Pre-Offence Property Can Be Attached as Equivalent Value Under PMLA: SAFEMA

Rajeshwari Kulkarni Vs Deputy Director (Appellate Tribunal under SAFEMA)

Property Bought Before the Crime Can Also Be Attached Under PMLA as “Equivalent Value”; Wife’s Name and Explained Sources Offer No Absolute Protection

Summary: The Appellate Tribunal under SAFEMA has held that property acquired before the alleged commission of the scheduled offence, and even property acquired from legitimate and explained sources, can be attached under the Prevention of Money Laundering Act, 2002 where it represents the “value of” the actual proceeds of crime. The Tribunal also held that property standing in the name of the accused’s wife could be attached where the acquisition was partly or substantially funded by the accused. However, while sustaining the attachment, the Tribunal protected the appellants’ physical possession of the residential properties during the pendency of the prosecution, except in exceptional circumstances.

Background of the Case

The appeals arose from an order confirming the provisional attachment of two residential properties situated at Jogeshwari and Bandra, Mumbai, having an aggregate market value of approximately Rs.8.58 crore. The properties were attached in connection with an investigation against Geodesic Limited and its directors.

Geodesic Limited had raised USD 125 million through Foreign Currency Convertible Bonds in 2008 for investment in and acquisition of overseas subsidiaries. The bonds were due for redemption in October 2013 at a maturity value of approximately USD 157.06 million. The Enforcement Directorate alleged that the company defaulted on repayment and transferred funds to overseas entities through fictitious transactions. It was further alleged that approximately Rs.250 crore was diverted to six shell companies by recording bogus purchases of software. The total alleged proceeds of crime were quantified at approximately Rs.743 crore.

Since the alleged proceeds were either parked abroad or were otherwise unavailable for attachment, the ED attached the two Mumbai properties as assets representing the equivalent value of the proceeds of crime.

Properties Purchased Before the Alleged Offence

The appellants argued that the Jogeshwari flat had been purchased in 1994 and the Bandra flat in 2000, whereas the alleged criminal activities took place between 2008 and 2013. Both properties had thus been purchased not only before the alleged offence but, in the case of the earlier flat, even before the enactment of the PMLA.

The Tribunal rejected this contention by distinguishing between the actual property derived from criminal activity and an alternative property attached as the “value of such property.” Where the property is attached because it directly or indirectly represents proceeds generated from the scheduled offence, a factual nexus with the criminal activity must ordinarily be established. However, when the actual proceeds are unavailable and another property is attached as equivalent value, the date and source of acquisition of the substitute property are not decisive.

Accordingly, even property acquired before the scheduled offence and from otherwise untainted sources may be attached as an equivalent-value property. The Tribunal followed its earlier decisions and the Punjab and Haryana High Court ruling in Dilbag Singh alias Dilbag Sandhu v. Union of India, which had distinguished decisions such as Pavana Dibbur v. Enforcement Directorate and rejected the proposition that pre-offence property can never be attached.

Explained Sources Do Not Defeat Equivalent-Value Attachment

The appellants contended that the Jogeshwari flat had been purchased through a housing loan, a loan against jewellery and funds raised from the sale of shares. The Bandra flat had initially been purchased jointly by the husband and wife, after which the husband gifted his 50 per cent share to the wife in December 2012 on their twentieth wedding anniversary.

The Tribunal held that when attachment is made as the value equivalent of unavailable proceeds of crime, the fact that the substitute property was acquired from explained sources does not prevent attachment. A legitimately acquired property can also be preserved for eventual confiscation in lieu of the actual criminal proceeds.

The Tribunal further noticed that the Bandra flat had initially been purchased jointly and substantial consideration had been paid from Kiran Kulkarni’s bank account. Part of the consideration for the Jogeshwari flat had also been paid by him. Therefore, the properties could not be regarded as entirely independent assets of his wife merely because they stood in her name.

Property in Wife’s Name Can Be Attached

Rajeshwari Kulkarni argued that she was neither an accused in the scheduled offence nor in the money-laundering case and had no role in the management of Geodesic Limited. She was merely a shareholder holding 300 shares and was a homemaker.

The Tribunal observed that the PMLA is intended to reach the proceeds of crime in whosoever’s name they are kept or by whomsoever they are held. Since funds belonging to Kiran Kulkarni had admittedly been utilised in acquiring the properties, their registration or subsequent transfer in favour of his wife did not immunise them from attachment.

The Tribunal also found that no sufficient independent financial source in the wife’s hands had been established. Even if loans had been obtained in her name, the sources from which those loans were repaid had not been satisfactorily demonstrated.

Money-Laundering Is a Continuing Offence

The appellants further argued that Sections 420 and 120-B of the IPC became scheduled offences only from 1 September 2009 and that the amendment permitting attachment of equivalent-value property in India where proceeds were held abroad came into effect only on 14 May 2015.

Rejecting the argument, the Tribunal held that money-laundering is a continuing offence. The relevant consideration is not merely the date on which the scheduled offence was committed but whether acts such as possession, concealment, acquisition, use or projection of proceeds as untainted property continued after the relevant provisions came into force.

Since the FCCBs remained unredeemed, the alleged funds continued to be held abroad and the attachment order was passed in July 2016, the amended provisions were already in force. The Tribunal therefore held that there was no impermissible retrospective application of the PMLA.

Attachment Sustained but Physical Possession Protected

The Tribunal declined to examine whether the FCCB funds were genuinely utilised, whether the software transactions were genuine or whether Kiran Kulkarni had personally committed the scheduled offences. Those matters were for the competent criminal court. For attachment proceedings, it was sufficient that prosecution for the scheduled offence and under the PMLA remained pending.

The appeals were accordingly dismissed, and the attachment was sustained. However, following Vijay Madanlal Choudhary v. Union of India, the Tribunal directed that physical possession of the residential properties should not be taken during the pendency of the prosecution except under exceptional circumstances.

Author’s Comments

The ruling draws an important distinction between tainted property and property attached as equivalent value. A property purchased before the crime may not itself represent criminal proceeds, but it can still be attached as a substitute where the actual proceeds are unavailable, dissipated or parked abroad.

The decision also shows that attachment is not equivalent to final confiscation. It is an interim protective measure. If the accused is ultimately discharged or acquitted in the scheduled offence, the foundation of the money-laundering action and consequent attachment would ordinarily disappear. Until then, however, explained sources, prior acquisition and registration in the spouse’s name may not by themselves defeat an equivalent-value attachment, though physical dispossession should remain an exceptional step.

