TaxTMI 
TaxTMI 
2026 (6) TMI 183
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....ng to the petitioner were utilised for formation of Jayanagar Layout without acquisition. It is further submitted that the petitioner had represented Mysore Urban Development Authority (MUDA) to allot sites in lieu of compensation and considering such request MUDA is stated to have executed the Sale Deeds with respect to the sites. 5. It is also made out from the facts that the petitioner and her daughter had approached the Revenue Authorities requesting for effecting of Katha on the basis of Sale Deeds executed by MUDA. However, the said request had been declined. 6. Meanwhile, Sri. Snehamayi Krishna had filed a complaint before the Court of LXXXI Additional City Civil and Sessions Judge (CCH-82) vide PCR No. 28/2024. The Special Court had directed the Karnataka Lokayukta Police to register a case, investigate and file a report as contemplated under Section 173 of Cr.P.C. Pursuant to such direction, the Lokayukta Police had registered FIR bearing Crime No. 11/2024 for the alleged offences punishable under Section 120-B, 166, 403, 406, 420, 426, 465, 468, 340 and 351 of IPC r/w Section 9 and 13 of the Prevention of Corruption Act, 1988 ("P.C. Act", for short) and under Sectio....
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....applied his mind nor recorded the essential findings as contemplated under the second proviso to Section 5(1) of PMLA before passing an order of provisional attachment. 16. Except for reproducing the language in the statutory provision, no grounds were made out for passing of provisional order of attachment that: (i) The imminent urgency for attachment of the properties was not made out. (ii) Absence of material that had formed the basis to believe that there was such urgency. (iii) The reasons to believe as recorded in the order of the provisional attachment is common as regards all properties as well as all the accused in an "omnibus and cyclostyled manner." 17. The petitioner had placed reliance on the judgment of the Apex Court in the case of Radha Krishan Industries v. State of Himachal Pradesh and Others (2021) 6 SCC 771 wherein, the Apex Court while dealing with Section 83 of the Himachal Pradesh Goods and Services Tax Act, 2017 had observed that, it is not mere expediency but necessity to pass an order of provisional attachment to protect interest of Government Revenue, that required demonstration. 18. Reliance is also placed on the judgm....
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....ex Court in Godrej Sara Lee Ltd. v. Excise and Taxation Officer-cum-Assessing Authority and Others (2023) SCC Online SC 95 has observed that the power to issue prerogative writs under Article 226 is plenary in nature and that exercise of power conferred under writ jurisdiction being discretionary and it is for the court to decide as to exercise of such power in appropriate circumstances. The distinction was drawn between the concept of maintainability and entertainability and it was observed that though a writ petition would be maintainable, however, whether the same could be entertained is a matter of judicial discretion and has reiterated the observations in the case of Whirlpool (supra) as well. 28. The observations made in Whirlpool (supra) at paras-5 and 6 are of relevance and extracted below: "5. A little after the dawn of the Constitution, a Constitution Bench of this Court in its decision reported in [1958] SCR 595 (State of Uttar Pradesh v. Mohammad Nooh) had the occasion to observe as follows : "10. In the next place it must be borne in mind that there is no rule, with regard to certiorari as there is with mandamus, that it will lie only where t....
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....ovide for an alternative efficacious remedy of redressal as regards the person aggrieved by not following of the procedure prescribed under second proviso to Section 5 before passing of an order of provisional attachment. 32. The question of relegating an aggrieved person to avail of statutory remedy would be only when the statutory remedy provides for a forum for redressal of grievance. 33. Under the scheme of PMLA, an order of provisional attachment when passed under Section 5 would be followed by forwarding of a copy along with material in possession of the competent Officer to the Adjudicating Authority in terms of Section 5(2). 34. Subsequently, a complaint will have to be filed before the Adjudicating Authority in terms of Section 5(5) of PMLA and finally the process of adjudication is resorted and under Section 8 an order is passed by the Adjudicating Authority. It would be necessary to take note of the procedure and power under Section 8 of PMLA. 35. Section 8 of PMLA reads as follows: "8. Adjudication.-(1) On receipt of a complaint under sub-section (5) of section 5, or applications made under sub-section (4) of section 17 or under sub-section (1....
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.... days] or] the pendency of the proceedings relating to any [offence under this Act before a court or under the corresponding law of any other country, before the competent court of criminal jurisdiction outside India, as the case may be; and] [(b) become final after an order of confiscation is passed under sub-section (5) or sub-section (7) of section 8 or section 58B or sub-section (2A) of section 60 by the [Special Court];] [Explanation.-For the purposes of computing the period of three hundred and sixty-five days under clause (a), the period during which the investigation is stayed by any court under any law for the time being in force shall be excluded.] (4) Where the provisional order of attachment made under sub-section (1) of section 5 has been confirmed under sub-section (3), the Director or any other officer authorised by him in this behalf shall forthwith take the [possession of the property attached under section 5 or frozen under sub-section (1A) of section 17, in such manner as may be prescribed: Provided that if it is not practicable to take possession of a property frozen under sub-section (1A) of section 17, the order of confiscation shall....
