Unitech Case: PMLA Appellate Tribunal Sets Aside ₹16.13 Crore Attachment Over 2004 Payment

The Appellate Tribunal under the Prevention of Money Laundering Act (PMLA) has recently set aside the provisional attachment of a fixed deposit worth ₹16.13 crore belonging to Sahana Builders and Developers Private Limited.

It held that the ₹10 crore the company received from Unitech Ltd. in 2004 was part of an ordinary business transaction and could not be treated as "proceeds of crime" under the PMLA.

Chairman Justice Munishwar Nath Bhandari allowed the company's appeal against the Adjudicating Authority's March 27, 2025 order confirming the attachment.

Observing that the payment had been made before the alleged laundering period, the tribunal ruled against attachment,

“In view of the above, transfer of Rs. 10 Crores to the appellant company for purchase of 11 shops by M/s Unitech Ltd. cannot be said to be out of the proceeds of crime. The outcome of the aforesaid is that the appellant is not in receipt of the proceeds of crime, rather transfer of Rs.10 Crores by M/s Unitech Ltd. was much prior to the crime period. It was in the course of business.”

The proceedings arise from multiple CBI FIRs against Unitech Ltd. and its promoters. They allege that the company collected ₹14,270 crore from more than 29,800 homebuyers by promising assured returns on their investments. A forensic audit ordered by the Supreme Court found that around ₹5,063.05 crore, nearly 40% of the funds, had been diverted for non-mandated purposes.

Acting on the audit findings, the Enforcement Directorate initiated proceedings under the PMLA. During its investigation, it found that Unitech Ltd. had paid ₹10 crore to Sahana Builders in two instalments in October 2004 towards the proposed purchase of 11 shops.

The proposed transaction never materialized. The amount remained with Sahana Builders. The ED treated it as proceeds of crime and provisionally attached the company's fixed deposit worth ₹16.13 crore as property of equivalent value.

Before the tribunal, the ED argued that the proceedings had been initiated pursuant to directions issued by the Supreme Court after the forensic audit. It contended that since the ₹10 crore remained payable to Unitech Ltd. after the proposed transaction fell through, the principal amount along with interest justified attachment of the equivalent-value fixed deposit.

Sahana Builders argued that the payment arose from an ordinary commercial transaction. It pointed out that the money had been received nearly two years before the alleged laundering period began.

The company submitted that after the proposed sale did not materialise, the amount was retained as a credit balance at Unitech Ltd.'s request. It also stated that interest on the amount was reflected in its books.

The company further argued that the ED was effectively trying to recover money allegedly due to Unitech Ltd. even though the payment had been made before the alleged proceeds of crime came into existence.

Accepting these submissions, the tribunal noted that the forensic audit identified the alleged diversion of homebuyers' funds as having taken place between 2006-07 and 2014-15. The payment to Sahana Builders, however, had been made in October 2004.

The tribunal held that if the transfer had taken place during or after the alleged crime period, the position may have been different. Since the payment preceded that period and arose from a commercial transaction, Sahana Builders could not be treated as having received proceeds of crime.

Rejecting the ED's justification for attaching property of equivalent value, the tribunal observed:

“The provisional attachment of the property for equivalent value can be caused if the proceed is not found available with the accused or the person but receipt or diversion of the proceeds would be a pre-condition which is not fulfilled in the present matter.”

The tribunal observed that any claim for recovery of the ₹10 crore now lay between Unitech Ltd.'s new management and Sahana Builders. It held that the ED could not act as a recovery officer under the guise of PMLA proceedings in respect of a payment made before the commission of the alleged offence.

Allowing the appeal, the tribunal clarified that its order would not create any embargo on Unitech Ltd.'s new management pursuing recovery of the amount in accordance with law.

For Appellant: Advocates Arun Kumar Agarwal; Shubham Agarwal; Amir Hussain; Nehal Gupta; Chiranjivi Sharma

For Respondent (ED): N. K. Matta, S.P.P; Aaditya R. Sharma; Kartik Malhotra; Harshit Gupta