Cases Discussed

• Pavana Dibbur v. Enforcement Directorate, (2023) 15 SCC 91
• Seema Garg v. Deputy Director, 2020 SCC OnLine P&H 738
• Kumar Pappu Singh v. Union of India, (2021) 1 HCC (AP) 556
• HDFC Bank Ltd. v. Union of India, 2021 SCC OnLine Pat 4222
• Satish Motilal Bidri v. Union of India, 2024 SCC OnLine Ker 3410
• State of Bombay v. Vishnu Ramachandra, AIR 1961 SC 307
• V.M. Ganesan v. Directorate of Enforcement, 2014 SCC OnLine Mad 10702
• Aslam Mohammad Merchant v. Competent Authority, (2008) 14 SCC 186
• J. Sekar v. Union of India, 2018 SCC OnLine Del 13481
• Partap Singh v. Director of Enforcement, (1985) 3 SCC 72
• Yash Raj Films Pvt. Ltd. v. Directorate of Enforcement, 2019 SCC OnLine ATPMLA 11
• Vijay Madanlal Choudhary v. Union of India, (2023) 12 SCC 1 / 2022 SCC OnLine SC 929
• Alive Hospitality & Foods Pvt. Ltd. v. Deputy Director, Directorate of Enforcement, 2025 SCC OnLine ATSAFEMA 161
• Smt. R. Booma and Shri S.P. Rajendran, FPA-PMLA-1638/CHN/2017 and FPA-PMLA-1632/CHN/2017
• Sadanand Nayak v. Dy. Director, FPA-PMLA-5612/BBS/2023
• Dilbag Singh @ Dilbag Sandhu v. Union of India & Ors., CWP-22688-2024
• State of Bihar Vs. Deokaran Nenshi, 1972 SCC 890
• Dyani Antony Paul and Ors. Vs. Union of India and Ors., MANU/KA/4442/2020
• Hari Narayan Rai v. Union of India, W.P. (Cr) No. 325/2010
• G. Gopalakrishnan Vs. Deputy Director, WP (MD) Nos. 11454, 14860 & 14894 to 14899 of 2018

FULL TEXT OF THE JUDGMENT/ORDER OF APPELLATE TRIBUNAL UNDER SAFEMA

The present appeals arise from Order dated 18.11.2016 of the Ld. Adjudicatory Authority (“AA”) established under the Prevention of Money Laundering Act, 2002 (“PMLA”) in Original Complaint (“OC”) No. 626/2016 confirming the Provisional Attachment Order (PAO) No. 13/2016 dated 12.07.2016 passed in Enforcement Case Information Report (ECIR) No. MBZO/02/2016 dated 12.01.2016, whereby the provisional attachment of the following properties of the appellants herein was confirmed:

S. No.	Details & Description of Properties	Value as per sale agreement (Rs.)	Market value on the date of provisional attachment
1.	Flat No. 45, 4th Floor, Avillion Green Field CHS Ltd., A6 Building, Jogeshwari (East), Mumbai, Maharashtra – 400093 (532 square feet) (hereinafter “Jogeshwari Flat”)	5,05,300/-	Rs. 7.69 crore
2.	Flat No. 19, 5th Floor, Konark Classic, 85 Waroda Road, Off Hill Road, Bandra, Mumbai, Maharashtra – 400050 2745 square feet) (hereinafter “Bandra Flat”)	1,65,33,500/-	Rs. 0.89 crore
Total		1,70,38,800/-	Rs. 8.58 crore

Facts in Brief

2. The relevant facts briefly are that a Preliminary Enquiry was undertaken by the MIDC Police Station vide P.E. No. 127/2015 against M/s Geodesic Ltd. pursuant to directions issued by the Hon’ble Bombay High Court vide their order dated 31.08.2015 in a company petition bearing No. 471/2013 filed by Citibank seeking winding up of the said company, and the recommendation of the Securities and Exchange Board of India (SEBI). Subsequent to the same, a FIR (No. 760/2015 dated 15.12.2015) was registered under Sections 409, 420, 477(A), 120-B read with 34 of the Indian Penal Code, 1860 (“IPC”) at MIDC Police Station, against Prashant Mulekar, Kiran Kulkarni, Pankaj Kumar Srivastava and Dinesh Jajodia, for default in repayment, transferring of Foreign Currency Convertible Bonds (FCCBs) for purposes other than for which they were raised and siphoning of funds to shell companies. The investigation was, thereafter, taken over by the Economic Offences Wing, Mumbai, Unit No. V and was renumbered as C.R. No. 88/2015. A, Chargesheet was filed in FIR No. 760/2015 on 16.04.2016 and the same is pending adjudication before the concerned court.

3. On the basis of the said FIR and the direction issued by the Hon’ble High Court of Judicature at Bombay vide Order dated 22.12.2015 in Company Petition bearing No. 471/2013, the Directorate of Enforcement (“ED”) recorded an Enforcement Case Information Report (ECIR) No. 02/MBZO/2016 dated 12.01.2016 to investigate the matter under the PMLA, as offences under Sections 420 and 120-B IPC are scheduled offences under Part-A of the Schedule to the PMLA.

4. The enquiries conducted by ED inter-alia revealed:

i. That the company raised $ 125 Million in January, 2008 for investment in its overseas subsidiaries and for acquisition of new overseas subsidiaries by issuing FCCBs for which Citibank, London acted as a trustee and the funds were to mature on 17.10.2013 with maturity value of approximately $ 157.06 Million. However, the company defrauded the FCCB holders and defaulted on repayment as the FCCBs were transferred to various overseas entities and subsidiaries of the company by fictitious transactions and were also siphoned off by bogus purchase of software from six shell companies;

ii. That the appellant Kiran Kulkarni, was the Managing and Executive Director of the company at the relevant time and was a direct beneficiary of the investments of the company along with its other Executive Directors, Prashant Mulekar and Pankaj Kumar Srivastava, as well as Tax Consultant Dinesh Jajodia. It was found that no efforts were made by the executive directors to bring back the investments despite being aware of the fact that the amount of $ 125 Million along with the interest totaling to $ 157.06 Million was to be repaid to the FCCB holders on maturity of funds in October, 2013;

iii. That the amount of $125 Million (equivalent to Rs. 493 crore calculated at Rs. 39.40 per $ 1) was, therefore, the ‘proceeds of crime’ generated out of criminal activities related to scheduled offences;

iv. That additionally, the company diverted funds amounting to Rs. 250 crore to six shell companies by showing purchase of software through bogus transactions in the books. Thus, the amount of Rs. 250 crore was also generated out of the criminal activities (bogus purchases) related to scheduled offences and the same amounts to proceeds of crime.

v. Therefore, the total proceeds of crime amounted to Rs. 743 crore, but the same was unavailable for attachment, as either the same was parked abroad or utilized in business activities to project it as untainted money, resulting in commission of money-laundering.

5. On the basis of the material placed before it, and the reasons to believe formed thereupon that proceeds of crime have been generated as a result of criminal conspiracy and cheating, and to ensure that the properties of equivalent value of the proceeds of crime in terms of Section 2(1)(u) PMLA are not further transferred or dealt with in such a manner as may result in frustrating further proceedings, viz., confiscation as provided under Chapter-III of PMLA, a Provisional Attachment Order (PAO No. 13/2016 dated 12.07.2016) was issued by Deputy Director, Directorate of Enforcement, whereby, a total of two properties for which part consideration was paid by appellant Kiran Kulkarni, were provisionally attached as value thereof in terms of Section 2(1)(u) PMLA.

