with the High Court of Bombay may be taken in substitution of the property because a sum of Rs.6,95,62,552/- is still lying with the Court Receiver appointed by the High Court of Bombay. In the background of the fact given above, the prayer was made to release the property by causing interference in the impugned order.
Arguments of Ld. Counsel for the respondent:
7. Ld. Counsel for the respondent raised objection to the submissions made by Ld. Counsel for the appellant. It was submitted that the property under provisional attachment belongs to the accused company involving in commission of crime. The provisional attachment was caused for the value of the proceeds of crime. Other than the property in question, many other properties were provisionally attached in the hands of the accused. The PAO was caused on 20.07.2020 while the Agreement for Sale was executed subsequent to the provisional attachment of the property. In the light of the facts given above, the prayer is made to dismiss the appeal.
8. Ld. Counsel for the respondent made elaborate arguments to contest the appeal, which would be referred while recording finding on each issue raised by Ld. Counsel for the appellant.
Findings of the Tribunal:
9. I have considered the rival submissions of the parties and perused the records. The brief facts pertaining to the registration of the FIRs has been given. The serious allegations exist against the accused for their involvement in predicate offence apart from the other offences. As many as 25 FIRs were registered from time to time by the investors allegedly cheated by the accused. The respondent recorded the ECIR and caused investigation under the Act of 2002. Finding proceeds in the hands of the accused, provisional attachment of the property which includes the property situated in Shilapur within the Revenue limits of Shilapur Taluk and District Nashik, Maharashtra was caused.
10. An Agreement for Sale was entered on 17.12.2020 with M/s Mars for consideration of Rs.10,17,00,000/- and in case of default of the seller, reduced consideration was to be of Rs.9 Crore. M/s Mars deliberately suppressed the provisional attachment of the property from the appellant. When M/s Mars failed to execute a Sale Deed, the Arbitration proceedings pursuant to the Agreement for Sale were initiated. An Arbitral Award was passed in favour of the appellant. M/s Mars did not inform about the provisional attachment of the property even during the arbitration proceedings and subsequently even during pendency of application under Section 34 and an appeal under Section 37 of the Arbitration and Conciliation Act, 1996 1996. The matter travelled upto the Apex Court. The SLP preferred by M/s Mars was dismissed. In the SLP also, information about the provisional attachment of the property was not disclosed. The appellant approached the High Court of Bombay for the execution of the Sale Deed and accordingly a Court Receiver was appointed to execute the Sale Deed on deposit of the balance consideration of Rs.6,95,62,552/-. The appellant, accordingly, deposited the amount of the consideration and on its deposit, a Sale Deed was registered in favour of the appellant through the receiver appointed by the High Court of Bombay. The amount of consideration deposited by the appellant is lying with the Court Receiver appointed by the High Court of Bombay and accordingly prayer is made to substitute the property in question with the amount of consideration lying with the High Court of Bombay. The amount aforesaid is lesser than the amount of consideration payable on execution of the Sale Deed for the reason that the part payment was made by the appellant Company to M/s Mars on execution of Agreement for Sale.
11. The facts aforesaid have been given to show a bona fide transaction in the hands of the appellant. It is coming out from the fact that even before the execution of Agreement for Sale, a Public Notice was issued to seek objection about the Agreement for Sale of the property. No objection in pursuance to the Public Notice was received despite provisional attachment of the property prior to it. It may be that the Public Notice may not have come to the knowledge of the Enforcement Directorate, however, that cannot be taken to the benefit of the respondent. The fact, further, remains that the property in question has been registered in the name of the appellant pursuant to the order by the High Court of the Bombay after an Arbitral Award followed by an application under Section 34 and an appeal under Section 37 of the Arbitration and Conciliation Act, 1996. It was followed by dismissal of the SLP by the Apex Court.
12. It is with further opinion that M/s Mars has suppressed the material facts from both sides. It did not disclose the provisional attachment of property to the Arbitral Tribunal, High Court of Bombay and the Apex Court and even while contesting PMLA proceedings and pursuing its own appeal before the Tribunal. The property was thus conveyed and registered in the name of the appellant.
13. In the light of the peculiar facts, I am of the opinion that the appellant, being the bona fide purchaser of the property, through the Court order, is entitled to seek its release subject to the right to the Enforcement Directorate to attach the amount lying with the High Court of Bombay i.e. Rs.6,95,62,552/-. The amount aforesaid was otherwise be payable to the seller. If an immediate action is taken by the Enforcement Directorate, the substitution of the property is made by securing the amount referred to above and accordingly, I cause interference in the impugned order to the extent of the property indicated in this order while leaving the other properties unaffected. The property in question would be released. It is, however, with the liberty to the respondent to take appropriate measure to seek release of Rs.6,95,62,552/- to substitute property looking to the peculiar facts of the case.
14. The aforesaid appeal is disposed of.
