Holding

A Special Court must defer any application under s.8(7) of the PMLA until the confirmation order under s.8(3) attains finality, and the appellant’s s.8(8) claim is not maintainable as it fails to meet the statutory conditions.

Summary

Nav Nirman Builders & Developers Pvt. Ltd. (appellant) had two parcels of land provisionally attached under the Prevention of Money‑Laundering Act, 2002 (PMLA) and a confirmation order under s.8(3) was challenged before the Appellate Tribunal under s.26. While the appeal was pending, the Enforcement Directorate filed an application under s.8(7) (confiscation on contingency) and the appellant filed an application under s.8(8) (restoration of property). The Special Court heard both applications together, allowed the s.8(7) application and dismissed the s.8(8) application; the High Court affirmed this order. The Supreme Court held that a pending appeal creates a deemed embargo, so the Special Court could not entertain the s.8(7) application until the confirmation order attained finality, and that the appellant’s s.8(8) claim failed to satisfy the statutory conditions. Consequently, the order allowing s.8(7) was set aside, the s.8(8) application was held non‑maintainable, and the appeal under s.26 was directed to be heard on its merits. The appeal was allowed.

Issues considered

The Special Court’s jurisdiction to entertain an application under s.8(7) of the PMLA while an appeal under s.26 of the PMLA is pending.
Whether the appellant’s application under s.8(8) of the PMLA is maintainable.
The interpretation of the expression ‘material before it’ and the stand‑alone nature of s.8(7) and s.8(8).
The applicability of the doctrine of merger and the embargo on proceedings under s.8(7) when a confirmation order is under appeal.

Legislation cited

Code of Criminal Procedure, 1973s. 482
Indian Penal Code, 1860s. 120B, s. 420, s. 467, s. 468, s. 471
Prevention of Corruption Act, 1988s. 13(1)(d), s. 13(2)
Prevention of Money Laundering Act, 2002s. 26, s. 35, s. 5(1), s. 8(1), s. 8(2), s. 8(3), s. 8(4), s. 8(5), s. 8(6), s. 8(7), s. 8(8)
Prevention of Money‑Laundering (Restoration of Confiscated Property) Rules, 2016s. Rule 2(b), s. Rule 3A
Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976

Headnote

Issue for Consideration In the instant case, this Court is concerned with the decision-making process adopted by the Special Court. Instead filed u/s.8(7) of the Prevention of Money-Laundering Act, 2002 (PMLA), and awaiting the adjudication by the Appellate Tribunal u/s.26 of the PMLA, the Special Court has allowed the said application. Headnotes† Prevention of Money-Laundering Act, 2002 – ss.8(7) and s.8(8):

Subjects

Proceeds of crimeSection 8(3) PMLASection 8(7) PMLASection 8(8) PMLADoctrine of mergerFinality of attachmentThird‑party claimantConfirmation orderConfiscation of propertyMoney‑launderingRestoration of propertySection 26 PMLAAppellate Tribunal procedureEntitlement to possessionMaterial before it

Judgment

[2026] 2 S.C.R. 406 : 2026 INSC 130

M/s. Nav Nirman Builders & Developers Pvt. Ltd. Through
its Managing Director, Naveen Singh
v.
The Union of India Through Deputy Director, Directorate of
Enforcement, Govt of India Ranchi, Jharkhand
(Criminal Appeal No. 729 of 2026)
06 February 2026
[M.M. Sundresh* and Nongmeikapam Kotiswar Singh, JJ.]

Issue for Consideration
In the instant case, this Court is concerned with the decision-making
process adopted by the Special Court. Instead of deferring the
application filed u/s.8(7) of the Prevention of Money-Laundering
Act, 2002 (PMLA), and awaiting the adjudication by the Appellate
Tribunal u/s.26 of the PMLA, the Special Court has allowed the
said application.

Headnotes†
Prevention of Money-Laundering Act, 2002 – ss.8(7) and s.8(8):
Held: Section 8(7) and Section 8(8) of the PMLA are stand-alone
provisions. [Para 52]

Prevention of Money-Laundering Act, 2002 – s.8(7) – When
attracted:
Held: s.8(7) of the PMLA gets attracted only in case of a contingency
and an application under the said provision can be decided by
the Special Court only once the confirmation order attains finality.
[Para 52]

Prevention of Money-Laundering Act, 2002 – ss.8(3) and
8(7) – Import of the expression “material before it” occurring
in s.8(7) of the PMLA:
Held: The expression “material before it” occurring in s.8(7) of the
PMLA has a limited import to the extent of showing the contingency
and the entitlement to possession as regards the Director or any

* Author
[2026] 2 S.C.R. 407

M/s. Nav Nirman Builders & Developers Pvt. Ltd. Through its Managing Director, Naveen Singh v.
The Union of India Through Deputy Director, Directorate of Enforcement, Govt of India Ranchi, Jharkhand

third party – In case of a party who has suffered an adverse order
u/s.8(3) of the PMLA, relief u/s.8(7) of the PMLA can be sought
for, provided there is new material that was not placed before or
considered by the Adjudicating Authority u/s.8(3) of the PMLA, or
by the higher forums, if so challenged. [Para 52]

Prevention of Money-Laundering Act, 2002 – Second proviso
to s.8(8) – Prevention of Money-laundering (Restoration of
Confiscated Property) Rules, 2016 – rr.2(b) and 3A – When
can an application under the second proviso to s.8(8) of the
PMLA be filed:
Held: An application under the second proviso to s.8(8) of the PMLA
can only be filed subject to satisfying the essential conditions laid
down by Rules 2(b) and 3A of the 2016 Rules. [Para 52]

Prevention of Money-Laundering Act, 2002 – ss.5(1), 8(3), 8(7),
8(8), 26 – Prevention of Corruption Act, 1988 – s.13(2) r/w.
s.13(1)(d) – An FIR was registered for the various offences
punishable under the IPC along with s.13(2) r/w. s.13(1)(d) of
the Prevention of Corruption Act, 1988 (predicate offence) –
A Provisional Attachment Order (PAO) was passed by the
respondent, u/s.5(1) of the PMLA, on 17.12.2017, attaching two
pieces of land purchased by the appellant in the years 2012
and 2014, in lieu of the amount allegedly received fraudulently
by the firm – The Adjudicating Authority passed a confirmation
order u/s.8(3) of the PMLA – Aggrieved, an appeal was filed
by the appellant u/s.26 of the PMLA – In the meantime, a
Prosecution Complaint was filed by the respondent u/s.45
of the PMLA – Charges were framed by the Special Court –
Respondent filed application invoking s.8(7) of the PMLA –
Thereafter, appellant filed an application invoking s.8(8) of the
PMLA – The Special Court considered both the applications
together, notwithstanding the pendency of the appeal filed
u/s.26 of the PMLA – The Special Court allowed application
u/s.8(7) of the PMLA and dismissed application u/s.8(8) of
PMLA – Resultantly, the confiscation of the attached properties,
as sought by the respondent, was ordered – The order passed
by the Special Court allowing the application u/s.8(7) of the
PMLA, was confirmed by the High Court – Correctness:
408 [2026] 2 S.C.R.