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...., earning or assets, out of which or by means of which he has acquired the property attached; (ii) show-cause why all or any of the properties should not be declared to be properties involved in money laundering and confiscated by the Central Government. 37. The Adjudicating Authority may under Section 8(2) after perusal of reply is theoretically vested with the power to drop the proceedings or to proceed under Section 8(3) to confirm the attachment of property. Needless to state, the Adjudicating Authority is required to record a finding as to whether the properties are involved in money laundering. 38. However, the procedure contemplated under Section 8 does not provide for testing the validity of the order of provisional attachment for non-following of the procedural requirement under Second Proviso to Section 5 (1). 39. As rightly contended by Sri Jaysham Jayasimha Rao, learned counsel for petitioner, the procedure prescribed under Section 8 is limited to confirmation of order of attachment, subject to the owner of the property establishing that the acquisition of property which is attached was acquired from sources of his income, earning or assets. 40. The procedur....
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....rtment of Directorate of Enforcement and Another 2020 SCC OnLine Kar 4995 to contend that the Court ought not to entertain the writ petition, as the PMLA provides for a comprehensive scheme for redressal of grievance. However, in Dyani Antony Paul (supra), the Co-ordinate Bench though recognizes the statutory scheme, however, has proceeded to entertain the writ petition observing that grounds urged touch upon the jurisdiction of the Authority to adjudicate and the procedural aspects alleging violation of principles of natural justice. The observations at para-161 would be relevant and the same is extracted herein below:- "161. In the writ petitions filed at Sl. No. I, II, III, IV, VI, VIII and IX, the challenge is not only to the provisional order of attachment but also to the confirmation order of attachment, notice issued seeking information from the Banks and financial institutions, consequential notices issued to comply with the confirmation order of attachment, consequential notice for handing over possession of the properties issued, summons issued under Section 50(3) and the remand application filed before the Special Judge of PMLA Court and as such on the sho....
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....ioned in that Schedule, before a Magistrate or court for taking cognizance of the scheduled offence, as the case may be, or a similar report or complaint has been made or filed under the corresponding law of any other 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.]. (emphasis supplied) 48. Admittedly, in the present case, the requirements of the First Proviso are not met insofar as no Final Report has been forwarded to the Magistrate as regards the predicate offence under Section 173 of Cr.P.C., as on the date of passing of the order of provisional attachment and such aspect is not controverted by the other side. However, the power to pas....
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....however, insofar as the requirement under the Second Proviso to Section 5(1) of PMLA as referred to supra, the finding recorded at para-9 of the provisional attachment order does not satisfy the legal requirement. 55. The observations made at para-9 relating to the provisional attachment reads as follows: "9. I have reasons to believe that the proceeds of crime involved in the subject case as discussed in this PAO, if the said identified immovable properties are not attached under the Act immediately, the non-attachment of the properties are likely to frustrate any further proceedings under the Act. In addition, if the Proceeds of Crime which are involved in Money Laundering are not attached, I have reasons to believe that such Proceeds of Crime would further be laundered; that it will bear effect on the financial system and can break the economic backbone of the country and which will derail the Indian Economic Systems badly." 56. Except para-9, there is no recording of any finding that the competent Officer has reason to believe on the basis of material in his possession that if property involved in money laundering is not attached immediately, such non-attac....
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....l not been effected pursuant to the Sale Deeds executed. 62. A perusal of the petition enclosed would indicate that the petitioner had sought for a direction to the MUDA for effecting transfer of katha with respect to sites transferred vide Sale Deeds dated 14.06.2024. In terms of the oral submission made, the said writ petition is still pending finalisation. If that were to be so, the question of transferring the proceeds of crime and layering such proceeds would not arise. 63. Any immovable property in the absence of mutation entries (katha) cannot be dealt with by way of transfer. Accordingly, the apprehension of the competent Officer that if provisional attachment is not resorted to, there would be a likelihood of frustrating the proceedings is not based on any objective material having a nexus with frustration of proceedings under the PMLA. 64. It is necessary to note that the material in possession of the competent Officer must be the basis for the reason to believe the necessity of attachment which if not resorted to would be likely to frustrate the proceedings. 65. The discussion in the provisional order of attachment relates to material that would throw light o....