Special Court Cannot Decide Section 8(7) PMLA Confiscation While Appeal Against Attachment Is Pending: Supreme Court in Nav Nirman Builders v. Union of India [2026 INSC 130]

In M/s. Nav Nirman Builders & Developers Pvt. Ltd. v. Union of India (2026 INSC 130), the Supreme Court held that Section 8(7) of the Prevention of Money-Laundering Act, 2002 is a complete provision by itself, that its inquiry is limited and gives the Special Court no power to review a decision under Section 8(3), and that once an order under Section 8(3) is challenged, a deemed embargo operates on the conclusion of proceedings under Section 8(7) (paras 27–29, 36–37). It also held that a restoration claim under the second proviso to Section 8(8) is subject to Rules 2(b) and 3A of the 2016 Restoration Rules, and that the appellant company's Section 8(8) application was rightly dismissed (paras 41–42, 49, 53). A Bench of Justice M. M. Sundresh and Justice Nongmeikapam Kotiswar Singh allowed the appeal (paras 50–56).

Status: Special Court order dated 15.09.2022 allowing the Enforcement Directorate's Section 8(7) application, as confirmed by the High Court on 27.02.2023, set aside; Appellate Tribunal's order dated 23.08.2023 dismissing the Section 26 appeal as infructuous set aside and the appeal restored; Criminal Appeal allowed (paras 50–51, 53–54, 56).

Headnote: Section 8(7) PMLA Confiscation Pending Appeal

Prevention of Money-Laundering Act, 2002 – Sections 2(1)(u), 5, 8(1), 8(2), 8(3), 8(5), 8(6), 8(7), 8(8), 9, 25, 26, 35 and 42 – Prevention of Money-laundering (Restoration of Confiscated Property) Rules, 2016 – Rules 2(b) and 3A – Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 – Section 12 – Proceeds of crime – Confirmation of provisional attachment – Confiscation on non-conduct of trial due to death of accused – Pendency of appeal before Appellate Tribunal – Deemed stay – Doctrine of merger – "Material before it" – Restoration to claimant.

Held: (i) The definition of "proceeds of crime" in Section 2(1)(u) is wide enough to include property equivalent in value to the property obtained from criminal activity, which can be attached if the proceeds of crime as such are not otherwise available (para 19).

(ii) Section 8(7) is a complete provision by itself, which can be pressed into service only in a contingency such as the death of the accused, the accused being declared a proclaimed offender, or a trial that has commenced but could not be concluded; a confirmation order under Section 8(3) is a sine qua non for it (paras 27–28).

(iii) The expression "material before it" in Section 8(7) has a limited import, to show the contingency and the entitlement to possession; the Special Court has no power to review a decision under Section 8(3). A party who suffered an adverse order under Section 8(3) may seek relief under Section 8(7) only on new material not considered by any forum under Section 8(3) (paras 29–31).

(iv) In view of the robust appellate mechanism and the doctrine of merger, when an appeal or further challenge against an order under Section 8(3) is pending, the Special Court must refrain from deciding a Section 8(7) application; there is a deemed stay on Section 8(7) proceedings until the confirmation order attains finality (paras 34–37, 46).

(v) A "claimant" under the second proviso to Section 8(8) must satisfy Rule 2(b) of the 2016 Rules and can only be a third party not arraigned as an accused; an application under the proviso can be filed only after charges are framed, in the manner set out in Rule 3A (paras 39–42).

(vi) The Special Court, by deciding the Section 8(7) application on merits while the Section 26 appeal was pending for want of coram, in effect rendered that appeal infructuous, which was totally impermissible in law; the appellant's Section 8(8) application, however, was rightly dismissed (paras 45, 47–49).

(paras 19–54)

Case Details: Nav Nirman Builders v. Union of India (2026 INSC 130)

Final Outcome: Criminal Appeal allowed; confiscation order under Section 8(7) PMLA set aside; Appellate Tribunal's order of 23.08.2023 set aside and Section 26 appeal restored for decision on merits within 4 weeks; Section 8(7) application to be kept pending; Section 8(8) application held not maintainable.