6. Consequent to the passing of the PAO, as per the requirement of Section 5(5) PMLA, an Original Complaint (OC) No. 626/2016 was filed before the Ld. AA for confirmation of the PAO, which was allowed by the Ld. AA vide Impugned Order dated 18.11.2016.

7. Aggrieved by the said order of the Ld. AA, the appellants have filed the present appeals under Section 26 PMLA before this Appellate Tribunal against the same.

Submissions for the Appellants

8. It is firstly submitted on behalf of the appellants that the properties should not have been provisionally attached as the properties in question have no nexus with the alleged proceeds of crime and were acquired in 1994 and 2000, i.e., prior to the period of commission of the alleged offences (i.e., January 2008 to March 2013) and, in fact, even before the enactment of the PMLA, 2002. Thus, the same were not acquired as a result of alleged criminal activity and cannot amount to proceeds of crime. Reliance is placed on Pavana Dibbur v. Enforcement Directorate, (2023) 15 SCC 91, Seema Garg v. Deputy Director, 2020 SCC OnLine P&H 738, Kumar Pappu Singh v. Union of India, (2021) 1 HCC (AP) 556, HDFC Bank Ltd. v. Union of India, 2021 SCC OnLine Pat 4222 and Satish Motilal Bidri v. Union of India, 2024 SCC OnLine Ker 3410.

9. It is pointed out that the Jogeshwari Flat was purchased in the name of appellant Rajeshwari Kulkarni vide Sale Deed dated 19.08.1994 for Rs. 5,05,300/- and the consideration was paid by the said appellant (Rajeshwari Kulkarni) using the home loan amount of Rs. 2,50,000/- taken from HDFC Bank and another loan amount of Rs. 40,000/- taken against her jewelry; and, the remaining amount was paid by the appellant Kiran Kulkarni by selling shares.

10. With regard to the Bandra Flat, it is submitted that it was initially purchased as a joint property by the appellants for Rs. 1,65,33,500/- vide Sale Deed dated 26.10.2000 and the sale consideration was paid using joint account of the appellants. However, Kiran Kulkarni subsequently transferred his 50% share in the said property to his wife Rajeshwari Kulkarni vide Gift Deed dated 27.12.2012 out of love and affection on the occasion of their 20th wedding anniversary. The said bona fide transfer was made prior to registration of FIR and before the allegations of wrongdoing against the company or the appellant Kiran Kulkarni were made.

11. In view of the above, it is stated that both the said properties were in the name of the appellant, Smt. Rajeshwari Kulkarni and could not have been attached for appellant Kiran Kulkarni, merely because the former is the wife of the latter, by invoking the principle of equivalent value. It is further submitted that Rajeshwari Kulkarni is neither an accused in the scheduled offence case nor in the money laundering case and has not been in possession of proceeds of crime at any time.

12. It is also submitted that it is the case of the ED that the entire amount of FCCBs, i.e., $ 125 Million, is proceeds of crime. Therefore, given the fact that the FCCBs were listed and registered in Singapore and raised in London, the same were always abroad and not in India. In fact, all the dealings regarding the FCCBs were dealt by the subsidiaries of the company and through banks such as BSI Bank, Singapore and Clariden Bank (now Credit Suisse Bank, Zurich). Properties of equivalent value in India could not have been provisionally attached by the ED as the amendment to insert the words ‘taken or held outside the country, then the property equivalent in value held within the country’ in the definition of ‘proceeds of crime’ in Section 2(1)(u) PMLA was not even enacted at the time of commission of the alleged offences, therefore, the same could not be made applicable to the present case. It is pointed out by the appellants that the ED has admitted in their Rejoinder before the Ld. AA that the proceeds of crime are abroad, therefore, it cannot take the plea that the proceeds of crime were in India and provisionally attach the properties as value thereof in terms of the second part of the definition of ‘proceeds of crime’ in Section 2(1)(u) PMLA. Even otherwise, the properties belonging to a third person (Rajeshwari Kulkarni) who is not connected with the offences, cannot be brought within the sweep of the provisions of PMLA, as such wide interpretation would have serious repercussions.

13. It is next submitted that the ED has alleged that the offence of money laundering took place in 2008, however, the scheduled offences under Sections 420 and 120-B were not made scheduled offences till 01.09.2009. Thus, the PMLA, being a criminal statute, its provisions cannot be made applicable retrospectively. Reliance is placed on the decision in State of Bombay v. Vishnu Ramachandra, AIR 1961 SC 307.

14. It is further submitted that the Respondent failed to make tangible efforts to establish that the proceeds of crime were held outside India and that the same were irretrievable despite best efforts being made, before attaching the properties in equivalent value under Section 2(1)(u) PMLA. Also, the ED has failed to establish that the appellants have received any proceeds of crime.

15. The appellants also contended that the Ld. AA failed to appreciate that the Respondent failed to record the reason required under Section 5(1) PMLA for formation of the belief that the appellants were in possession of the proceeds of crime and if the properties were not attached, they would be concealed, transferred or dealt with in a manner resulting in frustration of proceedings under the PMLA. Also, the attachment of properties, absent the ‘reason to believe’, was void and beyond the provisions of Section 5(1) PMLA. Such ‘reason to believe’ were not supplied to the appellants, resulting in violation of principles of natural justice. Reliance is placed on the judgments in V.M. Ganesan v. Directorate of Enforcement, 2014 SCC OnLine Mad 10702, Aslam Mohammad Merchant v. Competent Authority, (2008) 14 SCC 186, J. Sekar v. Union of India, 2018 SCC OnLine Del 13481, Partap Singh v. Director of Enforcement, (1985) 3 SCC 72 and Yash Raj Films Pvt. Ltd. v. Directorate of Enforcement, 2019 SCC OnLine ATPMLA 11.

16. It is further contended that the Rajeshwari Kulkarni did not have any knowledge about the alleged transactions as she was not an office-bearer in the company and was not responsible for its business affairs and management. She only had 300 shares of the company being just one among 28,000 shareholders. However, the ED did not take action against any of the shareholders and properties of Rajeshwari Kulkarni were attached solely for the reason that she is the wife of appellant Kiran Kulkarni. Therefore, the findings and allegations of the ED as well as the Ld. AA that Rajeshwari Kulkarni committed the offence of money laundering or dealt with proceeds of crime are baseless and unfounded.

17. It is also contended that there is no allegation against the appellant Kiran Kulkarni in the Chargesheet that he played any role in the investments or utilization of the FCCBs. In fact, the investigation itself reveals that Prashant Mulekar handled all the business activities pertaining to the FCCBs. The Ld. Counsel also relied on the Order dated 10.05.2016 granting bail to appellant Kiran Kulkarni wherein it is recorded that there is nothing on record to show that Kiran Kulkarni is a beneficiary and is directly involved in the criminal act and, at the highest, it was a case of vicarious liability.

