Court annuls orders due to failure to provide reasons, grants writ petition.

The court set aside the Provisional Order of Attachment (POA) dated December 29, 2017, and the order dated February 9, 2018, due to the Adjudicating Authority's failure to independently assess and communicate the "reasons to believe" to the petitioner, violating principles of natural justice. The authorities were permitted to restart the process upon meeting statutory obligations and disclosing reasons to the affected party. The writ petition was granted, the impugned orders were annulled, and no costs were awarded.

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Issues Involved:
1. Validity of the Provisional Order of Attachment (POA) dated December 29, 2017.
2. Legality of the order dated February 9, 2018, directing the issuance of a show-cause notice under Section 8(1) of the PMLA.
3. Requirement and communication of "reasons to believe" under Sections 5 and 8 of the PMLA.
4. Application of natural justice principles and the audi alteram partem rule.

Detailed Analysis:

1. Validity of the Provisional Order of Attachment (POA):
The POA dated December 29, 2017, was issued by respondent no.2 based on "reasons to believe" that the petitioner acquired properties from proceeds of crime derived from alleged money-laundering activities by other entities. The petitioner challenged this order, arguing that the "reasons to believe" were not adequately disclosed, thus impeding their ability to respond effectively.

2. Legality of the Order Dated February 9, 2018:
The order dated February 9, 2018, directed the issuance of a show-cause notice under Section 8(1) of the PMLA. The petitioner contended that the Adjudicating Authority (AA) failed to provide independent "reasons to believe" as required under Section 8(1), thereby vitiating the notice and subsequent proceedings. The court examined whether the AA adopted the reasons from the POA without independent assessment, which would constitute a dereliction of duty.

3. Requirement and Communication of "Reasons to Believe":
The court emphasized that both Sections 5 and 8 of the PMLA require independent "reasons to believe" at different stages. The petitioner argued that these reasons must be disclosed to enable an effective reply. The court referred to the Delhi High Court's judgment in J. Sekar and Ors. vs. Union of India and Ors., which held that the reasons must be noted and communicated to the affected party. Failure to disclose these reasons at the beginning would render the POA illegal.

4. Application of Natural Justice Principles:
The court highlighted the importance of the audi alteram partem rule, which mandates that a person must be given an opportunity to contest the notice and its basis. Without communication of the reasons to believe, the noticee would be unable to present a comprehensive defense. The court concurred with the Delhi High Court's view that the reasons to believe must be communicated to the noticee to ensure a fair hearing.

Conclusion:
The court found that the AA did not independently arrive at reasons to believe and merely adopted the reasons from the POA. This failure to exercise independent judgment and communicate the reasons to the petitioner vitiated the notice under Section 8(1) and subsequent proceedings. Consequently, the court set aside the POA dated December 29, 2017, and the order dated February 9, 2018. However, the authorities were allowed to reinitiate the process, provided they comply with the statutory requirements and communicate the reasons to believe to the noticee.

The writ petition was allowed, and the impugned orders were set aside, with no order as to costs. The court also directed that urgent certified website copies of the order be made available to the parties upon compliance with requisite formalities.

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