Madras High Court
M/S.Siva Industries And Holdings … vs The Directorate Of Enforcement Rep.By …
Author: C.V. Karthikeyan
Bench: C.V. Karthikeyan
CRL RC No. 51 of 2026
IN THE HIGH COURT OF JUDICATURE AT MADRAS
RESERVED ON PRONOUNCED ON
26.02.2026 13.03.2026
CORAM
THE HON'BLE MR JUSTICE C.V. KARTHIKEYAN
AND
THE HON'BLE MR.JUSTICE K.KUMARESH BABU
CRL RC No. 51 of 2026
M/s.Siva Industries and Holdings Limited,
Rep.by its Director, S.Manian (age 68),
Belicia Tower-I,
5th Floor, 1st main road,
MRC nagar,
R.A.Puram,
Chennai-600 119.
..Petitioner(s)
Vs
1. The Directorate of Enforcement Rep.by its
Assistant Director,
Chennai Zonal Office-I,
No.2, 5th and 6th Floor,
BSNL Administrative Building,
Kushkumar Road,
Nungambakkam,
Chennai-600 034.
2. IDBI Bank Limited
Rep Deputy General Manager,
Mid Corporate Group (MCG),
No.115, Anna Salai,
Saidapet, Chennai-600 015.
3. M/s.Winwind Power Energy Pvt.Ltd,
Chennai.
(Presently taken over by Resolution Applicant),
M/s.Agniti Industrial Parks Private Ltd.,
in terms of order dated February 08, 2021
passed by NCLT, Chennai).
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..Respondent(s)
PRAYER:-Criminal Revision filed under Section 397 r/w 401 of the Code of
Criminal Procedure, to call for the records relating to the proceedings made in
Crl.MP.No.1053 of 2025 in Spl.C.C.No.02 of 2021 dated 09.12.2025 on the file
of Honble IX Additional Special Judge for CBI Cases, Chennai and set aside the
same.
For Petitioner(s): Mr.Vijay Narayan
Senior Counsel
Assisted Mr. by S.Ravi
for M/s.Srilaw Associates
For Respondent(s): Mr. Cibi Vishnu,
Spl.Public Prosecutor (ED) for R1
Mr.M.L.Ganesh for R2
ORDER
(Order of the Court was made by K.Kumaresh Babu J.)
The present Criminal Revision petition has been filed challenging
the order dated 09.12.2025 made in Crl.MP.No.1053 of 2025 in Spl.C.C.No.02
of 2021
2. Heard Mr.Vijay Narayan, learned Senior Counsel, assisted by
Mr.S.Ravi learned counsel appearing on behalf of the petitioner, Mr. Cibi
Vishnu, learned Special Public Prosecutor (ED) appearing for the first
respondent and Mr.M.L.Ganesh, learned counsel appearing for the second
respondent.
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3. Mr.Vijaya Naryan learned Senior Counsel appearing for the Revision
Petitioner would submit that the petitioner had been embroiled in various
litigations including the proceedings under PMLA Act. He would submit that
the appellant had independently borrowed monies from the second respondent
and had also stood as a guarantor for the third respondent for a loan that had
been serviced by the second respondent in favour of the third respondent. He
would submit that as regards to the third respondent, the second respondent had
instituted proceedings before the Debut Recovery Tribunal in the year 2017. As
against the third respondent Insolvency and Bankruptcy Code (IBC)
proceedings were also initiated, wherein a Liquidator was appointed and the
third respondent was sold as a going concern to one M/s.Agniti Industrial Parks
Private Limited. The sale was also approved by the NCLT, Chennai. He would
submit that during the entire proceedings as against the third respondent before
the NCLT, the second respondent had not made any claim as against the third
respondent much as claimed which it had made before the Debt Recovery
Tribunal. Having not made any claim against the third respondent in the IBC
proceedings, after the disposal of the NCLT proceedings, the second respondent
had secured a decree in the recovery proceedings initiated by it as against the
third respondent as a borrower and the petitioner as a guarantor for a sum of
Rs.3,77,272.87/- by a decree dated 13.07.2021.