18. Next, it is argued that the allegations regarding the bogus software purchase are unfounded as the transactions of the company M/s Geodesic Ltd. with other companies associated with Mangiram Sharma were genuine and the same were checked by the concerned authorities. The same is evident from the fact that the software was legally exported and exports were found to be genuine by Software Technology Parks of India. Additionally, there is no allegation of cashback or illegal diversion of funds from the six companies controlled by Mangiram Sharma. Likewise, there is no evidence that the appellant Kiran Kulkarni was ever in possession of proceeds of crime ever and the attachment is liable to be set aside on this ground alone.

19. It is further submitted that the funds were utilized as per the mandate of offering and necessary letters were sent to the Reserve Bank of India in this regard. The Ld. Counsels for the appellants also relied upon the letter dated 06.11.2015 issued by the Reserve Bank of India to the Economic Offences Wing, Mumbai stating that no FEMA regulations are contravened by the company qua the FCCBs as well as the documents filed on record to show proper utilization of the FCCBs. Thus, there was no diversion of funds and same are still available, although, no investigation has been conducted by the ED in this regard. Even otherwise, assuming without admitting, the instant case at best is a case of mismanagement of funds (due to the global economic crisis) and not of breach of trust or cheating, as essential ingredients of cheating and dishonest intentions are absent. It is also submitted that at the relevant time i.e., 2008, the appellant Kiran Kulkarni was fully engaged in developing products and defining the technology road-map for the company, therefore, he was not aware of the transactions concerning the utilization of FCCBs. The purchase of software was looked after by Prashant Mulekar and there is no evidence on record to establish the involvement of the appellant Kiran Kulkarni in the alleged transactions or commission of offences.

20. It is argued that the company could not redeem the FCCBs as the company faced liquidity crunch in 2013 and the Hon’ble High Court of Judicature at Bombay appointed Official Liquidator on 07.04.2014 to administer the assets and records of the company.

21. It is also submitted that the possession in relation to the attached properties is not liable to be disturbed as it has been held by the Hon’ble Supreme Court in Vijay Madanlal Choudhary v. Union of India, (2023) 12 SCC 1 that the power to take possession of the attached properties ought to be invoked only in exceptional situation keeping in mind the peculiar facts of the case. The appellants have also relied upon the judgment of this Appellate Tribunal in Alive Hospitality & Foods Pvt. Ltd. v. Deputy Director, Directorate of Enforcement, 2025 SCC OnLine ATSAFEMA 161 wherein it has been held that attachment by itself neither disturbs the ownership title of the appellants nor deprives them of possession/enjoyment of the same.

22. It is also submitted that the attached properties are residential properties and there has been no default on the part of the appellants in relation to the interim arrangement directed by this Appellate Tribunal vide Order dated 21.03.2017. Thus, the present case does not fall in the category of exceptional case which would occasion taking possession of the attached properties, in terms of test laid down by the Hon’ble Supreme Court. Therefore, it is prayed by the appellant that the Appellate Tribunal may order that the possession in relation to the attached properties is not liable to be disturbed.

23. In light of the detailed submissions, as above, it is prayed by the appellants that the present appeals be allowed and the impugned order passed by the Ld. AA dated 18.11.2016 in OC No. 626/2016 be set aside as the same lacks reasoning of its findings.

Submissions for the Respondent (ED)

24. The Respondent has strongly opposed the arguments and contentions raised on behalf of the appellant and defended the impugned order dated 18.11.2016 confirming the provisional attachment of properties. The respondent has reiterated in detail the findings of the investigation against the appellants in the Reply to the appeal. As essential facts have already been discussed in considerable detail in paragraphs 2 to 5 above, the same are not repeated here in the interest of brevity and to avoid redundancy.

25. Next, the Respondent has emphasized the serious nature of the offence of money-laundering and its ramifications on the economy. It is submitted that the purpose of investigation under the PMLA is to identify the proceeds of crime and to subsequently confiscate the same, besides taking penal action against the offenders.

26. It is contended by the Respondent that the appellant Kiran Kulkarni was the Managing and Executive Director as well as a major share-holder and promoter of the company and was directly or indirectly controlling all funds/activities related to transfer of funds, acquisition of wholly owned subsidiary, investment/lending of funds and, hence, was a beneficiary of the proceeds of crime. Further, the appellant Kiran Kulkarni is a prime beneficiary and has been an accused in the scheduled offence and the money laundering case since the beginning as evident from the FIR and the ECIR.

27. It is also submitted on behalf of the Respondent that the Bandra Flat was initially purchased in the name of both the appellants (husband and wife) vide Sale Deed dated 26.10.2000 but the payment of Rs. 1,64,19,377/- for such property was made by appellant Kiran Kulkarni from his bank account number 5155893003 maintained with Citibank. However, the appellant Kiran Kulkarni transferred his undivided 50% share of the said flat to his wife appellant Rajeshwari Kulkarni vide Gift Deed dated 27.12.2012, anticipating the future legal action against the company for the violations and non-compliances.

28. It is further submitted that though the Jogeshwari Flat was purchased in the name of appellant Rajeshwari Kulkarni vide Sale Deed dated 19.08.1994, however, the consideration for the same was paid by the appellant Kiran Kulkarni to the amount of Rs. 1,64,300/- from his bank account number 5155893003 maintained with Citibank. Nonetheless, the appellants have admitted the fact that part consideration for the attached properties was paid by Kiran Kulkarni. Moreover, Rajeshwari Kulkarni is a full-time homemaker, and has no independent source of income. Thus, she could not have arranged the entire sale consideration.

29. Next, it is submitted that the appellant Rajeshwari Kulkarni cannot plead ignorance regarding the irregularities in the company as she was one of the shareholders in the company. Thus, the properties are attached as proceeds of crime/value thereof as the proceeds of crime are either parked abroad or not traceable. Moreover, the contention of the appellants that the properties cannot be attached as the provision for attachment of properties of equivalent value of proceeds of crime held outside India was not in force at the time of commission of alleged offences is baseless as the offence of money-laundering is a continuing offence and the appellants are still in possession of proceeds of crime.

30. It is also submitted by the Respondent that Prosecution Complaint was filed against the appellant Kiran Kulkarni under Section 45 PMLA on 22.06.2018 before the Special Court, and the investigation under PMLA is still continuing.

31. In summary, the Respondent submits that the Order of the Ld. AA in OC No. 626/2016 dated 18.11.2016 is well reasoned, passed after due diligence, and does not require any interference, and the attachment of the properties needs to be continued.

