Supreme Court Clarifies Stand-Alone Provisions of PMLA Sections 8(7) and 8(8), Apex Court Sets Aside Special Court's Confiscation Order, Directs Appellate Tribunal to Rehear Appeal on Merits
In a significant ruling, the Supreme Court of India has provided clarity on the interpretation of Sections 8(7) and 8(8) of the Prevention of Money-Laundering Act, 2002 (PMLA), emphasizing their status as stand-alone provisions. The judgment came in the case of M/s. Nav Nirman Builders & Developers Pvt. Ltd. versus Union of India, where the apex court scrutinized the actions of the Special Court and High Court regarding the confiscation of properties.
The Supreme Court, comprising Justices M.M. Sundresh and Nongmeikapam Kotiswar Singh, set aside the orders passed by the Special Court and confirmed by the High Court, which allowed the confiscation of properties under Section 8(7) of the PMLA. The apex court noted that the Special Court should have awaited the final decision of the Appellate Tribunal, where an appeal against the confirmation order under Section 8(3) of the PMLA was pending.
The case revolved around properties purchased by Nav Nirman Builders, which were provisionally attached on allegations of being acquired through proceeds of crime. Despite an appeal pending before the Appellate Tribunal, the Special Court proceeded with confiscation, a move deemed legally untenable by the Supreme Court.
In its detailed judgment, the Supreme Court highlighted the doctrine of merger, stating that any challenge to an order under Section 8(3) is subject to a higher forum's decision, thus creating a deemed embargo on further proceedings under Section 8(7) until the order attains finality. The court also underscored that an application under the second proviso to Section 8(8) must meet specific conditions outlined in the Prevention of Money-laundering (Restoration of Confiscated Property) Rules, 2016.
The apex court directed the Appellate Tribunal to rehear the appeal on its merits within four weeks, emphasizing the need for a robust appellate mechanism in PMLA cases. It also clarified that applications under Section 8(7) should be kept in abeyance until the appellate process concludes, ensuring fair judicial scrutiny.
Bottom Line:
Prevention of Money-Laundering Act, 2002 - Sections 8(7), 8(8), and 26 - Special Court cannot proceed under Section 8(7) without awaiting the finality of confirmation order under Section 8(3) by higher forums - Appeal under Section 26 provides a vested right to the aggrieved party to exhaust the appellate remedy - Stand-alone provisions under Sections 8(7) and 8(8) clarified.
Statutory provision(s): Prevention of Money-Laundering Act, 2002 - Sections 8(7), 8(8), 26