Case: M/s. Nav Nirman Builders & Developers Pvt. Ltd., through its Managing Director v. The Union of India, through Deputy Director, Directorate of Enforcement, Ranchi, Jharkhand

Neutral Citation: 2026 INSC 130

Case No.: Criminal Appeal No. ___ of 2026 (arising out of SLP (Crl.) No. 9216 of 2023)

Court: Supreme Court of India (Criminal Appellate Jurisdiction) – Reportable

Date of Decision: 6 February 2026

Bench: Justice M. M. Sundresh (author) and Justice Nongmeikapam Kotiswar Singh

Relevant Acts & Sections: Prevention of Money-Laundering Act, 2002 – Sections 2(1)(u), 5(1), 8, 9, 24, 25, 26, 35 and 42; Prevention of Money-laundering (Restoration of Confiscated Property) Rules, 2016 – Rules 2(b) and 3A; Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 – Section 12; Code of Criminal Procedure, 1973 – Section 482

Impugned Order: Order dated 27.02.2023 of the High Court in a petition under Section 482 CrPC, confirming the Special Court's order dated 15.09.2022 allowing the respondent's application under Section 8(7) of the PMLA (paras 13, 53)

Source: Supreme Court of India

Key Holdings of the Supreme Court

• Property equivalent in value to the proceeds of crime falls within Section 2(1)(u) and may be attached when the proceeds as such are not available (para 19).
• Section 8(7) applies only in the stated contingencies, read ejusdem generis, and requires a prior confirmation order under Section 8(3) (paras 27–28).
• The Special Court has no power to review a decision under Section 8(3); a party who lost under Section 8(3) can seek relief under Section 8(7) only on new material (paras 29–31, 52).
• Once an order under Section 8(3) is challenged, a deemed embargo and deemed stay operate on Section 8(7) proceedings until the confirmation order attains finality (paras 36–37, 46).
• Section 8(7) and Section 8(8) are stand-alone provisions; a claim under the second proviso to Section 8(8) must satisfy Rules 2(b) and 3A of the 2016 Rules (paras 41–42, 52).
• Confiscation under Section 8(7) vests the property absolutely in the Central Government under Section 9, extinguishing third-party rights (para 43).

Brief Facts of the Case

A partnership firm, M/s. Nav Nirman Builders, received about Rs. 79,11,559/- for a road work order of 2007. An FIR of 22.10.2009 under the IPC and the Prevention of Corruption Act alleged that the firm had not procured bitumen from Government oil companies as required and had submitted 37 invoices, of which 6 were forged. PMLA proceedings were initiated on 13.03.2012 against the firm and its Managing Partner; the appellant company, incorporated later with the firm's partners, was not arrayed as an accused (paras 5–8).

On 17.12.2017 a Provisional Attachment Order was passed attaching two pieces of land bought by the appellant in 2012 and 2014. The appellant was impleaded before the Adjudicating Authority, which confirmed the attachment under Section 8(3). The appellant's appeal under Section 26 was pending before the Appellate Tribunal, where status quo was ordered on 12.07.2018 (paras 9–10).

After the Managing Partner died on 02.05.2021 and proceedings against him were dropped, the Enforcement Directorate applied under Section 8(7) and the appellant applied under Section 8(8). Despite the pending Section 26 appeal, the Special Court allowed the Section 8(7) application on merits, ordered confiscation and dismissed the Section 8(8) application; the High Court declined to interfere. The Section 26 appeal was later dismissed as infructuous on 23.08.2023 (paras 12–14, 45).

Issues Before the Supreme Court

1. What is the scope of the Special Court's power under Section 8(7) of the PMLA and of the expression "material before it" (paras 27–31).
2. Whether the Special Court can decide a Section 8(7) application while an appeal against the confirmation order under Section 8(3) is pending (paras 33–37, 45–48).
3. Whether the appellant's application for restoration under Section 8(8) was maintainable (paras 38–42, 49).