Analysis & Findings

32. I have given careful consideration to the facts on record and the rival contentions of the parties. The first argument raised on behalf of the appellants in the present case is that the properties which have been attached have no nexus or connection with the proceeds or crime. The properties were acquired prior to the period of the alleged offence, i.e., January 2008 to March 2013, and in fact, they were acquired even before the enactment of the PMLA, 2002. Reliance is placed on the judgment of the Hon’ble Supreme Court in Pavana Dibbur v. Enforcement Directorate, (2023) 15 SCC 91, Seema Garg v. Deputy Director, 2020 SCC OnLine P&H 738 and other cases which have been mentioned in para 8 supra.

33. The submissions made by the appellant in this regard have been considered. In the present case, both sides are in agreement that the properties have been attached as “value of any such property”. The said expression, i.e., “value of any such property” constitutes a part and parcel of the definition of ‘proceeds of crime’ under section 2(1)(u) of the PMLA. Needless of say, where the property is attached not as property derived or obtained directly or indirectly as a result of criminal activity relating to the scheduled offence, but as “value of such property” or in other words, alternate property of equivalent value, the time of its acquisition of such alternate property would not be a material consideration. This Appellate Tribunal has had the occasion to the consider this issue in several cases. It would be sufficient to refer to just one recent judgment of the Appellate Tribunal wherein the underlying legal position is this regard has been explained succinctly. In its judgment dated 02.07.2026 passed in the case of Smt. R. Booma (FPA-PMLA-1638/CHN/2017) and Shri S.P. Rajendran (FPA-PMLA-1632/CHN/2017), this Appellate Tribunal had held as follows:

“16. Even from the legal perspective, the argument put forward on behalf of the appellants that properties acquired prior to the alleged period of crime cannot be attached as proceeds of crime is legally untenable. The underlying legal issue has been discussed in detail in the order dated 14.10.2024 of this Appellate Tribunal passed in the case entitled Sadanand Nayak v. Dy. Director, FPA-PMLA-5612/BBS/2023 (paragraphs 12 to 24) wherein, after a thorough review of all the authoritative case laws on the subject, including the aforesaid judgment of the Hon’ble Supreme Court in the case of Pavana Dibbur, no merit was found in contention that properties acquired prior to the alleged period of the scheduled offence cannot be attached as ‘proceeds of crime’ as defined under section 2(1)(u). Furthermore, in a judgment passed subsequent to the aforesaid order of this Appellate Tribunal, the Hon’ble Punjab and Haryana High Court in Dilbag Singh @ Dilbag Sandhu v. Union of India & Ors., CWP-22688-2024 (Order dated 13.11.2024), also did not find any merit in the argument that, as a rule, property acquired prior in time to the period of the alleged scheduled offence cannot be attached. The relevant paragraphs of the said judgment are reproduced hereunder:

1. Factual Matrix:

1.1 With the consent of learned counsel for the parties, as many as seven writ petitions involving common issues shall stand disposed of by this common order. The facts in this case have been derived from CWP-22688 2024, in which the arguments were made.

1.2 The petitioner has raised the following issues:

“A. Whether any property of the petitioner can be attached which were acquired prior to the scheduled offence and cannot be said to have any connection with the proceeds of crime in view of the Hon’ble Supreme Court judgment in Pavana Dibbur vs. Directorate of Enforcement 2023 SCC Online 1586 as well as the Division Bench judgment in Seema Garg vs. Deputy Director, Directorate of Enforcement 2020 (2) RCR (Criminal) 701 upheld by the Hon’ble Supreme Court and followed by various High Courts?”

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“3.8 Moreover, the reasoning adopted in Seema Garg’s case (supra) to the effect that there was no need to insert third part in the definition of the ‘proceeds of crime’ and that ‘value of such property’ is superfluous does not appear sound. It appears that transformative journey of the definition of phrase ‘proceeds of crime’ was not brought to the notice of the Division Bench in Seema Garg’s case (supra). In Abdullah Ali Balsharaf’s case (supra), Delhi High Court inadvertently overlooked the sub-category (i) of second part of definition of ‘proceeds of crime’. Similarly, Andhra Pradesh High Court in Kumar Pappu Singh’s case (supra) was not properly assisted. Furthermore, the attention of Patna High Court was not drawn to part 2(i) in HDFC Bank’s case (supra). Similar is the position in M/s Himachal Amta Power Limited’s case (supra). In this case, the attention of the Bench was not drawn to the second broader category of the definition. In Hemanshu Rajnikant Shah’s case (supra) the Court relied upon Seema Garg’s case (supra) and held that the properties acquired before the alleged crime and before the enforcement of the ‘2002 Act’ cannot be attached.

3.9 On the other hand the judgments passed in Vijay Madanlal Chaudhary’s case (supra), Axis Bank’s case (supra) and Prakash Industries case (supra) completely answer the question in favour of ED.

3.10 The petitioner’s counsel has also heavily relied upon Pavana Dibbur’s case (supra). This Bench has carefully read the aforesaid judgment. The aforementioned case involved attachment of properly falling under the category of ‘direct’ or ‘indirect’ proceeds of crime. The complaint under Section 44-45 of 2002 Act was quashed by the Supreme Court. The Bench was never called upon to analyse the contentions based upon Section 2(i)(u) of 2002 Act, whereas, in Vijay Madanlal Chaudhary’s case (supra) the Court directly answered the aforesaid question. Hence, there is no substance in the first argument of learned counsel for petitioner.”

“17. In light of the position of law as discussed above, even property that was acquired prior to the alleged period of crime and for that matter even property which has been acquired form the otherwise untainted sources can be attached as ‘value’ of the proceeds of crime. The argument put forward on behalf of the appellants that properties acquired prior to the alleged period of crime cannot be attached therefore lacks merit and is consequently, rejected.”

34. Following the reasoning adopted in the aforesaid case, the argument of the appellant that the properties in question could not have been attached as they had no nexus or connection with the alleged proceeds of crime is hereby rejected.

35. In the next set of contentions, it is sought to be argued that the properties in question were acquired out of explained sources. It is inter alia contended that the Jogeshwari Flat was purchased in the name of the appellant, Smt. Rajeshwari Kulkarni, vide Sale Deed dated 19.08.1994 for Rs. 5,05,300/- and the consideration was paid by her through a home loan of Rs. 2,50,000/- taken from HDFC Bank and another loan amount of Rs. 40,000/- taken against her jewelry. The remaining amount was paid by the appellant Kiran Kulkarni by selling shares. With regard to the Bandra Flat, it is submitted that it was initially purchased as a joint property by the appellants for Rs. 1,65,33,500/- vide Sale Deed dated 26.10.2000, and the sale consideration was paid using joint account of the appellants. However, Kiran Kulkarni subsequently transferred his 50% share in the said property to his wife Rajeshwari Kulkarni vide Gift Deed dated 27.12.2012 out of love and affection on the occasion of their 20th wedding anniversary. The said bona fide transfer was made prior to registration of FIR and before the allegations of wrongdoing against the company or the appellant Kiran Kulkarni were made.