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4. He would submit that the conduct of the second respondent which is a
public institution in not making a claim of the said amount before the NCLT as
against the third respondent and having knowledge that the third respondent had
been sold to as a going concern to a third party, had not substituted the said
third party before the Debt Recovery Tribunal and had obtained a decree which
according to him is nothing but an abuse of the judicial process, making such
judicial process wholly non-est and unenforceable. But, however on the strength
of the decree, further proceedings were initiated and properties belonging to the
petitioner was attached. He would submit that it is pertinent to note that already
the first respondent had attached the properties under the PMLA Act which is
pending adjudication before the Appellate Tribunal under the said Act.
5. He would submit that as against the petitioner, insolvency proceedings
before the NCLT were initiated by the second respondent and it had claimed
that the petitioner is a borrower and also a guarantor to another Company which
is a corporate debtor to it. Such proceedings was initiated against the petitioner
in the year 2019 and even in the said proceedings, the claim as against the
petitioner on the guarantee given to the third respondent company was not a part
of its claim.
6. He would submit that the Committee of creditors accepted a resolution
plan, but however the same was rejected by the NCLT and by the NCLAT on
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the Appeal filed by the Director of the petitioner. As against the said
proceedings, Special Leave Petitions were preferred and the Hon’ble Apex
Court considering the Provisions of the IBC Code and interpreting the same had
allowed the SLP and approved the settlement thereby putting an end to the
insolvency proceedings initiated by the second respondent against the petitioner.
He would submit that the conduct of the second respondent in neither bringing
it to the notice in the insolvency proceedings of its claim, as against the third
respondent and petitioner as a borrower and guarantor, in both the insolvency
proceedings, it would only be presumed that such claim as against the petitioner
had stood waived by it. According, to him, when the insolvency proceedings
were initiated against a corporate debtor, the creditor is bound to disclose all its
claim as against the corporate debtor for adjudication by the insolvency Court
which is the NCLT, in the present case.
7. He would submit that having failed to make such claim, the second
respondent is estopped from making any claim which was available to it prior to
initiation of such proceedings. He would submit that the second respondent had
approached the Special Court by invoking the Provisions of Sub-Section 8 of
Section 8 of the PMLA Act to order restoration and release of immovable
properties described in the schedule and to permit it to sell the same in
execution of the Debt Recovery Certificate issued in its favour. He would
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submit that on the facts stated above, the Recovery Certificate issued against the
petitioner itself is a non-est certificate and the same cannot be executed.
8. That apart, he would submit that the claim of the second respondent as
against the petitioner is only based upon a Guarantee Agreement pursuant to
which a Mortgage Deed was executed and that it had never been put in
possession of the property to invoke the said Provisions to seek restoration of
the property. Hence, he would submit that firstly, on the said ground, the said
application itself is not maintainable. He would further submit that the
Provisions of Section 8 (8) could only be invoked after the property had been
confiscated or on or after final disposal of the criminal proceedings or the
adjudication proceedings. He would submit that in this case, neither the criminal
case that had been filed under PMLA Act nor the Appellate proceedings
initiated against the order of adjudication had not culminated into a final order
of confiscation and therefore, the application filed by the second respondent
before the Special Court is wholly premature .
9. He would submit that the Court below without appreciating the above
facts had ordered the Claim Petition filed by the second respondent by ordering
restoration of the properties to the second respondent Bank. He would submit
that the same is contrary to the judgment of the Hon’ble Division Bench of this
Court reported in (2021) 2 LW Criminal 411. He would submit that the Hon’ble
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Division Bench of this Court had categorically held that the Provisions of
Section 8(8) of the PMLA Act could only be invoked after the order of
confiscation under Section 8(5) and that the 2nd Proviso inserted to Section 8(8)
is beyond the scope of the main Provision. He would draw attention of this
Court to the findings of the Division Bench particularly to context that the
second Proviso to Sub-Section 8 of Section 8 cannot be allowed to be operated
as it goes beyond the scope of the main Provision. He would also rely upon the
recent judgment of the Hon’ble Apex Court made in Crl.A.No.729 of 2026
dated 06.02.2026. Taking us through the aforesaid judgment, he would contend
that Section 8 (8) would have to be read along with the Rules framed in that
regard and the proceedings under Section 8(8) could only be invoked by the
Special Court after framing the charges under Section 4 of the PMLA Act and
also only in compliance with the mandates of Rule 3(A) of the Rules framed
thereunder. Hence he seeks indulgence of this Court.
