Jammu and Kashmir High Court Frees Golden Palms Project from PMLA Attachment

Court Orders Replacement of Attached Property with Monetary Deposit, Allowing Project Completion

In a significant judgment, the Jammu and Kashmir High Court has ordered the release of the Golden Palms project in Jammu from the clutches of the Prevention of Money Laundering Act (PMLA), 2002. The court has allowed M/s Pee Bee Associates, the petitioner, to replace the attachment of the project by depositing Rs. 47.16 crores, which represents proceeds of crime, with the Enforcement Directorate (ED). This decision comes as a relief for the petitioner and the numerous investors who had stakes in the project.

The case stemmed from accusations that M/s Adarsh Build Estate Limited (M/s ABEL), a respondent in the case, had invested proceeds of crime into the Golden Palms project. The land for the project, however, was never derived from criminal activity, being owned by the promoters of the petitioner. The court recognized the petitioner's bona fide actions and clarified that the project itself was not a product of money laundering. 

The judgment emphasized that while the financial involvement of M/s ABEL in the project was questionable, the petitioner had entered into a development agreement with M/s ABEL in good faith, at a time when no allegations or investigations tainted the latter's reputation. The court highlighted the importance of distinguishing between the proceeds of crime and the property owned by bona fide third parties.

The order marks a turning point for the abandoned Golden Palms project, which has been stalled since 2018, affecting around 170 investors. By allowing the petitioner to substitute the attached property with a monetary deposit, the court has paved the way for the project's completion, free from the shadow of PMLA proceedings. The funds deposited by the petitioner will be treated as attached property in the ongoing proceedings before the Special Court PMLA, Jaipur.

The court's decision underscores the necessity to balance enforcement of anti-money laundering laws with the protection of legitimate business interests and third-party rights. This judgment not only provides a lifeline to the Golden Palms project but also sets a precedent for similar cases involving bona fide third-party rights.

Bottom Line:

The court examined the attachment of property under the Prevention of Money Laundering Act, 2002 (PMLA) concerning the Golden Palms project and clarified the distinction between proceeds of crime and the property owned by bona fide third parties. 

Statutory provision(s): Prevention of Money Laundering Act, 2002 - Sections 2(u), 2(v), 3, 5(1), 8(3), 8(4)

M/s Pee Bee Associates Narwal v. Union of India, (Jammu And Kashmir) : Law Finder Doc Id # 2785814