Tribunal quashes ED attachment of properties of Praful Patel

An appellate tribunal in Delhi recently set aside the decision to attach seven properties owned by Nationalist Congress Party (Ajit Pawar faction) leader, Praful Patel, his wife Varsha Patel and his company, Millennium Developers in Mumbai in connection with a money laundering case..In 2022, the ED had provisionally attached seven flats spread across four floors of the Ceejay House Apartments of Worli (Mumbai), collectively worth approximately ₹180 crores. The ED made the move on allegations that the properties had been purchased from the wife of late drug baron Iqbal Mirchi.The provisional attachment was confirmed by the adjudicating authority under the Prevention of Money Laundering Act (PMLA) on January 5, 2023..This was challenged by the Patels before an appellate tribunal constituted under the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act (SAFEMA) in Delhi, which set aside the attachment on June 3..In the June 3 ruling, the appellate tribunal concluded that the ED's action amounted to harassment and reflected ulterior motives. The tribunal observed that neither the Patels nor their company had been named in the FIR based on which the ED had registered its Enforcement Case Information Report (ECIR). The tribunal further found that nothing was brought on record to show even their remote connection with the alleged crime. "Attachment of the above area at 12 to 15 floors of Ceejay House cannot be considered to be appropriate and legal. It cannot be concluded that a property taken on consideration and the Court decree can be said to be involved in the money laundering. Thus ... we quash the impugned orders of attachment so as the order of Adjudicating Authority," the appellate tribunal said. .The ED registered its ECIR in 2019 based on an FIR registered in 1994 against underworld gangster Iqbal Mohammad Memon alias Iqbal Mirchi. The ED later claimed that the Patels supported Iqbal Mirchi, a fugitive offender (who passed away in 2013), against whom a number of cases were registered. The Patels were not named accused in that FIR or the ECIR. However after summons were issued against them, a provisional attachment order against their seven properties was issued. .While challenging this action, the Patels informed the appellate tribunal that a portion of the property now owned by them had earlier been taken over by one MK Mohammad. Mohammad is said to have run two restaurants in an illegally constructed structure on this portion.Mohammad was later declared the owner of this portion by virtue of a consent decree, on the ground of adverse possession (a principle by which a person who is in long, uninterrupted possession of land may acquire valid title to it). The benefit of this consent decree was later assigned to Iqbal Mirchi's wife, Hazra Memon. Later, in 1999, the property was transferred to Patel after consideration was given to Hazra Memon under a court decree. In other words, this transaction with Hazra Memon was pursuant to the orders of the Bombay High Court, the tribunal was told. An agreement to exchange the property was entered into in 2004..Patel added that properties spanning 14,000 square feet belonging to Mirchi's aides were attached separately and that a double attachment of property belonging to the Patels was not required as it was not part of any proceeds of crime. Notably, the ED had alleged that the construction of the building on the said plot of land was done in violation of the permissible Floor Space Index (FSI). However, the tribunal observed that such an alleged violation of the FSI for the construction of the building did not constitute a scheduled offence under the PMLA."Hence it would not come under the purview of ED but only with a view to harass Patels, a plea about the above violation is taken," the tribunal said. This, on the face of the record, indicated the ulterior motives of the ED, the tribunal added. .The tribunal further held that with an exchange of property, the area which came to Patel would no longer remain "proceeds of crime." It noted that the proceeds of the crime were already protected once the ED attached the 14,000 square feet of property that came to Hazra Memon. The Patels' legally acquired property was only attached with a view to harass them, the tribunal concluded. Having made these observations, the appellate tribunal proceeded to allow the appeal filed by the Patels and Millennium Developers (appellants) and quashed the attachment order..Senior advocate Saurabh Kirpal and advocates Ayush Jindal, Aditya Agarwal, Prince Arora appeared for the appellants. The ED was represented by advocate Arjun Sawhney. .[Read Judgment]