Supreme Court Reports

Held: Admittedly, the appellant company, having suffered an order
u/s.8(3) of the PMLA, had preferred an appeal u/s.26 of the PMLA
which was pending on the file of the Appellate Tribunal even at the
time of filing of the applications u/ss.8(7) and 8(8) of the PMLA –
The fact that the said appeal was pending before the Appellate
Tribunal, for want of coram, is not in dispute – Once an order
under s.8(3) of the PMLA is challenged before a higher forum, a
deemed embargo operates on the conclusion of the proceedings
u/s.8(7) of the PMLA – Hence, the Special Court cannot go into
the issues which the higher forums have been entrusted with –
When an appeal is provided for under the statute, it gives a vested
right to any aggrieved person to exhaust the same – Instead of
deferring the application filed u/s.8(7) of the PMLA, and awaiting
the adjudication by the Appellate Tribunal u/s.26 of the PMLA, the
Special Court has allowed the said application, for which exhaustive
reasons have been given independently on merits – The Special
Court has, in effect, rendered the appeal u/s.26 of the PMLA
infructuous – The said action at the instance of the Special Court
is totally impermissible in law – Thus, the order passed by the
Special Court allowing the application u/s.8(7) of the PMLA, as
confirmed by the High Court in the impugned order is set aside.
[Paras 45, 46, 50]

Case Law Cited
Vijay Madanlal Chaudhary and Ors. v. Union of India and Ors.
[2022] 6 SCR 382 : (2023) 12 SCC 1 – relied on.
Attorney General for India v. Amratlal Prajivandas [1994] Supp.
1 SCR 1 : (1994) 5 SCC 54; Raman Tech. & Process Engg.
Co. v. Solanki Traders [2007] 12 SCR 409 : (2008) 2 SCC 302 –
referred to.
Directorate of Enforcement of Delhi v. Axis Bank & Ors., 2019
SCC Online Del 7854 – referred to.

List of Acts
Prevention of Money-Laundering Act, 2002; Prevention of
Corruption Act, 1988; Penal Code, 1860; Prevention of Money-
laundering (Restoration of Confiscated Property) Rules, 2016;
Smugglers and Foreign Exchange Manipulators (Forfeiture of
Property) Act, 1976.
[2026] 2 S.C.R. 409

M/s. Nav Nirman Builders & Developers Pvt. Ltd. Through its Managing Director, Naveen Singh v.
The Union of India Through Deputy Director, Directorate of Enforcement, Govt of India Ranchi, Jharkhand

List of Keywords
Proceeds of crime; Section 8(3) of Prevention of Money-Laundering
Act, 2002; Section 8(7) Prevention of Money-Laundering Act,
2002; Section 8(8) of Prevention of Money-Laundering Act,
2002; Doctrine of Merger; Finality of Attachment; Third-Party
Claimant; Confirmation order; Confiscation of properties; Money-
laundering; Restoration of properties; Section 35 of Prevention of
Money-Laundering Act, 2002; Section 26 of Prevention of Money-
Laundering Act, 2002; Procedure and Powers of Appellate Tribunal;
Entitlement to possession; ‘Materials before it’ occurring in s.8(7)
of Preventive of Money-Laundering Act, 2002.

Case Arising From
CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No.
729 of 2026
From the Judgment and Order dated 27.02.2023 of the High Court
of Jharkhand at Ranchi in CRMP No. 3608 of 2022

Appearances for Parties
Advs. for the Appellant(s):
Ajay Vikram Singh, Anshuman Sinha, Vijay Kumar Pandey, Vinay
Prakash, Ms. Pragya Sharma, Udayan Sinha, Prakhar Prakash,
Hemant Mour.
Advs. for the Respondent(s):
Zoheb Hussain, Annam Venkatesh, Arkaj Kumar, Ms. Sairica S
Raju, Arvind Kumar Sharma.

Judgment / Order of the Supreme Court

Judgment

M.M. Sundresh, J.
1. Leave granted.
2. An interesting question of law has arisen in this appeal, on the
interpretation of Section 8 of the Prevention of Money-Laundering
Act, 2002 (hereinafter referred to as the “PMLA”).
3. We have heard the learned counsel for the appellant and the learned
counsel for the respondent - Union of India. We have also perused
the written submissions and the documents filed by both sides, in
respect of their contentions.
410 [2026] 2 S.C.R.

Supreme Court Reports

BRIEF FACTS
4. We are only recording brief facts, as the issues relating thereto are
not required to be examined for deciding the present appeal.
5. A partnership firm, by the name M/s. Nav Nirman Builders (hereinafter
referred to as the “firm”) was constituted on 01.04.1993 with
Dharamveer Bhadoria (since deceased) as its Managing Partner.
After more than a decade from its constitution, the appellant company
was incorporated with the earlier partners of the firm, including
Dharamveer Bhadoria who was made its Managing Director. The
firm secured a work order from the Executive Engineer (RCD),
Chaibasa, on 23.02.2007. Upon completion of the work, a payment
of approximately Rs. 79,11,559/- was made to the firm.
6. Two years thereafter, a First Information Report (FIR) was registered
for the offences punishable under Sections 120B, 420, 467, 468, and
471 of the Indian Penal Code, 1860 along with Sections 13(2) read
with 13(1)(d) of the Prevention of Corruption Act, 1988 (hereinafter
referred to as the “predicate offence”), against the Executive
Engineer, the firm, and unknown others.
7. The sum and substance of the allegations in the FIR dated 22.10.2009
and the consequential charge sheet dated 03.12.2010 is that the
firm, despite being required to procure bitumen from oil companies
of the Government of India, under the terms and conditions of
the work order, did not do so, and the accused - public servants
fraudulently cleared the bills of the firm and facilitated their payment.
To cover up the said act, the firm submitted 37 invoices, claiming to
have procured bitumen from Indian Oil Corporation Limited Depot,
Tatanagar, of which 6 were forged and fabricated, and the remaining
pertained to some other work.
8. Based upon the materials revealed during the investigation of the
predicate offence, proceedings were initiated under the PMLA, on
13.03.2012, against the firm and Dharamveer Bhadoria. It is pertinent
to note that the appellant was not arrayed as an accused in these
proceedings. Perhaps, taking a wind of the proceedings initiated
under the PMLA, the appellant company underwent a reconstitution
on 08.06.2015.
9. A Provisional Attachment Order (PAO) was passed by the respondent,
under Section 5(1) of the PMLA, on 17.12.2017, attaching two pieces
[2026] 2 S.C.R. 411

M/s. Nav Nirman Builders & Developers Pvt. Ltd. Through its Managing Director, Naveen Singh v.
The Union of India Through Deputy Director, Directorate of Enforcement, Govt of India Ranchi, Jharkhand

of land purchased by the appellant in the years 2012 and 2014, in lieu
of the amount allegedly received fraudulently by the firm. Thereafter,
the respondent filed Original Complaint No. 760/2017 before the
Adjudicating Authority, seeking confirmation of the PAO. Accordingly,
proceedings were initiated under Section 8(1) of the PMLA.
10. An impleadment application was filed by the appellant in the aforesaid
proceedings, since properties purchased by it were provisionally
attached. The said application was allowed, arraying the appellant as
Defendant No. 8. After hearing all the parties, including the appellant,
the Adjudicating Authority passed a confirmation order under Section
8(3) of the PMLA. Aggrieved, an appeal was filed by the appellant
under Section 26 of the PMLA before the Appellate Tribunal, in which
an order of status quo dated 12.07.2018 was passed.
11. In the meantime, a Prosecution Complaint was filed by the respondent
under Section 45 of the PMLA, on 31.03.2018, against Dharamveer
Bhadoria and the firm. The sum and substance of the said complaint
is that the accused persons have utilised the proceeds of crime in
the purchase of immovable properties in the name of the appellant.
It is precisely on this ground that the Adjudicating Authority had
confirmed the PAO.
12. Charges were framed by the Special Court on 17.11.2018, against
Dharamveer Bhadoria and the firm. On account of his death, on
02.05.2021, the proceedings against him, in both the predicate
offence and the one under PMLA, were dropped. In view of the
above, the respondent filed an application invoking Section 8(7)
of the PMLA. Nearly two months thereafter, the appellant filed an
application invoking Section 8(8) of the PMLA, inter alia, contending
that the properties attached are its own.
13. The Special Court considered both the applications together,
notwithstanding the pendency of the appeal filed under Section
26 of the PMLA, and allowed the application filed under Section
8(7) of the PMLA, on merits. Consequently, the application filed
by the appellant under Section 8(8) of the PMLA was dismissed.
Resultantly, the confiscation of the attached properties, as sought
by the respondent, was ordered. While doing so, the Special Court
was also pleased to hold that the proceedings initiated against the
accused firm under the PMLA are liable to be dropped. The challenge
made by the appellant before the High Court under Section 482 of the
412 [2026] 2 S.C.R.

