Appellate Tribunal for Forfeited Property (ATFP): The bench of G.C Mishra and Rajesh Malhotra* (Members) were called upon to consider the appeal wherein the wife of one of the co-accused of PNB Fraud case, challenged the decision of Adjudicating Authority, whereby it confirmed the attachment of their New York based flat by the Enforcement Directorate (ED). The Tribunal dismissed the appeal stating that, as per definition of Proceeds of Crime (POC) under Section 2 (1)(u) of the PMLA, 2002, the legislation entitles the attachment of proceeds of crime which are either generated as a result of criminal activity relating to a scheduled offence, or, the equivalent value, or, where such proceeds of crime is taken, or, held outside the country, then the property equivalent in value held within the country or abroad.
The Tribunal opined that the attached property represented the value of proceeds of crime in terms of definition of Section 2 (1) (u) of PMLA, 2002 as ‘the value of any such property’ and was therefore liable for attachment under PMLA, 2002.
Background:
In 2018, Nirav Modi, Neeshal Modi, Ami Nirav Modi and Mehul Chinubhai Choksi, all in conspiracy with several officers of Punjab National Bank (PNB) and other unknown persons committed the offence of cheating against PNB and caused a wrongful loss. The public servants committed abuse of official position to cause pecuniary advantage to the firms owned by the afore-stated accused persons and wrongful loss to the PNB.
Consequently, an FIR was registered against the accused persons under Sections 120-B r/w 420 of the Penal Code, 1860 (IPC) read with Section 13(2) read with 13(1)(d) of PC Act, 1988. Accordingly, the ED initiated investigation in the case for the offence of money laundering, against the accused persons.
During the investigation, it was revealed that the appellant’s husband, Mihir Bhansali was de facto second in command in the entire controlling system and was actively involved in the diversion and laundering of the funds received from PNB. He was instrumental in setting up the scheme of transferring and layering of funds generated from the fraudulent Letters of Undertaking (LOUs). With his active involvement several dummy companies were formed all over the world including Dubai and Hong Kong to camouflage the real transactions.
Furthermore, during the investigation, it was revealed that a residential property in New York, USA, which was valued at USD 7.1 million, was initially purchased jointly in the name of Mihir Bhansali and the appellant. Later, after the criminal case was registered, Mihir Bhansali transferred ownership to his wife for nominal value USD 10 only. Substantial amount of proceeds of crime has been transferred to Mihir Bhansali and his company in form of Gold, cash and transfer of funds which are not available for attachment directly.
Therefore, the ED concluded that the property in question represented the value of proceeds of crime in terms of definition of Section 2 (1) (u) of PMLA, 2002 as the value of any such property is liable for attachment under PMLA, 2002.
The Adjudicating Authority after going through the allegations mentioned in complaint coupled with the documents and the statements under Section 50 of PMLA and after going through the replies of the Show Cause Notice and hearing the rival submissions, the Adjudicating Authority confirmed the Provisional Attachment Order (PAO).
Tribunal’s Assessment:
Perusing the appeal and the facts of the case, the Tribunal took note of the appellant’s contentions wherein it was stated that there was not an iota of evidence or allegation to show that the appellant was associated with those firms or running any of their activities or the business activities of the other accused persons. She was not charge-sheeted for commission of any predicate offence. The Tribunal further noted the appellant’s contention that the attached property was acquired prior to any allegation relating to generation of Proceeds of Crime.
The Tribunal took note of Mihir Bhansali’s active involvement in the scam and the fact that he transferred the ownership of the attached property in question to the appellant. The Tribunal stated that transfer of ownership to the appellant was done with an intention to avoid the clutches of the US agencies or Indian Agencies on this property i.e., to conceal the proceeds of crime and project it as untainted in the name of his wife.
The Tribunal noted that the respondents proved that the appellant acquired her wealth from her husband Mihir Bhansali. Counsel for the appellant failed to explain how appellant possessed her own funds to purchase the attached property worth USD 7.1 million, given the fact that the appellant is a house maker and was not carrying out any business activity.
The Tribunal noted that substantial amount of proceeds of crime has been transferred to Mihir Bhansali and his company, in form of Gold, cash and transfer of funds which were not available for attachment directly and were in exclusive knowledge of Mihir Bhansali, who has avoided investigation from last 6-7 years.
The allegations mentioned in the FIR and the complaint clearly reflected that there was sufficient ground to invoke the attachment of the property by ED and the Adjudicating Authority while issuing Show Cause Notice respectively. The fact that the appellant’s husband failed to join proceedings and the appellant herself adopted delaying tactics, thus she has no right to challenge the impugned order passed by the Adjudicating Authority on the other issue pertaining to violation of the principle of natural justice as alleged.
With the afore-stated assessment, the Tribunal dismissed the appeal thereby upholding the confirmation of attachment of property by the ED.
[Rakhi Bhansali v. Deputy Director, Directorate of Enforcement, FPA-PMLA-3021/MUM/2019, decided on 30-6-2025]
*Order by Rajesh Malhotra, Member
Advocates who appeared in this case :
For the Appellant: M.R Venkatesh, Arjun Harkauli, Abeer Shandilya, Advocates.
For the Respondent: Anubha Bhardwaj & Ayush Singh Dhami, Adv
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