2025 (11) TMI 201 - HC - Money Laundering

Petitions challenging provisional attachment under s.5 PMLA dismissed as Section 26 provides exclusive PMLA remedy

M/s. Krrish Realtech Pvt Ltd Through Its Authorised Representative And Amit Katyal Versus Union of India Through Secretary Ministry of Finance & Anr.

HC dismissed petitions challenging provisional attachment orders under s.5 PMLA, holding they are not maintainable under Article 226 because Section 26 ... Money Laundering - Maintainability of petition - availability of alternative remedy - Challenge to Provisional Attachment Orders issued under Section 5 of the Prevention of Money Laundering Act, 2002 - HELD THAT:- Considering the existence of an alternative and efficacious remedy under Section 26 of the PMLA, this Court is of the opinion that the present petitions do not merit interference under Article 226 of the Constitution of India - It is a well-settled legal principle that where a statute provides a self-contained appellate mechanism, recourse to the extraordinary jurisdiction of this Court under Article 226 is ordinarily not maintainable. Section 26 of the PMLA specifically provides that any person aggrieved by an order of the Adjudicating Authority may prefer an appeal to the Appellate Tribunal. Accordingly, the statutory scheme itself envisages that all questions relating to the validity, scope, and effect of an attachment order must first be adjudicated within the framework of the Act. This Court is not inclined to entertain the present petitions, as an alternative and efficacious statutory remedy is available to the petitioners - Petition disposed off. 1. ISSUES PRESENTED AND CONSIDERED 1. Whether writ petitions challenging Provisional Attachment Orders under Section 5 PMLA are maintainable before the High Court when a statutory appellate remedy exists under Section 26 of the PMLA. 2. Whether the impugned provisional attachment orders suffer from want of jurisdiction because the underlying predicate offences (FIRs/ECIR) were quashed/closed or otherwise not properly pleaded in the ECIR, including alleged non-reference to the principal FIR on which investigation is said to be founded. 3. Whether the Provisional Attachment Orders/Confirmation orders violate fundamental rights (Articles 14, 19(1)(e), 21 and Article 300A) or orders of higher courts (status quo / lis pendens) so as to warrant exercise of writ jurisdiction. 4. Whether the Adjudicating Authority's confirmation of provisional attachments is vitiated for want of proper constitution (requirement of three members including Chairperson under Section 6) rendering proceedings coram non judice. 5. Whether the impugned provisional attachment orders are invalid for failure to state reasons or to act 'on the basis of material in his possession' as mandated by Section 5(1) PMLA and whether concealment of material facts (eg. closure/quashing of FIRs) invalidates the attachments. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Maintainability of writs in presence of statutory appellate remedy (Section 26 PMLA) Legal framework: PMLA provides a self-contained scheme of adjudication, confirmation and appeal; Section 26 permits appeal to the Appellate Tribunal against orders of the Adjudicating Authority. Constitutional writ jurisdiction under Article 226 is discretionary and ordinarily deferred where efficacious statutory remedies exist. Precedent treatment: Courts have repeatedly held that where a statute provides an alternative efficacious remedy, writ jurisdiction should ordinarily not be exercised (principles from Thansingh Nathmal, Titaghur, Mafatlal and subsequent decisions). Recent High Court decisions (Gold Croft Properties, Dr. U.S. Awasthi, Adventure Island Ltd.) applied the same principle in PMLA context. Interpretation and reasoning: The Court applied the settled principle that the statutory remedy under the PMLA is adequate and capable of adjudicating all grounds raised in the writ petitions (including jurisdictional, factual and legal objections to attachments). Two of the challenged PAOs had already been confirmed and appeals filed; the third matter was sub judice before the Adjudicating Authority with judgment reserved. The Court observed that entertaining writs at this stage would bypass the statutory machinery and could lead to conflicting orders. Ratio vs. Obiter: Ratio - Where the Adjudicating Authority has exercised jurisdiction and an effective appeal exists under Section 26, writ petitions challenging attachment orders are ordinarily not maintainable and should be relegated to the Appellate Tribunal unless exceptional circumstances are shown. Conclusions: Writ petitions were not entertained; petitioners directed to avail the statutory appellate remedy and the Appellate Tribunal requested to decide appeals expeditiously (direction as to preferential disposal within a specified period). Issue 2 - Jurisdictional foundation of PAOs: existence and status of predicate offences / ECIR Legal framework: PMLA attachments proceed upon belief of proceeds of crime derived from scheduled offences; investigations are reflected in ECIRs which are linked to predicate offences (FIRs) but registration of a separate FIR is not always a sine qua non for attachment (as per Vijay Madanlal Choudhary). Precedent treatment: The respondent relied on Vijay Madanlal Choudhary (Supreme Court) for proposition that separate FIR registration is not essential for attachment; petitioners relied on cases and factual distinctions asserting lack of surviving scheduled offence. Interpretation and reasoning: The Court noted competing factual assertions regarding closure/quashing of multiple FIRs and whether the ECIR expressly referenced the key FIR. It recorded petitioners' contention