Provisional attachment and Section 8 notice under PMLA upheld where recorded reasons and material supported the required belief.
Under the amended Section 5(1) of the Prevention of Money Laundering Act, provisional attachment is permissible where the competent authority records reasons to believe, on the basis of material in its possession, that non-attachment is likely to frustrate proceedings; the recorded reasons here were sufficient, and the absence of a charge for the scheduled offence did not defeat the attachment. A notice under Section 8(1) is valid where the Adjudicating Authority considers the complaint and material before forming the requisite belief; the same-day issuance of notice, even on a voluminous record, did not by itself show non-application of mind.
Issues: (i) Whether the provisional attachment could be sustained under Section 5(1) of the Prevention of Money Laundering Act, 2002 in view of the second proviso and the recorded reasons to believe; (ii) Whether the notice issued under Section 8(1) of the Prevention of Money Laundering Act, 2002 was invalid for alleged non-application of mind.
Issue (i): Whether the provisional attachment could be sustained under Section 5(1) of the Prevention of Money Laundering Act, 2002 in view of the second proviso and the recorded reasons to believe.
Analysis: The attachment was examined in the context of the amended Section 5(1), particularly the second proviso inserted with effect from 01.06.2009. That proviso permits attachment where the competent authority records reasons to believe, on the basis of material in possession, that non-attachment is likely to frustrate proceedings under the Act. The record showed that such reasons were recorded and the amendment applied prior to the attachment order. The challenge founded on the absence of a charge for the scheduled offence could not prevail against the statutory exception created by the second proviso.
Conclusion: The provisional attachment was valid and the challenge to it failed.
Issue (ii): Whether the notice issued under Section 8(1) of the Prevention of Money Laundering Act, 2002 was invalid for alleged non-application of mind.
Analysis: The notice was tested against the statutory requirement that the Adjudicating Authority form reasons to believe upon receipt of the complaint. The record disclosed consideration of the complaint and material sufficient to support the formation of such belief, even though the complaint was voluminous. The issuance of notice on the same day did not, by itself, establish absence of application of mind.
Conclusion: The notice under Section 8(1) was not vitiated by non-application of mind.
Final Conclusion: Both grounds raised in the appeals were rejected, and the attachment proceedings were upheld.
Ratio Decidendi: Under the amended Section 5(1), provisional attachment is permissible on recorded reasons to believe that non-attachment is likely to frustrate proceedings, even where the person is not charged for the predicate offence; and notice under Section 8(1) is valid if the Adjudicating Authority forms the requisite belief on the complaint and material before it.