Serajuddin & Co. Vs Deputy Director (Appellate Tribunal under SAFEMA, New Delhi)
₹784-Crore Compensation for Illegal Mining Does Not Wipe Out “Proceeds of Crime”; PMLA Attachment of ₹622-Crore FDs Upheld: SAFEMA Tribunal
The Appellate Tribunal under SAFEMA has upheld the attachment of fixed deposits and bank deposits valued at approximately ₹622.62 crore, holding that payment of compensation pursuant to the Supreme Court’s directions for illegal mining does not amount to compounding of the offence of money laundering or extinguish the alleged proceeds of crime. The Tribunal further held that quashing of criminal proceedings against certain individual partners did not terminate the PMLA proceedings against the partnership firm when the Orissa High Court had expressly permitted such proceedings to continue against the firm.
Background
M/s Serajuddin & Co., a partnership firm engaged in mining iron ore and manganese ore in Odisha, was accused of undertaking production exceeding the limits approved under its mining plan and environmental clearance.
Following searches conducted on July 9, 2015, the Enforcement Directorate issued directions to various banks to freeze the firm’s current accounts and fixed deposits. The amounts lying in these accounts were stated to have originated from the sale of iron ore and manganese ore.
The ED estimated the alleged proceeds of crime at ₹785.67 crore. Bank deposits and fixed deposits worth approximately ₹497.68 crore as of July 2015, together with accumulated interest, were valued at ₹622.62 crore when the provisional attachment order was passed on October 24, 2019.
The Adjudicating Authority confirmed the attachment on September 25, 2020. The firm and three of its partners – Sarosh Yazdani, Meraj Yusha and Seraj Yusha – challenged the confirmation before the Tribunal.
Appellants’ Contentions
The appellants contended that the bank accounts had initially been frozen in July 2015, but the ED had not filed an application before the Adjudicating Authority seeking continuation of the freezing beyond the statutory period. Therefore, the continued freezing was illegal and could not subsequently be cured by issuing a fresh provisional attachment order.
They pointed out that an earlier Tribunal order dated May 6, 2019 had already set aside the freezing and seizure of the same properties. According to them, the ED could not overcome its earlier statutory lapse by subsequently attaching those very assets under Section 5 of the PMLA.
The appellants also argued that a sum of approximately ₹784.31 crore had already been deposited as compensation pursuant to the Supreme Court’s directions in Common Cause v. Union of India. Consequently, the same mining activity could not once again form the basis for computing proceeds of crime and attaching their bank deposits. Such action was alleged to result in double jeopardy.
It was further submitted that the calculations of excess production were inconsistent and unsupported by reliable material. The production had allegedly been approved by the Indian Bureau of Mines and, therefore, could not be treated as illegal production.
The appellants also relied upon the orders of the Orissa High Court quashing predicate-offence proceedings against certain partners and the PMLA proceedings against individual persons. They claimed that, once the scheduled offences were quashed, the attachment under the PMLA could not survive.
ED’s Stand
The ED contended that compensation paid for violations of environmental and forest laws was fundamentally different from attachment of proceeds derived from criminal activity.
According to the ED, payment of compensation did not absolve the accused of criminal liability and could not be adjusted against the proceeds of crime computed under the PMLA.
The ED maintained that the firm had derived a pecuniary benefit of ₹785.67 crore from illegal extraction and sale of minerals. Since the original proceeds could not be specifically traced, the bank deposits and fixed deposits were attached as property equivalent in value to the proceeds of crime.
Tribunal’s Findings
The Tribunal noticed that the Orissa High Court had quashed the criminal proceedings against certain individual partners because no specific allegations existed against them in their personal capacity. However, the High Court had expressly held that the proceedings against M/s Serajuddin & Co. stood on a different footing.
In its judgment dated July 18, 2025, the High Court permitted the money-laundering proceedings against the firm to continue. The firm’s challenge before the Supreme Court was subsequently withdrawn, with liberty to raise its contentions before the Trial Court.
Therefore, the quashing of proceedings against individual partners could not be treated as quashing of the scheduled offence or PMLA proceedings against the firm itself.
The Tribunal also distinguished its earlier order dated May 6, 2019, setting aside the freezing of the bank accounts. That order was passed because the prosecution complaint had not been filed within the prescribed period after the retention order. Significantly, the earlier appeals had not been decided on merits.
Thus, setting aside the freezing on a procedural ground did not prevent the ED from subsequently passing a valid provisional attachment order. Nor did the earlier order require the Tribunal to annul the subsequent attachment without examining it on merits.
Compensation Is Not Compounding of PMLA Offence
The Tribunal rejected the appellants’ principal argument that payment of ₹784.31 crore pursuant to the Supreme Court’s directions should neutralise the alleged proceeds of crime.
It held that such payment represented compensation for violations of environmental and forest laws. It could not be regarded as payment made towards compounding or settlement of an offence under the PMLA.