Supreme Court Reports

Code of Criminal Procedure, 1973 to the order of confiscation under
Section 8(7) of the PMLA also met with the same fate. Aggrieved,
the present appeal has been filed.
14. At this juncture, we may note that the appeal filed by the appellant
under Section 26 of the PMLA has been dismissed as infructuous,
on 23.08.2023, during the pendency of the present appeal.

SUBMISSIONS ON BEHALF OF THE APPELLANT
15. Learned counsel appearing for the appellant submitted that the
attached properties belong to the appellant company which is an
independent entity and has not been arraigned as an accused. Neither
the Special Court nor the High Court have gone into the merits of
the application filed by the appellant under Section 8(8) of the PMLA.
The fact that the appeal against the confirmation order passed by the
Adjudicating Authority under Section 8(3) of the PMLA was pending
before the Appellate Tribunal for a long time due to want of coram,
was brought to the notice of the Special Court. Yet, the Special Court
decided the application under Section 8(7) of the PMLA on merits.
The appellant cannot be made to suffer for the same. Even as per
the case of the respondent, the properties attached are not the
proceeds of crime, and are only alternate property in value thereof.
Despite the sources and the bank trail for the purchase of the said
properties having been clearly furnished, the Special Court has not
engaged with it in substance. The principle of ‘lifting the corporate
veil’ cannot be used unilaterally against the appellant’s properties.
Accordingly, the learned counsel submitted that the impugned order
passed by the High Court requires interference.

SUBMISSIONS ON BEHALF OF THE RESPONDENT
16. The facts as noted by the Special Court and the High Court would
reveal that the proceeds of crime to the tune of Rs. 79,11,559/-,
were first placed in the banking system by the firm and, thereafter,
layered and laundered by investing in immovable properties on
behalf of the appellant which shared the same name and address
as that of the firm. Dharamveer Bhadoria suppressed material facts,
including the existence of the appellant company and his role in the
same. It was discovered during the course of investigation that the
entire share capital of the appellant was owned and controlled by the
[2026] 2 S.C.R. 413

M/s. Nav Nirman Builders & Developers Pvt. Ltd. Through its Managing Director, Naveen Singh v.
The Union of India Through Deputy Director, Directorate of Enforcement, Govt of India Ranchi, Jharkhand

partners of the firm, who were either the Managing Director, Director,
or Shareholder in the appellant company. The reconstitution of the
appellant has been done after the initiation of proceedings under
the PMLA and, thus, cannot come to its rescue. The facts make it
clear that the appellant is a mere frontal and sham entity created
to divert the money obtained by fraudulent means. The subject
properties, having been purchased through the proceeds of crime,
were attached and, thereafter, confiscated, being the ‘value thereof’
of the proceeds of crime. Section 2(1)(u) of the PMLA is expansive
enough to deal with such a situation, as has been discussed in
Vijay Madanlal Chaudhary and Ors. v. Union of India and Ors.,
(2023) 12 SCC 1.
17. The pendency of the appeal preferred by the appellant before the
Appellate Tribunal under Section 26 of the PMLA would not come in
the way of deciding the application under Section 8(7) of the PMLA.
Reliance is placed on the decision of the Delhi High Court in Deputy
Director, Directorate of Enforcement of Delhi v. Axis Bank & Ors.
2019 SCC Online Del 7854 in this regard. In any case, the aforesaid
appeal has been dismissed, though subsequently. It is further
submitted that the appellant has failed to discharge the burden of
proof under Section 24 of the PMLA, as it failed to show the legitimate
source for purchasing the attached properties. It is well-settled that
the Courts are empowered to pierce the corporate veil and find out
the truth if criminal offences are sought to be committed under the
garb of corporate personality. Thus, the impugned order passed by
the High Court confirming the order passed by the Special Court
under Section 8(7) of the PMLA does not warrant any interference.

LEGAL DISCUSSION
18. We now proceed to discuss the relevant statutory provisions.

Section 2(1)(u) of the PMLA
“2. Definitions.—(1) In this Act, unless the context
otherwise requires,—

xxx xxx xxx
(u) “proceeds of crime” means any property derived
or obtained, directly or indirectly, by any person as
414 [2026] 2 S.C.R.

Supreme Court Reports

a result of criminal activity relating to a scheduled
offence or the value of any such property or where
such property is taken or held outside the country,
then the property equivalent in value held within the
country or abroad;
Explanation.—For the removal of doubts, it is hereby
clarified that “proceeds of crime” include property not only
derived or obtained from the scheduled offence but also
any property which may directly or indirectly be derived
or obtained as a result of any criminal activity relatable to
the scheduled offence;”
(emphasis supplied)

19. The definition of “proceeds of crime” under Section 2(1)(u) of the
PMLA is wide enough to include a property which is equivalent in
value to the property that is directly or indirectly obtained from a
criminal activity relating to the scheduled offence. Thus, such a
property can also be attached if the proceeds of crime, as such, are
not otherwise available. Section 2(1)(u) of the PMLA, despite being
a definition clause, indicates the very objective of the enactment to
secure proceeds of crime in any form. The scope and applicability
of this provision have been succinctly dealt with by this Court, in the
case of Vijay Madanlal Choudhary (supra), in the following manner:
“105. The other relevant definition is “proceeds of crime” in
Section 2(1)(u) of the 2002 Act. This definition is common to
all actions under the Act, namely, attachment, adjudication
and confiscation being civil in nature as well as prosecution
or criminal action. The original provision prior to amendment
vide the Finance Act, 2015 and Finance (No. 2) Act, 2019,
took within its sweep any property mentioned in Section
2(1)(v) PMLA derived or obtained, directly or indirectly, by
any person “as a result of” criminal activity “relating to” a
scheduled offence mentioned in Section 2(1)(y) read with
Schedule to the Act or the value of any such property. Vide
the Finance Act, 2015, it further included such property
(being proceeds of crime) which is taken or held outside the
country, then the property equivalent in value held within the
country and by further amendment vide Act 13 of 2018, it
[2026] 2 S.C.R. 415

