Bombay HC Allows Coda Payments Appeal Against PMLA Freeze

Tribunal Cannot Supply Missing Section 8(2) PMLA Finding: Bombay High Court Allows Coda Payments' Appeal Against Freeze

Published: 13 September 2026 · NyayVidhan

The Bombay High Court allowed Coda Payments India's appeal under Section 42 of the PMLA and quashed the Appellate Tribunal's order upholding the freezing of its bank and payment-gateway accounts (paras 1, 54). The Adjudicating Authority never recorded the Section 8(2) finding that the property was involved in money laundering, and the Tribunal could not supply it (paras 25-30). Freezing about Rs. 100 crore when one FIR of Rs. 85,650 remained was "ex-facie excessive and disproportionate" (para 40).

Key holdings

An order continuing a PMLA freeze must record the Section 8(2) finding that the property is involved in money laundering (paras 22-25, 53).

An appellate tribunal that notices the omission cannot supply the finding itself; it should interfere with the order (paras 26-30).

A company's turnover or foreign remittances do not by themselves make its bank balances proceeds of crime (paras 24, 38, 53).

Freezing about Rs. 100 crore when one FIR of Rs. 85,650 remained pending was excessive and disproportionate (paras 40-41).

The findings are confined to the legality of the orders and express no opinion on whether any offence was committed (para 53).

Judgment digest by NyayVidhan: a summary of the court's judgment, not its text. The judgment itself is the authoritative version.

Brief Facts

The Enforcement Directorate registered an ECIR on 28.12.2021 on ten FIRs, principally under Sections 420 and 120-B IPC, alleging unauthorised deductions from users of online games such as ‘Garena Free Fire’ (para 5). On 23.09.2022 it searched premises connected with the appellant and froze five bank accounts and merchant IDs with payment aggregators under Section 17(1A) (paras 6-7). The Adjudicating Authority confirmed the freezing on 15.03.2023 and the Appellate Tribunal dismissed the appeal on 06.03.2025 (paras 10-11). The appellant said it was only an intermediary and that nine of the ten FIRs had been closed; the ED relied on revenue of Rs. 2,850 crore and remittances of Rs. 2,320 crore abroad (paras 12-13).

Court's Findings

The Court held that the Tribunal disregarded the appellant's specific plea that the Adjudicating Authority, sitting as the Chairperson alone, lacked jurisdiction under Section 6, and that this disregard of the statutory mandate renders the authority's order "ipso facto a nullity" (paras 16-19). On the merits, Section 8(2) requires a finding that the property is involved in money laundering; recording that the material suffices to continue the freeze is different, and the authority neither identified such property nor explained its nexus with the alleged crime (paras 22-25). The Tribunal noticed the omission but could not "cure the defect" itself: an appellate body cannot supply a mandatory finding the original authority failed to record, as Mohinder Singh Gill shows (paras 26-33). Relying on Vijay Madanlal Choudhary, it held that turnover or foreign remittances do not by themselves make a company's assets proceeds of crime (paras 36-39). With nine of ten FIRs closed and one of Rs. 85,650 pending, the freeze was disproportionate, and the ED had produced no evidence of auto-debits without authentication (paras 40-47). Its failure to supply ‘reasons to believe’ vitiated the proceedings (para 52).

Legal Principle

Before a PMLA freeze or retention is continued, the Adjudicating Authority must itself record the Section 8(2) finding that the property is involved in money laundering. Satisfaction that continuation is needed is no substitute, an appellate tribunal cannot supply the finding later, and gross turnover alone is not proceeds of crime (paras 30, 38, 53).

Precedents Relied Upon

Mohinder Singh Gill & Anr. v. Chief Election Commissioner, New Delhi & Ors. (1978) 1 SCC 405
Relied Upon Discussed at ¶ 32, 33
An order of a statutory authority must stand or fall on the reasons it contains; they cannot be supplemented later by affidavit or fresh grounds. Applied: an appellate authority cannot supply the foundational finding the original authority had to record.
63 Moons Technologies Ltd. v. Union of India (2019) 18 SCC 401 [printed: 2019 18 SCC 401]
Relied Upon Discussed at ¶ 32
Reaffirms that a statutory order must stand or fall on the reasons contained in it.
Vijay Madanlal Choudhary & Ors. v. Union of India & Ors. (2023) 12 SCC 1
Relied Upon Discussed at ¶ 36, 52
‘Proceeds of crime’ must be construed strictly; property is not proceeds of crime merely because it is attached in connection with a scheduled offence — it must be derived or obtained as a result of criminal activity relating to a scheduled offence.

View all precedents (5)

M/s. Prakash Industries Ltd. v. Union of India & Anr. 2023 SCC OnLine Del 336
Relied Upon Discussed at ¶ 52
Delhi High Court decision with which the Section 17 freezing order was held to be contrary.
J. Sekar v. Union of India 2018 SCC OnLine Del 6523
Relied Upon Discussed at ¶ 52
Delhi High Court: the ‘reasons to believe’ must be communicated to the noticee under Section 8(1) PMLA at every stage; failure to disclose them at the beginning is an illegality vitiating the proceedings.

Tribunal Cannot Supply Missing Section 8(2) PMLA Finding: Bombay High Court Allows Coda Payments' Appeal Against Freeze

Judgment Intelligence

Key holdings

Brief Facts

Court's Findings

Legal Principle

Precedents Relied Upon

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