The materials collected during investigation indicated that production exceeded the approved quantities. Statements recorded from the partners also showed that the amounts deposited in the banks and converted into fixed deposits represented proceeds from the sale of iron ore and manganese ore.
Consequently, the attached deposits were required to remain secured until the Special Court finally determined whether they constituted proceeds of crime and were liable to confiscation.
The Tribunal, therefore, dismissed all four appeals and continued the attachment of ₹622.62 crore.
Author’s Comments
The ruling draws an important distinction between regulatory compensation and proceeds-of-crime attachment. Payment of compensation for unauthorised mining does not, by itself, establish that the criminal consequences of the underlying conduct have been settled. Unless the governing statute or judicial order expressly provides otherwise, such payment cannot automatically extinguish proceedings under the PMLA.
The decision also clarifies that an earlier freezing order set aside for failure to comply with a statutory timeline does not necessarily create a permanent immunity against attachment. Where the earlier order was not decided on merits, the ED may initiate a fresh attachment if the statutory requirements are independently satisfied.
However, continuation of attachment does not amount to a final declaration that the entire ₹622.62 crore constitutes proceeds of crime. The Tribunal has merely permitted the funds to remain secured pending the Special Court’s adjudication. The ED must still establish the scheduled criminal activity, the computation of illegal gains and the necessary connection between such activity and the property attached.
Further, payment of compensation cannot be deducted mechanically from the proceeds of crime; but while ordering final confiscation, courts may have to ensure that the combined civil, compensatory and criminal consequences do not result in an impermissible duplication concerning the same quantified economic benefit.
Cases Discussed
- M/s VGN Developers P Ltd. & Anr. Vs Deputy Director, Enforcement Directorate (Madras High Court), Crl. O.P. No. 9796 of 2019 & Crl. M.P. No. 5129 of 2019, dated 04.10.2019.
- Md. Mofazzalur Rahman Vs State of Odisha (Vigilance), CRLMC No. 2845 of 2021, dated 23.09.2022.
- Md. Mofazzalur Rahman & Another (Md. Intekhab Alam) Vs State of Odisha (Vigilance), CRLMC No. 2272 of 2021, dated 23.09.2022.
- Md. Intekhab Alam and Another Vs Assistant Director, Enforcement Directorate (Orissa High Court), CRLMC No. 4405 of 2024, dated 18.07.2025.
- Common Cause Vs Union of India & Ors., W.P. (Civil) No. 194 of 2014.
- Appeal Nos. FPA-PMLA-1192/BBS/2016, FPA-PMLA-1193/BBS/2016, FPA-PMLA-1194/BBS/2016 and FPA-PMLA-1195/BBS/2016, Tribunal order dated 06.05.2019.
- Appeal No. FPA-PMLA-3782/BBS/2020, Tribunal order dated 03.10.2023.
FULL TEXT OF THE JUDGMENT/ORDER OF APPELLATE TRIBUNAL UNDER SAFEMA
This Order disposes of the Appeals Nos. FPA-PMLA-3779/ BBS/2020 filed by M/s Serajuddin & Co., FPA-PMLA-3780/BBS/ 2020 filed by Shri Sarosh Yazdani, FPA-PMLA-3781/BBS/2020 filed by Shri Meraj Yusha and FPA-PMLA-3783/BBS/2020 filed by Shri Seraj Yusha, against the Order dated 25.09.2020 (Impugned Order) passed by the Ld. Adjudicating Authority (AA) under the Prevention of Money Laundering Act, 2002 (PMLA) in the Original Complaint No. 1222/2019 (OC). The Provisional Attachment Order No. 04/2019 dated 24.10.2019 (PAO) issued in ECIR No. ECIR/06/BSZO/2014 dated 12.12.2014 was confirmed vide the Impugned Order.
2. Ld. Counsel for the Appellants submitted that the Appellant Company is a partnership firm registered before the Registrar of Firms, Kolkata, West Bengal vide Registration No. 176559 dated 16.10.2007 and is in the legitimate business of mining of Iron Ore and Manganese Ore in Odisha since 1955 under a valid license/lease granted by the Government of Odisha/Government of India and the said license/lease has been renewed from time to time. The Respondent post searches and seizures on 09.07.2015, issued letters to the banks of the Appellants on 14.07.2015 and 15.07.2015 directing them to freeze the Current Accounts/FDs of the Appellant. In pursuance of the letters dated 14.07.2015 and 15.07.2015 issued by the Enforcement Directorate, the operation of Current Accounts and FDs were restricted by the bank Authorities. Ld. Counsel for the Appellants submitted that after searches and seizures on 09.07.2015 and freezing of Accounts of the Appellants on 14.07.2015 and 15.07.2015, an Original Application (OA) No. 29/2015 dated 31.07.2015 was filed by the Respondent under sub-section (4) of Section 17 of PMLA for retention of seized documents. The OA 19/2015 dated 31.07.2015 was filed only for retention of documents and in the said OA there was no reference to freezing of the Accounts and FDs. No separate OA was filed seeking continuation of freezing of the said Accounts and FDs. To overcome the statutory lapse, the Respondent has wrongly issued a Provisional Attachment Order (PAO) No. 04/2019 dated 24.10.2019 under sub-section (1) of Section 5 of PMLA which has been confirmed in a routine and casual manner by the Ld. AA vide order dated 25.09.2020 in OC No. 1222/2019.
