SAFEMA Clarifies the Extent of Its Powers: Only the Special Court Holds Authority to Release Property

Appellate Tribunal SAFEMA (‘Appellate Tribunal’) in the case of Ara Properties v. Deputy Director, Directorate of Enforcement[i] discussed the powers of both the Appellate Tribunal and Special Court while discussing the provisions of ss. 8 and 35 of the Prevention of Money Laundering Act, 2002 (‘PMLA’).

Facts

• The appellants filed an appeal against the provisional attachment order and its subsequent confirmation, which were set aside. They requested the release of the property attached under the provisional attachment order.

• The appellants relied on the Appellate Tribunal's decision in Pulkit Garg & Ors. v. Deputy Director, Directorate of Enforcement[ii], in which the prayer of release in similar circumstances was granted.

• The application was contested on the grounds that the appellants had filed a similar application before the Special Court to release the attached property, thus making the current application subject to res judicata.

Held

• The Appellate Tribunal dismissed the application on the grounds that the power to release the property lies with the Special Court under s. 8 of the PMLA. This is applicable if the Special Court determines that no money laundering offence has occurred and the property is not involved in money laundering.

• While discussing its decision in Pulkit Garg (supra), the Appellate Tribunal observed that s. 8 of the PMLA does not restrict it from ordering the release of property and that the application could be considered under s. 35 of the PMLA.

• However, it was observed that the Appellate Tribunal is not granted such powers under the PMLA, and s. 35 of the PMLA solely allows it to regulate its own procedure.

Our Analysis

In this case, the Appellate Tribunal reaffirmed the extent of its powers. The Appellate Tribunal may exercise powers similar to those vested in a civil court as necessary for discharging its functions and has the authority to regulate its own procedure. However, its powers do not extend to substantive reliefs, such as property release, which remain within the purview of the Special Court.

End Notes

[i] [2024] 165 taxmann.com 203 (SAFEMA - New Delhi) dated 25.07.2024.

[ii] FPA-PMLA-2342/DLI/2018 dated 16.03.2023.

Authored by Rosy Gupta, Advocate at Metalegal Advocates. The views expressed are personal and do not constitute legal opinions.