Hyderabad: Buying a property before an alleged offence does not shield it from attachment if it represents the value of proceeds of crime that are no longer available, the Appellate Tribunal under SAFEMA has held, upholding the attachment of ₹41.5 lakh in the Chadalavada Infratech Ltd (CIL) bank fraud case.SAFEMA tribunal chairman Justice Munishwar Nath Bhandari dismissed an appeal by K Sreenivasulu Reddy on Sept 21. The attachment remains subject to the outcome of the criminal trial.₹41.5 lakh withdrawn in cashThe Enforcement Directorate (ED) alleged that CIL diverted loans through fake subcontract payments, with recipients withdrawing cash or returning funds to entities controlled by managing director Chadalavada Ravindra Babu.KK Construction, a partnership firm involving Reddy and his brother, K Ravi Shekhar Reddy, received ₹7.5 crore from CIL and allegedly routed ₹2.3 crore back. Reddy personally received ₹33.5 lakh on April 5, 2013, and ₹8 lakh on Nov 4, 2013, both of which he withdrew entirely in cash.According to the findings, he variously described the receipts as his brother’s financial assistance for agriculture, subcontract payments and his 25% partnership profit share. He produced no documents establishing expenditure on subcontract work.Reddy challenged the ED’s attachment order of March 24, 2025, which was confirmed on Aug 19, arguing that the property had been acquired before the alleged offence.The tribunal rejected the argument, holding that Section 2(1)(u) of the Prevention of Money Laundering Act (PMLA) covers “the value of any such property” and therefore permits attachment of equivalent-value property when the direct proceeds of crime are no longer available.₹166.9 crore alleged bank lossThe investigation followed a complaint by SBI deputy general manager Debasish Bhattacharjee and a CBI FIR registered on Sept 28, 2020, alleging cheating, conspiracy and corruption against CIL, Ravindra Babu and the late Chadalavada Venkata Subba Rao.CIL had obtained ₹281.2 crore from SBI’s Nacharam Industrial area branch for power projects in Assam, Bihar, Chhattisgarh, Karnataka and Maharashtra. The accounts became irregular on Jan 5, 2011, and were classified as non-performing assets (NPAs) on April 15, despite two rounds of restructuring.Investigators alleged that diversion of funds caused SBI a loss of ₹166.9 crore. A forensic audit by A Raju and Prasad identified related-party payments, misuse of credit limits and quid pro quo transactions. The ED subsequently initiated a money-laundering investigation under the PMLA.