3. Ld. Counsel for the Appellants submitted that the Appellant Company is a partnership firm registered before the Registrar of Firms, Kolkata, West Bengal vide Registration No. 176559 dated 16.10.2007 and is in the legitimate business of mining of Iron Ore and Manganese Ore in Odisha since 1955 under a valid license/lease granted by the Government of Odisha/Government of India and the said license/lease has been renewed from time to time. The Respondent post searches and seizures on 09.07.2015, issued letters to the banks of the Appellants on 14.07.2015 and 15.07.2015 directing them to freeze the Current Accounts/FDs of the Appellant. In pursuance of the letters dated 14.07.2015 and 15.07.2015 issued by the Enforcement Directorate, the operation of Current Accounts and FDs were restricted by the bank Authorities. Ld. Counsel for the Appellants submitted that after searches and seizures on 09.07.2015 and freezing of Accounts of the Appellants on 14.07.2015 and 15.07.2015, an Original Application (OA) No. 29/2015 dated 31.07.2015 was filed by the Respondent under sub-section (4) of Section 17 of PMLA for retention of seized documents. The OA 19/2015 dated 31.07.2015 was filed only for retention of documents and in the said OA there was no reference to freezing of the Accounts and FDs. No separate OA was filed seeking continuation of freezing of the said Accounts and FDs. To overcome the statutory lapse, the Respondent has wrongly issued a Provisional Attachment Order (PAO) No. 04/2019 dated 24.10.2019 under sub-section (1) of Section 5 of PMLA which has been confirmed in a routine and casual manner by the Ld. AA vide order dated 25.09.2020 in OC No. 1222/2019.
4. Ld. Counsel for the Appellants submitted that on one hand, the Respondent has relied upon Sections 420 and 120-B of IPC as scheduled offences and on the other hand they have taken the plea of lack of ‘Environment Clearance’ under the Forest Conservation Act, 1986. This shows complete non application of mind on the part of the Respondent to falsely implicate the Appellant for the alleged excessive production of the Iron ore and Manganese Ore for the period prior to the provisions of PMLA and scheduled offences have come into force. Ld. Counsel for the Appellants submitted that on perusal of both the Charge-sheets dated 30.03.2012, Original Complaint dated 06.11.2019 and the Provisional Attachment Order No. 04/2019 dated 24.10.2019, it is evident that there have been contradictory figures regarding the alleged excess production by the Appellant and the same are based merely on surmises and conjectures. The Respondent wrongly issued direction to banks on 14.07.2015 and 15.07.2015 to freeze the Accounts and FDs of the Appellant in a casual manner with an arbitrary exercise of powers and again frozen the Accounts and FDs of the Appellants by PAO dated 24.10.2019. This makes it clear that the Respondent had grossly misused its powers and completely failed to adhere to the statutory provisions of PMLA.
5. Ld. Counsel for the Appellants submitted that the Respondent has not followed the legislative mandate of sub-section (3) of Section 20 of PMLA which provides for release of frozen property on the expiry of 180 days. On the other hand, no OA was filed seeking continuation of freezing of Current Accounts and FDs from the Ld. AA by way of OA under sub-section (4) of Section 17 of PMLA. The retention of frozen property beyond 180 days without permission of the Ld. AA is a nullity and an absolute illegality which cannot be rectified or cured by passing a PAO. Thus, PAO dated 24.10.2019 and the impugned order dated 25.09.2020 are contrary to the letter and spirit of the provisions of PMLA and liable to be quashed and set aside. Ld. Counsel for the Appellants submitted that the Ld. AA has failed to appreciate the fact that the Appellant has never been in possession of the alleged PoC. It was submitted that the Ld. AA has confirmed the PAO through the Impugned Order passed in a mechanical manner ignoring the pleadings of the Appellant and without recording reasons as mandated in law.
