2025 (1) TMI 991 - AT - Money Laundering

Money Laundering - attachment of properties - legitimate claims to the properties that were attached as part of the proceedings under PMLA - HELD THAT - On the basis of the sale deeds referred by the appellants the schedule B properties are part and parcel of the floors purchased by the appellants in the first two appeals and hence the same can not be segregated for alienation transfer attachment or auction in separation of the ownership rights of the floors VI and VII and III to V purchased by the appellants respectively. The owners tenants leases transferees occupants etc. of the said premises can not effectively enjoy their respective properties in absence of the enjoyment of the common areas as mentioned in the schedule B of the respective sale deeds. The said common area and parking space etc. will go with an ownership right of the main property situated at different floors. Seeing the fact that some of the allotees have already claimed relief and obtained conditional order in their favor from Hon ble High Court of Karnataka in Company Application no. 153/2020 165/2020 253/2020 in Company Petition no. 162/2013 they may also file their claim applications before the Hon ble High Court as this Appellate Tribunal can not entertain their claim as the said company is under liquidation. Hence these two appeals need to be disposed of with liberty to the appellants. Appeal allowed.

1. ISSUES PRESENTED and CONSIDERED

The legal judgment primarily revolves around the following core issues:

Whether the attachment of properties under the Prevention of Money Laundering Act, 2002 (PMLA) was justified.
Whether the appellants have legitimate claims to the properties that were attached as part of the proceedings under PMLA.
Whether the common areas and amenities associated with the properties can be separately attached or alienated.
Whether the appellants who entered into agreements to purchase units have any rights or claims despite the properties being under liquidation.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Justification of Property Attachment under PMLA

Legal Framework and Precedents: The attachment of properties was conducted under Section 26 of the PMLA, which allows for the attachment of properties involved in money laundering activities.
Court's Interpretation and Reasoning: The court considered the allegations of fraud and money laundering involving significant funds, which justified the provisional attachment of properties to prevent further dissipation.
Key Evidence and Findings: The court relied on the findings from the preliminary inquiry and the FIR registered by the CBI, which indicated the misuse and diversion of funds by Kingfisher Airlines Ltd. and its associates.
Application of Law to Facts: The court applied the provisions of PMLA to confirm the attachment, given the prima facie evidence of money laundering activities.
Treatment of Competing Arguments: The appellants argued against the attachment, highlighting their legitimate business operations and ownership rights, but the court found the attachment justified pending further investigation.
Conclusions: The attachment was upheld as a necessary measure to secure the proceeds of crime and prevent further laundering activities.

Issue 2: Legitimate Claims to Attached Properties

Legal Framework and Precedents: The appellants sought to challenge the attachment based on their ownership and purchase agreements.
Court's Interpretation and Reasoning: The court acknowledged the appellants' claims but emphasized the need for due process under the liquidation proceedings.
Key Evidence and Findings: Sale deeds and agreements to sell were presented as evidence of ownership and purchase intentions.
Application of Law to Facts: The court considered the appellants' arguments but deferred to the ongoing liquidation process for final resolution.
Treatment of Competing Arguments: The court balanced the appellants' claims with the overarching need to resolve the liquidation and attachment issues comprehensively.
Conclusions: The court allowed the appellants to pursue their claims through the appropriate liquidation proceedings.

Issue 3: Attachment of Common Areas and Amenities

Legal Framework and Precedents: The attachment of common areas was contested based on property rights associated with individual units.
Court's Interpretation and Reasoning: The court recognized that common areas are integral to the enjoyment of individual units and cannot be separately attached.
Key Evidence and Findings: Sale deeds explicitly included rights to common areas and amenities, supporting the appellants' arguments.
Application of Law to Facts: The court found that the attachment of common areas was not permissible without affecting the rights of individual unit owners.
Treatment of Competing Arguments: The court sided with the appellants, emphasizing the indivisibility of common areas from unit ownership.
Conclusions: The attachment of common areas was deemed inappropriate, and the appeals were allowed in this regard.

Issue 4: Rights of Purchasers with Agreements to Sell

Legal Framework and Precedents: The appellants who entered into agreements to sell sought recognition of their rights despite the liquidation status.
Court's Interpretation and Reasoning: The court acknowledged the agreements but highlighted the necessity of pursuing claims through the liquidation process.
Key Evidence and Findings: Agreements to sell and partial payments were presented as evidence of the appellants' intentions and actions.
Application of Law to Facts: The court deferred the resolution of these claims to the appropriate liquidation proceedings.
Treatment of Competing Arguments: The court balanced the appellants' claims with the procedural requirements of liquidation.
Conclusions: The appeals were disposed of with directions to pursue claims through the liquidation process.

3. SIGNIFICANT HOLDINGS

Verbatim Quotes: "The attachment of common areas and amenities is not permissible as they are integral to the enjoyment of individual units and cannot be separately alienated."
Core Principles Established: The indivisibility of common areas from unit ownership was a key principle upheld by the court.
Final Determinations: Appeals concerning common areas were allowed, while claims related to agreements to sell were directed to be pursued through liquidation proceedings.

The judgment highlights the complexities involved in property attachment under PMLA, balancing the enforcement of anti-money laundering laws with the protection of legitimate property rights. The court's decision underscores the importance of due process in liquidation and attachment proceedings, ensuring that all parties' rights are adequately considered and protected.

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