Kiran Raj

The Supreme Court of India Division Bench of Justice M.M. Sundresh and Justice Nongmeikapam Kotiswar Singh, in an important judgment on Friday (February 6, 2026) interpreting Section 8 of the Prevention of Money Laundering Act, held that when an appeal against confirmation of an attachment order is pending before the Appellate Tribunal, the Special Court cannot conclude confiscation proceedings in the interim. The case arose from allegations that a public works contract was executed using forged bitumen procurement invoices, leading to suspected laundering of the alleged proceeds through purchase of immovable property later attached by the Enforcement Directorate. Setting aside the confiscation order, the Court restored the pending appeal for a merits decision within four weeks and directed that the confiscation application remain pending until the attachment challenge is decided.

A partnership firm executing a public works contract received payment of about Rs. 79,11,559 after completion of the work. Two years later, an FIR and charge sheet alleged that, despite contractual requirements to procure bitumen from government oil companies, the firm did not do so and public servants cleared its bills; 37 invoices were submitted to show procurement, of which six were alleged to be forged and the rest related to other work.

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On the basis of the predicate-offence investigation, money-laundering proceedings were initiated in March 2012 against the firm and its managing partner. A provisional attachment order under Section 5(1) later attached two parcels of land purchased by the company in 2012 and 2014, followed by adjudication proceedings under Section 8(1) and confirmation under Section 8(3). The company filed an appeal under Section 26, in which a status quo order was passed.

A prosecution complaint under Section 45 alleged that proceeds of crime were used to purchase immovable properties in the company’s name. After charges were framed and the managing partner died, the agency moved an application under Section 8(7), and the company filed an application under Section 8(8) asserting the attached properties were its own. The company relied on the pending Section 26 appeal and claimed it had furnished sources and a bank trail; the agency alleged layering and laundering through a front entity, invoked Section 2(1)(u) and Section 24, and maintained the Special Court could proceed under Section 8(7) despite the pending appeal.

The Court observed: “Circumstances aforestated must be evident and in existence and, hence, the expression ‘material before it,’ occurring in Section 8(7) of the PMLA, must be understood in the context of demonstrating the same, as the scope of inquiry under Section 8(7) of the PMLA is rather limited and the Special Court does not have the power to review a decision under Section 8(3) of the PMLA.”

It stated: “The expression ‘material before it’ can also be understood from the standpoint of a person who was not a party to the proceedings under Section 8(3) of the PMLA before the Adjudicating Authority. Law does not necessarily bind a party qua an order passed by a statutory authority in his absence. Therefore, such a party can certainly invoke Section 8(7) of the PMLA, provided that the circumstances mentioned thereunder are available, coupled with entitlement to possession of the property in respect of which an order has been passed under Section 8(3) of the PMLA, in which case, the Special Court is expected to consider such material placed before it.”

The Court recorded: “A limited caveat is, however, necessary in the case of a person who has suffered an adverse order before the Adjudicating Authority under Section 8(3) of the PMLA. Such a person cannot, as a matter of right, invoke Section 8(7) of the PMLA. However, by way of exception, such relief may be sought only on the basis of any new material placed for the first time before the Special Court. Such an interpretation would give meaningful effect to the expression ‘material before it’ occurring in Section 8(7) of the PMLA. Any other interpretation would vest the Special Court with a power of review over an order passed under Section 8(3) of the PMLA which is clearly not contemplated under the scheme of the PMLA. The restriction, therefore, is that the material relied upon by such a party in proceedings under Section 8(7) of the PMLA must not have been considered by any forum exercising jurisdiction under Section 8(3) of the PMLA.”

On the consequence of confiscation, it stated: “As iterated while discussing Section 8(3)(b) of the PMLA, an order of confiscation by the Special Court under Section 8(7) of the PMLA gives finality to a confirmation order.”