36. It is further argued that, therefore, both the aforementioned properties stood in the name of Smt. Rajeshwari Kulkarni and could not have been attached in proceedings against Sh. Kiran Kulkarni invoking the principle of ‘equivalent value’ merely because she is the wife of the latter. It is submitted that Smt. Rajeshwari Kulkarni is neither an accused in the scheduled offence case nor in the money laundering case, and was not in possession of proceeds of crime at any time. Properties belonging to a third person who is not connected with the offences, cannot be brought within the sweep of the provisions of PMLA, as such wide interpretation would have serious repercussions. Smt. Rajeshwari Kulkarni did not have any knowledge about the alleged transactions as she was not an office-bearer in the company, and was not responsible for its business affairs and management. She only had 300 shares of the company being just one among 28,000 shareholders. ED did not take action against any of the shareholders and their properties, but Rajeshwari Kulkarni’s properties were attached solely for the reason that she is the wife of appellant Kiran Kulkarni. It is, therefore, contended that the findings and allegations of the ED as well as the Ld. AA that Rajeshwari Kulkarni committed the offence of money laundering or dealt with proceeds of crime are baseless and unfounded.

37. The above submissions made on behalf of the appellants have been considered. At the outset, it may be pointed out that as has already been discussed in considerable detail above, the properties in this case have been attached invoking the “value of any such property” part of the definition of ‘proceeds of crime’. Where the property has been attached as “value of such property” or in other words, value equivalent to the actual proceeds of crime, the explanation with regard to the sources of acquisition of such properties of equivalent value of the properties is irrelevant. Even legitimately properties, which have been acquired entirely from explained sources, can be attached in lieu of the actual (whether direct or indirect) proceeds of crime.

38. Secondly, as has been pointed out by the respondent, the acquisition of the properties was partly or wholly funded by Sh. Kiran Kulkarni. The Bandra Flat was initially purchased in the names of both the appellants (husband and wife) vide Sale Deed dated 26.10.2000 but the payment of Rs. 1,64,19,377/- for such property was made by appellant Kiran Kulkarni from his bank account number 5155893003 maintained with Citibank. However, Kiran Kulkarni transferred his undivided 50% share of the said flat to his wife Rajeshwari Kulkarni vide Gift Deed dated 27.12.2012, anticipating the future legal action against the company. As for the Jogeshwari Flat, the respondent has pointed out that it was purchased in the name of appellant Rajeshwari Kulkarni vide Sale Deed dated 19.08.1994. However, the consideration for the same was paid by the appellant Kiran Kulkarni to the extent of Rs. 1,64,300/- from his bank account number 5155893003 maintained with Citibank. Therefore, even as per the admitted position of the appellants, at least a part of the consideration for the said attached properties was paid by Sh. Kiran Kulkarni, who was a director of the company, and furthermore, is himself an accused person in the prosecution complaint filed by the Directorate. It is further pointed out that Smt. Rajeshwari Kulkarni was a full-time homemaker and had no independent source of income. She could not have arranged the sale consideration. Nothing has been brought on record by the appellants to contradict these facts and to establish the existence of independent, untainted sources of income in the hands of Smt. Rajeshwari Kulkarni. The onus to do so was squarely upon the appellants under the provisions of PMLA. Even if certain loans were genuinely taken by her, the sources out of which the same were repaid have not been disclosed.

39. So far as the legal position is concerned, the Hon’ble Supreme Court, in their landmark judgment in the case of Vijay Madanlal Choudhary v. Union of India & Ors. 2022 SCC OnLine SC 929, has observed that the objective of enacting the PMLA was the attachment and confiscation of proceeds of crime which is the quintessence, so as to combat the evil of money-laundering, by reaching the proceeds of crime in whosoever’s name they are kept or by whosoever they are held. In the present case, funds of Sh. Kiran Kulkarni admittedly found their way into the properties in question. Therefore, the properties could certainly be attached in an investigation against Sh. Kulkarni, regardless of the fact that the properties were acquired/ or transferred in the name of his wife, Rajeshwari Kulkarni.

40. In light of all the facts discussed above, the contention of the appellants, (i) that the properties were from explained sources, and, (ii) that the property standing in the name of Smt. Rajeshwari Kulkarni could not be attached, are found to be without merit and are hereby rejected.

41. It is next submitted that it is the case of the ED itself that the entire amount of FCCBs, i.e., $ 125 Million, is the proceeds of crime, and, given the fact that the said FCCBs were listed and registered in Singapore and raised in London, the same were always abroad and not in India. In fact, all the dealings regarding the FCCBs were dealt by the subsidiaries of the company and through banks such as BSI Bank, Singapore and Clariden Bank (now Credit Suisse Bank, Zurich). Therefore, as the alleged ‘proceeds of crime’ were located overseas, attachment of properties in India did not arise as the provision bringing property ‘taken or held outside the country, then the property equivalent in value held within the country’ within the definition of ‘proceeds of crime’ in Section 2(1)(u) PMLA was not even enacted at the time of commission of the alleged offences. It is pointed out by the appellants that the ED has admitted in their Rejoinder before the Ld. AA that the proceeds of crime are abroad, therefore, it cannot take the plea that the proceeds of crime were in India and provisionally attached the properties as ‘value thereof’ in terms of the second part of the definition of ‘proceeds of crime’ in Section 2(1)(u) PMLA.

42. The above submissions of the appellant have been considered. It is by now a well-settled legal proposition that the offence of money laundering is a continuing offence. A continuing offence is one which is susceptible of continuance and is distinguishable from one which is committed once and for all. A continuing offence occurs and re-occurs, and each time, an offence is committed. It was so held by the Hon’ble Supreme Court in State of Bihar Vs. Deokaran Nenshi (1972 SCC 890). In Dyani Antony Paul and Ors. Vs. Union of India and Ors. Manu/KA/4442/2020, the Hon’ble Karnataka High Court has held categorically that money laundering is a continuing offence and, therefore, the issue of retrospective effect does not arise.

43. The PMLA prohibits the act of money laundering. It does not prohibit the scheduled offence. The schedule offence merely constitutes the substrate on which the charge of money laundering stands. Therefore, the question whether or not the law has been applied retrospectively insofar as the offence of money laundering is concerned, has to be examined with reference to the time of commission of ‘money laundering’ as defined under the PMLA, and not with reference to the time of commission of the scheduled offence. In other words, regardless of whether the scheduled offence was committed before or after the PMLA was amended in order to introduce a new provision, the amended provision will apply if it came into the statute book before any of the actions constituting ‘money laundering’ under the Act, i.e., concealment/ possession/ acquisition/ use/ projecting or claiming of the proceeds of crime to be untainted property, occur. Reference may also be made at this point to the judgment of the Hon’ble Jharkhand High Court, in Hari Narayan Rai v. Union of India (W.P. (Cr) No. 325/2010) wherein it was held:

“The relevant date is not the acquisition of illicit money but the date on which such money is being processed for projecting it untainted”

44. The amendment to the definition of the term “proceeds of crime” under section 2(1)(u) in order to insert the words, “or where such property is taken or held outside the country, then the property equivalent in value held within the country” was admittedly made with effect from 14.05.2015. In the present case, the FCCBs in question were redeemable in 2013. The same have not redeemed. The further allegations are that the money was diverted to shell entities by showing purchase of software through bogus transactions. The attachment of properties was made by ED in this case vide order dated 12.07.2016 when the amended law was in force. Furthermore, the ED has attached the said property invoking the provision already in the Act which enabled it to attach the value of such property, as discussed in para 33 above. The factual and legal position being as discussed above; I do not find any merit in the argument of the appellant that equivalent property in India could not have been attached in the present case.