6. Ld. Counsel for the Appellants relied upon the statements of various witnesses to support his contentions, which were as follows:
a. Shri Mofazzalur Rahman vide his statements dated 27.08.2015 and 23.09.2015 stated inter-alia that he was the Joint Managing Partner of M/s Serajuddin & Co., which has two mining leases of Balda Iron Block and Guruda Manganese Block and presently, mining operation is being carried out in Balda Iron Ore Mines. He also stated he was the partner in the firm M/s Serajuddin & Co. since 1986 and he was responsible for the decisions taken for the business of the firm.
b. Shri Intekhab Alam vide his statement dated 11.08.2015 stated that he was a partner in M/s Serajuddin & Co. since 06.04.2001 and Shri Seraj Yusha and Md. Mofazzalur Rahman are the Authorized Signatories. When he was questioned regarding the source of fixed deposit in different banks amounting to Rs. 491 Crores (appx.) belonging to M/s. Serajuddin & Co., he stated that the source of such money was the proceeds from sale of minerals.
c. Shri Sarosh Yazdani vide his statement dated 14.01.2016 stated inter-alia that the Authorized Signatory in Serajuddin & Co. are Seraj Yusha and Mofazzalur Rahman and he was the partner in M/s Serajuddin & Co. since 2008.
d. Shri Meraj Yusha vide his statement dated 12.11.2015 stated inter-alia that he was a partner in M/s Serajuddin & Co. since 2008 and there were no specific areas of work as such which were looked after by him; however, he supervised the work relating to mining and sale whenever the Joint Managing Partners desired. When questioned to state the source of money deposited in different banks in the form of fixed deposits, he replied stating that these were entirely sale proceeds of iron ore and manganese ore produced from the mines of M/s. Serajuddin & Co. at Balda and Guruda.
e. Shri Seraj Yusha vide his statement dated 29.07.2015 stated inter-alia that he was a partner in M/s Serajuddin & Co. and details of other partners are as mentioned in re-constituted Partnership Deed dated 01.10.2011. He also stated that the payments from the buyers were received in his account as well as in the account of Md. Mofazzalur Rahman, as they were the Authorized Signatories of M/s. Serajuddin & Co. He further stated that the major beneficiaries were all the partners of M/s Serajuddin & Co. At present, he and Shri Mofazzalaur Rahman were the Joint Managing Partners and were responsible for the day-to-day business of the Company.
6. Ld. Counsel for the Appellants submitted that M/s Serajuddin & Co. had paid the compensation amount of Rs.753,98,41,469.31 for violations of Environmental Clearances and Forest Act, as per the order/direction of the Hon’ble Supreme Court and therefore, cannot be accused of generating proceeds of crime under PMLA. Ld. Counsel for the Appellant submitted that the actual production during 24.08.2000 to 10.11.2009 was 22,586 MT as evident from the response dated 04.03.2019 provided by the Office of Regional Controller of Mines, Bhubaneshwar, thus, the finding of the Respondent that the total production was 8,29,447 MT is incorrect. Ld. Counsel for the Appellants contended that there was no excess production of Iron Ore during 2000-2003 and 2005-2006, as admitted by the Respondent. Also, the alleged excess production during 2003-2004, 2004-2005 and 2006-2009 is without any basis. Ld. Counsel for the Appellants further submitted that the production quantity was approved by the IBM, therefore, there was no question of excess production as calculated to be Rs.6,92,98,143.16 by the Respondent.
7. Ld. Counsel for the Appellants further argued that the Appeal Nos. FPA-PMLA-1192/BBS/2016 filed by M/s. Serajuddin & Co., FPA-PMLA-1193/BBS/2016 filed by M/s. Yazdani International Pvt. Ltd., FPA-PMLA-1194/BBS/2016 filed by Shri Seraj Yusha, Shri Meraj Yousha & Ors. and FPA-PMLA-1195/BBS/2016 filed by Shri Sarosh Yazdani against the Order dated 01.12.2015 confirming the Freezing/Seizure of these very properties were allowed by this Tribunal on 06.05.2019. Ld. Counsel argued that having first failed to freeze the properties, the Respondent resorted to the attachment of the properties vide PAO dated 24.10.2019 in the same ECIR No. ECIR/06/BSZO/2014 dated 12.12.2014. He contended that the PAO and its confirmation are therefore vitiated. Ld. Counsel further argued that there does not exist any scheduled offences as the Hon’ble High Court of Orissa allowed CRLMC No. 2845 of 2021 and CRLMC No. 2272 of 2021 by its two Judgments dated 23.09.2022. Moreover, the Hon’ble High Court of Orissa partly allowed CRLMC No. 4405 of 2024 quashing the money laundering proceedings. Ld. Counsel also pointed out that the challenge to the said Order by the Appellants in the Hon’ble Supreme Court of India was withdrawn. Ld. Counsel further argued that this Tribunal vide Order dated 03.10.2023 allowed the Appeal No. FPA-PMLA-3782/BBS/2020 filed by Shri Md. Mofazzalur Rahman. Ld. Counsel pleaded that the Impugned Order is also vitiated, because the Ld. AA has failed to make any finding under Section 8 (2) of PMLA. Ld. Counsel contended that the Impugned Order has been passed only on the basis of the provisions of Section 24 of PMLA. Ld. Counsel therefore pleaded to allow the Appeals.
