2025 (10) TMI 1276 - HC - Money Laundering

Provisional PMLA attachment vacated after 180-day limit expired despite COVID exclusions; Section 8(3) proceedings incomplete

Samta Chaturvedi Versus Union of India & Ors.

HC held the provisional attachment under PMLA ceased to operate as the 180-day period had expired even after excluding COVID-periods, so the impugned ... Money Laundering - provisional attachment order of property - operation of provisional attachment order beyond 180 days from the date of the order - HELD THAT:- Section 5(1)(b) of the PMLA provides that the provisional attachment order shall operate for a period not exceeding 180 days from the date of the order. The provisional attachment order was issued on 10 November 2021. Even if the Covid period, as exempted under the notifications issued from time to time, is excluded, still, the period of 180 days has since elapsed. Therefore, by relying on the notifications exempting the periods due to the Covid-19 pandemic or the decision of the Hon’ble Delhi High Court in the case of M/s. Vikas WSP Ltd. [2025 (9) TMI 1539 - DELHI HIGH COURT], there is no question of operating the impugned provisional attachment order qua the Petitioner’s properties any longer. Merely because the impugned provisional attachment order may have referred to properties of more than one individual or entity, a stay obtained by one of the individuals or entities qua the properties in which it had claimed any interest, will not ordinarily extend the period of 180 days for the purpose of 3rd proviso to Section 5(1) of the PMLA - Since the period of 180 days has long expired, even after excluding the period during the Covid pandemic and since the stay of the Hon’ble Delhi High Court does not apply to the case of the Petitioner, it is declared that the impugned provisional attachment order will no longer apply or can no longer be operated qua the attached properties in which the Petitioner claimed interest. The attachment, to that extent, of the properties in which the Petitioner claim interest will therefore stand vacated or raised hereafter. It is noted that though there was no restraint, the Enforcement Directorate has also not finalised the attachment proceeding by taking appropriate steps under Section 8(3) of the PMLA to date. Application disposed off. ISSUES PRESENTED AND CONSIDERED 1. Whether a provisional attachment order made under Section 5(1)(b) of the Prevention of Money Laundering Act (PMLA) can operate beyond 180 days from the date of the order when the 180-day period has expired. 2. Whether periods excluded by Covid-19 related notifications and judicial decisions extend the operation of a provisional attachment order beyond 180 days. 3. Whether a stay of proceedings or interim order granted by a High Court in respect of a provisional attachment order obtained by one affected party extends the benefit of the third proviso to Section 5(1)(b) of the PMLA to other persons or entities whose properties were also referenced in the same provisional attachment order but who did not obtain the stay. 4. The consequences flowing from expiry of the 180-day period for properties in which the petitioner claims interest, and the scope of relief available without adjudicating ownership. ISSUE-WISE DETAILED ANALYSIS Issue 1: Operation of provisional attachment beyond 180 days under Section 5(1)(b) Legal framework: Section 5(1)(b) authorises provisional attachment of property for a period not exceeding 180 days from the date of the order; Section 5(3) provides cessation on expiry of that period or on an order under Section 8(3); Section 5 contains a third proviso addressing computation of the 180-day period where proceedings are stayed by the High Court. Precedent treatment: The Court considered prior judicial analysis referenced by parties but did not overrule authority; it applied statutory text to facts. Interpretation and reasoning: The 180-day limitation is normative and temporal; once the statutory period has elapsed (even after accounting for recognized exclusions), the provisional attachment cannot continue to operate as against an affected person whose period has expired. The Court examined the date of attachment (10 November 2021) and concluded that, on the material before it, the 180 days have long expired. Ratio vs. Obiter: Ratio - A provisional attachment under Section 5(1)(b) ceases to operate against an affected person upon expiry of the 180-day period prescribed by statute, unless timely extension or exclusion under the statutory proviso applies to that person. Conclusion: The provisional attachment order cannot continue to operate qua the petitioner's claimed properties because the statutory 180-day period has expired. Issue 2: Effect of Covid-19 period exclusions and related judicial decisions on the 180-day computation Legal framework: Time-computation adjustments arising from government notifications (Covid-related) and judicial determinations