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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: (i) Whether the encumbrance entries relating to properties whose provisional attachment under the Prevention of Money Laundering Act, 2002 was not confirmed could be directed to be removed. (ii) Whether the provisional attachment and consequential confirmation relating to the other property could be quashed for want of notice and in view of the prior purchase by the petitioners.
Issue (i): Whether the encumbrance entries relating to properties whose provisional attachment under the Prevention of Money Laundering Act, 2002 was not confirmed could be directed to be removed.
Analysis: The provisional attachment in respect of the properties covered by the writ petition was not confirmed by the adjudicating authority. The record also did not show any effective reinvestigation or continuation of attachment after the confirmation failure. Once the attachment ceased to remain in force, the entries continued in the encumbrance certificate could not survive independently.
Conclusion: The encumbrance entries were liable to be removed, and the relief was in favour of the petitioners.
Issue (ii): Whether the provisional attachment and consequential confirmation relating to the other property could be quashed for want of notice and in view of the prior purchase by the petitioners.
Analysis: The property had been purchased before the provisional attachment, and the fact of such purchase was not brought to the notice of the adjudicating authority. The petitioners were also not issued notice before the provisional attachment order. The availability of alternative remedies did not require relegation to those forums in the peculiar facts, particularly when the attachment was unsupported on merits and was inconsistent with the treatment of the other similarly placed properties.
Conclusion: The provisional attachment order and the confirmation order were liable to be quashed, and the relief was in favour of the petitioners.
Final Conclusion: The writ petitions were allowed by granting relief against both the subsisting encumbrance entries and the attachment orders, while leaving open the authority to proceed afresh if the sale is later found to be sham or an accommodation transaction.
Ratio Decidendi: Where a provisional attachment under the Prevention of Money Laundering Act, 2002 is not confirmed and no effective continuation of the attachment is shown, the consequential encumbrance entry cannot survive; similarly, an attachment passed without notice to a prior purchaser and without addressing the purchaser's title cannot be sustained on merits.
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