Nagpur / Mumbai, March 2026 – The Nagpur Bench of the Bombay High Court has set aside key orders of the PMLA Appellate Tribunal in a ruling that delivers a major legal victory to the Enforcement Directorate in a case linked to alleged coal block allocation irregularities. A Division Bench comprising Justices Mukulika S. Jawalkar and Nandesh S. Deshpande allowed two First Appeals filed by the Joint Director of the Enforcement Directorate, quashing and setting aside the Appellate Tribunal’s orders dated August 28, 2017 and January 25, 2018. These earlier orders had overturned the ED’s provisional attachment of properties, particularly those mortgaged to banks.
The Tribunal had ruled in favour of secured creditors including HDFC Bank and Punjab National Bank, citing their priority rights under Section 31-B of the Recovery of Debts and Bankruptcy Act, 1993 and Section 26-E of the SARFAESI Act. The Bombay High Court overruled this position, restoring the ED’s attachment and directing the respondent banks to approach the Special Court under Section 8(8) of the PMLA for appropriate relief, including release of attached properties.
The Case Background: Grace Industries and the Coal Block Probe
The case stems from an FIR registered by the Central Bureau of Investigation alleging irregularities in coal block allocation involving Grace Industries Ltd. The ED claimed that the company generated wrongful gains of over ₹24.92 crore, categorising it as “proceeds of crime” under the PMLA. The attached assets had been mortgaged to HDFC Bank for credit facilities prior to the ED’s action and the bank had already classified the account as a non-performing asset and initiated recovery proceedings under the SARFAESI Act before the ED’s provisional attachment was levied.
The central legal question was whether banks’ secured creditor rights under SARFAESI could override the ED’s PMLA attachment. The Bombay High Court’s answer is unambiguous: PMLA attachment takes precedence, and banks must seek relief through the Special PMLA Court rather than through the Appellate Tribunal.