45. For the same reasons as have been discussed in detail in the preceding paragraphs, there is no merit in the contention of the appellant that the offence of money laundering in this case took place in 2008 and the offences under Sections 420 and 120-B were not made scheduled offences till 01.09.2009, thus, the PMLA, being a criminal statute, its provisions cannot be made applicable retrospectively. Firstly, as already explained, retrospectivity or otherwise in the application of law in the case of an action under the PMLA has to be adjudged with reference to the act which constituted the offence of ‘money laundering’ and not with reference to the time of commission of the scheduled offence. Furthermore, money laundering is a continuing offence which continues to be committed as long as the person is in possession of the proceeds of crime. The appellants continued to remain in possession of the proceeds of crime even after the offences Sections 420 and 120-B of the IPC were added to the Schedule, and, in fact, continue to remain in possession till now and, therefore, are continuing to commit the offence even now. Therefore, the question of retrospective application simply does not arise. In the landmark case of Vijay Madanlal Choudhary (supra) the Apex Court has categorically held that the criminal activity may have been committed before the same had been notified as scheduled offence under PMLA, but if a person has indulged in or continues to indulge directly or indirectly in dealing with proceeds of crime, derived or obtained from such criminal activity even after it has been notified as a scheduled offence, such person may be liable to be prosecuted for offence of money laundering under PMLA.

46. It is further submitted that the Respondent failed to make tangible efforts to establish that the proceeds of crime were held outside India and that the same were irretrievable despite best efforts being made, before attaching the properties in equivalent value under Section 2(1)(u) PMLA. Also, the ED has failed to establish that the appellants have received any proceeds of crime.

47. This contention of the appellant does not require detailed discussion. It is the appellant’s own categorical submission (see para 41 supra) that the alleged proceeds of crime were raised abroad and were always located abroad. Needless to say, such properties located outside the country were not accessible to ED. Moreover, the “value of such properties” is as much a part of the definition of proceeds of crime as the direct or indirect proceeds of crime and ED was well within its rights to attach the same.

48. The next argument raised on behalf of the appellant is that the Respondent failed to record the reasons as per the requirement of Section 5(1) PMLA for formation of the belief that the appellants were in possession of the proceeds of crime and if the properties were not so attached, they would be concealed, transferred or dealt with in a manner resulting in frustration of proceedings under the PMLA. It is submitted that in the absence of ‘reason to believe’, the attachment of properties was void and beyond the provisions of Section 5(1) of the PMLA. Such ‘reason to believe’ were not supplied to the appellants, resulting in violation of principles of natural justice. Reliance is placed on various judgments which have been mentioned in para 15 supra.

49. The arguments raised on behalf of the appellant have been considered. In this regard, the relevant part of the Provisional Attachment Order dated 12.07.2016, is extracted below:

“10.3 Thus the aforesaid two immovable properties though were registered in the name of Smt Rajeshwari Kulkarni, wife of Shri Kiran Kulkarni but the same was acquired by Shri Kiran Kulkarni. Thus it appears that the purpose of the registration and/or transferring by gift deed of the aforesaid two immovable properties in the name of Mrs. Rajeshwari Kulkarni, wife of Shri Kiran Kulkarni is nothing but an attempt to scuttle the proceedings under PMLA, 2002. The said immovable properties are therefore, being attached in lieu of proceeds of crime in terms of value thereof as defined under section 2 (1) (u) of the Prevention of Money Laundering Act, 2002.

11. Thus, I have reason to believe that above mentioned immovable property acquired by Shri Kiran Kulkarni but registered in the name of Mrs. Rajeshwari Kulkarni, wife of Shri Kiran Kulkarni, may be disposed off/concealed or dealt with any manner to frustrate proceedings relating to confiscation of proceeds of crime under PMLA. Hence, the said property needs to be provisionally attached under Section 5 of PMLA, 2002 as per the provisions of value of any such property in terms of Section 2 (1) (u) of PMLA, 2002.

12. AND WHERAS I have carefully considered the material placed before me including the charge sheet, statements recorded under Secilen 50 of the Prevention of Money Laundering Act, 2002. Upon careful consideration of the said material, I have reasons to believe that

(i) The material placed before me prima facie discloses commission of the offence of money laundering as per Section 3 of the Prevention of the Money Laundering Act 2002.

(ii) Shri Kiran Kulkarni and other Director of M/s. Geodesic Limited have laundered a substantial POC.

The said two immovable properties viz. (a) Flat No. 19 on the 5th floor, and one Stilt Parking space and one open parking space in the compound of the building “Konark Classic’ situate at 85, Warods Road, Off Hill Road, Bandra Mumbai -400 050 on Plot No.s 4 & 5, C.T.S. Nos. 3-B/27, B/28 and B/29A, Survey No. 92 in the village Bandra, Taluka Andheri -400 050 admeasuring 2505 Sq. Ft. area having agreement value of Rs. 1,65,33,500/-(present market value Rs. 7.69 Crore appx. (based on the Ready Reckoner of Govt. of Maharashtra for Stamp Duty for the year 2016-17 @ Rs. 301500 per sq mtr equivalent to Rs. 28,010/- per sq. ft) & (b) Flat No. 45, Fourth Floor, Avillion Green Field CHS Ltd. A6 Building, Survey No. 42, Hissa No. 3 (part) and Survey No. 34, Hissa No 1 (part) in the village Majas, Jogeshwari (E), Mumbai admeasuring 532 Sq. Ft. carpet area having agreement value of Rs. 5,05,300/- (present market value Rs. 0.89 Crore appx. (based on the Ready Reckoner of Govt. of Maharashtra for Stamp Duty for the year 2016-17 @ Rs. 181100 per sq mtr equivalent to Rs. 16825/- per sq. ft)) though registered in the name of Mrs Rajeshwari Kulkarni, wife of Shri Kiran Kulkarni but was acquired by Shri Kiran Kulkarni is to be treated as ‘proceeds of crime’ under provisions of value thereof as per the Section 2 (1) (u) of PMLA, 2002.