10. The learned Standing Counsel appearing for the first respondent
would submit that the second respondent Bank, who is the claimant had
suffered a direct loss due to the conduct of the petitioner and dilution of its
securities. He would further submit that as a rightful and legitimate claimant,
the second respondent which had suffered direct and quantifiable loss is entitled
for restoration of the property which had been mortgaged to it by the petitioner
to safeguard its interest. He would further submit that at any rate, it is not
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disputed by the petitioner of its mortgage with the second respondent and it
would only be petitioner who would be benefitted if the second respondent is
allowed to proceed with the sale of the property from any future interest. Hence,
he seeks dismissal of the Revision.
11. Mr.M.L.Ganesh, the learned counsel appearing on behalf of the
second respondent would submit that the second respondent has a decree upon
which a recovery certificate had been issued and the property had also been
attached by the Debt Recovery Tribunal. He would further submit that a claim
before the Debt Recovery Tribunal was not the subject matter of the insolvency
proceedings that has been initiated against the petitioner and that there was no
claim over the said amount. He would submit that the petitioner having stood as
a guarantor and having mortgaged the property cannot deny the legitimate claim
of the second respondent. He would further submit that the adjudication
proceedings have been concluded by the Authority and the property had also
been attached by the first respondent.
12. Relying upon Sub-Section 8 of Section 8 of the the PMLA Act, he
would submit that even during the pendency of the PMLA proceedings, a
legitimate claimant can approach the Court for restoration of the property to its
benefit. He would further submit that even though the Court had restored the
property, it had laid down the conditions upon which the second respondent
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would have to deal with the property. He would further submit that the appellant
had neither been benefitted with any orders of stay, either on the adjudication
proceedings or in the attachment proceedings before the Debt Recovery
Tribunal. He would further submit that even if the property is finally
confiscated and also if the petitioner is acquitted in the criminal case before the
Special Court, the second respondent has a right to proceed with the aforesaid
property under the Provisions of Sub-section 8 of Section 8 of the PMLA Act
or the Debt Recovery Act as the case may be. Therefore, he would submit that
the petitioner cannot be said to be an aggrieved person in any manner to
challenge the impugned proceedings. Hence, he seeks dismissal of the Revision.
13. We have considered the submissions made by the learned counsels
appearing on either side and perused the materials available on record.
14. The issue before us is as to whether the impugned order restoring the
property to the second respondent for it to proceed in accordance with law has
been made in accordance with the Provisions of Sub-Section 8 of Section 8 of
the PMLA Act. For better appreciation, the relevant Provision is extracted
hereunder:-
“ 8. Adjudication – (1) On receipt of a complaint under sub-section (5) of
section 5, or applications made under sub-section (4) of section 17 or
under sub-section (10) of section 18, if the Adjudicating Authority has
reason to believe that any person has committed an 1[offence under
section 3 or is in possession of proceeds of crime], it may serve a notice
of not less than thirty days on such person calling upon him to indicate
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CRL RC No. 51 of 2026the sources of his income, earning or assets, out of which or by means of
which he has acquired the property attached under sub-section (1) of
section 5, or, seized 2[or frozen] under section 17 or section 18, the
evidence on which he relies and other relevant information and
particulars, and to show cause why all or any of such properties should
not be declared to be the properties involved in money-laundering and
confiscated by the Central Government:
Provided that where a notice under this sub-section specifies any
property as being held by a person on behalf of any other person, a copy
of such notice shall also be served upon such other person:
Provided further that where such property is held jointly by more than
one person, such notice shall be served to all persons holding such
property.
