Prime Ispat Limited Vs Deputy Director (Appellate Tribunal under SAFEMA, New Delhi)
PMLA: Direct Appeal Against Provisional Attachment Order Not Maintainable, Rules Tribunal
The Appellate Tribunal under SAFEMA, New Delhi, has held that a direct appeal against a Provisional Attachment Order (PAO) is not maintainable under Section 26 of the Prevention of Money Laundering Act, 2002 (PMLA). The provision permits an appeal against an order of the Adjudicating Authority, rather than the provisional attachment issued by the Enforcement Directorate.
In Prime Ispat Limited v. Deputy Director, Directorate of Enforcement, Raipur, Appeal No. FPA-PMLA-946/RP/2024, decided on 4 November 2026, the Tribunal sustained the ED’s preliminary objection and directed the parties to appear before the Adjudicating Authority.
The ruling addressed maintainability, leaving the merits of the disputed attachment for adjudication.
Background: Earlier Attachment Had Not Been Confirmed
The dispute involved a provisional attachment order dated 27 November 2020.
The appellant referred to an earlier PAO dated 4 April 2017, which the Adjudicating Authority had declined to confirm through orders dated 14 April 2018 and 27 June 2018. According to the appellant, those orders found that a case of money-laundering had not been made out against it.
The ED challenged those decisions before the Tribunal. While its appeals remained pending, it issued the subsequent PAO in November 2020.
The appellant challenged the fresh attachment before the Delhi High Court, principally contending that the earlier adjudication concerned the same transaction and that the subsequent attachment attracted the doctrine of res judicata.
High Court Directed Treatment of Writ Petition as Appeal
By an order dated 10 February 2023, the Delhi High Court directed that the writ petition be treated as an appeal challenging the November 2020 PAO.
The High Court directed the Tribunal to consider it “in accordance with law”, along with the two pending appeals filed by the ED. The stay application was also to be treated as an application before the Tribunal.
Existing interim protection was continued until the Tribunal decided the stay application, subject to further orders.
Against this procedural background, the Tribunal initially intended to consider the matters together. However, the ED raised a preliminary objection to the maintainability of the direct challenge to the PAO.
ED Relied on the Limits of Section 26
The ED submitted that Section 26 provides an appeal against an order passed by the Adjudicating Authority.
A PAO, by contrast, is issued under Section 5 and must undergo adjudication under Section 8. The Adjudicating Authority may confirm the attachment or decline confirmation after examining the case.
According to the ED, the Tribunal could not bypass that statutory stage and directly determine the validity of the PAO.
It requested that the preliminary objection be decided first. If accepted, the matter should proceed before the Adjudicating Authority rather than be examined on merits by the Tribunal.
Appellant Relied on the High Court’s Directions
The appellant opposed the objection by referring to the express direction that its writ petition be treated as an appeal.
It urged the Tribunal to decide the challenge on merits together with the ED’s pending appeals.
The appellant also referred to an interim order dated 25 November 2024 passed by a Single Bench of the Delhi High Court in connected proceedings involving restoration of a writ petition.
The Tribunal nevertheless considered whether the statutory appellate jurisdiction permitted a direct challenge to a provisional attachment.
Tribunal Distinguished PAO from Adjudication Order
After examining Section 26, the Tribunal held that the statutory provision did not authorise an appeal against the PAO itself.
It distinguished between the initial attachment by the ED and the subsequent order of the Adjudicating Authority. Under the statutory sequence, the provisional attachment is submitted for adjudication, and the resulting order can be challenged through the prescribed appellate mechanism.
The Tribunal noted that Section 26 separately permits certain appeals by reporting entities against orders under Section 13(2). That category did not apply to the present dispute.
The appellant’s case therefore lacked the appealable order required for invoking the Tribunal’s jurisdiction.
Direction to Act “In Accordance with Law” Was Material
The Tribunal acknowledged the Delhi High Court’s direction but emphasised its requirement to consider the matter in accordance with law.