(iv) If no provisional attachment order is passed in this matter at this crucial stage, the above mentioned property / proceeds of crime are likely to be transferred or dealt with in such manner, which may result in frustrating the proceedings relating to confiscation under Chapter III of the Prevention of Money Laundering Act, 2002. [Emphasis added]

50. From the above, it is clear that reasons to believe under section 5(1) were duly recorded by the Directorate and there is no merit in the contention of the appellant that the same were not recorded. Furthermore, the same were incorporated in the PAO itself and the appellants was well aware of the said reason to believe. It may also be mentioned here that insofar as the legal position is concerned, there is nothing in the language of section 5(1) to suggest that further to recording the reasons, the same must also be shared with the person concerned. Insofar as the judgment of the Hon’ble Delhi High Court in J. Sekar W.P. (C) 5320/2017 dated 11th January, 2018 is concerned, I find that the operation of the judgment of the Hon’ble Delhi High Court has been stayed by the Hon’ble Supreme Court where the matter is still pending for determination. On the other hand, the Hon’ble Madras High Court, in G. Gopalakrishnan Vs. Deputy Director WP (MD)Nos. 11454, 14860 & 14894 to 14899 of 2018 (Order Dt. 03.01.2019), has held that section 5 nowhere stipulates that there should be communication of reasons in the form of show cause notice before ordering provisional attachment. The validity period of provisional attachment is only for a period of 180 days, and therefore, the initial order has all the characteristics of a show cause notice and no further requirement is contemplated in the statute.

51. In view of the factual and legal positions discussed above, I do not find any merit in the submissions made on behalf of the appellant with regard to the issue of ‘reason to believe’ under section

52. Next, a series of arguments have been raised on behalf of the appellants challenging the allegations made in the scheduled offence case. It is inter alia argued that the software purchases were genuine and not bogus, the software was legally exported and exports were found to be genuine by Software Technology Parks of India; that there is no allegation of cashback or illegal diversion of funds from the six companies controlled by Shri Mangiram Sharma; that the funds were utilized as per the mandate of offering and necessary letters were sent to the RBI; that the RBI, vide their letter dated 06.11.2015 to the Economic Offences Wing, Mumbai had stated that no FEMA regulations had been contravened by the company qua the FCCBs and the documents filed on record to show proper utilization of the FCCBs and, as such, there was no diversion of funds and same are still available; that no investigation has been conducted by the ED in this regard; that even otherwise at best it was a case of mismanagement of funds which occurred due to the global economic crisis and not of breach of trust or cheating, as essential ingredients of cheating and dishonest intentions are absent. It is also submitted that at the relevant time, i.e., 2008, the appellant Kiran Kulkarni was fully engaged in developing products and defining the technology road-map for the company, therefore, he was not aware of the transactions concerning the utilization of FCCBs. The purchase of software was looked after by Prashant Mulekar and there is no evidence on record to establish the involvement of the appellant Kiran Kulkarni in the alleged transactions or commission of offences. It is also argued that the company could not redeem the FCCBs as the company faced liquidity crunch in 2013 and the Hon’ble High Court of Judicature at Bombay appointed Official Liquidator on 07.04.2014 to administer the assets and records of the company. It is submitted that the issue of FCCBs was a genuine business decision which did not fructify as planned. The collapse of Lehmann Brothers happened in 2008. So, investments as planned could not be made and funds remained simply parked abroad. Then the company went into liquidation in 2016. It is submitted that the money is still available.

53. Having considered these submissions, I find that the same are directed against the allegations in the scheduled offence case. It is not necessary for this Appellate Tribunal to enter into the merits of these arguments. Needless to say, the Tribunal has no jurisdiction to adjudicate upon the merits of the scheduled offence case. The present appeal is directed against attachment of property under the PMLA. The Hon’ble Supreme Court, in Vijay Madanlal Choudhary v. Union of India (supra) has categorically held that the expression “derived or obtained” contained in the definition of ‘proceeds of crime’ is indicative of criminal activity relating to a scheduled offence already accomplished and, in the event the person named in the criminal activity relating to a scheduled offence is finally absolved by a Court of competent jurisdiction owing to an order of discharge, acquittal or because of quashing of the criminal case (scheduled offence) against him/her, there can be no action for money-laundering against such a person or person claiming through him in relation to the property linked to the stated scheduled offence. Therefore, if the appellant is not guilty of the schedule offence as claimed by him, the PMLA prosecution case against him would also fail and the attachment of the property would come to an end. For the purposes of the present proceedings before this Appellate Tribunal which is against attachment of properties, it is sufficient that a prosecution case in the scheduled offence stands filed and the accused therein have not been absolved of the charges till date. In fact, as pointed out by the respondents, a prosecution complaint dated 22.06.2018 stands filed even under the PMLA wherein the appellant Sh. Kiran Kulkarni himself is an accused. As pointed out by the Hon’ble Supreme Court in Vijay Madanlal Choudhary (supra), attachment of property under Section 5 is a balancing arrangement to secure the interest of the person as well as to ensure that the proceeds of crime remain available for being dealt with in the manner provided by the 2002 Act. It is only an interim measure to protect the property during the pendency of the prosecution case. Attachment per se does not deprive the person of ownership or even possession of the property.

54. The last contention of the appellant, which is by way of an alternative contention, is that possession of the attached properties is not liable to be disturbed as it has been held by the Hon’ble Supreme Court in Vijay Madanlal Choudhary v. Union of India, (2023) 12 SCC 1 that the power to take possession of the attached properties ought to be invoked only in exceptional situation keeping in mind the peculiar facts of the case. The appellants have also relied upon the judgment of this Appellate Tribunal in Alive Hospitality & Foods Pvt. Ltd. v. Deputy Director, Directorate of Enforcement, 2025 SCC OnLine ATSAFEMA 161 wherein it has been held that attachment by itself neither disturbs the ownership title of the appellants nor deprives them of possession/enjoyment of the same. It is also submitted that the attached properties are residential properties and there has been no default on the part of the appellants in relation to the interim arrangement directed by this Appellate Tribunal vide Order dated 21.03.2017. Thus, the present case does not fall in the category of exceptional case which would occasion taking possession of the attached properties, in terms of test laid down by the Hon’ble Supreme Court. Therefore, this Appellate Tribunal may order that the possession in relation to the attached properties is not liable to be disturbed.

55. This submission of the appellants is in accordance with the prevailing legal position and has also not been contested by the respondent. There is nothing on record to indicate that any action to take physical possession of the properties has been taken by the respondent. However, since the ground has been raised and stay on possession of the attached properties has been prayed for, it is hereby directed that in light of the judgment of the Hon’ble Supreme Court in Vijay Madanlal Chaudhary (supra) possession of the attached properties shall not be taken by the respondent during the pendency of the prosecution case before the Ld. Special Court except under exceptional circumstances of the nature contemplated in the said order of the Hon’ble Supreme Court.

56. Consequent to the detailed discussions as above, these two appeals are hereby dismissed.

57. Pending applications, if any, shall also stand disposed of.

58. No orders as to costs.