Kanta Katyal Vs Deputy Director (Appellate Tribunal under SAFEMA, New Delhi)
No Predicate Offence, No Proceeds of Crime: SAFEMA Tribunal Lifts ₹161.22 Crore PMLA Attachment
Summary: A batch of appeals was filed by members of the Katyal family, family trusts, group companies, financial institutions & other affected parties challenging confirmation of a Provisional Attachment Order under the Prevention of Money Laundering Act, 2002.
The ED issued the PAO on 6 August 2024, attaching movable & immovable properties valued at ₹161,21,94,504. The Adjudicating Authority confirmed the attachment on 29 January 2025, holding that the properties represented proceeds of crime generated through offences allegedly committed by companies of the Krrish Group & their promoters.
The proceedings originated from eight FIRs registered between 2013 & 2022 by the Delhi Police Economic Offences Wing & Haryana Police against Brahma City Private Limited, Krrish Realtech Private Limited, Angle Infrastructures Private Limited, their directors & key executives, including Amit Katyal & Rajesh Katyal.
The alleged offences included criminal conspiracy, breach of trust, cheating, forgery & use of forged documents under the IPC.
Allegations of the ED
The ED alleged that Krrish Realtech collected large advances from prospective buyers for development of 466 plots in Gurugram. Buyer advances allegedly increased from ₹103.05 crore in FY 2010-11 to ₹503.09 crore by FY 2020-21.
According to the ED, instead of utilising the funds for the intended projects, the promoters diverted them to related parties, shell companies & other real estate ventures. No revenue from plot sales was allegedly reported up to FY 2021-22.
The ED further alleged that funds were routed through Mahadev Infratech Private Limited, which invested more than ₹205 crore in One Transworks Colombo Private Limited, a luxury real estate project in Sri Lanka. Substantial amounts were also allegedly transferred through Jasmine Buildmart Private Limited, Angle Infrastructure Private Limited & several shell companies.
Based on this alleged diversion, layering & overseas investment, the ED treated the buyer advances of ₹503.09 crore as proceeds of crime & attached properties worth ₹161.22 crore.
Issues before the Tribunal
The principal issue was whether a PMLA attachment could survive when the FIRs forming the foundation of the scheduled offences had been quashed, closed, discharged or otherwise interfered with by competent criminal courts.
A connected issue was whether the Adjudicating Authority could rely upon FIR No. 439 of 2024, which was registered after issuance of the PAO & was not referred to in the reasons to believe, PAO, Original Complaint or show-cause notice.
The Tribunal also considered whether settlement with complainants or clubbing of FIR No. 439 of 2024 with an earlier FIR independently justified release of the attached properties.
Appellants’ submissions
The appellants contended that none of the eight FIRs forming the basis of the PAO remained legally operative. Various proceedings had ended through quashing of FIRs, discharge orders, setting aside of summons or interference with cognizance orders.
Therefore, no scheduled offence survived to support the existence of proceeds of crime or continuation of attachment under PMLA.
They further argued that FIR No. 439 of 2024 was registered after the PAO. Since it was absent from the reasons to believe, PAO, Original Complaint & show-cause notice, the Adjudicating Authority could not use it retrospectively to confirm an earlier attachment.
The appellants also submitted that the Supreme Court had clubbed FIR No. 439 of 2024 with FIR No. 30 of 2019. Since the cognizance order for the section 420 offence in the earlier FIR had been set aside, the later FIR allegedly could not sustain a predicate offence.
It was additionally argued that disputes with buyers were being settled & attachment would obstruct repayment of remaining claimants.
ED’s contentions
The ED opposed the appeals, maintaining that serious allegations of diversion, layering & laundering of buyer funds existed. It sought to sustain the attachment by relying upon the entire funds trail & subsequent criminal proceedings, including FIR No. 439 of 2024.
Tribunal’s findings & legal reasoning
The Tribunal found that the eight FIRs preceding the PAO had either been quashed, resulted in discharge or suffered other judicial interference affecting the scheduled offences. In one matter, a closure report had been filed, though formal acceptance was not shown.