M/s. Nav Nirman Builders & Developers Pvt. Ltd. Through its Managing Director, Naveen Singh v.
The Union of India Through Deputy Director, Directorate of Enforcement, Govt of India Ranchi, Jharkhand

also added property which is abroad. By further amendment
vide Finance (No. 2) Act, 2019, Explanation has been
added which is obviously a clarificatory amendment. That is
evident from the plain language of the inserted Explanation
itself. The fact that it also includes any property which
may, directly or indirectly, be derived as a result of
any criminal activity relatable to scheduled offence
does not transcend beyond the original provision.
In that, the word “relating to” (associated with/has
to do with) used in the main provision is a present
participle of word “relate” and the word “relatable” is
only an adjective. The thrust of the original provision
itself is to indicate that any property is derived or
obtained, directly or indirectly, as a result of criminal
activity concerning the scheduled offence, the same
be regarded as proceeds of crime. In other words,
property in whatever form mentioned in Section 2(1)
(v), is or can be linked to criminal activity relating to
or relatable to scheduled offence, must be regarded as
proceeds of crime for the purpose of the 2002 Act. It
must follow that the Explanation inserted in 2019 is merely
clarificatory and restatement of the position emerging from
the principal provision [i.e. Section 2(1)(u).
106. The “proceeds of crime” being the core of
the ingredients constituting the offence of money
laundering, that expression needs to be construed
strictly. In that, all properties recovered or attached
by the investigating agency in connection with the
criminal activity relating to a scheduled offence under
the general law cannot be regarded as proceeds of
crime. There may be cases where the property involved
in the commission of scheduled offence attached by
the investigating agency dealing with that offence,
cannot be wholly or partly regarded as proceeds of
crime within the meaning of Section 2(1)(u) of the 2002
Act — so long as the whole or some portion of the
property has been derived or obtained by any person
“as a result of” criminal activity relating to the stated
scheduled offence. To be proceeds of crime, therefore,
416 [2026] 2 S.C.R.

Supreme Court Reports

the property must be derived or obtained, directly or
indirectly, “as a result of” criminal activity relating to
a scheduled offence. To put it differently, the vehicle used
in commission of scheduled offence may be attached as
property in the case (crime) concerned, it may still not
be proceeds of crime within the meaning of Section 2(1)
(u) of the 2002 Act. Similarly, possession of unaccounted
property acquired by legal means may be actionable for
tax violation and yet, will not be regarded as proceeds
of crime unless the tax legislation concerned prescribes
such violation as an offence and such offence is included
in the Schedule to the 2002 Act. For being regarded as
proceeds of crime, the property associated with the
scheduled offence must have been derived or obtained
by a person “as a result of” criminal activity relating to
the scheduled offence concerned. This distinction must
be borne in mind while reckoning any property referred
to in the scheduled offence as proceeds of crime for the
purpose of the 2002 Act. Dealing with proceeds of crime
by way of any process or activity constitutes offence of
money laundering under Section 3 PMLA.
107. Be it noted that the definition clause includes
any property derived or obtained “indirectly” as well.
This would include property derived or obtained from
the sale proceeds or in a given case in lieu of or in
exchange of the “property” which had been directly
derived or obtained as a result of criminal activity
relating to a scheduled offence. In the context of the
Explanation added in 2019 to the definition of the
expression “proceeds of crime”, it would inevitably
include other property which may not have been
derived or obtained as a result of any criminal activity
relatable to the scheduled offence. As noticed from the
definition, it essentially refers to “any property” including
abroad derived or obtained directly or indirectly. The
Explanation added in 2019 in no way travels beyond that
intent of tracking and reaching up to the property derived or
obtained directly or indirectly as a result of criminal activity
relating to a scheduled offence. Therefore, the Explanation
[2026] 2 S.C.R. 417

M/s. Nav Nirman Builders & Developers Pvt. Ltd. Through its Managing Director, Naveen Singh v.
The Union of India Through Deputy Director, Directorate of Enforcement, Govt of India Ranchi, Jharkhand

is in the nature of clarification and not to increase the width
of the main definition of “proceeds of crime”. The definition
of “property” also contains Explanation which is for the
removal of doubts and to clarify that the term property
includes property of any kind used in the commission of
an offence under the 2002 Act or any of the scheduled
offences.
108. In the earlier part of this judgment, we have
already noted that every crime property need not be
termed as proceeds of crime but the converse may be
true. Additionally, some other property if purchased
or derived from the proceeds of crime even such
subsequently acquired property must be regarded
as tainted property and actionable under the Act. For,
it would become property for the purpose of taking
action under the 2002 Act which is being used in the
commission of offence of money laundering. Such
purposive interpretation would be necessary to uphold
the purposes and objects for enactment of the 2002 Act.

xxx xxx xxx
172. It was also urged before us that the attachment of
property must be equivalent in value of the proceeds of
crime only if the proceeds of crime are situated outside
India. This argument, in our opinion, is tenuous. For, the
definition of “proceeds of crime” is wide enough to not
only refer to the property derived or obtained as a result
of criminal activity relating to a scheduled offence, but
also of the value of any such property. If the property
is taken or held outside the country, even in such a
case, the property equivalent in value held within
the country or abroad can be proceeded with. The
definition of “property” as in Section 2(1)(v) is equally
wide enough to encompass the value of the property
of proceeds of crime. Such interpretation would further
the legislative intent in recovery of the proceeds of
crime and vesting it in the Central Government for
effective prevention of money laundering.
418 [2026] 2 S.C.R.

Supreme Court Reports

173. We find force in the stand taken by the Union of
India that the objectives of enacting the 2002 Act was the
attachment and confiscation of proceeds of crime which
is the quintessence so as to combat the evil of money
laundering. The second proviso, therefore, addresses the
broad objectives of the 2002 Act to reach the proceeds of
crime in whosoever’s name they are kept or by whosoever
they are held. To buttress this argument, reliance has
been placed on the dictum in Attorney General for India v.
Amratlal Prajivandas, (1994) 5 SCC 54 : 1994 SCC (Cri)
1325] and Raman Tech. & Process Engg. Co. v. Solanki
Traders (2008) 2 SCC 302 : (2008) 1 SCC (Civ) 539].”
(emphasis supplied)

20. Chapter – III of the PMLA deals with attachment, adjudication and
confiscation of property, with one following the other. We wish to
extract relevant provisions of the said Chapter, for the sake of
convenience.

Section 8 of the PMLA
“8. Adjudication.— (1) On receipt of a complaint under
sub-section (5) of Section 5, or applications made under
sub-section (4) of Section 17 or under sub-section (10)
of Section 18, if the Adjudicating Authority has reason to
believe that any person has committed an offence under
Section 3 or is in possession of proceeds of crime, it may
serve a notice of not less than thirty days on such person
calling upon him to indicate the sources of his income,
earning or assets, out of which or by means of which he
has acquired the property attached under sub-section
(1) of Section 5, or, seized or frozen under Section 17
or Section 18, the evidence on which he relies and other
relevant information and particulars, and to show cause
why all or any of such properties should not be declared
to be the properties involved in money-laundering and
confiscated by the Central Government:
Provided that where a notice under this sub-section
specifies any property as being held by a person on behalf
[2026] 2 S.C.R. 419

M/s. Nav Nirman Builders & Developers Pvt. Ltd. Through its Managing Director, Naveen Singh v.
The Union of India Through Deputy Director, Directorate of Enforcement, Govt of India Ranchi, Jharkhand

of any other person, a copy of such notice shall also be
served upon such other person:
Provided further that where such property is held jointly
by more than one person, such notice shall be served to
all persons holding such property.
(2) The Adjudicating Authority shall, after—
(a) considering the reply, if any, to the notice issued
under sub-section (1);
(b) hearing the aggrieved person and the Director
or any other officer authorised by him in this
behalf; and
(c) taking into account all relevant materials placed
on record before him,
by an order, record a finding whether all or any of the
properties referred to in the notice issued under sub-section
(1) are involved in money-laundering:
Provided that if the property is claimed by a person,
other than a person to whom the notice had been
issued, such person shall also be given an opportunity
of being heard to prove that the property is not involved
in money-laundering.
(3) Where the Adjudicating Authority decides under
sub-section (2) that any property is involved in money-
laundering, he shall, by an order in writing, confirm the
attachment of the property made under sub-section (1)
of Section 5 or retention of property or record seized
or frozen under Section 17 or Section 18 and record a
finding to that effect, whereupon such attachment or
retention or freezing of the seized or frozen property
or record shall—
(a) continue during [investigation for a period
not exceeding three hundred and sixty-five
days or the pendency of the proceedings
relating to any offence under this Act before
a court or under the corresponding law of
any other country, before the competent
420 [2026] 2 S.C.R.

