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Case Details: Rebba Satyanarayana vs. Deputy Director Directorate of Enforcement - [2025] 174 taxmann.com 261 (SAFEMA-New Delhi)

Judiciary and Counsel Details

V. Anandarajan & Rajesh Malhotra, Member
Y.S. Reddy, Adv. for the Appellant.
Ms Anubha Bhardwaj, Adv. for the Respondent.

Facts of the Case

In the instant case, the General Manager and Senior Regional Head of IDBI Bank lodged a complaint regarding large-scale fraud in the processing and sanctioning of loans under the Kisan Credit Card (KCC) scheme for the construction of ponds/tanks for fish farming/pisciculture.

Accordingly, CBI registered an FIR against the accused persons, including the appellants. Based on the incriminating material collected during the investigation, the Enforcement Directorate (ED) passed a provisional attachment order (PAO) concerning the appellant’s properties. The Adjudicating Authority confirmed the PAO in its impugned order.

SAFEMA Held

The Appellate Tribunal SAFEMA observed that, as per the definition of ‘Transfer’ under Section 2(1)(za) of the Prevention of Money Laundering Act (PMLA), 2002, which includes sale, purchase, mortgage, pledge, gift, loan, or any other form of transfer of right, title, possession, or lien, even if the subject properties were mortgaged with the bank, the appellants could still transfer the said property by other means, without discharging the loan liability, by executing a sale deed to a third party, leasing it, or taking other steps without the knowledge of the ED or the mortgagee bank.

Therefore, the contention that there was no apprehension or reason to believe that the mortgaged properties, if not immediately attached, could frustrate any proceeding, could not be accepted.

Furthermore, in the absence of a specific rule under PMLA for substitution of immovable property, the Appellate Tribunal could not grant permission for such substitution to the appellants.

Additionally, the total quantum of the fraud was significantly higher than the properties attached by the ED, hence the question of substituting these properties with cash deposits did not arise. The Appellate Tribunal SAFEMA held that, in view of the above, the instant appeal against the order of the Adjudicating Authority was to be dismissed as it was devoid of merit.