It held that if no scheduled offence survived in relation to the FIRs on which the PAO was founded, the attachment could not have been confirmed.
Regarding FIR No. 439 of 2024, the Tribunal held that a subsequent FIR could provide the ED with a fresh cause of action for issuing a separate PAO. However, it could not retrospectively validate an attachment made before that FIR existed, particularly when it was absent from every foundational document.
The Tribunal rejected the broader argument that clubbing FIR No. 439 with the earlier FIR automatically extended every prior order to the later allegations. Clubbing permitted common investigation but did not necessarily extinguish the later FIR ex post facto.
It also held that settlement intentions alone could not justify release of attached properties.
Relying upon Rajiv Chanana v. Deputy Director, ED & Prakash Industries Ltd. v. ED, the Tribunal reiterated that a scheduled offence is not merely a trigger but the foundation of money-laundering proceedings. Once that foundation disappears, property cannot continue to be characterised as proceeds of crime.
Accordingly, both the PAO & its confirmation were set aside.
Practical implications
The ruling confirms that PMLA proceedings cannot remain suspended in isolation after the underlying scheduled offence is extinguished. ED must continuously demonstrate the legal survival of the predicate offence supporting attachment.
A later FIR cannot cure defects in an earlier PAO. It may justify fresh proceedings, but only through the statutory process based upon new reasons to believe.
The decision also distinguishes settlement from legal extinction of the predicate offence. Settlement by itself is insufficient, whereas quashing or discharge directly affects the jurisdictional foundation.
The central principle is clear: without a surviving scheduled offence, there can be no legally sustainable proceeds of crime & consequently no continuing PMLA attachment.
Cases Discussed
- Rajiv Chanana v. Dy. Director, Directorate of Enforcement (2014 SCC OnLine Del 4889)
- Prakash Industries Ltd. v. Directorate of Enforcement [2022 SCC OnLine Del 2087]
- T.T. Antony versus State of Kerala (2001) 6 SCC 181
FULL TEXT OF THE JUDGMENT/ORDER OF APPELLATE TRIBUNAL UNDER SAFEMA AT NEW DELHI
By a batch of appeals, a challenge has been made to the order dated 29.01.2025 passed by the Adjudicating Authority confirming the Provisional Attachment Order (‘PAO’) dated 06.08.2024.
Brief facts of the case:
2. The Delhi Police (Economic Offences Wing), New Delhi and the Haryana Police, Gurgaon registered multiple FIRs against M/s Brahma City Pvt. Ltd. (formerly known as M/s Krrish Buildtech Pvt. Ltd.), M/s Krrish Realtech Pvt. Ltd., M/s Angle Infrastructures Pvt. Ltd. and their directors and key executives including Shri Amit Katyal, Shri Rajesh Katyal and others. The FIR was registered for the offence under Sections 34, 120-B, 406, 409, 420, 467, 468 and 471 of the Indian Penal Code, 1860. The Adjudicating Authority has given reference of 8 FIRs registered against the accused from time to time. The first FIR was registered in the year 2013 followed by another two FIRs in the same year and thereupon one FIR in the year 2016 followed by another FIR in the year 2019. Subsequent FIRs were registered in the year 2020 and 2022. The respondent recorded the ECIR finding a predicate offence and accordingly investigation was initiated. Finding case against the appellants, PAO was issued on 06.08.2024 and was sent along with an Original Complaint to the Adjudicating Authority for its confirmation. The Adjudicating Authority has confirmed the PAO of the properties finding involvement of the accused and acquisition of the proceeds of crime out of predicate offence. The gist of the FIR has been summarized by the Adjudicating Authority to show a wrongful loss to the complainant and unjust gain to the accused. A summary of the allegations recorded by the Adjudicating Authority are as under:-
(a) M/s Krrish RealtechPvt. Ltd., established in 2010 with an initial share capital of Rs. 1 lakh, began operations by collecting funds from plot buyers starting from FY 2010-11. Previously, M/s Brahma City Pvt. Ltd. managed plot development, but from FY 2010-11, Sh. Amit Katyal, through his employees and directors, began channelling these funds into M/s Krrish RealtechPvt. Ltd.