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court of criminal jurisdiction outside India,
as the case may be; and
(b) become final after an order of confiscation
is passed under sub-section (5) or sub-
section (7) of Section 8 or Section 58-B
or sub-section (2-A) of Section 60 by the
Special Court.
Explanation.—For the purposes of computing the
period of three hundred and sixty-five days under
clause (a), the period during which the investigation is
stayed by any court under any law for the time being
in force shall be excluded.
(4) Where the provisional order of attachment made under
sub-section (1) of Section 5 has been confirmed under
sub-section (3), the Director or any other officer authorised
by him in this behalf shall forthwith take the possession
of the property attached under Section 5 or frozen under
sub-section (1-A) of Section 17, in such manner as may
be prescribed:
Provided that if it is not practicable to take possession of
a property frozen under sub-section (1-A) of Section 17,
the order of confiscation shall have the same effect as if
the property had been taken possession of.
(5) Where on conclusion of a trial of an offence under
this Act, the Special Court finds that the offence of
money-laundering has been committed, it shall order
that such property involved in the money-laundering or
which has been used for commission of the offence of
money-laundering shall stand confiscated to the Central
Government.
(6) Where on conclusion of a trial under this Act, the
Special Court finds that the offence of money-laundering
has not taken place or the property is not involved in
money-laundering, it shall order release of such property
to the person entitled to receive it.
(7) Where the trial under this Act cannot be conducted
by reason of the death of the accused or the accused
[2026] 2 S.C.R. 421

M/s. Nav Nirman Builders & Developers Pvt. Ltd. Through its Managing Director, Naveen Singh v.
The Union of India Through Deputy Director, Directorate of Enforcement, Govt of India Ranchi, Jharkhand

being declared a proclaimed offender or for any
other reason or having commenced but could not be
concluded, the Special Court shall, on an application
moved by the Director or a person claiming to be
entitled to possession of a property in respect of
which an order has been passed under sub-section
(3) of Section 8, pass appropriate orders regarding
confiscation or release of the property, as the case
may be, involved in the offences of money-laundering
after having regard to the material before it.
(8) Where a property stands confiscated to the Central
Government under sub-section (5), the Special Court,
in such manner as may be prescribed, may also direct
the Central Government to restore such confiscated
property or part thereof of a claimant with a legitimate
interest in the property, who may have suffered a
quantifiable loss as a result of the offence of money
laundering:
Provided that the Special Court shall not consider such
claim unless it is satisfied that the claimant has acted in
good faith and has suffered the loss despite having taken
all reasonable precautions and is not involved in the offence
of money laundering
Provided further that the Special Court may, if it thinks
fit, consider the claim of the claimant for the purposes
of restoration of such properties during the trial of the
case in such manner as may be prescribed.”
(emphasis supplied)

Section 9 of the PMLA
“9. Vesting of property in Central Government.— Where
an order of confiscation has been made under sub-
section (5) or sub-section (7) of Section 8 or Section
58-B or sub-section (2-A) of Section 60 in respect
of any property of a person, all the rights and title
in such property shall vest absolutely in the Central
Government free from all encumbrances:
422 [2026] 2 S.C.R.

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Provided that where the Special Court or the Adjudicating
Authority, as the case may be, after giving an opportunity of
being heard to any other person interested in the property
attached under this Chapter, or seized or frozen under
Chapter V, is of the opinion that any encumbrance on the
property or lease-hold interest has been created with a
view to defeat the provisions of this Chapter, it may, by
order, declare such encumbrances or lease-hold interest
to be void and thereupon the aforesaid property shall vest
in the Central Government free from such encumbrances
or lease-hold interest:
Provided further that nothing in this section shall operate
to discharge any person from any liability in respect of
such encumbrances which may be enforced against such
person by a suit for damages.”
(emphasis supplied)

Confirmation of a Provisional Attachment Order
21. Section 8 of the PMLA gets attracted upon filing of a complaint under
Section 5(5) of the PMLA after a PAO is passed by the Director
or any other officer, or when applications are made under Section
17(4) or Section 18(10) of the PMLA pursuant to the retention of
property or record seized or frozen under Section 17 or Section
18 of the PMLA. Under Section 8(1) of the PMLA, the Adjudicating
Authority, after satisfying itself that there exist reasons to believe that
a person has committed an offence under Section 3 of the PMLA
or is in possession of the proceeds of crime, is expected to serve
notice on such a person calling upon him to indicate the sources of
his income, earning or assets, out of which or by means of which he
has acquired the property attached under Section 5(1) of the PMLA
or, seized or frozen under Section 17 or Section 18 of the PMLA.
22. The expression “any person” used in Section 8(1) of the PMLA, gives
a wide power of examination to the Adjudicating Authority for the
purpose of taking a decision qua confirming a PAO under Section
5(1) of the PMLA or the retention of property or record seized or
frozen under Section 17 or Section 18 of the PMLA.
[2026] 2 S.C.R. 423

M/s. Nav Nirman Builders & Developers Pvt. Ltd. Through its Managing Director, Naveen Singh v.
The Union of India Through Deputy Director, Directorate of Enforcement, Govt of India Ranchi, Jharkhand

23. The proviso to Section 8(2) of the PMLA facilitates ‘any other
person’ claiming the property, in respect of which a notice has been
issued under Section 8(1) of the PMLA, to be heard, in order to
prove that the said property is not involved in money-laundering.
Thus, while exercising the power of confirmation under Section 8(3)
of the PMLA, the Adjudicating Authority is expected to conduct a
proper inquiry into the question of whether the property is involved
in money-laundering.
24. Upon confirmation of the PAO under Section 8(3) of the PMLA, the
designated officer of the prosecuting agency shall forthwith take
possession under Section 8(4) of the PMLA. The decision of the
Adjudicating Authority, in confirming the attachment, is subject to a
challenge, if any, before the higher forums under the PMLA.
25. Section 8(3)(b) of the PMLA gives an element of finality to a
confirmation order once an order of confiscation is passed by the
Special Court under Section 8(5) or Section 8(7) or Section 58B or
Section 60(2A) of the PMLA. Therefore, the confirmation of attachment
under Section 8(3) of the PMLA would be subject to confiscation
under the aforementioned provisions. In other words, though the
attachment continues after its confirmation, it is only meant to be
so till an order of confiscation is passed.

Confiscation/Release of properties upon conclusion of the trial
26. Once the Special Court, after conclusion of the trial, holds that the
offence of money-laundering has been committed, Section 8(5) of
the PMLA mandates the Special Court to confiscate the property to
the Central Government. Alternatively, if the Special Court concludes
that the offence of money-laundering has not been committed, then
Section 8(6) of the PMLA gets attracted, leading to the release of
the property to the person entitled to receive it.

Confiscation/Release of properties due to non-conduct of the trial
27. Section 8(7) of the PMLA allows confiscation of properties in the
event of non-conduct of the trial, and is a complete provision by
itself. A sine qua non for the Special Court to decide an application
under Section 8(7) of the PMLA is an order of confirmation of the
PAO by the Adjudicating Authority under Section 8(3) of the PMLA.
424 [2026] 2 S.C.R.