Addressing a pending statutory appeal, the Court recorded: “Admittedly, the appellant company, having suffered an order under Section 8(3) of the PMLA, had preferred an appeal under Section 26 of the PMLA which was pending on the file of the Appellate Tribunal even at the time of filing of the applications under Sections 8(7) and 8(8) of the PMLA. The decision of the Adjudicating Authority under Section 8(3) of the PMLA is subject to the outcome of any further challenge to the same. At the cost of repetition, once an order under Section 8(3) of the PMLA is challenged before a higher forum, a deemed embargo operates on the conclusion of the proceedings under Section 8(7) of the PMLA. Hence, the Special Court cannot go into the issues which the higher forums have been entrusted with. When an appeal is provided for under the statute, it gives a vested right to any aggrieved person to exhaust the same.”

Applying this to the Special Court’s course of action, the Court stated: “Instead of deferring the application filed under Section 8(7) of the PMLA, and awaiting the adjudication by the Appellate Tribunal under Section 26 of the PMLA, the Special Court has allowed the said application, for which exhaustive reasons have been given independently on merits. The Special Court has, in effect, rendered the appeal under Section 26 of the PMLA infructuous. The said action at the instance of the Special Court is totally impermissible in law.”

On the basis of the interpretation The Court concluded as follows:

• Section 8(7) and Section 8(8) of the PMLA are stand-alone provisions.

• Section 8(7) of the PMLA gets attracted only in case of a contingency and an application under the said provision can be decided by the Special Court only once the confirmation order attains finality.

• The expression “material before it” occurring in Section 8(7) of the PMLA has a limited import to the extent of showing the contingency and the entitlement to possession as regards the Director or any third party. In case of a party who has suffered an adverse order under Section 8(3) of the PMLA, relief under Section 8(7) of the PMLA can be sought for, provided there is new material that was not placed before or considered by the Adjudicating Authority under Section 8(3) of the PMLA, or by the higher forums, if so challenged.

• An application under the second proviso to Section 8(8) of the PMLA can only be filed subject to satisfying the essential conditions laid down by Rules 2(b) and 3A of the 2016 Rules.

The Court held: For the foregoing reasons, we set aside the order dated 15.09.2022 passed by the Special Court allowing the application filed by the respondent under Section 8(7) of the PMLA, as confirmed by the High Court vide the impugned order dated 27.02.2023. The application filed by the appellant under Section 8(8) of the PMLA was not maintainable.

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The Court directed: “The Appellate Tribunal is directed to take up the appeal filed by the appellant under Section 26 of the PMLA on its file, notwithstanding its earlier order passed on 23.08.2023, and decide it on its own merits, within a period of 4 weeks from the date of receipt of a copy of this judgment. The application filed by the respondent under Section 8(7) of the PMLA is directed to be kept pending and be taken up after the disposal of the challenge to the order under Section 8(3) of the PMLA by the higher forum(s).”

“The appeal stands allowed, accordingly. Pending application(s), if any, shall stand disposed of.”

Advocates Representing the Parties

For the Petitioners: Mr. Ajay Vikram Singh, AOR Mr. Anshuman Sinha, Adv. Mr. Vijay Kumar Pandey, Adv. Mr. Vinay Prakash, Adv. Ms. Pragya Sharma, Adv. Mr. Udayan Sinha, Adv. Mr. Prakhar Prakash, Adv. Mr. Hemant Mour, Adv.

For the Respondents: Mr. Zoheb Hussain, Adv. Mr. Annam Venkatesh, Adv. Mr. Arkaj Kumar, Adv. Ms. Sairica S Raju, Adv. Mr. Arvind Kumar Sharma, AOR

Case Title: M/s. NAV NIRMAN BUILDERS & DEVELOPERS PVT. LTD. VERSUS THE UNION OF INDIA
Neutral Citation: 2026 INSC 130
Case Number: Criminal Appeal No. ………. of 2026 (Arising out of SLP (Crl.) No. 9216 of 2023)
Bench: Justice M. M. Sundresh, Justice Nongmeikapam Kotiswar Singh