2025 (4) TMI 251 - HC - Money Laundering

Provisional Attachment Under PMLA Upheld: Statutory Appeal Process Takes Precedence Over Writ Petition Challenges

Suresh Prasad Versus Directorate of Enforcement

HC dismissed writ petition challenging provisional attachment under PMLA. Court held that the petition was not maintainable due to pending appeal before ... Money Laundering - challenge to Provisional Attachment Order - Whether the petitioner can challenge the provisional attachment order through a writ petition under Article 226, given that an appeal is pending before the appellate tribunal under Section 26 of PMLA? - HELD THAT:- By the impugned provisional order dated 07.03.2024, the bank accounts mentioned at serial Nos. 5, 6 & 10 of the notice dated 25.11.2021 are proposed to be attached under the provision of Section 5 of the Act and the same has been confirmed by the adjudicating authority vide order dated 18.07.2024. Against the order of adjudicating authority, an appeal before the appellate tribunal has been preferred by the petitioner and the appeal being No. 1661 of 2024 is pending before the appellate tribunal. The writ petition challenging the provisional order dated 07.03.2024 is not maintainable, as the same is subject matter of the appeal before the appellate tribunal under Section 26 of PMLA. Petition dismissed. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered in this judgment include: Whether the provisional attachment order dated 07.03.2024 under Section 5 of the Prevention of Money Laundering Act, 2002 (PMLA) is valid and lawful. Whether the petitioner can challenge the provisional attachment order through a writ petition under Article 226, given that an appeal is pending before the appellate tribunal under Section 26 of PMLA. Whether the authority can exercise multiple options under Sections 5, 17, or 18 of PMLA once one of the options has been exercised.ISSUE-WISE DETAILED ANALYSIS1. Validity of the Provisional Attachment OrderThe relevant legal framework involves Section 5 of PMLA, which allows the attachment of property involved in money laundering. The court noted that the provisional attachment order dated 07.03.2024 was issued under this section and subsequently confirmed by the adjudicating authority under Section 8 of the Act.The court's interpretation emphasized that the provisional attachment is part of the legal process under PMLA, which includes confirmation by the adjudicating authority and the possibility of appeal before the appellate tribunal.Key evidence included the fact that the adjudicating authority had confirmed the provisional attachment order, and the petitioner had already filed an appeal against this confirmation, which was pending.The court applied the law to the facts by recognizing the procedural steps followed under PMLA and the existence of an ongoing appeal process, which rendered the writ petition under Article 226 inappropriate at this stage.2. Maintainability of the Writ PetitionThe court considered whether a writ petition is maintainable when an appeal is pending. The legal framework includes Article 226 of the Constitution, which provides for writ jurisdiction, and Section 26 of PMLA, which outlines the appellate process.The court reasoned that since the appeal process under PMLA was actively being pursued by the petitioner, the writ petition was not maintainable. The court referenced legal precedents that discourage parallel proceedings when a statutory appeal is available and being utilized.Competing arguments included the petitioner's contention that the provisional attachment was an abuse of process, while the respondent argued for adherence to the statutory appeal process.The court concluded that the writ petition was not maintainable due to the pending appeal, but granted the petitioner liberty to raise all relevant points before the appellate tribunal.3. Exercise of Multiple Options under PMLAThe petitioner argued that once the authority exercises an option under Sections 5, 17, or 18 of PMLA, it cannot resort to other options. The court examined this argument but did not provide a detailed analysis, as it deferred the matter to the appellate tribunal where the appeal was pending.The court acknowledged the petitioner's right to raise this point in the appellate proceedings, indicating that the issue requires consideration within the statutory appeal framework.SIGNIFICANT HOLDINGSThe court held that the writ petition was not maintainable due to the ongoing appeal process under Section 26 of PMLA. It emphasized the importance of following the statutory appeal process and discouraged the use of writ jurisdiction when an appeal is pending.Verbatim quotes of crucial legal reasoning include the court's statement that 'the writ petition challenging the provisional order dated 07.03.2024 is not maintainable, as the same is subject matter of the appeal before the appellate tribunal under Section 26 of PMLA.'Core principles established include the adherence to procedural steps outlined in PMLA and the discouragement of parallel proceedings when a statutory appeal is available.The court's final determination was to dismiss the writ petition as not maintainable, granting the petitioner liberty to pursue all arguments before the appellate tribunal. The court also closed the miscellaneous application and noted that any interim orders merged with the final order.