Court's Findings and Reasoning

Proceeds of crime (paras 18–19): Relying on Vijay Madanlal Choudhary, the Court held that Section 2(1)(u) is wide enough to include property equivalent in value to the tainted property, and reflects the Act's object of securing proceeds of crime in any form.

Scheme of Section 8 (paras 21–26): The Adjudicating Authority must conduct a proper inquiry, including hearing any other person claiming the property under the proviso to Section 8(2). Attachment confirmed under Section 8(3) continues only until confiscation, which gives it finality under Section 8(3)(b).

Limited inquiry under Section 8(7) (paras 27–31): Section 8(7) is triggered only by the stated contingencies, and "any other reason" is read ejusdem generis with death or proclamation of the accused. A third party who was not before the Adjudicating Authority may place material before the Special Court, but a party who suffered an adverse order under Section 8(3) can do so only on new material; any other reading would give the Special Court a review power not contemplated by the Act.

Appellate mechanism and merger (paras 33–37): The Appellate Tribunal is headed by a sitting or retired Judge, has civil court powers and must try to decide appeals within six months under Section 26(6). The order of the higher forum supersedes the confirmation order under the doctrine of merger, so the Special Court must await the outcome of the challenge.

Restoration under Section 8(8) (paras 38–42): Section 8(8) places a heavy onus on a claimant to show legitimate interest, quantifiable loss, good faith and non-involvement. The second proviso, allowing restoration during trial, must be read with Rules 2(b) and 3A of the 2016 Rules, which require charges to have been framed.

Application to the facts (paras 45–49): The appellant's Section 26 appeal was admittedly pending for want of coram. By allowing the Section 8(7) application on merits, the Special Court rendered that appeal infructuous, which was impermissible. However, having appealed against the Section 8(3) order and not having shown a quantifiable loss, the appellant did not satisfy Section 8(8).

Final Outcome and Directions

• Special Court order dated 15.09.2022 allowing the Section 8(7) application, as confirmed by the High Court on 27.02.2023, set aside (paras 50, 53).
• Appellate Tribunal's order dismissing the Section 26 appeal as infructuous set aside, as merits were not gone into for no fault of the appellant (para 51).
• Appellate Tribunal directed to take up and decide the appeal on merits within 4 weeks of receipt of the judgment, notwithstanding its order of 23.08.2023 (para 54(i)).
• The respondent's Section 8(7) application to be kept pending until disposal of the challenge to the Section 8(3) order by the higher forum(s) (para 54(ii)).
• The appellant's Section 8(8) application held not maintainable; factual observations are prima facie and will not bear on further proceedings (paras 53, 55).

Legal Principle Laid Down

Sections 8(7) and 8(8) of the PMLA are stand-alone provisions. An application under Section 8(7) can be decided by the Special Court only once the confirmation order under Section 8(3) attains finality; while an appeal or further challenge to that order is pending, a deemed stay operates. The expression "material before it" has a limited import, and a party who suffered an adverse order under Section 8(3) can seek relief under Section 8(7) only on new material. A claim under the second proviso to Section 8(8) can be made only on satisfying Rules 2(b) and 3A of the 2016 Rules (paras 31, 36–37, 52).

Precedents Relied Upon

• Vijay Madanlal Choudhary v. Union of India, (2023) 12 SCC 1 – Relied upon – scope of "proceeds of crime" under Section 2(1)(u), including property equivalent in value. Discussed at paras 16, 19.
• Deputy Director, Directorate of Enforcement v. Axis Bank, 2019 SCC Online Del 7854 – Cited by the respondent – relied on for the submission that a pending Section 26 appeal does not bar a Section 8(7) application; the Court took a different view. Referred to at para 17.

Important Paragraphs of the Judgment

Verbatim extracts from the judgment. For the full text, refer to the judgment PDF below.

Para 27: "Section 8(7) of the PMLA allows confiscation of properties in the event of non-conduct of the trial, and is a complete provision by itself."

Para 31: "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."