(2) The Adjudicating Authority shall, after–
(a) considering the reply, if any, to the notice issued under sub-
section (1);
(b) hearing the aggrieved person and the Director or any other
officer authorised by him in this behalf; and
(c) taking into account all relevant materials placed on record before
him, by an order, record a finding whether all or any of the properties
referred to in the notice issued under sub-section (1) are involved in
money-laundering:
Provided that if the property is claimed by a person, other than a
person to whom the notice had been issued, such person shall also be
given an opportunity of being heard to prove that the property is not
involved in money-laundering.
(3) Where the Adjudicating Authority decides under sub-section (2) that
any property is involved in money-laundering, he shall, by an order in
writing, confirm the attachment of the property made under sub-
section (1) of section 5 or retention of property or 3[record seized or
frozen under section 17 or section 18 and record a finding to that effect,
whereupon such attachment or retention or freezing of the seized or
frozen property] or record shall–
(a) continue during 4[investigation for a period not
exceeding 5[three hundred and sixty-five days] or] the pendency of the
proceedings relating to any offence under this Act before a court or under
the corresponding law of any other country, before the competent court of
criminal jurisdiction outside India, as the case may be; and
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(b) become final after an order of confiscation is passed under sub-
section (5) or sub-section (7) of section 8 or section 58B or sub-
section (2A) of section 60 by the 8[Special Court].
[Explanation.–For the purposes of computing the period of three
hundred and sixty-five days under clause (a), the period during which the
investigation is stayed by any court under any law for the time being in
force shall be excluded.]
(4) Where the provisional order of attachment made under sub-
section (1) of section 5 has been confirmed under sub-section (3), the
Director or any other officer authorised by him in this behalf shall
forthwith take the [possession of the property attached under section 5 or
frozen under sub-section (1A) of section 17, in such manner as may be
prescribed:
Provided that if it is not practicable to take possession of a property
frozen under sub-section (1A) of section 17, the order of confiscation
shall have the same effect as if the property had been taken possession
of.](5) Where on conclusion of a trial of an offence under this Act, the
Special Court finds that the offence of money-laundering has been
committed, it shall order that such property involved in the money
laundering or which has been used for commission of the offence of
money-laundering shall stand confiscated to the Central Government.
(6) Where on conclusion of a trial under this Act, the Special Court finds
that the offence of money laundering has not taken place or the property
is not involved in money-laundering, it shall order release of such
property to the person entitled to receive it.
(7) Where the trial under this Act cannot be conducted by reason of the
death of the accused or the accused being declared a proclaimed offender
or for any other reason or having commenced but could not be
concluded, the Special Court shall, on an application moved by the
Director or a person claiming to be entitled to possession of a property in
respect of which an order has been passed under sub-section (3) of
section 8, pass appropriate orders regarding confiscation or release of
the property, as the case may be, involved in the offence of money-
laundering after having regard to the material before it.
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(8) Where a property stands confiscated to the Central Government under
sub-section (5), the Special Court, in such manner as may be prescribed,
may also direct the Central Government to restore such confiscated
property or part thereof of a claimant with a legitimate interest in the
property, who may have suffered a quantifiable loss as a result of the
offence of money laundering:
Provided that the Special Court shall not consider such claim unless
it is satisfied that the claimant has acted in good faith and has suffered
the loss despite having taken all reasonable precautions and is not
involved in the offence of money laundering:
Provided further that the Special Court may, if it thinks fit, consider
the claim of the claimant for the purposes of restoration of such
properties during the trial of the case in such manner as may be
prescribed. “
15. Section 8 empowers an Adjudicating Authority, if he had reasons to
believe that there has been a commission of offence under Section 3 of the Act,
then the property involved after following the procedure, the competent
authority could attach the property and upon conclusion of the trial and the
offence being proved would stand confiscated to the Central Government.
However, if the offence is not proved, it should be released to the person
entitled to receive it. Sub-Section 7 of Section 8 also envisages confiscation
pending trial for the reasons indicated therein. Sub-Section 8 of Section 8
entitles a claimant with legitimate interest to approach the Special Court for
restoration of the confiscated property if it has suffered a quantifiable loss. The
first Proviso appended therein empowers such Court not to consider the claim if
the claimant had not satisfied the Court, that it had acted in good faith and had
suffered the loss despite taking all reasonable precautions and that such
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claimant is not involved in the offence of money laundering. A second Proviso
came to be introduced in the year 2018, to consider the claim of a claimant for
the purpose of restoration even during the trial in the manner as may be
prescribed.
