Court Upholds ED's Property Attachment under PMLA; Stay on Proceedings

The court held that the Enforcement Directorate (ED) had the right to attach the properties of the petitioners under the Prevention of Money Laundering Act (PMLA) as the ED followed due process and had sufficient grounds for the attachment. However, the court restrained the ED from further proceedings in ECIR No.ECIR/BGZO/04/2019/AD-AKV/1541 due to an interim stay on the predicate offence proceedings, citing precedents that PMLA proceedings cannot continue if the accused are acquitted in the predicate offence. The attachment order was kept in abeyance until the related writ and criminal petitions are resolved.

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Issues Involved:
1. Whether the Enforcement Directorate had the right to attach the properties of the petitionersRs.
2. Whether the proceedings under the Prevention of Money Laundering Act (PMLA) in ECIR No.ECIR/BGZO/04/2019/AD-AKV/1541 should be permitted to continue despite the interim order of stay of further proceedings granted in the predicate offences under the Indian Penal Code (IPC)Rs.

Issue-wise Detailed Analysis:

1. Whether the Enforcement Directorate had the right to attach the properties of the petitionersRs.

The petitioners challenged the provisional attachment order issued by the Enforcement Directorate (ED) under Section 5(1) of the PMLA, arguing that the registration of the Enforcement Case Information Report (ECIR) was solely based on a case registered by the Central Bureau of Investigation (CBI). The petitioners contended that since the proceedings in the predicate offence (C.C.No.11606 of 2020) were stayed by the High Court, the basis for the attachment under PMLA was also stayed, and hence, the attachment should be stayed as well.

The court noted that Section 5 of the PMLA empowers the ED to provisionally attach properties if there is a reason to believe that the properties are proceeds of crime and are likely to be concealed, transferred, or dealt with in a manner that may frustrate proceedings related to confiscation. The court observed that the ED had recorded reasons for the attachment in writing and had followed the due process under Section 5 of the PMLA. Thus, the court concluded that the ED had the right to attach the properties of the petitioners, and the attachment order was in compliance with the PMLA.

2. Whether the proceedings under PMLA in ECIR No.ECIR/BGZO/04/2019/AD-AKV/1541 should be permitted to continue despite the interim order of stay of further proceedings granted in the predicate offences under IPCRs.

The court examined whether the proceedings under PMLA should continue in light of the stay order in the predicate offence. The petitioners relied on the Supreme Court judgment in *Vijay Madanlal Choudary v. Union of India* and a judgment by the High Court of Madras in *B. Shanmugam and Others v. Karthik Dasari*, which held that if the accused are acquitted in the predicate offence, the offence under PMLA cannot be sustained.

The court noted that the Supreme Court in *Vijay Madanlal Choudary* established that if the accused in the predicate offence are acquitted, discharged, or if the proceedings are quashed, the proceedings under PMLA cannot continue. The court further observed that the interim stay of the predicate offence proceedings means that the proceedings are eclipsed but not extinguished. Therefore, the attachment order under PMLA should not continue while the stay is in effect.

The court also referred to the judgment of the High Court of Madras, which held that when the proceedings in the predicate offence are stayed, the ED should refrain from proceeding further under PMLA until the stay is lifted or the predicate offence is resolved.

Based on these precedents, the court concluded that the proceedings under PMLA should be stalled until the resolution of the predicate offence proceedings. The court restrained the ED from proceeding further with the provisional attachment and kept the attachment order in abeyance until the disposal of the related writ and criminal petitions.

Order:
1. The writ petition is allowed in part.
2. The ED is restrained from proceeding further in ECIR No.ECIR/BGZO/04/2019/AD-AKV/1541 regarding the provisional attachment order dated 01-08-2022 until the disposal of Writ Petition No.14431 of 2020 and Criminal Petition No.7949 of 2020.
3. The provisional attachment order dated 01-08-2022 shall be kept in abeyance until the disposal of the aforementioned petitions.
4. No specific order from the court hearing the writ and criminal petitions is required to continue these proceedings. Once those proceedings are permitted to continue, the continuation of the impugned proceedings becomes axiomatic.

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