(b) According to the balance sheets of M/s Krrish Realtech Pvt. Ltd., the company received Rs. 103.05 crores as advances from plot buyers in FY 2010-11. The advances received in subsequent years are detailed as follows: FY 2011-12: Rs. 149.66 crores; FY 2013-14: Rs. 444.71 crores; FY 2014-15: Rs. 465.21 crores; FY 2015-16: Rs. 490.68 crores; FY 2016-17: Rs. 491.02 crores; FY 2017-18: Rs. 498.84 crores; FY 2018-19: Rs. 503.16 crores; FY 2019-20: Rs. 501.44 crores; and FY 2020-21: Rs. 503.09 crores. The total proceeds of crime from misappropriated plot buyers’ funds amount to Rs. 503.09 crores.
(c) M/s Krrish Realtech Pvt. Ltd. began accepting funds through MoUs with prospective plot buyers for the development of 466 plots in Gurugram. However, instead of using these funds for the intended real estate projects, they were diverted to related parties, primarily Sh. Amit Katyal and other Krrish group companies. This diversion is documented in the audited financial statements, and the company did not report any revenue from plot sales up to FY 2021-22, suggesting a deliberate intent to defraud the buyers.
(d) The misappropriated funds were invested into shell companies and other real estate ventures, benefiting the promoters of M/s Krrish Realtech Pvt. Ltd. Sh. Amit Katyal invested significantly in M/s Mahadev Infratech Pvt. Ltd., a shell company, using funds diverted from M/s Krrish Realtech Pvt. Ltd., M/s Mahadev Infratech Pvt. Ltd., in turn, invested over Rs. 205 crores into M/s One Transworks Colombo Pvt. Ltd., a real estate project in Sri Lanka.
(e) Funds were further channelled into two Krrish group companies: M/s Jasmine Buildmart Pvt. Ltd. and M/s Angle Infrastructure Pvt. Ltd. Sh. Amit Katyal also invested in real estate projects through these companies, including Florence Estate via M/s Angle Infrastructure Pvt. Ltd. and Provence Estate via M/s Jasmine Buildmart Pvt. Ltd.
(f) Sh. Amit Katyal transferred over Rs. 117 crores from Account No. 9232560000547 at HDFC Bank and over Rs. 116 crores from Account No. 9232560001091 at HDFC Bank to his personal accounts between FY 2010-11 and FY 2020-21. Only Rs. 3.4 crores and Rs. 2.5 crores were returned to the company, respectively, indicating no intention of returning the misappropriated funds.
(g) Sh. Amit Katyal transferred more than Rs. 40 crores from these HDFC Bank accounts to M/s Mahadev Infratech Pvt. Ltd. This amount was not fully returned to the company, indicating continued misappropriation. Over Rs. 200 crores were infused into M/s Mahadev Infratech Pvt. Ltd. through share premiums, unsecured loans, and other dubious transactions, including loans from shell companies in Kolkata that have since been struck off.
(h) The funds trail through M/s Mahadev Infratech Pvt. Ltd. shows a direct transfer of Rs. 205 crores to Sri Lanka for investment in M/s One Transworks Colombo Pvt. Ltd., a luxury real estate project, representing a clear instance of proceeds of crime. Additionally, Sh. Amit Katyal and associated entities utilized shell companies, including M/s Heaven Tradelink Pvt. Ltd., M/s Shreyans Vyapar Pvt. Ltd., and M/s Macro Tradecom Pvt. Ltd., to acquire properties without clear sources of funds.