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28. Section 8(7) of the PMLA can only be pressed into service in
case of a contingency, on an application to be moved either by
the Director of the prosecuting agency or a person claiming to be
entitled to possession of the property. The said contingency would
include situations such as when the trial cannot be conducted by
reason of the death of the accused, or if the accused is declared
as a proclaimed offender, or for any other reason, or the trial having
commenced but could not be concluded. The expression “any other
reason or having commenced but could not be concluded” must
be read in conjunction with either the death of the accused, or the
declaration of the accused as a proclaimed offender, in view of the
principle of ejusdem generis.
29. Circumstances aforestated must be evident and in existence and,
hence, the expression “material before it,” occurring in Section 8(7)
of the PMLA, must be understood in the context of demonstrating
the same, as the scope of inquiry under Section 8(7) of the PMLA
is rather limited and the Special Court does not have the power to
review a decision under Section 8(3) of the PMLA.

Expression “material before it” vis-à-vis Section 8(7) of the PMLA
30. The expression “material before it” can also be understood from
the standpoint of a person who was not a party to the proceedings
under Section 8(3) of the PMLA before the Adjudicating Authority.
Law does not necessarily bind a party qua an order passed by a
statutory authority in his absence. Therefore, such a party can certainly
invoke Section 8(7) of the PMLA, provided that the circumstances
mentioned thereunder are available, coupled with entitlement to
possession of the property in respect of which an order has been
passed under Section 8(3) of the PMLA, in which case, the Special
Court is expected to consider such material placed before it.
31. A limited caveat is, however, necessary in the case of a person who
has suffered an adverse order before the Adjudicating Authority under
Section 8(3) of the PMLA. Such a person cannot, as a matter of right,
invoke Section 8(7) of the PMLA. However, by way of exception, such
relief may be sought only on the basis of any new material placed for
the first time before the Special Court. Such an interpretation would
give meaningful effect to the expression “material before it” occurring
in Section 8(7) of the PMLA. Any other interpretation would vest the
Special Court with a power of review over an order passed under
[2026] 2 S.C.R. 425

M/s. Nav Nirman Builders & Developers Pvt. Ltd. Through its Managing Director, Naveen Singh v.
The Union of India Through Deputy Director, Directorate of Enforcement, Govt of India Ranchi, Jharkhand

Section 8(3) of the PMLA which is clearly not contemplated under the
scheme of the PMLA. The restriction, therefore, is that the material
relied upon by such a party in proceedings under Section 8(7) of
the PMLA must not have been considered by any forum exercising
jurisdiction under Section 8(3) of the PMLA.
32. As iterated while discussing Section 8(3)(b) of the PMLA, an order
of confiscation by the Special Court under Section 8(7) of the PMLA
gives finality to a confirmation order.

Procedure and Powers of the Appellate Tribunal
33. As against the order passed by the Adjudicating Authority under
Section 8(3) of the PMLA, an appeal lies to the Appellate Tribunal
under Section 26 of the PMLA. Section 25 of the PMLA states that the
Appellate Tribunal under the PMLA shall be the one constituted under
Section 12 of the Smugglers and Foreign Exchange Manipulators
(Forfeiture of Property) Act, 1976 (hereinafter referred to as the
“SAFEMA”).

Section 25 of the PMLA
“25. Appellate Tribunal.—The Appellate Tribunal
constituted under sub-section (1) of Section 12 of
the Smugglers and Foreign Exchange Manipulators
(Forfeiture of Property) Act, 1976 (13 of 1976) shall
be the Appellate Tribunal for hearing appeals against
the orders of the Adjudicating Authority and the other
authorities under this Act.”
(emphasis supplied)

Section 12 of the SAFEMA
“12. Constitution of Appellate Tribunal.—(1) The
Central Government may, by notification in the Official
Gazette, constitute an Appellate Tribunal consisting
of a Chairman and such number of other members
(being officers of the Central Government not below
the rank of a Joint Secretary to the Government) as the
Central Government thinks fit, to be appointed by the
Government for hearing appeals against the orders made.
426 [2026] 2 S.C.R.

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(a) under Section 7, sub-section (1) of Section 9
or Section 10;
(b) under Section 68-F, Section 68-I, sub-section (1)
of Section 68-K or Section 68-L of the Narcotic
Drugs and Psychotropic Substances Act, 1985
(61 of 1985);
(c) by the Adjudicating Authority or any other
authority under the Prevention of Money-
laundering Act, 2002 (15 of 2003);
(d) by the Adjudicating Authorities, Competent
Authorities and the Qualifications, Special
Director (Appeals) under the Foreign Exchange
Management Act, 1999 (42 of 1999).
(2) The Chairman of the Appellate Tribunal shall be a
person who is or has been a Judge of the Supreme
Court or of a High Court.”

xxx xxx xxx
(emphasis supplied)

Section 26 of the PMLA
“26. Appeal to Appellate Tribunal.—(1) Save as
otherwise provided in sub-section (3), the Director
or any person aggrieved by an order made by the
Adjudicating Authority under this Act, may prefer an
appeal to the Appellate Tribunal.
(2) Any reporting entity aggrieved by any order of the
Director made under sub-section (2) of Section 13, may
prefer an appeal to the Appellate Tribunal.
(3) Every appeal preferred under sub-section (1) or sub-
section (2) shall be filed within a period of forty-five
days from the date on which a copy of the order made
by the Adjudicating Authority or Director is received
and it shall be in such form and be accompanied by such
fee as may be prescribed:
[2026] 2 S.C.R. 427

M/s. Nav Nirman Builders & Developers Pvt. Ltd. Through its Managing Director, Naveen Singh v.
The Union of India Through Deputy Director, Directorate of Enforcement, Govt of India Ranchi, Jharkhand

Provided that the Appellate Tribunal may, after giving an
opportunity of being heard, entertain an appeal after the
expiry of the said period of forty-five days if it is satisfied
that there was sufficient cause for not filing it within that
period.
(4) On receipt of an appeal under sub-section (1), or sub-
section (2), the Appellate Tribunal may, after giving the
parties to the appeal an opportunity of being heard, pass
such orders thereon as it thinks fit, confirming, modifying
or setting aside the order appealed against.
(5) The Appellate Tribunal shall send a copy of every
order made by it to the parties to the appeal and to the
Adjudicating Authority or the Director concerned, as the
case may be.
(6) The appeal filed before the Appellate Tribunal under
sub-section (1) or sub-section (2) shall be dealt with
by it as expeditiously as possible and endeavour shall
be made by it to dispose of the appeal finally within
six months from the date of filing of the appeal.”
(emphasis supplied)

Section 35 of the PMLA
“35. Procedure and powers of Appellate Tribunal.—
(1) The Appellate Tribunal shall not be bound by the
procedure laid down by the Code of Civil Procedure,
1908 (5 of 1908), but shall be guided by the principles
of natural justice and, subject to the other provisions
of this Act, the Appellate Tribunal shall have powers
to regulate its own procedure.
(2) The Appellate Tribunal shall have, for the purposes
of discharging its functions under this Act, the same
powers as are vested in a civil court under the Code
of Civil Procedure, 1908 (5 of 1908) while trying a suit,
in respect of the following matters, namely:—
(a) summoning and enforcing the attendance of any
person and examining him on oath;
428 [2026] 2 S.C.R.

