TaxTMI 
TaxTMI 
2025 (11) TMI 1712
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.... 3. The hearing of this Petition was expedited by the Hon'ble Supreme Court by its order dated September 03, 2021. The record shows that the matter was taken up by the Bench (Coram: G. S. Patel & Madhav Jamdar, JJ) on 6 December 2021, but was adjourned because the Advocates on record for the 2nd and 3rd Respondents had filed their leave note. Matter was directed to be listed on 10 January 2022. 4. Thereafter, the records show that the matter was listed only on 16 September 2025 before the Coordinate Bench (Coram: Suman Shyam and Manjusha Deshpande, JJ). On this date, neither the Advocates for the Petitioners nor the Advocates for the Respondents appeared. Therefore, the matter was adjourned to 14 October 2025. 5. The matter was brought before this Bench on 14 November 2025, on which date, we were informed of the Hon'ble Supreme Court's order dated 3 September 2021 and the directions for the expeditious disposal of this Petition. Accordingly, we inquired with the learned Counsel whether they were prepared to proceed with the final hearing of this Petition. However, the learned Counsel for the Petitioner fairly indicated that the learned Counsel for the 2nd Respondent had rec....
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...., made in SMWP, on the PMLA timelines. If such orders are held to apply in the context of provisional attachment orders issued under Section 5 of the PMLA, then Mr Pawar would possibly be justified in contending that the impugned PAO has not ceased to have effect upon the expiry of 180 days from the date of its issue. However, if it is held that the Hon'ble Supreme Court's order would not cover or apply the PAO issued under Section 5 of the PMLA, then, we would possibly have to accept Mr. Chothani's contention that the impugned PAO which was issued on 27 November 2020 ceased to have effect upon the expiry of 180 days and consequently, would lapse by 26 May 2021. 10. The material facts for deciding the above issue in this case are few and undisputed. The impugned PAO was issued on 27 November 2020, and the 180-day period from its issuance expired on 26 May 2021. The ED filed a complaint against the Petitioner, i.e. Complaint No. 1381 of 2020, on 18 December 2020, under Section 5(5) before the adjudicating authority. On 7 January 2021, the adjudicating authority issued a show cause notice to the Petitioners, calling upon them to show cause as to why the impugned PAO and the provis....
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....ng the question whether the provisional attachment order stood lapsed by operation of law or is kept in abeyance in terms of the order dated 08 March 2021 passed by this Court in Suo-Motu Writ Petition (C) No. 3 of 2000". The Hon'ble Supreme Court further clarified that it was not expressing any opinion either way on that issue, which may be pursued by the parties before the High Court. 16. Mr. Chothani, the learned counsel for the Petitioners, submitted that the provision in Section 5(3) of the PMLA, which had provided that the provisional attachment orders would cease to have any effect after 180 days from the date of their issue, was one of the important safeguards provided to a person against the otherwise stringent provisions of the PMLA. He submitted that this was one of the reasons why the Hon'ble Supreme Court, in the case of Vijay Madanlal Chaoudhary Vs. Union of India 2023 (12) SCC 1 upheld the constitutional validity of the PMLA by observing that the provisional attachment order operates for a fixed duration of not more than 180 days unless it is confirmed by the adjudicating authority. 17. Mr Chothani submitted that the scope of such a safeguard was never whittled....
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....based on all this, if the ED and the adjudicating authority had no difficulty in doing all this, there was no valid reason for not abiding by the timeline specified in Section 5(3) of the PMLA. He submitted that even otherwise, based upon such contentions, statutory timelines cannot be breached. 21. Mr. Chothani submitted that the Hon'ble Supreme Court's orders in SWMP apply mainly to proceedings which are in the nature of interse private disputes between private litigants. They do not and were never intended to protect acts in the nature of provisional attachment orders, which are not even "proceedings", whether judicial or quasi-judicial. He submitted that the Calcutta High Court has correctly construed the Hon'ble Supreme Court's orders and therefore, we should also take the view which aligns with that of the Calcutta High Court. 22. Mr. Chothani submitted that the Delhi decision records that the ED had filed an application before the Hon'ble Supreme Court in SMWP to exclude the COVID period for determining the timelines in PMLA. He submitted that no relief was granted to ED though protection was granted in the context of the Arbitration and Conciliation Act,1996, Commerci....
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....ce in the TOLA. Mr Chothani submitted that this was yet another indication that the Hon'ble Supreme Court's orders in the SMWP neither apply nor were intended to apply to the timelines provided under the PMLA. 26. For all the above reasons, Mr. Chothani submitted that the Rule in this Petition may be made absolute by declaring that the impugned PAO stands lapsed with effect from 26 May 2021 and by issuing consequential orders restraining the Respondents from acting based upon the impugned PAO. 27. Mr Sachin Pawar at the outset submitted that he adopts the reasoning in the Delhi High Court order and therefore, the grounds which persuaded the Delhi High Court to hold in favour of the ED may be taken as the ED's arguments in opposition to the contentions raised in this Petition. 28. Mr Sachin Pawar submitted that during the COVID pandemic, it was impossible for the ED to function effectively. He submitted that the position of ED was not different from that of private litigants when it came to compliance with laws of limitation, etc. He submitted that the logic behind granting relaxation and exclusions to private litigants should equally apply to public authorities such as the....