(i) Investments by Sh. Amit Katyal in M/s Jasmine Buildmart Pvt. Ltd. and M/s Angle Infrastructure Pvt. Ltd. also constitute direct proceeds of crime. Approximately Rs. 235 crores were transferred to M/s Jasmine Buildmart Pvt. Ltd. from Sh. Amit Katyal’s accounts, and M/s Jasmine Buildmart Pvt. Ltd. transferred around Rs. 128 crores back to Sh. Amit Katyal, indicating a deliberate rotation and layering of proceeds of crime. Sh. Rajesh Katyal, a director, was complicit in facilitating the transfer of over Rs. 200 crores abroad, further enabling the laundering of misappropriated funds.
3. The PAO was caused on 06.08.2024 for the movable and immovable properties for a sum of Rs.1,61,21,94,504/- only. The Adjudicating Authority confirmed the PAO and aggrieved by the aforesaid, separate appeals have been filed by the appellants.
Arguments of the Ld. Counsel for the appellants:
4. Ld. Counsel for the appellants submitted that the impugned order of the Adjudicating Authority is in ignorance of the submissions made by the appellant and thereby a perverse finding has been recorded. The Adjudicating Authority ignored that the FIRs registered against the appellants from the year 2013 to till 2022 were either quashed by the High Court or a discharge order was passed. It includes quashing of the summoning order in relation to one FIR and quashing of the cognizance order of the predicate offence in reference to other FIR. In fact, no FIR pertaining to the predicate offence was pending on or before the order passed by the Adjudicating Authority. Yet, ignoring the fact aforesaid, the provisional attachment of the properties was confirmed by the Adjudicating Authority and therefore the impugned order deserves to be set-aside on the aforesaid ground itself.
5. Ld. Counsel for the appellants, further, submitted that the Adjudicating Authority has taken into consideration the FIR No. 439 of 2024, which was registered subsequent to the recording of the ECIR and even after the PAO. The Original Complaint does not have reference of the said FIR to seek confirmation of the provisional attachment. The PAO was caused in relation to 8 FIRs and accordingly the Original Complaint was sent to the Adjudicating Authority to seek confirmation of the order of the provisional attachment of the properties. In the Original Complaint, there was no reference of FIR No. 439 of 2024. The Adjudicating Authority could not have confirmed the provisional attachment of the properties based on the facts which were not available while passing of the order of attachment of the properties. It was referred even in reasons to believe and lastly in the Original Complaint. It was not incorporated even in the show-cause notice given by the Adjudicating Authority. The material, which was not considered for causing PAO and even not referred in the Original Complaint to seek confirmation of the attachment of the properties could not have been taken to confirm the PAO. The subsequent FIR could have been taken up separately for necessary action as per the law, if it is made out, but could not have been inter-mixed at the stage of adjudication of the case by the Adjudicating Authority. Thus, on the aforesaid ground also, the impugned order deserves to be set-aside.
6. Ld. Counsel for the appellants, further, submitted that the FIR No. 439 of 2024 was, otherwise, of no consequence in view of the fact that the Hon’ble Apex Court vide its order dated 18.05.2026 merged the said FIR with FIR No. 30 of 2019 registered by the PS Economic Offences Wing Delhi, thus, the allegation therein could not have been taken when the FIR No. 30 of 2019 resulted in setting-aside the cognizance order for the offence under section 420 of the IPC against the appellant. It was submitted that the cognizance of the offence was taken by the Ld. Chief Judicial Magistrate but order of cognizance was interfered by the Court of Session Judge vide its order dated 04.06.2025. The cognizance of the offence under Section 420 of the IPC was set-aside and therefore no predicate offence remains in reference to FIR No. 439 of 2024 subsequent to clubbing of the FIR bearing No. 30 of 2019. Thus, the impugned order deserves to be set-aside even on the aforesaid ground also.
7. Ld. Counsel for the appellants lastly submitted that effort of the appellant is to settle the dues of the complainant and in that regard, it remained successful not only to settle the matter but based on the aforesaid, even in the FIRs were quashed or interference in the proceedings were made. Therefore, even going by the intent of the appellants, this Tribunal should cause interference in the impugned order as the appellant is intended to settle the issues raised by the complainant which, otherwise, is essentially of civil nature. The prayer was accordingly made to cause interference in the impugned order.