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(b) requiring the discovery and production of
documents;
(c) receiving evidence on affidavits;
(d) subject to the provisions of sections 123 and
124 of the Indian Evidence Act, 1872 (1 of 1872,
requisitioning any public record or document or
copy of such record or document from any office;
(e) issuing commissions for the examination of
witnesses or documents;
(f) reviewing its decisions;
(g) dismissing a representation for default or
deciding it ex parte;
(h) setting aside any order of dismissal of any
representation for default or any order passed
by it ex parte; and
(i) any other matter, which may be, prescribed by
the Central Government.
(3) An order made by the Appellate Tribunal under this Act
shall be executable by the Appellate Tribunal as a decree
of civil court and, for this purpose, the Appellate Tribunal
shall have all the powers of a civil court.
(4) Notwithstanding anything contained in sub-section
(3), the Appellate Tribunal may transmit any order made
by it to a civil court having local jurisdiction and such civil
court shall execute the order as if it were a decree made
by that court.
(5) All proceedings before the Appellate Tribunal
shall be deemed to be judicial proceedings within the
meaning of sections 193 and 228 of the Indian Penal
Code (45 of 1860) and the Appellate Tribunal shall be
deemed to be a civil court for the purposes of sections
345 and 346 of the Code of Criminal Procedure, 1973
(2 of 1974).”
(emphasis supplied)
[2026] 2 S.C.R. 429

M/s. Nav Nirman Builders & Developers Pvt. Ltd. Through its Managing Director, Naveen Singh v.
The Union of India Through Deputy Director, Directorate of Enforcement, Govt of India Ranchi, Jharkhand

34. Section 12(2) of the SAFEMA, 1976 provides that the Appellate
Tribunal shall be headed by either a sitting or retired Judge of
the High Court or the Supreme Court which by virtue of Section
25 of the PMLA becomes the Appellate Tribunal under the PMLA.
Proceedings before it are akin to trying a suit, with the same powers
as those vested in a civil Court. These proceedings are deemed to
be judicial in nature and orders passed by the Appellate Tribunal
have the trappings of a decree of a civil Court. As per Section 35(1)
of the PMLA, the Appellate Tribunal can regulate its own procedure,
not bound by the procedural constraints laid down by the Code of
Civil Procedure, 1908. Thus, the Appellate Tribunal has additional
powers which may otherwise not be available with a civil Court.
Any person aggrieved by any decision or order of the Appellate
Tribunal may further file an appeal to the High Court under Section
42 of the PMLA.
35. The fact that a robust mechanism is provided for by fixing a higher
qualification for the constitution of the Appellate Tribunal is a clear
indicator that a decision under Section 8(3) of the PMLA is not meant
to be brought under the judicial scrutiny of the Special Court. We
also take note of the time limit prescribed under Section 26(6) of the
PMLA for the Appellate Tribunal to dispose of an appeal filed before
it as expeditiously as possible, and make an endeavour to do so
within a period of six months. This provision not only indicates the
urgency for disposal, but also recognises that the right of a party to
invoke Section 8(7) of the PMLA, in a given case, cannot be kept
in suspense for a long time.
36. Thus, when an appeal or a further challenge is pending before the
Appellate Tribunal or the concerned higher forum against an order
passed under Section 8(3) of the PMLA, the Special Court is expected
to refrain from dealing with an application filed under Section 8(7) of
the PMLA, without awaiting the disposal of such appeal or further
challenge. We also say so in view of the doctrine of merger.

Doctrine of merger vis-à-vis an order under Section 8(3) of the
PMLA
37. When a challenge is made to an order passed by the Adjudicating
Authority under Section 8(3) of the PMLA before the Appellate Tribunal
under Section 26 of the PMLA, or the High Court under Section 42
430 [2026] 2 S.C.R.

Supreme Court Reports

of the PMLA, or the Supreme Court thereafter, the order passed by
such higher forum supersedes and replaces the earlier confirmation
order, in view of the doctrine of merger. Thus, there can be only one
order under Section 8(3) of the PMLA. Once an order under Section
8(3) of the PMLA is challenged, a deemed embargo operates on
the conclusion of the proceedings under Section 8(7) of the PMLA.
Thus, there is a deemed stay on the proceedings under Section 8(7)
of the PMLA until the confirmation order attains finality.

Restoration of properties under Section 8(8) of the PMLA
38. Section 8(8) of the PMLA deals with the consequential action that
the Special Court is expected to undertake after a property stands
confiscated to the Central Government under Section 8(5) of the
PMLA. Section 8(8) of the PMLA restricts the power of the Special
Court in considering a claim for restoration, only to a case where the
claimant has a legitimate interest in the property and has also suffered
a quantifiable loss as a result of the offence of money-laundering. This
is subject to the further restriction that such a claimant has acted in
good faith, is not involved in the offence of money-laundering and,
despite taking all reasonable precautions, has suffered the loss.
Therefore, the onus is heavily placed on the claimant, wherein he
is required to prove his bona fides.
39. The second proviso to Section 8(8) of the PMLA is an exception
to Section 8(8) of the PMLA which facilitates a claimant to make a
claim for restoration of properties during the pendency of the trial.
The circumstances under which such a power can be exercised is
on the basis of a prescription in the form of rules. Therefore, the
provision itself facilitates rules to be prescribed on the manner in
which the aforesaid claim may be considered. This proviso must
be read in consonance with Sections 73 and 74 of the PMLA
which empowers the Central Government to make the requisite
rules that are to be laid before the Parliament before it comes into
the statute. The relevant rules in this regard are the Prevention of
Money-laundering (Restoration of Confiscated Property) Rules, 2016
(hereinafter referred to as the “2016 Rules”), as amended in 2019.
40. At this juncture, we take note of the fact that the second proviso
to Section 8(8) of the PMLA, having been introduced by way of a
subsequent amendment, is meant to give adequate relief to a claimant.
[2026] 2 S.C.R. 431

M/s. Nav Nirman Builders & Developers Pvt. Ltd. Through its Managing Director, Naveen Singh v.
The Union of India Through Deputy Director, Directorate of Enforcement, Govt of India Ranchi, Jharkhand

In other words, a claimant need not wait for the conclusion of a trial
under the PMLA if he is able to satisfy the requisite parameters as
stipulated under the 2016 Rules.

Rule 2 of the 2016 Rules
“2. Definitions.—In these rules, unless the context
otherwise requires,—

xxx xxx xxx
(b) “claimant” means a person who has acted in good
faith and has suffered a quantifiable loss as a
result of the offence of Money-laundering despite
having taken all reasonable precautions, and is
not involved in the offence of money-laundering;”
(emphasis supplied)

Rule 3A of 2016 Rules
“3A. Manner of restoration of property during trial. —(1)
The Special Court, after framing of the charge under
section 4 of the Act, on the basis of an application
moved for restoration of a property attached under
sub-section (1) of section 5, or, seized or frozen under
section 17 or section 18 of the Act prior to confiscation,
if it thinks fit, may, for the purposes of the second
proviso to sub-section (8) of section 8 of the Act, cause
to be published a notice in two daily newspapers, one in
English language and one in vernacular language, having
sufficient circulation in the locality where such property is
situated calling upon the claimants, who claim to have
a legitimate interest in such property or part thereof, to
submit and establish their claims, if any, for obtaining
restoration of such property or part thereof.”
(emphasis supplied)

41. Though the PMLA does not define a claimant, Rule 2(b) of the 2016
Rules defines a ‘claimant’ as one who has acted in good faith and
has suffered a quantifiable loss, pursuant to an offence of money-
432 [2026] 2 S.C.R.

