TaxTMI 
TaxTMI 
2026 (8) TMI 1755
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....tion of Money Laundering Act, 2002 (for short, "the PMLA"), whereby 46 immovable and movable properties of the petitioners, valued at approximately Rs. 80.36 Crores, have been provisionally attached. The petitioners have also assailed the Original Complaint dated 10.04.2026 filed by the Directorate of Enforcement before the Adjudicating Authority under Section 5(5) of the PMLA, as also the Show Cause Notice dated 30.04.2026 issued by the Adjudicating Authority under Section 8 of the PMLA pursuant thereto, seeking quashment of the entire proceedings. 3. (a) Case of the petitioners is that petitioner No.1 is a partnership firm engaged in the business of supply of medical equipments, reagents and consumables to various Government and private institutions, whereas petitioner No.2 is one of its partners. It is the further case of the petitioners that petitioner No.1 was awarded Tender No.182 by the Chhattisgarh Medical Services Corporation Limited (CGMSCL) for supply of medical equipments and consumables and, pursuant thereto, supplied medical goods worth approximately Rs. 476.84 Crores. According to the petitioners, against the aforesaid supplies, payments to the extent of only abou....
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.... of Enforcement alleged that petitioner No.1, acting through petitioner No.2, had manipulated the tender process relating to Tender No.182 and thereby generated proceeds of crime, which were quantified at approximately Rs. 135.02 Crores. It is the petitioners' case that, on the basis of the aforesaid allegations, the impugned PAO under Section 5(1) of the PMLA came to be issued, followed by the filing of an Original Complaint before the Adjudicating Authority under Section 5(5) of the Act, pursuant to which proceedings under Section 8 of the PMLA are presently pending. 4. (I) Learned counsel appearing for the petitioner would contend that the impugned PAO has been passed without satisfying the mandatory jurisdictional requirements contained in Section 5(1) of the PMLA. It is submitted that the very assumption of jurisdiction by the Directorate of Enforcement is ex facie illegal inasmuch as no "proceeds of crime", as defined under Section 2(1)(u) of the PMLA, have come into existence. According to the petitioners, the Directorate has mechanically treated the commercial profit or margin arising from execution of a valid Government contract as proceeds of crime without first es....
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..... 5. (A) Learned counsel appearing for the respondents/ED, at the very outset, raised a preliminary objection regarding the maintainability of the present writ petition. It is submitted that the challenge in the present writ petition is directed against the PAO No.06/2026 dated 13.03.2026 passed under Section 5(1) of the PMLA. According to the respondent, the impugned attachment is merely a provisional measure contemplated under the statutory scheme and cannot be examined in isolation de hors the adjudicatory mechanism specifically provided under the PMLA. It is contended that immediately after passing of the PAO, the Directorate of Enforcement has filed the Original Complaint before the learned Adjudicating Authority under Section 5(5) of the PMLA within the prescribed period and the adjudication proceedings under Section 8 are presently pending. The petitioners have already been served with notice by the Adjudicating Authority and are entitled to raise all factual and legal objections before the said forum. It is, therefore, submitted that the present writ petition, filed during the pendency of the statutory adjudication proceedings, is premature and not maintainable in law. ....
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....ialized forum constituted under the PMLA and have failed to demonstrate any exceptional circumstance, such as patent lack of jurisdiction, violation of principles of natural justice or challenge to the constitutional validity of any statutory provision, so as to warrant interference by this Court in exercise of its extraordinary jurisdiction under Article 226 of the Constitution. (E) In support of the aforesaid preliminary objection, reliance has been placed upon the decisions of the Hon'ble Supreme Court in Pareena Swarup v. Union of India, (2008) 14 SCC 107 and Special Director and Another v. Mohd. Ghulam Ghouse and another (2004) 3 SCC 440, as well as the decisions of the Delhi High Court in Rai Foundation v. Directorate of Enforcement, 2015 SCC OnLine Del 7626, Rose Valley Hotels & Entertainments Ltd. v. Secretary, Department of Revenue, 2015 SCC OnLine Del 10111, RBL Bank Ltd. v. Directorate of Enforcement and Ors. (LPA No.381/2023 decided on 19.9.2023), Gold Croft Properties Pvt. Ltd. v. Directorate of Enforcement (LPA No.167/2023) and M/s Krrish Realtech Pvt. Ltd. v. Union of India (WPC & CM Appl. 4399/2025 decided on 3.11.2025), to contend that where the PMLA provide....
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....sequential proceedings initiated under the PMLA is maintainable under Article 226 of the Constitution of India despite the complete statutory adjudicatory mechanism provided under the PMLA ?" 9. At the outset, this Court finds considerable force in the preliminary objection raised by the learned counsel appearing for the respondent-Directorate of Enforcement regarding the maintainability of the present writ petition. 10. The PMLA has been enacted by the Parliament with an intent to prevent money-laundering and to provide for confiscation of property derived from, or involved in, money-laundering and for matters connected therewith or incidental thereto. The said enactment categorically provides a complete adjudicatory mechanism in respect of an order of provisional attachment. Section 5(5) of the PMLA mandates filing of a complaint before the Adjudicating Authority, which, in terms of Section 8 of the PMLA, is empowered to examine the legality and validity of the provisional attachment after issuing notice to the affected person, considering his reply, affording him an opportunity of hearing and taking into consideration the material placed before it. 11. Against the order....
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....date of the order, in such manner as may be prescribed: Provided that no such order of attachment shall be made unless, in relation to the scheduled offence, a report has been forwarded to a Magistrate under section 173 of the Code of Criminal Procedure, 1973 (2 of 1974), or a complaint has been filed by a person authorised to investigate the offence mentioned 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.]. Provided a....
