Prevention of Money Laundering Act, 2002 (“PMLA”) has been a law of fierce enforcement, known for its severity, rigor and stringency has been recently interpreted for an attachment of property case of Joint Director & Anr. v. Eastern Institute for Integrated Learning in Management University & Anr., by the Supreme Court, which raises eyebrows and leaves a few questions to ponder upon.
The Enforcement Directorate (“ED”) provisionally attached high-value assets of M3M in a money laundering probe in July 2024. In response of the same, M3M group, one of the largest unlisted players in India, citing commercial interest of the company, proposed to substitute its other unsold property under M3M Broadway project in Haryana with the one provisionally attached by ED.
In response to the proposal by M3M group, ED conducted an independent valuation of the property by M/s CSV Techno Solutions LLP, to ascertain the value of the proposed property for substitution. As per the valuation report dated 14.05.2025, the fair market value of the 274 commercial units offered for substitution came out to be INR 275 crores. Further, a few more commercial units amounting to INR 42 crores were offered for substitution which made the total substitution value to be INR 317 crores. The property which was earlier provisionally attached by ED amounted to approximately INR 300 crores.
After satisfactory valuation, the ED put a total of nine conditions before accepting the proposal of substitution of property. These conditions were:
- Title Certificate and No Encumbrance certificate: M3M group was asked to submit a certificate declaring that the proposed property is free from encumbrances including third-party claims and that they have a clear title to the same. M3M submitted these certificates to the satisfaction of ED.
- No alienation: ED demanded a declaration from M3M group that they will not alienate the proposed property by way of sale, transfer or any manner, during the ongoing proceedings of the case. The M3M submitted a notarized undertaking to this effect.
- Title documents: M3M group was required to submit title documents of the proposed property to be kept in the custody of the ED.
- Indemnity Bond: M3M group was further required to furnish an indemnity bond to make good the loss suffered by ED in pursuance of such substitution of property.
- Protection of rights of third-party buyers: The ED made M3M group give an undertaking to safeguard the rights of third-party buyers of other commercial units of the project and that the current proceeding shall not be the excuse of jeopardizing their interests and rights.
- Possession on confirmation of attachment: M3M group had been required to hand over possession of the alternate asset if in case the attachment is confirmed by the authorities.
- Disclosure regarding source of funds: the M3M group was required to disclose the source of its finds completely in a transparent manner which were utilized to acquire the substituted asset. It was done to ensure that the substituted asset is clean and that no proceeds of crime are used to acquire the proposed asset.
- Undertaking as to cooperation with investigation: M3M group is required to cooperate during the investigation of ED and shall appear or produce the required documents whenever called upon in this regard.
- No effect to the ongoing investigation: M3M group was required to confirm that there has been no prejudice against the ongoing investigation.
After all the nine conditions were fulfilled by the M3M group, the Supreme Court in its final grant of relief clarified that the judgement in this case shall not be taken as a precedent and that the decision in the present case has been made merely on the basis of the facts and circumstances of this case.
The ruling of the apex court in this case has been seen as one of the stances where the Court kept in mind continuity of business and commercial side of the accused party which is a newer concept to witness. The Supreme Court did not completely side with the Enforcement Directorate, even though an investigation is ongoing. Instead, the Court tried to strike a balance between allowing the investigation to continue and considering the economic and financial impact on the business of the accused party. While this is a welcome move in view of the economic justice, but at the same time it shall be considered within the spheres of maintaining the intent and objective of the legislation itself, which in this case appears to be in equilibrium.
There are various stakeholders of an ongoing business. The understanding of the fact that the interests of all those stakeholders which are involved in a particular business shall not be hampered due to an ongoing criminal case against an entity reflects upon a matured judicial system With the substitution of property, the enforcement power of PMLA is also not curtailed, rather it strengthens its applicability in the real world where the interests of many innocent stakeholders is also involved above the actions of a few alleged conspires of a crime.
This judgment marks a progressive evolution in the enforcement landscape under PMLA. While safeguarding the government's interest by securing assets worth more than the originally attached amount (₹317 Cr against ₹300 Cr), it also acknowledges the legitimate commercial needs of large business entities under investigation. Such pragmatic flexibility should indeed be treated as a precedent, especially in high-stake economic offences involving major corporate houses. If a party voluntarily offers a higher-value, untainted asset for substitution—without obstructing the investigation—then the law must encourage this compliance. It not only ensures asset security but also supports economic continuity, investor confidence, and stakeholder protection. This balance between enforcement and commercial sensibility reflects the maturing jurisprudence under PMLA and must be built upon.
Author: Adv. Tarun Gaur, the Chambers of Tarun Gaur, Advocates. Views are personal.