It reasoned that treating the writ petition as an appeal did not eliminate the need to examine maintainability under Section 26.
The Tribunal consequently declined to exercise a power that, in its view, the statute did not confer. It also noted that the proceedings pending before the High Court would be decided independently on their merits.
Matter Sent to Adjudicating Authority
The Tribunal disposed of the appeal as not maintainable and vacated the interim order for the matter to proceed before the Adjudicating Authority.
The parties were directed to appear on 20 November 2026. The Adjudicating Authority was instructed to consider its earlier order declining confirmation of the attachment.
The Tribunal did not decide the res judicata objection or uphold the attachment on merits. Its decision concerned the statutory forum and stage for examining the disputed PAO.
FULL TEXT OF THE ORDER OF APPELLATE TRIBUNAL UNDER SAFEMA
This order would decide the appeal preferred by the appellant under Section 26 of the Prevention of Money Laundering Act, 2002 (in short “the Act of 2002”) against the Provisional Attachment Order (“PAO”) dated 27.11.2020.
Arguments/Submissions of the Ld. Counsel for the parties:
2. The appellant has given reference to a Writ Petition to challenge the same PAO dated 27.11.2020. The Writ Petition against the PAO in WP (C) 10166/2021 & CM Appl. 31354/2021 was finally decided by the Hon’ble High Court of Delhi vide its order dated 10.02.2023 with following directions, quoted thus:
14. It is accordingly directed that the present writ petition shall be treated as an appeal challenging the PAO dated 27th November, 2020. This appeal to the PAO shall be considered by the Appellate Tribunal under the PMLA Act in accordance with law along with the two pending appeals filed by the ED. The stay application filed before this Court shall be considered as a stay application before the Appellate Tribunal under the PMLA Act.
15. It is made clear that until the stay application is decided by the Appellate Tribunal, the interim order dated 14th September, 2021 in W.P. (C) 10166/2021 and the interim order dated 1st September, 2022 in W.P. (C) 10613/2021 shall continue.
16. The interim order dated 14th September, 2021 in W.P. (C) 10166/2021 is extracted as under:
8. Till the next date, the adjudicating authority will not proceed with the matter and will therefore fix a date after the next date of hearing before this Court.”
17. The interim order dated 1st September, 2022 in W.P. (C) 10613/2021 is extracted as under:
In W.P.(C) 10613/2022, the Court notes that it had taken notice of the contention of learned counsel to the extent that the proceeds of crime in the hands of Mrs. Mamta Aggarwal, was quantified at Rs.15,00,000. Out of the same, Rs.4,75,000/- was found lying in the account of M/s Capstone and the balance amount of Rs.10,25,000/- was identified in the hands of the petitioner here as a consequence of which the land in question came to be attached.
The Court takes note of the submission of Mr. Bhandari, learned counsel appearing for the petitioner, that it was ready to deposit the aforesaid sum without prejudice to its rights and contentions subject to the Provisional Attachment Order of the land in question being lifted.
Before this Court it is not disputed that the total proceeds of crime stand quantified at Rs.15,00,000/- out of which only Rs.10,25,000/- has been found to have been secreted in the hands of the petitioner.
In that view of the aforesaid matter, subject to the petitioner depositing a sum of Rs.10,25,000/- before the competent Adjudicating Authority, the provisional attachment of the plot of land shall stand lifted subject to further orders being passed in the writ petition.
18. The said two interim orders shall be subject to further orders which may be passed by the Appellate Tribunal under the PMLA Act.
19. With these observations, the present petition, along with all pending applications are disposed of.
3. The directions quoted above were to the effect that the Writ Petition preferred before the Hon’ble High Court of Delhi for the challenge to the PAO would be treated as an appeal for its consideration by the Appellate Tribunal under the Act of 2002 in accordance with law along with two pending appeals filed by the Enforcement Directorate (ED).