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....ther country: Provided further that, notwithstanding anything contained in [first proviso], any property of any person may be attached under this section if the Director or any other officer not below the rank of Deputy Director authorised by him for the purposes of this section has reason to believe (the reasons for such belief to be recorded in writing), on the basis of material in his possession, that if such property involved in money laundering is not attached immediately under this Chapter, the non-attachment of the property is likely to frustrate any proceeding under this Act:] [Provided also that for the purposes of computing the period of one hundred and eighty days, the period during which the proceedings under this section is stayed by the High Court, shall be excluded and a further period not exceeding thirty days from the date of order of vacation of such stay order shall be counted.] (2) The Director, or any other officer not below the rank of Deputy Director, shall, immediately after attachment under sub-section (1), forward a copy of the order, alongwith the material in his possession, referred to in that sub-section, to the Adjudicating A....
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....ified for appointment as a District Judge, in a sealed envelope. The Court noted that this ensures fairness in the action and the accountability of the authority that passed the provisional attachment order. 35. The Hon'ble Supreme Court also referred to yet another important safeguard in Section 5(3) of the PMLA, which provides that the provisional attachment order ceases to operate on the date of an order passed by the adjudicating authority under Section 8(3) or the expiry of the period specified in sub-Section (1), i.e., the period of 180 days, whichever is earlier. Additionally, under Section 5(5), the authorised officer was obliged to file a complaint before the adjudicating authority within 30 days of the provisional attachment. 36. The Hon'ble Supreme Court also clarified that an order passed under Section 5(1) of PMLA is only provisional. The duration of this provisional attachment order, issued under Section 5(1), is limited to 180 days, subject to confirmation by an independent adjudicating authority. Based on this, the Hon'ble Supreme Court concluded that adequate safeguards have been put in place as a prerequisite for exercising the powers of emergency attachment....
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....ing the 180-day period prescribed under Section 5 of the PMLA. 40. To appreciate the ED's contention, we transcribe the order dated 10 January 2022 herein below for the convenience of reference: - "1. In March, 2020, this Court took Suo Motu cognizance of the difficulties that might be faced by the litigants in filing petitions/ applications/ suits/ appeals/ all other quasi proceedings within the period of limitation prescribed under the general law of limitation or under any special laws (both Central and/or State) due to the outbreak of the COVID-19 pandemic. 2. On 23.03.2020, this Court directed extension of the period of limitation in all proceedings before Courts/Tribunals including this Court w.e.f. 15.03.2020 till further orders. On 08.03.2021, the order dated 23.03.2020 was brought to an end, permitting the relaxation of period of limitation between 15.03.2020 and 14.03.2021. While doing so, it was made clear that the period of limitation would start from 15.03.2021. 3. Thereafter, due to a second surge in COVID19 cases, the Supreme Court Advocates on Record Association (SCAORA) intervened in the Suo Motu proceedings by filing Miscellaneous App....
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....r clarified that the period from 15.03.2020 till 28.02.2022 shall also stand excluded in computing the periods prescribed under Sections 23 (4) and 29A of the Arbitration and Conciliation Act, 1996, Section 12A of the Commercial Courts Act, 2015 and provisos (b) and (c) of Section 138 of the Negotiable Instruments Act, 1881 and any other laws, which prescribe period(s) of limitation for instituting proceedings, outer limits (within which the court or tribunal can condone delay) and termination of proceedings. 6. As prayed for by learned Senior Counsel, M.A. No.29 of 2022 is dismissed as withdrawn." 41. Admittedly, para 5(IV) of the Hon'ble Supreme Court's order dated 10 January 2022, on which Mr Pawar placed significant emphasis, does not mention PMLA. Instead, it refers to specific provisions of the Arbitration and Conciliation Act, 1996, the Commercial Courts Act, 2015, and the Negotiable Instruments Act, 1881. Even these provisions relate to initiating proceedings, setting outer limits for court or tribunal discretion regarding delay, and terminating proceedings. 42. Since the final order dated 10 January 2022 refers to certain specific provisions of the specified....