8. Ld. Counsel for the Respondent submitted that under the PMLA, the Directorate is required to identify the proceeds of crime and to attach the same in whatever form it is available and to seek for confiscation before the trial court. Simply because compensation was paid for the Environmental Clearances and Forest Act violations, the accused are not absolved from criminal prosecution and from attachments of the proceeds of crime. Accordingly, the compensation paid in respect of violation of Environmental Clearances and Forest Act cannot be set off while computing the proceeds of crime under PMLA relating to illegal mining. Reliance in this regard was placed on the decision of the Hon’ble High Court of Madras in M/s VGN Developers P Ltd. & Anr. vs. Deputy Director, Enforcement Directorate in Crl. O.P. No. 9796 of 2019 & Crl. M.P. No.5129 of 2019 dated 04.10.2019:
“As rightly submitted by the learned Additional Solicitor General, the definition of “proceeds of crime” under Section 2(u) of the Act is very exhaustive and elaborate. It speaks of any property derived or obtained, directly or indirectly, by any person. It is no doubt true that the complaint has been made by the respondent only in pursuant to the scheduled offence. However, the object, rationale and the scope enshrined under the Prevention of Money Laundering Act, 2002, being a special statute is distinct and different from the one enshrined under the Indian Penal Code and the Prevention of Corruption Act. Though the facts may be overlapping the nature of investigation differs. Therefore, it cannot be stated that a mere closure by the Central Bureau of Investigation would provide a death knell to the proceedings of the respondent. In a given case, the complaint may emanate from a registration of a case involving scheduled offence. But the fate of the investigation in the said scheduled offence cannot have bearing to the proceedings under the Prevention of Money Laundering Act, 2002. Section 2(u) of the Act merely speaks of a criminal activity relating to a scheduled offence. Therefore, we are concerned with the criminal activity qua a scheduled offence. Section 3 deals with the offence on money laundering. Once the respondent is of the view that a person is involved in any process of activity connected with the “proceeds of crime“, which definition is very wide then he gets the power to investigate further. When such an investigation gets completed and found that there indeed was a money laundering, then the matter will have to be proceeded with before the jurisdictional Court, on a complaint being taken on file. Hence, there is no difficulty in holding that both the investigations can go on using the same channel while their waters need not mix all the time.”
9. The Ld. Counsel for the Respondent further submitted that the economic offences have wide effect on the society. The Directorate has also filed complaint against the Appellant and its Joint Managing Directors under Section 45 of PMLA before the Special Court under PMLA which stands duly registered. Ld. Counsel for the Respondent also submitted that M/s Serajuddin & Co. has acquired proceeds of crime as defined under PMLA and projected the same as untainted. The investigation conducted under PMLA established that the properties attached represent the equivalent value of ‘proceeds of crime‘ as defined under Section 2(1)(u) of PMLA. Ld. Counsel for the Respondent submitted that the Appellant has undertaken illegal production of iron ore and Manganese Ore and has gained pecuniary benefit of Rs. 785,67,15,919/- as detailed in ‘Table–9’ of the Original Complaint. The said amount is nothing but the Proceeds of Crime derived or obtained directly or indirectly by the Appellant as a result of criminal activity relating to the scheduled offences as mentioned in the charge sheet filed by Odisha State Vigilance Department. The Appellant produced iron ore over and above the IBM approved mining plan and over and above the approved “Environment Clearance” limit. Also, the quantity of illegal production of iron ore by the Appellant was much more if the Environmental Clearance limit is taken into consideration.