4. Ld. Counsel for the appellant made a reference of the chequered history involving initial PAO dated 04.04.2017 alleged to be on the same allegation, which was not confirmed by the Adjudicating Authority vide its orders dated 14.04.2018 and 27.06.2018. It was after holding that a case of money- laundering is not made out against the petitioner. Those orders were challenged by the ED by maintaining an appeal under Section 26 of the Act of 2002 where an interim order was passed by this Tribunal.
5. During the pendency of the appeals, the respondent issued another PAO dated 27.11.2020 which was assailed by maintaining Writ Petition before the Hon’ble High Court of Delhi. It is mainly on the ground that for the same transaction, the PAO was caused earlier and sent to the Adjudicating Authority was not confirmed. The second PAO would suffer from the Doctrine of res judicata. The Hon’ble High Court of Delhi finding pendency of the two appeals against the order passed by the Adjudicating Authority, issued directions to treat the Writ Petition to be an appeal for its consideration by the Appellate Tribunal in accordance with law along with two pending appeals. The appellant, however, maintained an appeal instead of taking up the Writ Petition to be an appeal. In any case, the appeal filed by the appellant was listed before this Tribunal from time to time.
6. This Tribunal was intent to take up the present appeal along with the two pending appeals. However, an objection to the maintainability of the present appeal was raised by the respondent with the prayer to decide the preliminary objection at the first instance and if the preliminary objection is rejected then to take up the present appeal along with the other two pending appeals. This Tribunal accordingly taken up the issue to consider the preliminary objection raised by the Ld. Counsel for the respondent.
7. Ld. Counsel for the respondent submitted that an appeal, before this Tribunal lies under Section 26 of the Act of 2002 against an order of the Adjudicating Authority and not against the PAO. Thus, the present appeal would not be maintainable dehors the statutory provisions. It was clarified further that if at all Hon’ble High Court of Delhi sent the Writ Petition to treat it to be an appeal, this Tribunal is under obligation to address the objection in reference to the statutory provisions. It is more so when directions of the Hon’ble High Court of Delhi are for consideration the case in accordance with law. The law (statute under the Act of 2002) does not permit an appeal against the PAO but against the order passed by the Adjudicating Authority.
8. To analyze the issue, I may quote Section 26 of the Act of 2002, which is quoted thus:
26. Appeal to Appellate Tribunal.—(1) Save as otherwise provided in sub-section (3), the Director or any person aggrieved by an order made by the Adjudicating Authority under this Act, may prefer an appeal to the Appellate Tribunal.
(2) Any reporting entity aggrieved by any order of the Director made under sub-section (2) of section 13, may prefer an appeal to the Appellate Tribunal.
(3) Every appeal preferred under sub-section (1) or sub-section (2) shall be filed within a period of forty-five days from the date on which a copy of the order made by the Adjudicating Authority or Director is received and it shall be in such form and be accompanied by such fee as may be prescribed: Provided that the Appellate Tribunal may, after giving an opportunity of being heard, entertain an appeal after the expiry of the said period of forty-five days if it is satisfied that there was sufficient cause for not filing it within that period.
(4) On receipt of an appeal under sub-section (1) or sub-section (2), the Appellate Tribunal may, after giving the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit, confirming, modifying or setting aside the order appealed against.
(5) The Appellate Tribunal shall send a copy of every order made by it to the parties to the appeal and to the concerned Adjudicating Authority or the Director, as the case may be.
(6) The appeal filed before the Appellate Tribunal under sub-section (1) or sub-section (2) shall be dealt with by it as expeditiously as possible and endeavour shall be made by it to dispose of the appeal finally within six months from the date of filing of the appeal.
