2021 (6) TMI 1061

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....ovisional attachment of their property, namely, Rs. 1.5 crores in cash under Section 5 of The Prevention of Money-Laundering Act, 2002 ("PML Act"), purportedly on the ground that it represents proceeds of a crime. 2 The Petitioners' main grievance is that Section 5 of the PML Act provides for two pre-conditions, which must co-exist before any action is taken thereunder by Director or other authorized officer. These pre-conditions are, firstly, that the person, against whom action is taken, is found to be in possession of proceeds of crime as defined in Section 2(u) of the PML Act and, secondly, that such proceeds are likely to be concealed, transferred or dealt with in any manner, which may result in frustrating any proceedings relating ....

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....erred or dealt with by the person from whose possession it was seized. 3 It is important to note that in the present case, the property was seized, after a search was carried out under Section 17 of the PML Act on 23 March, 2021, and on 9 April, 2021, that is to say, within about a fortnight of such seizure, the Director, who was of the view that there was a sufficient case to proceed under Section 5 of the PML Act, ordered its provisional attachment. There is no substance in the Petitioners' contention that having seized the property under Section 17 of the PML Act, the State was bound to apply for continuation of seizure under sub-section (4) of that section, and not exercise powers under Section 5 of the PML Act. The initial search fo....

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....aw on the point requires the formation of reason to believe the existence of the two pre-conditions under Section 5 on the basis of material in possession of the Director. Learned Counsel submits that on the date when the order was passed under Section 5, there was no such material. It is submitted that there was no material to indicate that the cash was likely to be transferred or dealt with by the Petitioners, considering particularly that it was under seizure at that time under Section 17 of the PML Act and placed in a designated bank account under the control of the Director. Insofar the argument of learned Counsel that likelihood of transfer or dealing with the property must exist on the very date of the order under Section 5 and not o....