10. Ld. Counsel for the Respondent contended that the total identified properties in bank accounts, FDs and TDRs presently were to the tune of Rs. 497,68,74,972/- as on July, 2015 which was prohibited for withdrawal and converted to FDs and were presently valued at Rs. 622,62,05,200/-. Therefore, Rs. 622,62,05,200/- lying in the FDs and the TDRs etc. were provisionally attached vide PAO No. 04/2019. The total Proceeds of Crime (POC) were Rs. 785,67,15,919/- as per ‘Table–9’ of the Original Complaint. Since, the criminal activity had taken place during different points of time, it was not possible to trace the POC derived or obtained at the time of commission of the scheduled offence. Hence, the above said amount of Rs. 622,62,05,200/- was attached provisionally, being the value thereof/equivalent amount of the POC. Ld. Counsel for the Respondent submitted that M/s Serajuddin & Co. submitted a letter no. S & CO/545/17-18 dated 13.11.2017 wherewith the lessee submitted the Demand Notice No. 4124/Mines dated 02.09.2017 issued by the Deputy Director of Mines, Joda Circle, District Keonjhar, Odisha to M/s Serajuddin & Co. in consonance with the Judgment dated 02.08.2017 of the Hon’ble Supreme Court in W.P. (C) No. 114 of 2014. In reply to the aforementioned letters all dated 14.07.2015, Axis Bank vide e-mail dated 16.07.2015 provided details of 23 active accounts held by M/s Serajuddin & Co. wherein the total balance amount was Rs.221,74,38,763/-. In the reply, Kotak Mahindra Bank vide e-mail dated 14.07.2015 provided details of six TD accounts wherein total balance amount was Rs. 55,86,50,008/-. In reply, HDFC Bank vide fax letter dated 16.07.2015 provided details of fifteen TD accounts wherein total balance amount was Rs.190,71,28,629.50. In reply, UCO Bank vide letter No. HO/OSD/KYC-AML/1639/ 2015-16 dated 23.07.2015 provided the details of three accounts wherein the balance amount was Rs. 5,55,85,944/-. In reply, State Bank of India, Commercial Branch, Bhubaneswar, Odisha vide letter dated 12.08.2015 provided the details of the FD A/c No. 35150848084 of the lessee wherein the balance amount was Rs. 23,74,33,691/- as on 12.08.2015. The balance amount in SBI, Barbil was Rs. 35,83,736/-. The total balance amount lying in the above accounts of M/s Serajuddin & Co. amounted to Rs. 497,68,74,972/-. Ld. Counsel therefore pleaded to dismiss the Appeals.
11. We have considered the rival submissions and the material on record. We have also scrutinized the Judgments of the Hon’ble Orissa High Court and those of this Tribunal cited by the Appellants. First and foremost, we intend to look at the contents of these judgments, so as to gauge the impact of these Judgments on the present set of Appeals. The Judgment dated 23.09.2022 of the Hon’ble Orissa High Court, Cuttack in CRLMC No. 2845 of 2021 in the matter relating to the challenge to the Charge-Sheet No. 3 dated 30.03.2012, between Md. Mofazzalur Rahman vs. State of Odisha (Vigilance) states the following in the concluding Paragraphs 18 and 19:
“18. In view of the well settled principle of law, as apparent from the decisions quoted above, the prosecution launched against the petitioner is found to be legally not sustainable, although the petitioner is admittedly a Partner of the Lessee-company. Further, for the discussion made hereinbefore, the offence of criminal conspiracy and other offences as alleged, are found to be not made out against the petitioner, especially when there is no specific allegation in that regard against him either as an individual or a partner of the Lessee company. Hence, this Court finds merit in the contention of the petitioner that continuance of the criminal proceeding against him will amount to abuse of the process of the Court. The CRLMC, therefore, deserves to be allowed.
19. In the result, the CRLMC is allowed, and the impugned order passed in T.R. No.15 of 2012 in the court of the learned Special Judge (Vigilance), Keonjhar qua the petitioner as well as the consequential proceedings against him stand quashed.”
The Judgment dated 23.09.2022 of the Hon’ble Orissa High Court, Cuttack in CRLMC No. 2272 of 2021 in the matter relating to the challenge to the Charge-Sheet No. 4 dated 30.03.2012 between Md. Mofazzalur Rahman & Another (Md. Intekhab Alam) vs. State of Odisha (Vigilance) states the following in the concluding Paragraphs 18 and 19:
“18. In view of the well settled principle of law, as apparent from the decisions quoted above, the prosecution launched against the petitioners is found to be legally not sustainable, although the petitioners are admittedly Partners of the Lessee-company. Further, for the discussion made hereinbefore, the offence of criminal conspiracy and other offences as alleged, are found to be not made out against the petitioners, especially when there is no specific allegation in that regard against them either as an individual or a partner of the Lessee company. Hence, this Court finds merit in the contention of the petitioners that continuance of the criminal proceeding against them will amount to abuse of the process of the Court. The CRLMC, therefore, deserves to be allowed.
19. In the result, the CRLMC is allowed, and the impugned order passed in T.R. No.16 of 2012 in the court of the learned Special Judge (Vigilance), Keonjhar qua the petitioners as well as the consequential proceedings against them stand quashed.”
The Judgment dated 18.07.2025 of the Hon’ble Orissa High Court, Cuttack in CRLMC No. 4405 of 2024 in the matter relating to the challenge to the Prosecution Proceedings under PMLA between Md. Intekhab Alam & Another vs. Assistant Director, Enforcement Directorate, Government of India, Bhubaneswar states the following in the Paragraphs Nos. 4, 5, 31, 32, 33 and 34:
“4. That it is also a matter of record that this Court vide order dated 23.09.2022 passed in CRLMC No.2845 of 2021 and CRLMC No.2272 of 2024, quashed the order of taking cognizance passed by the trial court and the entire proceedings emanating thereof against Md. Mofazzalur Rahman (deceased) and Md. Intekhab Alam (Petitioner No.1). Pursuant to the order dated 23.09.2022 passed by this Court, the learned Special Judge (Vigilance) Keonjhar vide order dated 01.11.2022 closed the case against the aforesaid accused in so far as the scheduled offence is concerned.