9. The perusal of the provisions, quoted above, reveals that an appeal would lie before the Appellate Tribunal by the Director or any person aggrieved by an order made by the Adjudicating Authority. It can be filed even by the reporting entity, if aggrieved by an order of the Director under sub- section(2) of Section 13 of the Act of 2002, which is not a case herein because the PAO was caused under Section 5 of the Act of 2002 is to be adjudicated under Section 8 of the Act of 2002. There is no provision which authorizes the Tribunal to entertain an appeal against provisional attachment of the property. Ld. Counsel for the respondent, thus, submitted that this Tribunal should relegate the matter to the Adjudicating Authority for passing an appropriate order instead of considering the appeal on merit under Section 26 of the Act of 2002.
10. It is with further submission that the Counsel appeared before the Hon’ble High Court of Delhi in WP (C) No. 10166/2021 & CM Appl. 31354/2021 decided by the order dated 10.02.2023 did not assist the Hon’ble Court about the jurisdiction of the Appellate Tribunal, otherwise, the matter would have been relegated to the Adjudicating Authority to consider the justification of the PAO. The Adjudicating Authority would have denied confirmation of the PAO or could have confirmed the order and in that case, the appeal could have been preferred to this Tribunal under Section 26 of the Act of 2002. In absence of the proper assistance by the Counsel for the parties, a direction was given to treat the Writ Petition to be an appeal for adjudication of the PAO while no such jurisdiction lies with the Appellate Tribunal.
11. Ld. Counsel for the respondent accordingly prayed for dismissal of the appeal being not maintainable and requested for relegating it to the Adjudicating Authority to pass an appropriate order after taking into consideration the earlier PAO passed by it denying the confirmation of the provisional attachment of the property, though, the subject matter in the present PAO is quite different than the earlier PAO. In any case, the prayer of the Ld. Counsel for the respondent while pressing the objection on maintainability of the appeal remains for relegating the case to the Adjudicating Authority.
12. The preliminary objection was seriously opposed by the Ld. Counsel for the appellant. It was mainly in reference to the order passed by the Hon’ble High Court of Delhi dated 10.02.2023 in WP(C) No. 10166/2021 & CM Appl 31354/2021. The relevant portion of the directions has been quoted in the earlier paras of this order and thereby referring to the directions of the Hon’ble High Court of Delhi, the prayer was made by Ld. Counsel for the appellant to hear and decide the appeal against the PAO.
13. Ld. Counsel for the appellant made a reference to the order dated 25.11.2024 passed by the Single Bench of Hon’ble High Court of Delhi in WP (C) 10613/2022 analyzing the same objection, as raised by the Ld. Counsel for the respondent. An interim order has been passed staying the proceedings before the Adjudicating Authority. It is with fair admission that an appeal against the order of this Tribunal lies before the Division Bench, however, it was heard by the Single Bench on account of application to seek restoration of the Writ Petition disposed of by relegating it to the Appellate Tribunal for passing an order treating it to be an appeal. The restoration application was principally to seek an order on merit by restoring the Writ Petition. There a reference of the order passed by this Tribunal dated 24.10.2024 was given. The Single Bench of the Hon’ble High Court of Delhi had taken note of the order while passing interim order though effectively the appellant approached the Hon’ble High Court of Delhi for restoration of its Writ Petition.
14. The prayer was made to decide the appeal on its merits after rejecting the preliminary objection raised by the respondent about the maintainability of the appeal.
Findings of the Tribunal:
15. I have considered the rival submissions raised by the Ld. Counsel for the parties.
16. This appeal would decide the preliminary objection raised by the Ld. Counsel for the respondent about the maintainability of the appeal. The appeal was, otherwise, to be taken up for its disposal on merit along with two appeals preferred by the ED to challenge the order of the Adjudicating Authority denying the confirmation of the earlier PAO. The PAO in question was passed subsequently and was challenged by maintaining Writ Petition before the Hon’ble High Court of Delhi but has been relegated to this Tribunal to treat it to be an appeal for consideration of case along with two pending appeals.