may exclude certain periods from computation of statutory timelines; Section 5's third proviso separately provides for exclusion of periods during which High Court stays proceedings and an additional period of up to 30 days after vacation. Precedent treatment: The Respondents relied upon decisions and notifications that excluded Covid-periods for computation of statutory limitation; the Court considered those authorities but evaluated their effect factually. Interpretation and reasoning: Even if Covid-period exclusions relied upon by respondents are applied, the Court found that the 180-day period in the present case still lapsed. The Court therefore treated the Covid exclusions as insufficient, on the facts, to extend the operative life of the attachment beyond 180 days for the petitioner. Ratio vs. Obiter: Ratio - Covid-period exclusions, while relevant to computation of statutory time, do not operate as a blanket extension where, on computation, the 180 days have nonetheless expired. Conclusion: Covid-related exclusions do not preserve the provisional attachment in respect of the petitioner's claimed properties in this matter. Issue 3: Whether a High Court stay obtained by one entity extends the third proviso's benefit to other entities referenced in the same provisional attachment order Legal framework: The third proviso to Section 5(1)(b) excludes from the 180-day computation the period during which 'the proceedings under this section is stayed by the High Court' and adds a further excluded period of up to 30 days from vacation of the stay; proviso's language is concerned with the stay of proceedings under the section. Precedent treatment: The Court considered a Delhi High Court stay obtained by another entity which challenged the same provisional attachment order; parties relied on that stay to argue extension for all referenced properties. Interpretation and reasoning: The Court held that a stay obtained by one affected party in respect of properties in which that party has an interest cannot ordinarily be extended to continue the provisional attachment (or its excluded computation) for other persons/entities who did not obtain such a stay. The textual and contextual reading requires that the excluded period applies to proceedings insofar as they are stayed vis-à-vis a particular person/entity; the benefits of a stay are not freely transferable to third parties whose interests were not protected by the stay order. The Court noted that the stay in the other proceeding was qua the properties and parties concerned in that petition and did not operate in favour of the present petitioner. Ratio vs. Obiter: Ratio - A High Court stay in favour of one party does not automatically exclude the stayed period from the 180-day computation for other persons/entities referenced in the same provisional attachment order unless the stay expressly applies to them. Conclusion: The third proviso's exclusion cannot be invoked by the petitioner on the basis of a stay obtained by another party; therefore the stay did not extend the 180-day period for the petitioner. Issue 4: Relief and consequences where the 180-day period has expired; scope of Court's order Legal framework: On expiry of the statutory provisional period under Section 5, Section 5(3) contemplates cessation of the attachment; the enforcement authority retains statutory remedies (including steps under Section 8) and rights to secure interests pending adjudication. Precedent treatment: The Court applied statutory cessation principles without addressing final ownership; prior interlocutory orders in related matters were examined for relevance only. Interpretation and reasoning: The Court declared that, since the 180-day period has expired and the petitioner did not have a stay protecting its position, the provisional attachment no longer applies qua the petitioner's claimed properties and accordingly such attachment is vacated/raised insofar as those properties are concerned. The Court expressly clarified that this declaration is not an adjudication of ownership and does not preclude the enforcement authority from taking lawful steps under the PMLA to secure or assert its interest. The Court also observed that the enforcement authority had not completed steps under Section 8(3) to finalize attachment. Ratio vs. Obiter: Ratio - Expiry of the 180-day provisional period requires vacating the provisional attachment as to the affected person whose period has expired; such vacatur is without prejudice to enforcement authority's other statutory remedies and without serving as recognition of ownership. Conclusion: The attachment stands vacated/raised insofar as the petitioner's claimed properties; the declaration is limited and does not determine ownership or preclude lawful steps by the enforcement authority. The Court temporarily stayed its vacatur for four weeks to preserve the status quo and prevent transfer or alienation pending any further orders.