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laundering, even after taking all necessary precautions. An essential
condition is that he should not be involved in the offence of money-
laundering. Thus, a ‘claimant,’ as mentioned under the proviso, has
to be understood on the touchstone of Rule 2(b) of the 2016 Rules.
As a necessary corollary, such a person can only be a third party
who is not arraigned as an accused, and his entitlement is subject
to the conditions imposed by the definition under Rule 2(b) read with
Rule 3A of the 2016 Rules.
42. Rule 3A of the 2016 Rules deals with the manner in which restoration
of a property can be ordered for during the trial. For the exercise of
such power, it is mandatory for the charges under Section 4 of the
PMLA to have already been framed. Only then can an application
under the second proviso to Section 8(8) of the PMLA be filed. Such
an application may be for restoration of a property attached under
Section 5(1) of the PMLA, or seized or frozen under Sections 17 or
18 of the PMLA which are obviously prior to confiscation, after which
due publication will have to be made. Under this Rule, the Special
Court will have to satisfy itself that a ‘claimant’ has established
his legitimate interest in the property which would obviously be a
question of fact. Thus, the second proviso to Section 8(8) of the
PMLA has to be understood and read along with Rule 2(b) and Rule
3A of 2016 Rules.

Vesting of Confiscated properties with the Central Government
43. Once an order of confiscation has been made either under Section
8(5), or Section 8(7), or Section 58B, or Section 60(2A) of the PMLA,
the confiscated properties vest in favour of the Central Government,
as provided under Section 9 of the PMLA. Resultantly, any right or
title over the property, qua a third party, gets extinguished, since
such a vesting becomes absolute. By the operation of law, the
Central Government gets ownership of the property, free from any
encumbrances. Hence, this provision clearly delineates the final
consequence of a confiscation order.
44. To sum up, Chapter – III of the PMLA provides a comprehensive
picture of how properties involved in the offence of money-laundering
are to be dealt with. With the aforesaid discussion, we shall now
proceed to analyse the facts of the instant appeal.
[2026] 2 S.C.R. 433

M/s. Nav Nirman Builders & Developers Pvt. Ltd. Through its Managing Director, Naveen Singh v.
The Union of India Through Deputy Director, Directorate of Enforcement, Govt of India Ranchi, Jharkhand

ANALYSIS
45. Admittedly, the appellant company, having suffered an order under
Section 8(3) of the PMLA, had preferred an appeal under Section 26
of the PMLA which was pending on the file of the Appellate Tribunal
even at the time of filing of the applications under Sections 8(7)
and 8(8) of the PMLA. The fact that the said appeal was pending
before the Appellate Tribunal, for want of coram, is not in dispute.
The decision of the Adjudicating Authority under Section 8(3) of
the PMLA is subject to the outcome of any further challenge to
the same.
46. As discussed, the powers of the Appellate Tribunal are rather
wide and exhaustive. What is referred to under Section 8(7) of the
PMLA is a confirmation order which has attained finality. At the
cost of repetition, once an order under Section 8(3) of the PMLA is
challenged before a higher forum, a deemed embargo operates on
the conclusion of the proceedings under Section 8(7) of the PMLA.
Hence, the Special Court cannot go into the issues which the higher
forums have been entrusted with. When an appeal is provided for
under the statute, it gives a vested right to any aggrieved person
to exhaust the same.
47. In the present case, we are concerned with the decision-making
process adopted by the Special Court, as confirmed by the High
Court. Instead of deferring the application filed under Section 8(7)
of the PMLA, and awaiting the adjudication by the Appellate Tribunal
under Section 26 of the PMLA, the Special Court has allowed the
said application, for which exhaustive reasons have been given
independently on merits. The Special Court has, in effect, rendered
the appeal under Section 26 of the PMLA infructuous. The said action
at the instance of the Special Court is totally impermissible in law.
48. We have already discussed the scope and ambit of the proceedings
under Section 8(7) of the PMLA which is predicated upon an order
under Section 8(3) of the PMLA that has attained finality. The Special
Court is required to act in furtherance of the order passed under
Section 8(3) of the PMLA, including those which may be passed by
the higher forums, upon being challenged before them. Hence, the
aforesaid decision-making process adopted by the Special Court is
legally untenable.
434 [2026] 2 S.C.R.

Supreme Court Reports

49. Insofar as the application filed by the appellant under Section 8(8) of
the PMLA is concerned, we find that it has been correctly dismissed
by the Special Court. Having preferred an appeal under Section 26
of the PMLA against the order suffered under Section 8(3) of the
PMLA, and not having demonstrated that it suffered a quantifiable
loss as a result of the offence of money-laundering, the necessary
conditions under Section 8(8) of the PMLA have not been satisfied
by the appellant company.
50. In such view of the matter, we set aside the order passed by the
Special Court allowing the application under Section 8(7) of the
PMLA, as confirmed by the High Court in the impugned order. We
are also conscious of the fact that after filing the present appeal,
the Appellate Tribunal has dismissed the appeal under Section 26
of the PMLA, as having become infructuous.
51. Hence, the interest of justice would require that the order passed
by the Appellate Tribunal under Section 26 of the PMLA also be set
aside, as merits have not been gone into by the Appellate Tribunal
for no fault of the appellant. It would only be fair and just to restore
the said appeal for a decision on merits.

CONCLUSION
52. On the basis of the interpretation given by us in this judgment, we
conclude as follows:
• Section 8(7) and Section 8(8) of the PMLA are stand-alone
provisions.
• Section 8(7) of the PMLA gets attracted only in case of a
contingency and an application under the said provision can
be decided by the Special Court only once the confirmation
order attains finality.
• The expression “material before it” occurring in Section 8(7)
of the PMLA has a limited import to the extent of showing the
contingency and the entitlement to possession as regards the
Director or any third party. In case of a party who has suffered
an adverse order under Section 8(3) of the PMLA, relief under
Section 8(7) of the PMLA can be sought for, provided there is
new material that was not placed before or considered by the
[2026] 2 S.C.R. 435

M/s. Nav Nirman Builders & Developers Pvt. Ltd. Through its Managing Director, Naveen Singh v.
The Union of India Through Deputy Director, Directorate of Enforcement, Govt of India Ranchi, Jharkhand

Adjudicating Authority under Section 8(3) of the PMLA, or by
the higher forums, if so challenged.
• An application under the second proviso to Section 8(8) of
the PMLA can only be filed subject to satisfying the essential
conditions laid down by Rules 2(b) and 3A of the 2016 Rules.
53. For the foregoing reasons, we set aside the order dated 15.09.2022
passed by the Special Court allowing the application filed by the
respondent under Section 8(7) of the PMLA, as confirmed by
the High Court vide the impugned order dated 27.02.2023. The
application filed by the appellant under Section 8(8) of the PMLA
was not maintainable.

DIRECTIONS
54. Consequently, the following directions are issued:
(i) The Appellate Tribunal is directed to take up the appeal filed
by the appellant under Section 26 of the PMLA on its file,
notwithstanding its earlier order passed on 23.08.2023, and
decide it on its own merits, within a period of 4 weeks from the
date of receipt of a copy of this judgment.
(ii) The application filed by the respondent under Section 8(7) of
the PMLA is directed to be kept pending and be taken up after
the disposal of the challenge to the order under Section 8(3)
of the PMLA by the higher forum(s).
55. We make it clear that our factual observations, being prima facie in
nature, shall have no bearing on the further proceedings.
56. The appeal stands allowed, accordingly.
57. Pending application(s), if any, shall stand disposed of.

Result of the case: Appeal allowed.

†
Headnotes prepared by: Ankit Gyan