17. The preliminary objection of maintainability of the appeal is in reference to the Section 26 of the Act of 2002, which has been quoted earlier. The perusal of the statutory provision reveals an appeal before this Tribunal against the order passed by the Adjudicating Authority under the Act of 2002. An appeal has not been provided against the PAO, rather, as per Section 5 read with Section 8 of the Act of 2002, PAO is sent to the Adjudicating Authority by the ED to seek its confirmation. The Adjudicating Authority may confirm the PAO or it can be denied considering the facts and circumstances in accordance with law applicable to the case. In absence of a provision of an appeal against the PAO, the respondent raised the preliminary objection, though, contested by the Ld. Counsel for the appellant in reference to the order passed by the Hon’ble High Court of Delhi relegating the Writ Petition for challenge to the PAO to this Tribunal for its decision in accordance with law treating it to be an appeal along with two pending appeals.
18. In the light of the order of the Hon’ble High Court of Delhi, the petition was taken to be an appeal, however, the issue remains about its maintainability because subsequent to the direction to treat the Writ Petition to be an appeal before this Tribunal, it is required to be considered in accordance with law. The statutory provision does not permit an appeal against the PAO before this Tribunal and therefore issue would be whether this Tribunal can exercise power dehors the statutory provision. An answer would obviously be adverse to the appellant because no Tribunal or Court can act dehors the provision of law till it held to be ultra virus and otherwise presumption of constitutional validity remains in favour of the statute.
19. In the light of the aforesaid, this Tribunal has to take a call to offend the statutory provision which otherwise is not permissible but at the same time to take up the matter in reference to the direction of the Hon’ble High Court of Delhi. The direction of the Hon’ble High Court has been quoted earlier, however, para 14 of the said order is again reiterated and thus quoted as under:-
14. It is accordingly directed that the present writ petition shall be treated as an appeal challenging the PAO dated 27th November, 2020. This appeal to the PAO shall be considered by the Appellate Tribunal under the PMLA Act in accordance with law along with the two pending appeals filed by the ED. The stay application filed before this Court shall be considered as a stay application before the Appellate Tribunal under the PMLA Act.
20. The para quoted above shows a direction for treating the Writ Petition to be an appeal which has been complied with by the Registry of this Tribunal by treating the Writ Petition to be an appeal, rather, separate appeal has been filed by the appellant. The issue remains for its consideration along with other two pending appeals which this Tribunal was intent to do but in view of the preliminary objection and as prayed by the respondent to decide the preliminary objection at the outset and if it is rejected to consider the present appeal along with two pending appeals. Thus, at this stage, I am considering the preliminary objection raised by the respondent. I am cautious of the direction of the Hon’ble High Court of Delhi to consider the appeal in accordance with law. If I go in accordance with law, an appeal is not provided under Section 26 of the Act of 2002 against the PAO. The directions of the Hon’ble High Court of Delhi are very specific to consider the appeal in accordance with law, though along with two other appeals, but it has already been clarified that owing to the preliminary objection, it was taken up for an order. It is to decide the preliminary objection and if it is rejected then to consider the appeal along with two pending appeals.
21. I find substance in the preliminary objection raised by the Ld. Counsel for the respondent about the maintainability of the appeal as no Tribunal or Court has authority to act offending the statutory provision unless it is strike down. The constitutional validity otherwise remains in favour of the statute.
22. Ld. Counsel for the appellant made a reference of the interim order passed by the Single Bench of the Hon’ble High Court of Delhi where challenged was not made to earlier order rather for the restoration of the Writ Petition. In any case, the matter pending before the Hon’ble High Court of Delhi would be decided on its merit and otherwise I have passed the order in accordance with the provision of law and as per the direction of the Hon’ble High Court of Delhi, as understood.
23. Finding substance in the preliminary objection, it sustains. The appeal is disposed of holding it to be not maintainable. The matter would obviously go to the Adjudicating Authority for which the interim order is vacated. The parties should remain present before the Adjudicating Authority on 20.11.2026. The Adjudicating Authority would consider the matter keeping in mind its earlier order denying the confirmation of the PAO of the property.
24. With the aforesaid, the appeal is disposed of.