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....es should not be declared to be the properties involved in money-laundering and confiscated by the Central Government: Provided that where a notice under this sub-section specifies any property as being held by a person on behalf of any other person, a copy of such notice shall also be served upon such other person: Provided further that where such property is held jointly by more than one person, such notice shall be served to all persons holding such property. (2) The Adjudicating Authority shall, after- (a) considering the reply, if any, to the notice issued under sub-section (1); (b) hearing the aggrieved person and the Director or any other officer authorised by him in this behalf, and (c) taking into account all relevant materials placed on record before him, by an order, record a finding whether all or any of the properties referred to in the notice issued under sub-section (1) are involved in money-laundering: Provided that if the property is claimed by a person, other than a person to whom the notice had been issued, such person shall also be given an opportunity of being heard to prove that the proper....
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....undering, it shall order release of such property to the person entitled to receive it. (7) Where the trial under this Act cannot be conducted by reason of the death of the accused or the accused being declared a proclaimed offender or for any other reason or having commenced but could not be concluded, the Special Court shall, on an application moved by the Director or a person claiming to be entitled to possession of a property in respect of which an order has been passed under sub-section (3) of section 8, pass appropriate orders regarding confiscation or release of the property, as the case may be, involved in the offence of money-laundering after having regard to the material before it. (8) Where a property stands confiscated to the Central Government under sub-section (5), the Special Court, in such manner as may be prescribed, may also direct the Central Government to restore such confiscated property or part thereof of a claimant with a legitimate interest in the property, who may have suffered a quantifiable loss as a result of the offence of money laundering: Provided that the Special Court shall not consider such claim unless it is satisfied th....
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....aw or fact arising out of such order: Provided that the High Court may, if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal within the said period, allow it to be filed within a further period not exceeding sixty days. Explanation.-For the purposes of this section, "High Court" means- (i) The High Court within the jurisdiction of which the aggrieved party ordinarily resides or carries on business or personally works for gain; and (ii) Where the Central Government is the aggrieved party, the High Court within the jurisdiction of which the respondent, or in a case where there are more than one respondent, any of the respondents, ordinarily resides or carries on business or personally works for gain." 14. A conjoint reading of the aforesaid provisions of the PMLA would show that the Parliament has provided a complete adjudicatory mechanism against every provisional attachment order. The legality of the provisional attachment is required to be examined, in the first instance, by the Adjudicating Authority after affording full opportunity of hearing to the affected person. The order passed by the Adjudicat....
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....s to be approved by the Adjudicating Authority after proper adjudication within 180 days. The act envisages three layers of the grievance redressal in addition to safeguards incorporated in Section 5(1) of the Act. The Adjudicating Authority may confirm or set aside the provisional attachment order on the basis of material produced by the parties before it. If Adjudicating Authority confirms the order of provisional attachment, the Act envisages appeal before the Appellate Tribunal. Section 42 of the Act provides further appeal to the High Court. Thus, it is clear that petitioner has an effective alternative remedy upto the High Court by way of adjudicating proceedings, appeal to the Appellate Tribunal and finally, appeal to the High Court. Petitioner can raise all the pleas including that of the jurisdiction before the Adjudicating Authority. 12. It is trite law that Article 226 of the Constitution of India vests wide discretion in the Writ Court to entertain the writ petition on any grievance and to grant appropriate relief. It is an extraordinary jurisdiction vested in the writ Court. The Writ Courts observe self- imposed restraint in exercising the jurisdiction under A....
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....ent from paragraphs 9.40 and 9.46 of the show-cause notice. 29. It is well established by catena of decisions of the Apex Court that High Court will not entertain a petition under Article 226 of the Constitution, if an effective alternative remedy is available to the aggrieved person or the statute under which the action complained of has been taken, itself contains a mechanism for redressal of the grievance. This principle is well enunciated in the case of NIVEDITA SHARMA v. CELLULAR OPERATORS OF INDIA, (2011) 14 SCC 337. In fact, the Apex Court in the case of SPECIAL DIRECTOR v. MOHD. GHULAM GHOUSE, (2004) 3 SCC 440, has deprecated the practice of High Courts entertaining writ petitions questioning the legality of the show-cause notices, thereby stalling enquiries retarding investigative process initiated to find actual facts with the participation and in the presence of the parties unless the petitioner established absolute want of jurisdiction of authority to even investigate into facts. It is observed in this context that writ petitions should not be entertained and the petitioner should invariably be directed to respond to the show-cause notice. 30. It is ne....
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....th further statutory appeals under Sections 26 and 42 of the Act. The petitioner has failed to establish any exceptional circumstance, such as patent lack of jurisdiction, breach of principles of natural justice or manifest arbitrariness, warranting interference by this Court at this stage. In view of the settled principle that where an efficacious statutory remedy is available, the High Court should ordinarily decline to exercise its extraordinary writ jurisdiction, this Court is not inclined to entertain the present writ petition and leaves it open to the petitioner to avail the remedies available under the PMLA-2002." 19. The authorities relied upon by the petitioners also do not advance their case. There can be no quarrel with the proposition that the availability of an alternative statutory remedy does not oust the jurisdiction of the High Court under Article 226 of the Constitution of India. However, the issue before this Court is not one of absence of jurisdiction but of the exercise of judicial discretion. In the facts of the present case, the petitioners have failed to demonstrate the existence of any exceptional circumstance warranting bypass of the complete statutory ....