16. The Central Government had also framed The Prevention of Money
Laundering (Restoration of Confiscated Property) Rules 2016 which also came
to be amended in the year 2019 by insertion of Rule 3A which would relate to
the second Proviso to Sub-Section 8 of Section 8. For better appreciation,
relevant Provision is extracted hereunder:-
“3A. Manner of restoration of property during trial.- (1) The Special
Court, after framing of the charge under section 4 of the Act, on the basis of
an application moved for restoration of a property attached under sub-
section (1) of section 5, or, seized or frozen under section 17 or section 18
of the Act prior to confiscation, if it thinks fit, may, for the purposes of the
second proviso to sub-section (8) of section 8 of the Act, cause to be
published a notice in two daily newspapers, one in English language and
one in vernacular language, having sufficient circulation in the locality
where such property is situated calling upon the claimants, who claim to
have a legitimate interest in such property or part thereof, to submit and
establish their claims, if any, for obtaining restoration of such property or
part thereof.
17. The said Provision had come up for consideration before the Hon’ble
Apex Court in the judgment relied upon by the learned Senior Counsel
appearing for the petitioner in Crl.A.No.729 of 2026 dated 06.02.2026. After
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analysing the Provisions of the PMLA Act, the Hon’ble Apex Court has
concluded as follows:-
“5.2. On the basis of the interpretation given by us in this judgment, we conclude 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.”
18. The Hon’ble Apex Court had categorically held that an application
under second Proviso to Section 8 (8) of the PMLA Act can only be filed
subject to satisfying the essential conditions laid down by Rule 2(b) and 3A of
the 2016 Rules as amended in 2019. The Hon’ble Apex Court in coming to such
a conclusion had also held that when an order of the Adjudicating Authority has
been challenged in the higher forum, a deemed embargo operates on the
conclusion of the proceedings and hence, the Special Court cannot go into the
issues which the higher forums had been entrusted with. It had also
categorically held that when an appeal is provided under the Statute, it gives a
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vested right to any aggrieved person to exhaust the same. For better
appreciation, the relevant paragraph is extracted hereunder:-
“ 46. As discussed, the powers of the Appellate Tribunal are rather wide and
exhaustive. What is referred to Under Section 8(7) of the PMLA is a
confirmation order which has attained finality. 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.
47. In the present case, we are concerned with the decision-making process
adopted by the Special Court, as confirmed by the High Court. 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.”
19. In the present case, admittedly, the appeal against the order of
Adjudicating Authority is pending for consideration before the Statutory
Tribunal in that regard. That apart, it is also admitted that charges have not been
framed under Section 4 of the Act. In that context, the thorough reading of Rule
3A would indicate that only after framing of the charge under Section 4 of the
Act, an application to move for restoration under the Second Proviso of Sub-
Section 8 of Section 8 of the PMLA Act could be proceeded with.
20. That apart, the aforesaid Rule also envisages issuing of a notice in two
daily newspapers having sufficient circulation in the locality and also calling
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upon the claimants who may have a legitimate interest in the property or part
thereof.
21. We refrain ourselves from looking into the issue as to whether the
publication is necessary in dealing with an application under Sub-Section 8 of
Section 8 as the first contingency under Rule 3A namely framing of Charge
itself has not taken place for the Court to exercise its power under Sub-Section 8
of Section 8 apart from the fact that as already indicated, the appeal filed against
the order of adjudication is pending consideration. Hence, by applying the ratio
laid down by the Hon’ble Apex Court, the order impugned cannot be allowed to
stand.
22. In fine, this Criminal Revision is allowed and the order impugned
stands set aside. However, there shall be no order as to costs.
(C.V.K.,J.) (K.B.,J.)
13.03.2026
Index: Yes/No
Speaking/Non-speaking order
Neutral Citation: Yes/No
GBA
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C.V.KARTHIKEYAN, J.
AND
K.KUMARESH BABU, J.
GBA
CRL RC No. 51 of 2026
13.03.2026
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