2023 (4) TMI 1306 - HC - Money Laundering

Bank's challenge to provisional attachment order under PMLA dismissed, alternate remedy available under Section 8(2)

Delhi HC dismissed bank's challenge to provisional attachment order under PMLA Act. Court held that predicate offences of criminal breach of trust and ... Money Laundering - Provisional attachment order - predicate offences - subject property is involved in any money laundering activities or not - Section 8(2) first proviso of the PMLA Act - HELD THAT:- The predicate offence in the present case are acts of criminal breach of trust and forgery by the accused persons with respect to the credit facilities provided by the Appellant/Bank between the years 2007-2018. The issue as to whether the commission of the offence between 2007-2018 overlaps or is prior to the creation of mortgage can be adjudicated by the authorities under the PMLA Act and this Court, at this juncture, is not inclined to go into that question. This Court, therefore, does not find any reason to interfere with the order of the learned Single Judge who has also not commented on this question and has left the matter to the authorities under the PMLA Act to consider the issue. It is well settled that when a statute prescribes a particular mode or a mechanism for adjudication of disputes arising out of that statute, then writ Courts must loathe in interfering the mode prescribed in that stature. The scheme of the PMLA Act provides for mechanism beginning with a Provisional Attachment Order (PAO) attaching the property which is then confirmed by the Adjudicating Authority under Section 8(2) of the Act. When a property stands confiscated, a trial is conducted by the Special Court and in accordance with Section 8(8) of the Act, the Special Court may direct Central Government to restore such confiscated property. Therefore, this Court is of the view that the Appellant/Bank has an alternate efficacious remedy within the scope of the Act - This Court, therefore, does not find any infirmity in the judgment of the learned Single Judge in relegating the Appellant/Bank to the Adjudicating Authority to ventilate its grievances under Section 8(2) of the PMLA Act and the same does not require interference and is accordingly upheld. Application dismissed. Issues Involved:1. Challenge to the Provisional Attachment Order (PAO) under the PMLA Act.2. Jurisdiction and efficacy of the Adjudicating Authority.3. Priority of secured creditor over Enforcement Directorate's rights.4. Availability of alternative remedies under the PMLA Act.Summary:1. Challenge to the Provisional Attachment Order (PAO) under the PMLA Act:The Appellant sought to challenge the Order dated 22.03.2023, passed by the learned Single Judge, which dismissed the writ petition challenging the Provisional Attachment Order (PAO) No.12/2019 dated 02.09.2019. This PAO was issued by the Deputy Director, Directorate of Enforcement, New Delhi, attaching the immoveable property under Section 5(1) of the Prevention of Money Laundering Act, 2002 (PMLA Act). The Adjudicating Authority confirmed the PAO by an order dated 21.02.2020.2. Jurisdiction and efficacy of the Adjudicating Authority:The learned Single Judge directed the Appellant/Bank to approach the Adjudicating Authority under Section 8(2) of the PMLA Act to establish that the subject property is not involved in money laundering activities. The Court emphasized that the Adjudicating Authority has the jurisdiction to hear any aggrieved person under Section 8(2) and Section 8(8) of the PMLA Act, and the Appellant/Bank should utilize this statutory mechanism.3. Priority of secured creditor over Enforcement Directorate's rights:The Appellant/bank argued that the subject property, mortgaged to the bank in 2007, should not be considered proceeds of crime and that the bank, as a secured creditor, should have priority over the Enforcement Directorate's rights under the PMLA Act. However, the learned Single Judge found that the issue of whether the property could have been attached as proceeds of crime should be adjudicated by the authorities under the PMLA Act.4. Availability of alternative remedies under the PMLA Act:The Court reiterated the principle that when a statute provides a specific mechanism for adjudication, writ Courts should generally refrain from interfering. The Court cited precedents from the Supreme Court, emphasizing that writ jurisdiction should be exercised only in extraordinary circumstances and when no efficacious alternative remedy is available. The Court found that the Appellant/Bank has an adequate remedy within the PMLA Act's framework and upheld the learned Single Judge's decision to direct the Appellant/Bank to the Adjudicating Authority.Conclusion:The Court dismissed the LPA, finding no reason to interfere with the learned Single Judge's order, which directed the Appellant/Bank to approach the Adjudicating Authority under the PMLA Act. The Court emphasized the availability of alternative remedies and the statutory mechanism provided by the PMLA Act for resolving such disputes.