SAFEMA Tribunal Confirms PMLA Attachment Where Assessee Fails To Produce Bank Statement

Background of the Dispute

The matter in Deva Manohar S Vs Deputy Director, Directorate of Enforcement (Appellate Tribunal Under SAFEMA, New Delhi) arose from proceedings under the Prevention of Money Laundering Act, 2002 (PMLA) connected with an alleged fraud in a Co-operative Bank.

An FIR was lodged by the Joint Registrar of Co-operative Societies alleging criminal breach of trust, cheating, forgery, conspiracy and manipulation of electronic records. The offences cited were:

  • Section 406, Section 408, Section 409, Section 417, Section 420, Section 465, Section 468, Section 471, Section 120B and Section 34 of the IPC, and
  • Section 65 of the Information Technology (Amendment) Act, 2008.

The FIR named multiple accused, including Ms. Jyothi Madhu, who had served as Branch Manager of the Co-operative Bank. The core allegation concerned irregular handling and manipulation of funds linked to fixed deposits.

Pursuant to the investigation, the Directorate of Enforcement (ED) allegedly tracked a money trail indicating that a sum of ₹8,28,093 moved from the account of one Sri Nivas and ultimately reached the bank account of the appellant, Deva Manohar S.

Because the specific funds were stated to be no longer available—having been dissipated or otherwise not found in the same form—the ED proceeded to attach other property of the appellant for an equivalent value of ₹8,28,093, via a provisional attachment order (PAO) dated 09.07.2024.

The Adjudicating Authority under PMLA later confirmed this provisional attachment by order dated 13.12.2024. The appellant carried this confirmation order in appeal to the Appellate Tribunal under SAFEMA, New Delhi.

The Tribunal’s order is not concerned with the total alleged fraud in the Co-operative Bank; instead, it focuses narrowly on whether the appellant can resist attachment of his property to the extent of ₹8,28,093, the amount alleged to have been routed into his account from the account of Sri Nivas.

Central Questions Before the Tribunal

The Tribunal distilled the controversy into a few key issues:

  1. Whether the appellant’s property could remain attached solely because his bank account allegedly received ₹8,28,093 traceable to proceeds of crime, despite his plea that he was himself a victim of the bank fraud.

  2. Whether repayment of a loan of ₹5,00,000 taken from the same Co-operative Bank, and filing a complaint with the Superintendent of Police, sufficed to show bona fides and to snap the link between the appellant and the alleged proceeds of crime.

  3. What inference should be drawn from the appellant’s categorical denial of receiving the funds coupled with his failure to place his own bank statement on record, when such document was uniquely within his control.

The dispute thus turned as much on evidentiary conduct and burden as on the legal framework of attachment under PMLA.

Appellant’s Stand: “I Am a Victim, Not a Beneficiary”

Before the Tribunal, the appellant advanced the following points:

  • He had taken a loan of ₹5,00,000 from the Co-operative Bank and had completely repaid that loan. According to him, once the loan was closed, there was no rational basis to treat him as a recipient of any fraudulent funds, let alone to attach his assets for ₹8,28,093.

  • The appellant claimed that he had no role in any fraudulent scheme allegedly carried out by Ms. Jyothi Madhu. Rather, he asserted that he had suffered because of the fraudulent acts and was, in effect, just another victim of the same fraud.

  • To demonstrate his good faith, he relied on a complaint he lodged with the Superintendent of Police, which was followed by a report on the fraud. He sought to use this as proof that he had proactively approached law enforcement, instead of colluding with any accused persons.

  • He specifically denied that he had knowingly received ₹8,28,093 in his bank account via the account of Sri Nivas. In his submission, the ED and the Adjudicating Authority had simply relied on an alleged fund trail without confirming it through his actual bank statement.

On this basis, the appellant requested the Tribunal to:

  • Set aside the confirmation of the provisional attachment order, and
  • Release his property from attachment, contending that it had been wrongly restrained based on a mistaken or incomplete understanding of the banking records.

No additional legal or factual grounds were pressed despite the Tribunal inviting further submissions.

ED’s Reply: Fund Trail Speaks for Itself