Para 36: "Thus, when an appeal or a further challenge is pending before the Appellate Tribunal or the concerned higher forum against an order passed under Section 8(3) of the PMLA, the Special Court is expected to refrain from dealing with an application filed under Section 8(7) of the PMLA, without awaiting the disposal of such appeal or further challenge."

Para 37: "Once an order under Section 8(3) of the PMLA is challenged, a deemed embargo operates on the conclusion of the proceedings under Section 8(7) of the PMLA. Thus, there is a deemed stay on the proceedings under Section 8(7) of the PMLA until the confirmation order attains finality."

Para 41: "As a necessary corollary, such a person can only be a third party who is not arraigned as an accused, and his entitlement is subject to the conditions imposed by the definition under Rule 2(b) read with Rule 3A of the 2016 Rules."

Para 47: "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."

Practical Impact of the Ruling

• For owners of attached property: A pending appeal against confirmation of attachment now operates as a deemed stay on confiscation under Section 8(7); a Special Court cannot pre-empt it (paras 36–37).
• For the Enforcement Directorate: Confiscation applications under Section 8(7), for example after the death of the accused, must await finality of the Section 8(3) order (paras 37, 54(ii)).
• For Special Courts: The inquiry under Section 8(7) is limited and cannot become a review of the Section 8(3) decision; only new material may be considered from a party who lost before the Adjudicating Authority (paras 29–31).
• For third-party claimants: Restoration during trial under the second proviso to Section 8(8) requires framing of charges and proof of good faith, quantifiable loss and non-involvement under the 2016 Rules (paras 38, 41–42).
• For the Appellate Tribunal: Appeals dismissed as infructuous because of a premature confiscation order may be restored and must be decided on merits (paras 51, 54(i)).

FAQs on Section 8(7) PMLA Confiscation

1. What did the Supreme Court decide in Nav Nirman Builders v. Union of India?

It set aside a PMLA confiscation order passed under Section 8(7) while the owner's appeal against confirmation of attachment was pending, and restored that appeal before the Appellate Tribunal (paras 50–51, 53–54).

2. When can a Special Court order confiscation under Section 8(7) of the PMLA?

Only where the trial cannot be conducted or concluded, such as on the death of the accused or his being declared a proclaimed offender, and only after the confirmation order under Section 8(3) has attained finality (paras 28, 52).

3. What happens to a Section 8(7) application if an appeal under Section 26 is pending?

The Special Court must refrain from deciding it; a deemed stay operates until the confirmation order attains finality (paras 36–37).

4. Can the Special Court re-examine the Adjudicating Authority's decision under Section 8(3)?

No. It has no power of review; a party who lost under Section 8(3) can seek relief under Section 8(7) only on new material not considered earlier (paras 29, 31).

5. Who is a claimant for restoration under the second proviso to Section 8(8)?

A third party not arraigned as an accused, who acted in good faith and suffered a quantifiable loss despite reasonable precautions, as defined in Rule 2(b) of the 2016 Rules, applying after charges are framed (paras 41–42).

Keywords: 2026 INSC 130, Nav Nirman Builders v. Union of India, Section 8(7) PMLA, Section 8(8) PMLA, confiscation pending appeal, deemed stay, doctrine of merger, Section 8(3) PMLA confirmation order, Section 26 PMLA appeal, Appellate Tribunal, material before it, proceeds of crime, Section 2(1)(u), Restoration of Confiscated Property Rules 2016, Rule 3A, Vijay Madanlal Choudhary, Enforcement Directorate, Justice M. M. Sundresh, Justice N. Kotiswar Singh, Supreme Court judgment

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Download Judgment PDF – Nav Nirman Builders v. Union of India

Judgment PDF: 2026 INSC 130 – M/s. Nav Nirman Builders & Developers Pvt. Ltd. v. Union of India (Criminal Appeal No. ___ of 2026, arising out of SLP (Crl.) No. 9216 of 2023) – Download Judgment PDF

Source: Supreme Court of India (official website).