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....nter alia states that an indefeasible right to default bail accrues if no charge-sheet is filed within the period specified under that section before a competent Court of Law, an issue was raised regarding the applicability of the orders made in Suo-Motu Writ Petition (SMWP) in the case of S. Kasi (supra). The State argued that the orders in the SMWP would exclude the specified period during the COVID pandemic when calculating the period prescribed under Section 167 of Cr.PC. After a detailed examination of the various orders issued in SMWP alongside the provisions of Section 167 of Cr.PC., the Hon'ble Supreme Court ruled that the orders in the SMWP would not exclude, extend, or modify the timelines set under Section 167 of Cr.PC. 46. The Hon'ble Supreme Court expressly rejected the State's contention that the order dated 23 March 2020 passed in SMWP had extended the period for filing a charge-sheet by the police as contemplated under Section 167(2) of Cr.PC. by observing:- "the order dated 23-3-20202 cannot be read to mean that it ever intended to extend the period of filing charge-sheet by police as contemplated under Section 167(2) CrPC. The investigating officer cou....
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....event, even if Mr Pawar's argument that Section 5 of the PMLA is concerned only with 'property rights', is to be accepted, we cannot forget that, under our Constitutional scheme, interference with a person's property rights must be authorised and in accordance with the law. 51. In Mukesh Kumar (supra), the Hon'ble Supreme Court held that the right to property is now recognised not only as a constitutional or statutory right but also as a human right. Human rights have historically been viewed within the scope of individual rights, such as the right to health, livelihood, shelter, and employment. However, these rights are now acquiring a multifaceted dimension. The right to property is also regarded as an integral part of this expanded dimension. 52. Similarly, in Harikrushna Mandir Trust (supra), the Hon'ble Supreme Court, while reaffirming that the right to property is a constitutional and human right, held that the "power to deprive a person of property must be expressly provided for and the same cannot be implied". Therefore, the decision and the strong observations in S. Kasi (supra) cannot simply be dismissed as suggested by Mr Sachin Pawar on behalf of the E.D. The ....
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....to have them altered or, at least, clarified, to make them applicable to the PMLA timelines. As recorded in paragraphs 68, 72 and 73 of the Delhi High Court's decision in Vikas WPS Ltd. (supra), the ED had in fact filed an interlocutory application, i.e. Interim Application No.91204 of 2020 in the SMWP "seeking clarification regarding PMLA time-lines". Admittedly, no relief was granted to ED in any of the orders made in the SMWP, including the final order dated 10 January 2022. 57. Mr Sachin Pawar, however, submitted that the above circumstance is irrelevant or insignificant because there is no record of the Hon'ble Supreme Court specifically rejecting the relief applied for by the ED in Interim Application No.91204 of 2020. He submitted that, on such a basis, even the Delhi High Court, correctly, attached no significance to the disposal of the ED's Interim Application No. 91204 of 2020 vide the final order dated 10 January 2022. 58. In our opinion, the disposal of ED's Interim Application No.91204 of 2022 without granting the ED any relief or without issuing any clarification whether the orders made in SMWP would apply to the PMLA timelines cannot be held to be irrelevant or....
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.... Hon'ble Supreme Court in SMWP apply to or affect the timelines under PMLA, we have referenced them solely because Mr. Pawar, relying on some observations from the Delhi High Court decision, argued that it was practically impossible for the ED or its officials to act during the COVID pandemic period. The ED has provided no record to support this claim, and the facts of the present case contradict any assertion of impossibility or disproportionate disadvantage. 63. Mr. Chothani's reference to the provisions of TOLA is also relevant. If Mr. Pawar's argument that the orders made by the Hon'ble Supreme Court in SMWP would apply to all adjudicatory authorities, including the tax authorities and the PMLA authorities, were correct, then perhaps there was no need to issue an Ordinance followed by enacting TOLA to provide certain relaxations in timelines specified under eight statutes, including laws related to Benami properties or black money, etc. The lack of any reference to PMLA in TOLA, therefore, cannot be deemed insignificant. 64. As noted in Vijay Chaudhary (Supra), the shelf-life of a provisional attachment order being 180 days or the requirement of having it confirmed by the....
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....n for the parties to argue all permissible contentions therein. 68. In Kaushalya Infrastructure (supra), the Hon'ble Supreme Court was considering the argument that a provisional attachment order triggered the adjudication proceedings, and as the provisional attachment order was set aside by the High Court, no adjudication proceedings can be continued further against the Petitioner. The Hon'ble Supreme Court rejected such a contention by observing as follows: - "4. Going by the scheme of Sections 5 and 8 PMLA, we have no hesitation in observing that the aforenoted argument is misplaced. The fact that the petitioner has succeeded before the High Court, does not per se result in nullifying the adjudication proceedings, which, nevertheless, can proceed and need to be taken to its logical end by the adjudicating authority in accordance with law. 5. The satisfaction to be recorded by the authorised officer in terms of Section 5 PMLA is in two respects. The first is that the property in question had been acquired through proceeds of crime and involved in an offence of money laundering; and the second satisfaction specific in terms of Section 5(1) of the Act is that t....