5. The petitioners, relying upon the order dated 23.09.2022 passed by this Court in CRLMC No.2845 of 2021 and CRLMC No.2272 of 2024 and subsequent orders closing the case against the petitioners by the court below, are now seeking quashing of the proceedings under the PMLA, 2002, pending before the learned Special Judge, PMLA.
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31. Therefore, the proceedings against M/s. Serajuddin & Co. (Petitioner No.2) for the offence of money laundering stand on a different footing altogether. This Court finds merit in the argument of the learned Senior Counsel for the Opposite Party that the proceedings under the predicate offence are not quashed in its entirety and same are still pending against other accused person before the Vigilance Court and the issue with regard to whether the money recovered and seized is proceeds of crime will finally be determined in the course of trial. Moreover, in view of a statutory presumption that any money/property recovered from the petitioners constitutes ‘proceeds of crime’ unless same is disproved at trial, the petitioner No.2 must discharge its burden at the trial alone, for which the proceedings ought not be quashed at the stage of cognizance.
32. Consequently, the proceedings against the petitioners, Md. Intekhab Alam and another are hereby quashed.
33. However, the proceedings against the company/firm shall continue, and the Enforcement Directorate is free to proceed in accordance with law regarding any further investigation or prosecution of the company/firm under PMLA by strictly complying the procedural safeguard provided under the Prevention of Money Laundering Act, 2002, and any other applicable laws.
34. The CRLMC is partly allowed.”
12. Perusal of the Judgments of the Hon’ble Orissa High Court brings out that in both Charge-Sheet No. 3 and Charge-Sheet No. 4 as mentioned afore, the criminal proceedings initiated for the offences including the scheduled offences against Shri Md. Mofazzalur Rahman were quashed. It is also clear that in Charge-Sheet No. 4 the criminal proceedings initiated for the offences including the scheduled offences against Md. Intekhab Alam were also quashed. Both these Judgments also state that the consequential proceedings have been quashed. The Judgment dated 18.07.2025 of the Hon’ble High Court of Orissa quashes the money laundering proceedings against Md. Intekhab Alam. However, the Order makes it clear that the proceedings against the Company/ Firm would continue and the Respondent Directorate was given freedom to further investigate or prosecute the Company/Firm under the PMLA. In this regard, following two sentences of Paragraph 30 of the Judgment (supra) leave no scope for ambiguity:
“……..Although, this Court vide order dated 23.09.2022, has quashed the criminal proceedings against Petitioner No.1 in the predicate offence, however, on perusal of the said order, findings recorded by this Court would suggest that petitioner No.1 was able to persuade this Court that the allegations and the material brought on record by the prosecution in the Charge Sheet was primarily against M/s. Serajuddin & Co (Petitioner No.2) and there was no specific allegation against the Petitioner No.1 in his personal and individual capacity, therefore, he in his personal capacity cannot be made to face the criminal trial in the predicate offence………”
It is also on record that M/s. Serajuddin & Co. had challenged this Order in the Hon’ble Supreme Court of India. However, vide Order dated 08.05.2026 in Special Leave to Appeal (Crl) Nos. 13963/2025 the SLP was dismissed as withdrawn with liberty to raise the relevant contentions before the Trial Court. Ld. Counsel for the Respondent Directorate has stated that the prosecution under PMLA is still in progress.
13. Ld. Counsel for the Appellants also made the contention that this Tribunal vide its Order dated 06.05.2019 allowed the Appeal Nos. FPA-PMLA-1192/BBS/2016 filed by M/s. Serajuddin & Co., FPA-PMLA-1193/BBS/2016 filed by M/s. Yazdani International Pvt. Ltd., FPA-PMLA-1194/BBS/2016 filed by Shri Seraj Yusha, Shri Meraj Yousha & Ors. and FPA-PMLA-1195/BBS/2016 filed by Shri Sarosh Yazdani against the Order dated 01.12.2015 confirming the Freezing/Seizure of these very properties. On perusal of the said Order of this Tribunal, it is clear that the seizure/freezing was set aside on the grounds that even after lapse of 3 Year and 5 Months the Prosecution Complaint had not been filed within 90 days of the passing of the Retention Order for the properties. The said Order specifically clarified that the Appeals were not decided on merits. At that point in time as per the provisions of Section 8 (3) (a) of PMLA there was stipulation to file the Prosecution Complaint within the period of 90 days of passing the Order of freezing/seizure/retention/ attachment. Therefore, passing of the Order dated 06.05.2019 by this Tribunal precludes neither the possibility of making an attachment subsequently, nor to uphold the attachment merely on this ground that the Freezing Order had been set aside.