Arguments of the Ld. Counsel for the respondent:
8. Ld. Counsel for the respondent vehemently contested the appeals on all the grounds raised by Ld. Counsel for the appellants. Elaborate arguments were made and would be referred while recording finding on each issue raised by the Ld. Counsel for the appellants. It is to avoid repetition of the same facts and for the sake of brevity.
Findings of the Tribunal:
9. I have considered the rival submissions of the parties and scanned the matter carefully. In the brief facts of the case, I have given reference to the FIRs registered against the accused from time to time and the allegations therein. It is a fact that 8 FIRs were registered against the accused from time to time, starting from the year 2013 till the year 2022 i.e. before the provisional attachment of the properties was caused. The argument of the Ld. Counsel for the appellant is in reference to the different orders passed by the Courts either quashing of the proceedings/FIRs or quashing of cognizance order for the predicate offence. It is even a discharge order and order to set-aside summons issued to cause presence of the accused. In substance, the argument of the appellant was that no predicate offence exists against the appellants to maintain the order of the provisional attachment of the properties and its confirmation. Reference of all the FIRs were given viz-a-viz the orders passed by the High Court and the Court of Session to cause interference either in the FIR or in the proceedings. It is even in the order for taking cognizance of the offence coupled with summoning the accused and interference in the cognizance order for predicate offence. I don’t find a contest on the factual aspect, other than that, in one FIR, a closure report has been given but there is no order on record to show its acceptance. Though, in absence of service of the summons to the complainant, the matter has been consigned to the record by the Trial Court and thereby the period provided in CrPC for taking cognizance of the offence has already expired. Thus, if no predicate offence exists against the appellants in reference to which the provisional attachment has been caused, it could not have been confirmed by the Adjudicating Authority. The fact, however, remains that one FIR bearing No. 439 of 2024 was lodged subsequent to the provisional attachment of the properties and it is for that reason alone it does not find reference in the PAO. It has not even mentioned in the Original Complaint sent to the Adjudicating Authority to seek confirmation of the PAO. The Adjudicating Authority, however, made a reference of the said FIR to confirm the PAO.
10. The issue would be as to whether the subsequent FIR disclosing the predicate offence could have been taken into consideration by the Adjudicating Authority while confirming the PAO passed prior to the FIR No. 439 of 2024. It is even if an addendum to the ECIR was issued. The addendum may give cause to the respondent to issue a separate order for provisional attachment of the properties but it could not have been considered by the Adjudicating Authority for confirmation of the PAO passed prior to the FIR No. 439 of 2024. In fact, there is no reference to the said FIR or the allegation made therein in the Original Complaint as well as in the PAO. It was not mentioned even while recording “reasons to believe”. Thus, the fact aforesaid could not have been ignored by the Adjudicating Authority to confirm the provisional attachment of the properties.
11. Ld. Counsel for the appellants, further, submitted that the FIR No. 439 of 2024 was otherwise, clubbed with the earlier FIR No. 30 of 2019 where an interference in the cognizance order for the offence under Section 420 of IPC was caused by the District and Sessions Judge vide its order dated 04.06.2025. The argument was that with the clubbing of the FIR No. 439 of 2024 with FIR No. 30 of 2019, the allegation for commission of offence under Section 420 of IPC would not stand. I am not in agreement with the argument aforesaid. It may be true that the Hon’ble Apex Court has clubbed two FIRs for the purpose of investigation by applying ratio propounded in the case of T.T. Antony versus State of Kerala reported in (2001) 6 SCC 181. The clubbing of two FIRs is for the purpose of common investigation but if any order has been passed in reference to the earlier FIR, it may not apply ex-post facto to the subsequent FIR other than in a case of exceptional nature. Thus, to the extent, I am not in agreement of the argument raised by the appellant to record my finding that the FIR No. 439 of 2024 should not be taken into consideration for the offence under Section 420 of the IPC.
