PMLA Appellate Tribunal Grants Major Relief to Dalmia Cement, Cuts ‘Proceeds of Crime’ from ₹793 Cr to ₹92.52 Cr in Jagan Reddy Quid Pro Quo Case

March 9, 2026 : The Appellate Tribunal under the Prevention of Money Laundering Act (PMLA) has granted substantial relief to M/s Dalmia Cement (Bharat) Limited by drastically reducing the alleged “proceeds of crime” from ₹793.34 crore to ₹92.52 crore, while partly allowing the company’s appeal against attachment of properties.

The ruling, delivered by Shri V. Anandarajan (Member) on 9 March 2026, arose from a challenge to the Adjudicating Authority’s order dated 22 September 2025, which had confirmed attachment of properties worth approximately ₹377.26 crore pursuant to a Provisional Attachment Order issued by the Enforcement Directorate (ED) on 31 March 2025.

Background of the Case
The proceedings stem from a CBI case registered in 2011 alleging a quid pro quo arrangement involving former Andhra Pradesh Chief Minister Y.S. Jagan Mohan Reddy. The allegation was that various companies, including Dalmia Cement, invested in entities linked to Jagan Mohan Reddy in exchange for illegal governmental favours, including mining leases.

As per the ED, Dalmia Cement invested ₹95 crore in Bharathi Cement Corporation Pvt. Ltd. and allegedly derived illegal gains through limestone mining from Kadapa. Initially, the ED quantified proceeds of crime at ₹793.34 crore, comprising share transactions and mining-related gains.

Tribunal Rejects Share Transaction as ‘Proceeds of Crime’
A central issue before the Tribunal was whether ₹84 crore earned from the sale of shares of Bharathi Cement to French company PARFICIM could be treated as proceeds of crime.

Relying on its earlier precedent in connected matters, the Tribunal held that such proceeds could not be classified as “proceeds of crime.” It noted that the buyer was a bona fide third-party foreign investor not implicated in the scheduled offence and whose investment had been accepted as genuine.

The Tribunal emphasized that the share investment constituted an outflow from the appellant and not an amount “derived or obtained,” thereby falling outside the definition under Section 2(1)(u) of the PMLA.

Revised Computation Accepted
During proceedings, the ED itself revised the computation of alleged proceeds of crime to ₹176.52 crore after deducting extraction costs. This included ₹92.52 crore from mining profits and ₹84 crore from share sale.

After excluding the share sale component, the Tribunal held that only ₹92.52 crore could be sustained as proceeds of crime, observing that the earlier figure of ₹793.34 crore was unsustainable.

Mining Profits Still Under Scrutiny
On the issue of mining-related gains, however, the Tribunal found sufficient prima facie material to treat profits from limestone extraction as proceeds of crime. It highlighted a sequence of events involving grant and transfer of prospecting licence and mining lease that indicated a coordinated and potentially collusive arrangement rather than routine administrative action.

The Tribunal also noted that a chargesheet had already been filed in the scheduled offence and that the issue would ultimately be adjudicated by the competent criminal court.

‘Reason to Believe’ Requirement Upheld
Rejecting the appellant’s challenge to the validity of attachment, the Tribunal held that the ED had adequately recorded “reason to believe” under Section 5 of the PMLA. It clarified that at the stage of provisional attachment, conclusive proof is not required, and the existence of sufficient material is adequate to justify action.

Relief on Substitution of Attached Properties
Significantly, the Tribunal permitted substitution of attached properties with alternative security such as bank guarantees or other financial instruments. It noted that the attached assets were part of the company’s operational infrastructure and that even the ED was amenable to securing the alleged amount through alternate means.

This approach, the Tribunal observed, balances enforcement objectives with protection of legitimate business operations.

Outcome
The appeal was partly allowed. The Tribunal upheld attachment only to the extent of ₹92.52 crore linked to alleged mining gains, while granting relief in respect of the remaining amount. It also allowed substitution of attached assets, subject to satisfaction of the authority.

Case Details:
Case: M/s Dalmia Cement (Bharat) Limited v. Deputy Director, Directorate of Enforcement
Case No: FPA-PMLA-1973/HYD/2025
Coram: Shri V. Anandarajan (Member)