No Confiscation Without Finality: Supreme Court Clarifies Section 8 of PMLA in Nav Nirman Builders

Introduction

The Prevention of Money Laundering Act, 2002 (PMLA) is a stringent legislative instrument aimed at depriving offenders of the proceeds of crime, while simultaneously embedding a layered adjudicatory and appellate framework to guard against arbitrary deprivation of property. This balance between enforcement rigour and procedural fairness came under scrutiny before the Supreme Court in the case of M/s. Nav Nirman Builders & Developers Pvt. Ltd. v. The Union of India¹, while examining whether a Special Court under the PMLA can order confiscation of property when an appeal against confirmation of attachment under Section 8(3)² is pending before the Appellate Tribunal under Section 26.

The controversy raised a fundamental question of procedural finality: whether irreversible civil consequences could be imposed while the legality of attachment itself remained under appellate consideration. The Supreme Court clarified that confiscation is a consequence of final adjudication, not a provisional enforcement measure, and that the Act’s rigour must operate strictly within its statutory safeguards.

Statutory Scheme under Section 8: Attachment, Appeal and Confiscation

Analysing Section 8 of the PMLA, the Court noted that provisional attachment under Section 5, once confirmed under Section 8(3), is expressly subject to appeal under Section 26 and a further appeal under Section 42. This appellate framework, the Court emphasised, is integral to the Act’s design. Permitting confiscation during the pendency of an appeal would render the remedy under Section 26 illusory, as confiscation extinguishes ownership while attachment merely operates as a protective restraint.

The Court’s reasoning draws support from Vijay Madanlal Choudhary v. Union of India³, which emphasised the conceptual separation between attachment, possession, and confiscation. Attachment was characterised as provisional, whereas confiscation was recognised as a final consequence following due adjudication. The present judgment reinforces that final deprivation cannot precede final adjudication. The judgment also reflects the principle articulated in Whirlpool Corporation v. Registrar of Trade Marks, Mumbai & Ors.⁴, that statutory remedies must be effective and meaningful, and not reduced to post-facto formalities.

In Axis Bank v. Directorate of Enforcement⁵, the Court clarified that attachment does not extinguish ownership and that confiscation alone results in vesting of property in the State, underscoring strict adherence to statutory procedure where property rights are affected. Similarly, in B. Rama Raju v. Union of India⁶, the constitutional validity of attachment provisions was upheld on the understanding that robust appellate remedies operate as safeguards against arbitrariness. Allowing confiscation during appellate pendency would undermine this balance.

Limits on the Special Court’s Jurisdiction

The Supreme Court delineated the jurisdictional limits of the Special Court, holding that while it is empowered to conduct trial and pass consequential orders, it cannot conclusively determine property rights that remain under statutory challenge. So long as an appeal against confirmation of attachment is pending, the issue whether the property constitutes proceeds of crime remains sub judice. Any order of confiscation at this stage would pre-empt the appellate process and collapse the statutory distinction between provisional restraint and final deprivation.

Emphasising the qualitative distinction between attachment and confiscation, the Court aligned its reasoning with Article 300A⁷, reiterating that deprivation of property must strictly conform to law. The Court clarified that its interpretation does not dilute enforcement powers, as attachment continues to protect the State’s interest during appellate pendency. What is impermissible is the premature crystallisation of confiscation, which irreversibly alters proprietary rights before statutory remedies are exhausted.

Conclusion

The Supreme Court conclusively held that confiscation under Sections 8(5) or 8(6) of the PMLA cannot be ordered while an appeal against confirmation of attachment under Section 8(3) is pending under Section 26. By reaffirming statutory sequencing and appellate finality, the Court underscored that the PMLA’s rigour operates within the discipline of procedural due process, ensuring that enforcement remains robust without compromising institutional legitimacy.

Citations

1. M/s. Nav Nirman Builders & Developers Pvt. Ltd. v. The Union of India,Criminal Appeal @ SLP (Crl.) 9216 of 2023.  
   ↩︎
2. The Prevention of Money Laundering Act, 2002 ↩︎
3. Vijay Madanlal Chaudhary, 2022 SCC OnLine SC 929 ↩︎
4. Whirlpool Corporation v. Registrar of Trade Marks, Mumbai & Ors.,AIR 1999 SUPREME COURT 22 ↩︎
5. Deputy Director, Directorate of Enforcement of Delhi v. Axis Bank & Ors. 2019 SCC Online Del 7854. ↩︎
6. B. Rama Raju v. Union of India and Ors.,[2011] 108 SCL 491 (AP) ↩︎
7. Article 300A of the Constitution of India, 1950 ↩︎

Expositor(s): Adv. Jahnobi Paul