PMLA attachment, confiscation and restoration were examined by the Supreme Court in M/s. Nav Nirman Builders & Developers Pvt. Ltd. v. Union of India, 2026 INSC 130. The Court examined the interplay between attachment, adjudication, confiscation and restoration of property under Section 8 of the Prevention of Money-Laundering Act, 2002 (PMLA).
The judgment is significant in clarifying the stage at which proceedings under Section 8(7) may be decided, the scope of the expression “material before it”, the circumstances in which restoration may be sought during trial, and the meaning of “proceeds of crime” for the purposes of attachment.
1. Section 8(7) proceedings cannot be concluded before finality of the Section 8(3) confirmation order
The Supreme Court held that proceedings under Section 8(7) cannot be adjudicated and concluded while the order confirming attachment under Section 8(3) remains under challenge before a higher forum.
Where the confirmation order is challenged before the Appellate Tribunal under Section 26 of the PMLA, a deemed embargo operates on the conclusion of the Section 8(7) proceedings until the challenge to the confirmation order is resolved.
The Special Court cannot, through proceedings under Section 8(7), decide issues which are pending consideration before the appellate forum. The Court therefore emphasised the importance of preserving the statutory appellate remedy and the finality of the confirmation order before confiscation proceedings are concluded.
2. “Material before it” under Section 8(7) has a limited scope
The expression “material before it” in Section 8(7) does not confer a general power of review upon the Special Court over the order passed under Section 8(3).
The Court held that where a person has already participated in the adjudication proceedings and has suffered an adverse order, an application under Section 8(7) cannot be used to re-agitate the same material and seek a fresh determination of issues already decided.
The new material relied upon must be material which was not previously available for consideration in the earlier proceedings. It must be relevant to the statutory contingency which has triggered the Section 8(7) proceedings and, where applicable, the entitlement of the person claiming possession of the property.
3. The statutory contingencies under Section 8(7) must be established
Section 8(7) operates in specified circumstances where the trial under the PMLA cannot be conducted or cannot be concluded, including situations involving the death of the accused, the accused being declared a proclaimed offender, or other circumstances contemplated by the provision.
The material placed before the Special Court must therefore establish the relevant statutory contingency. The Court also applied the principle of ejusdem generis in understanding the scope of the expression “for any other reason” in the context of the provision.
4. A person who participated in the adjudication proceedings cannot use Section 8(7) as a review proceeding
The judgment makes an important distinction between a genuine statutory proceeding under Section 8(7) and an attempt to reopen an adverse attachment determination.
A person who was a party to the adjudication proceedings may place new material before the Special Court, but the provision does not create a general review jurisdiction over the earlier determination under Section 8(3).
The material must be genuinely new and relevant to the statutory requirements governing the Section 8(7) proceeding.
5. Restoration under Section 8(8) during trial is available to a qualifying claimant
The Court also examined the restoration mechanism under Section 8(8) of the PMLA and the Prevention of Money-laundering (Restoration of Confiscated Property) Rules, 2016.
A “claimant” under the Rules must have acted in good faith, suffered a quantifiable loss as a result of the offence of money-laundering despite having taken reasonable precautions, and must not be involved in the offence of money-laundering.
The Court held that the second proviso to Section 8(8), which enables restoration during the trial, is governed by the statutory framework and the 2016 Rules. Under Rule 3A, an application for restoration during trial can be made only after charges under Section 4 of the PMLA have been framed and in accordance with the prescribed procedure.
The restoration mechanism is therefore distinct from a challenge to the attachment or confiscation proceedings.
6. “Proceeds of crime” may include property equivalent in value
The Supreme Court also reiterated the breadth of the definition of “proceeds of crime” under Section 2(1)(u) of the PMLA.
The expression includes not only property derived or obtained directly or indirectly from criminal activity relating to a scheduled offence, but also property equivalent in value to such property.
Consequently, the absence or unavailability of the original property derived from criminal activity does not, by itself, prevent the attachment of property equivalent in value, subject to the statutory requirements of the PMLA.
Conclusion
M/s. Nav Nirman Builders & Developers Pvt. Ltd. v. Union of India is significant for clarifying the sequence and relationship between the proceedings concerning attachment, adjudication, confiscation and restoration under Section 8 of the PMLA.
The judgment reinforces that:
- a Section 8(7) confiscation proceeding cannot be concluded while the Section 8(3) confirmation order remains under challenge;
- “material before it” under Section 8(7) does not confer a general power of review;
- new material must be relevant to the statutory contingency and the claim to possession;
- restoration during trial under Section 8(8) is subject to the statutory conditions and the 2016 Rules; and
- proceeds of crime may include property equivalent in value to property derived or obtained from criminal activity.
This article is intended as a brief legal update on a recent judgment and should not be treated as legal advice on any particular facts.