SAFEMA Tribunal Upholds ED Attachment of ₹60 Crore Property in Madhu Koda Money Laundering Case

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The Smugglers and Foreign Exchange Manipulators (SAFEMA) Tribunal has upheld the Enforcement Directorate's attachment of properties worth ₹60 crore in Mumbai linked to former Jharkhand Chief Minister Madhu Koda's money laundering and foreign exchange manipulation case. The Tribunal, in its November 2026 order, dismissed the appeal of Union Bank of India, which had sought release of the mortgaged assets to recover its ₹30 crore loan. The ruling affects the bank's recovery process and clarifies the legal position on attachment of mortgaged properties in PMLA cases.

The attached properties are flats in 'Babylon Building' on Edenwala Road, Matunga (East), Mumbai, mortgaged by two shell companies—M/s Balaji Lifestyle Realtors Pvt. Ltd. and M/s Balaji Universal Tradelinks Pvt. Ltd.—to obtain the loan under 'advance against foreign documentary bills'. The registered value of the properties was shown as only ₹9.57 crore against a market value exceeding ₹60 crore. The loan was initially ₹20 crore with a ₹5 crore cash credit limit, later increased to ₹30 crore.

The Tribunal ruled that the bank cannot sell the attached property directly and must approach the special PMLA court to claim its dues from auction proceeds. Any surplus after recovering the actual loan amount must be remitted to the ED. The Tribunal also observed that while mortgaged assets are not immune from attachment, the ED should focus on identifying and attaching properties directly derived from criminal proceeds rather than those already under bank mortgage.

The case originated from a 2009 Income Tax department raid that uncovered secret documents revealing Koda's international financial network. The ED's Patna branch initially registered an ECIR, and later the investigation was transferred to the ED Lucknow due to foreign transactions and hawala links. The Adjudicating Authority had earlier upheld the attachment, which the Tribunal has now confirmed.

What is the SAFEMA Tribunal and when was it established?

The Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, or SAFEMA, was enacted in 1976 to provide for the forfeiture of illegally acquired properties of smugglers and foreign exchange manipulators. The SAFEMA Appellate Tribunal was constituted under Section 12 of this Act to hear appeals against orders of the competent authority. The tribunal has the same powers as a civil court under the Code of Civil Procedure, 1908, in matters of summoning witnesses and requiring document production. Its jurisdiction is distinct from the Adjudicating Authority under the Prevention of Money Laundering Act, 2002, though both deal with proceeds of crime. The SAFEMA Act was upheld as constitutionally valid by the Supreme Court in the 1994 case of Attorney General for India v. Amratlal Prajivandas, which dealt with the forfeiture of properties of relatives and associates of smugglers.

What is the legal conflict between bank recovery and ED attachment?

The case highlights the tension between a bank's right to recover its dues by selling mortgaged assets and the ED's power to attach properties derived from criminal activity under the Prevention of Money Laundering Act (PMLA), 2002. The Tribunal's ruling clarifies that even mortgaged assets are not beyond the ED's reach if they are proceeds of crime. It also directs that banks must pursue recovery through the special PMLA court, ensuring that any surplus from auction goes to the state, not the accused.

What has the ruling achieved and what remains unresolved?

The ruling strengthens the ED's hand in asset recovery in high-profile money laundering cases by affirming that tainted properties cannot be shielded by prior mortgage. It also provides a clear procedure for banks to recover their dues while preserving the state's claim on surplus. However, the actual recovery for Union Bank remains pending, as it must now file a claim before the special PMLA court. The case also leaves open the broader challenge of balancing the rights of secured creditors with the state's enforcement powers in financial crimes.