14. Ld. Counsel for the Appellants has also referred to this Tribunal Order dated 03.10.2023, which allowed the Appeal No. FPA-PMLA-3782/BBS/2020 filed by Shri Md. Mofazzalur Rahman. The Order of the Tribunal was passed in the light of the scheduled offences having been quashed by the Hon’ble High Court of Orissa qua Shri Md. Mofazzalur Rahman in its Judgments dated 23.09.2022. As discussed in the aforementioned Paragraph 12, the scheduled offences qua Shri Md. Mofazzalur Rahman were quashed by the said Judgments. It was further clarified by the Hon’ble High Court of Orissa in its Judgment dated 18.07.2025 that further necessary action under PMLA could continue against M/s. Serajuddin & Co. It is also clear that in the aforementioned Judgments the cases of the three individual Appellants herein, were not under consideration. We therefore observe that the Order dated 03.10.2023 of this Tribunal does not bar us from considering the Appeals filed by the Firm and the three individual Appellants on merit.
15. We do not agree with the contention made by the Ld. Counsel for the Appellants that no finding has been made in the Impugned Order under Section 8 (2) of PMLA. In fact, on reading the ‘Discussions’ made by the Ld. AA in the Impugned Order, it is obvious that besides the Complaint, the submissions made by the Appellants and the rejoinder filed by the Complainant/ Respondent (herein) have been duly considered by the Ld. AA. We also find that there has been due consideration of the estimate made of the proceeds of crime. The total Proceeds of Crime (POC) were estimated to be Rs.785,67,15,919/-. FDs and TDRs were identified as movable properties to the tune of Rs. 497,68,74,972/- as on July, 2015 in the name of M/s Serajuddin & Co. At the time of passing of PAO these were valued along with the interest accumulated at Rs.622,62,05,200/-. Thus, the attachment was made of the properties then available of the proceeds of crime.
16. The pleading has been made by the Appellants that the provisions of PMLA could not be invoked in view of the matter having been finally settled by the Hon’ble Supreme Court in Common Cause vs. Union of India & Ors. (W.P. Civil No. 194 of 2014), whereby in compliance to the direction of the Hon’ble Court an amount of Rs. 784,31,38,569.31 had been deposited as compensation for illegal mining. The argument advanced was that the offence, if any, under the Forest Conservation Act and the Environment Act were neither the schedule offences under PMLA, nor could invite further penalty which would tantamount to double jeopardy. The Appellants also challenged the methodology adopted in arriving at the estimate for excess production, during the course of investigation. In Paragraph 17 (ii) of the Impugned Order the following finding has been made:
“On the issue that M/s Serajuddin & Company has paid the compensation for the violations of Environmental Clearances and Forest Act, as per the order/direction of the Hon’ble Supreme Court and therefore cannot be accused of generating proceeds of crime under PMLA 2002, the complainant has stated that the compensation was paid for the violations of the environmental Clearances and Forest Act and not for the proceeds of crime derived out of illegal mining. As per the PMLA, the Directorate is required to identify the proceeds of crime and to attach the same in whatever form it is available and to seek for confiscation before the trial court. Simply because compensation was paid for the Environmental Clearances and Forest Act violations, the accused are not absolved from criminal prosecution and from attachments of the crime proceeds. Accordingly, the compensation paid in respect of violation of Environmental Clearances and Forest Act cannot be set off while computing the proceeds of crime under PMLA relating to illegal mining. Therefore, the allegations of the defendants are baseless and without merit.”
The payment made by the Appellants on the directions of the Hon’ble Supreme Court cannot be regarded by them as the amount for the compounding of the PMLA offences. We observe that the scheduled offences have been invoked in the Charge-Sheets. The investigations conducted under the provisions of PMLA have brought out that the quantity of Iron Ore mined exceeded the approved production quantities. Amounts of high denominations were found in the bank accounts of the Appellants. The statements recorded during the course of investigation revealed that the source of money deposited in different banks in the form of Fixed Deposits were sale proceeds of Iron Ore and Manganese Ore. Enquiries were also made from the Directorate of Mines, Government of Odisha. In view of such findings, we observe that the attachment of the available proceeds of crime or its value equivalent need to be continued with till the findings of the Trial Court are made final. The scheme of PMLA requires the proceeds of crime to be secured and remain available for confiscation, if it is so warranted at the time of conclusion of the PMLA Trial.
17. In view of the aforementioned discussions and findings, we therefore dismiss the Appeals Nos. FPA-PMLA-3779/ BBS/2020 filed by M/s Serajuddin & Co., FPA-PMLA-3780/BBS/ 2020 filed by Shri Sarosh Yusha and FPA-PMLA-3781/BBS/2020 filed by Shri Meraj Yusha and FPA-PMLA-3783/BBS/2020 filed by Shri Seraj Yusha. Applications pending, if any, are disposed of accordingly.