that most underlying FIRs were closed/quashed and that the ECIR lacked reference to the principal FIR, but treated these as disputed questions of fact amenable to adjudication by the statutory forum. The Court emphasized that such factual controversies are not ordinarily resolved in writ proceedings where an alternative remedy exists. Ratio vs. Obiter: Obiter on factual sufficiency - the Court did not finally decide whether attachments lacked predicate offences; rather it held that such issues are to be examined by the Adjudicating Authority/Appellate Tribunal. Conclusions: The contention that ECIR lacked reference to the principal FIR and that no scheduled offence survived was left to the statutory adjudicatory process; writ relief was declined on maintainability grounds. Issue 3 - Alleged violation of higher court orders (status quo / lis pendens) and fundamental rights Legal framework: Orders of higher courts (status quo) and principles of lis pendens are enforceable; fundamental rights (Articles 14, 19(1)(e), 21 and Article 300A) can warrant writ jurisdiction where statutory machinery is inadequate or there is flagrant violation. Precedent treatment: The Court acknowledged that exceptional circumstances - such as total violation of fundamental rights or blatant disregard of superior court orders - can justify writ intervention despite statutory remedies (cited Mafatlal and other authorities recognizing exceptions). Interpretation and reasoning: While petitioners asserted that attachments contravened Supreme Court status quo directions and infringed property and other fundamental rights, the Court found these contentions capable of effective redressal before the Appellate Tribunal. The Court observed that petitioners failed to demonstrate that the statutory remedy was illusory or ineffective, or that there had been a jurisdictional or procedural violation of such magnitude as to require immediate writ relief. Ratio vs. Obiter: Ratio - Alleged contravention of superior court orders or infringement of fundamental rights does not ipso facto render writ jurisdiction appropriate where an efficacious statutory appeal exists and no exceptional circumstances eliminating that remedy are shown. Conclusions: Allegations of violation of status quo and fundamental rights were to be raised and adjudicated in the appeal; writ petitions dismissed without expressing any opinion on merits. Issue 4 - Constitution/coram of the Adjudicating Authority (single member vs three members) Legal framework: Section 6 PMLA prescribes constitution of the Adjudicating Authority; statutory provisions and subordinate rules govern bench constitution and whether a single member bench can validly decide matters. Precedent treatment: Conflicting High Court decisions exist on whether single-member adjudication is permissible; some judgments have upheld single-member benches while others have been stayed at the Supreme Court level (eg. J. Sekar stayed). Interpretation and reasoning: The Court noted petitioners' objection regarding constitution of the Authority and that the Authority relied on precedent permitting single-member constitution. The Court held that challenges to coram/non-joinder are matters for the Appellate Tribunal to consider in the appeal against the confirmation orders; mere assertion of coram defect does not automatically attract writ intervention in presence of alternate remedy. Ratio vs. Obiter: Obiter - the Court did not adjudicate the correctness of single-member constitution; ratio - such jurisdictional/coram challenges fall appropriately for consideration by the Appellate Tribunal when an appeal is available. Conclusions: Petitioners to raise coram/constitution issues before the Appellate Tribunal; writ relief denied. Issue 5 - Requirement of reasons/material under Section 5(1) and concealment of material facts Legal framework: Section 5(1) requires the Director to pass provisional attachment orders 'on the basis of material in his possession' and the statutory scheme envisages reasoned adjudication and opportunity before confirmation under Section 8. Precedent treatment: Courts have intervened where attachments were made in total disregard of material facts or where orders lacked any basis, or where principles of natural justice were breached. Interpretation and reasoning: Petitioners alleged concealment of material (closure/quashing of five FIRs) and absence of reasons in PAOs; the Court observed these are mixed questions of law and fact which the Adjudicating Authority and the Appellate Tribunal are equipped to examine. No exceptional circumstance was demonstrated to displace the statutory route for such scrutiny. Ratio vs. Obiter: Ratio - Alleged non-disclosure or failure to base PAOs on material is a ground for challenge but, ordinarily, must be ventilated and decided in the adjudicatory/appeal process under the Act rather than by invoking writ jurisdiction at the interlocutory stage. Conclusions: Petitioners directed to raise these contentions before the Appellate Tribunal; no writ interference. Overall Conclusion of the Court The High Court declined to entertain the writ petitions and disposed of them without expressing any opinion on merits, holding that the PMLA's statutory scheme provides an effective remedy by way of appeal under Section 26, and that the issues raised (predicate offences/ECIR sufficiency, status of FIRs, effect of higher court status quo orders, constitution of Adjudicating Authority, adequacy of reasons/material and alleged fundamental rights violations) are to be adjudicated by the Adjudicating Authority/Appellate Tribunal. The petitioners were granted liberty to pursue statutory appeals, and the Appellate Tribunal was requested to decide the appeals expeditiously.