12. Ld. Counsel for the appellants , further, submitted that the settlement has arrived between the parties. Thus, the intention of the appellant company is not to advance cause of offence but to settle the disputes and thereby proceeding in reference to many complaints have been interfered by the Courts. The statement was also made that if the attachment of the property is made, the company would not be in position to settle the remaining cases. The intention of the appellant can be noted but that alone cannot be taken to be a ground to release the property under the provisional attachment, though, I have recorded my opinion adverse to the respondent while referring to the facts pertaining to the PAO followed by the Original Complaint and even “reasons to believe” recorded while causing PAO where reference of FIR No. 439 of 2024 has not been given. The provisional attachment of the properties could not have been confirmed in reference to the FIR registered subsequent to the PAO and even the Original Complaint sent to the Adjudicating Authority to seek confirmation of the order, rather, it could have been taken as a fresh cause for necessary action.
13. It is now a settled position of law that where the scheduled offence does not survive or is not established against the accused, the proceedings under PMLA, 2002, including the attachment of property alleged to represent the proceeds of crime, cannot be sustained. In the present case, the very foundation of the alleged scheduled offences stands extinguished, as the FIRs forming the basis of the alleged scheduled offences have either been quashed by the competent Courts or closure reports have been filed by the concerned authorities. Consequently, the scheduled offences, which constitute the basis for the invocation of the provisions of the PMLA, cannot survive in the eyes of law. The following judgments, reiterate the settled legal position that failure to establish the scheduled offence necessarily impacts the proceedings under the PMLA and the consequential attachment, are relied upon and are set out below. I may refer the judgement in the case of Rajiv Chanana v. Dy. Director, Directorate of Enforcement (2014 SCC OnLine Del 4889). Para 19 of the judgment is quoted thus:-
“19. It necessarily follows that the attachment of a property is liable to be vacated if the existence of a scheduled offence is negated. Clearly, attachment of proceeds of crime cannot continue if the alleged scheduled offence is not established after trial. Given the scheme of the PMLA, attachment of property (proceeds of crime) must be lifted if it is found that the scheduled offence, on the basis of which attachment was effected, does not exist. In absence of a scheduled offence, the question of existence of any proceeds thereof, do not arise.”
14. I may, further, refer the judgment of the Delhi High Court in the case of Prakash Industries Ltd. v. Directorate of Enforecement [2022 SCC OnLine Del 2087]. Para 9 of the judgment is quoted hereunder:
“9. This Court thus comes to the definite conclusion, that while the offense of money laundering may have been correctly described as a stand-alone offense in the sense of being a condition precedent for an allegation of money laundering being raised, that in itself would not infuse jurisdiction in proceedings that may be initiated under the Act even after a competent court has come to hold that no criminal offense stands committed or situations where the primary accused is discharged of the offense or proceedings quashed. When the offense of money laundering is described as a stand-alone offense, all that is sought to be conveyed is that it is to be tried separately in accordance with the procedure prescribed under the Act. It is evident from a reading of the Act that while the commission of a predicate offense constitutes the trigger for initiation of proceedings under the Act, the offense of money laundering must be tried and established separately. However, the Court finds itself unable to hold that a charge of money laundering would survive even after the charges in respect of the predicate offense are quashed or the accused is discharged upon the competent court finding that no offense is made out. The predicate offense does not merely represent the trigger for a charge of money laundering being raised but constitutes the very foundation on which that charge is laid. The entire edifice of a charge of money laundering is raised on an allegation of a predicate offense having been committed, proceeds of crime generated from such activity and a projection of the tainted property as untainted. However, once it is found on merits that the accused had not indulged in any criminal activity, the property cannot legally be treated as proceeds of crime or be viewed as property derived or obtained from criminal activity.”
15. In the light of the aforesaid, I find reason to cause interference in the impugned order and as a consequence, the order for provisional attachment of the properties so as its confirmation by the impugned order are set-aside.
16. The appeals are disposed of with the aforesaid.
