MR SHANKER MAHADEVAN IYER vs DEPUTY DIRECTOR
- Court
- Karnataka High Court
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HC-KAR
NC: 2026:KHC:59898
WP No. 34513 of 2024
CNR: KAHC010734842024
®
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
TH
DATED THIS THE 28 DAY OF OCTOBER, 2026
BEFORE
THE HON'BLE MR. JUSTICE SURAJ GOVINDARAJ
WRIT PETITION NO. 34513 OF 2024 (GM-RES)
BETWEEN
MR. SHANKER MAHADEVAN IYER
S/O LATE SHANKER IYER
AGED ABOUT 66 YEARS
R/AT 1/D 15-991/31, LAKSHMI SHANKER
GREEN FIELD LAYOUT,
CHILLMBI MANGALORE,
ASHOK NAGAR (MR), DAKSHINA KANNADA
KARNATAKA-575006.
...PETITIONER
(BY SRI: D.R. RAVISHANKAR., SR. COUNSEL FOR
SRI. ABHISHEK MARLA M J., ADVOCATE)
AND
DEPUTY DIRECTOR
DIRECTORATE OF ENFORCEMENT
MANGALURU SUBZONAL OFFICE
ND
2 FLOOR, 4-212/16 “VISTAAR”
COMMERCIAL COMPLEX,
AIRPORT ROAD YEYYADI,
KONCHADY
MANGALURU-575008
…RESPONDENT
(BY SMT. ANUPARNA BORDOLOI., ADVOCATE)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 & 227
OF THE CONSTITUTION OF INDIA PRAYING TO ISSUE A WRIT OF
CERTIORARI OR ANY OTHER APPROPRIATE WRIT, ORDER OR
DIRECTION AND QUASH THE IMPUGNED ORDER PASSED BY
Digitally Signed By:
SURAJ GOVINDA RAJ
29/10/2026, 13:40, Bengaluru
Verified
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RESPONDENT, DATED 29.10.2024 PASSED IN ECIR/MGSZO/04/2022
(ANNEXURE-A) IN RESPECT OF THE SCHEDULE PROPERTIES AND
ETC.
THIS WRIT PETITION COMING ON FOR ORDERS AND HAVING
BEEN RESERVED FOR ORDERS ON 29.07.2026, THIS DAY, THE
COURT PRONOUNCED THE FOLLOWING:
CORAM: HON'BLE MR. JUSTICE SURAJ GOVINDARAJ
CAV ORDER
1. The Petitioner is before this Court seeking for the
following reliefs:
i) Issue a writ of certiorari or any other appropriate
writ, order or direction and quash the impugned
order passed by Respondent, dated 29.10.2024
passed in ECIR/MGSZO/04/2022 (Annexure-A) in
respect of the schedule properties.
ii) Grant such other reliefs as this Hon’ble Court
deems fit to grant in the interest of justice and
equity.
2. The Petitioner is aggrieved by the show cause
notice dated 30.11.2024 issued under Section 8 of
the Prevention of Money Laundering Act, 2002 (for
short, ‘PMLA, 2002’) and in that background the
Petitioner has sought for the aforesaid reliefs.
3. The Petitioner claims that he is a proprietor of M/s.
S.S.Maritime which was in the business of
stevedoring and related activities since the year
Digitally Signed By:
SURAJ GOVINDA RAJ
29/10/2026, 13:40, Bengaluru
Verified
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1990. The Petitioner had, on 09.02.2011, paid a
sum of Rs.25,00,000/- to one M/s. Hanuman
Minerals for supply of high-grade iron ore. In the
month of January 2012, M/s. Hanuman Minerals
had approached the Petitioner with assurance to
return the entire sum of Rs.25,00,000/- but had
also suggested that M/s.S.S.Maritime take up
stevedoring in respect of 40000 metric tons (MT)
of iron ore at Alcon and Maina Jetties situated in
Goa. M/s.Hanuman Minerals thereafter is alleged
to have paid a sum of Rs.10,00,000/- on
30.01.2012, a sum of Rs.7,00,000/- on
02.02.2012 as a partial repayment of a sum of
Rs.25,00,000/-. There being certain contractual
dispute between M/s.Hanuman Minerals and
M/s.Manipal Global Services Pvt. Ltd (for short,
‘ M/s.Manipal Global’ ) as regards the agreement
dated 18.01.2012, M/s.Manipal Global had filed a
private complaint in PCR No.23/2017 before the
Additional Civil Judge and ACJM, Udupi, which was
referred to the Manipal Police Station for
investigation. In furtherance of which, Crime
No.90/2017 was registered on 02.06.2017 against
the Petitioner and 10 others for offences
punishable under Sections 120B, 406, 417, 420,
Digitally Signed By:
SURAJ GOVINDA RAJ
29/10/2026, 13:40, Bengaluru
Verified
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465, 466, 467, 468, 471, 474 and 34 of the IPC,
wherein the Petitioner was arraigned as accused
no.11. On completion of investigation, charge
sheet has been filed wherein the Petitioner has
been arraigned as accused no.3.
4. The aforesaid offences being scheduled offences
under paragraph No.1 of Part-A of the Schedule of
the PMLA 2002, the Respondent has recorded an
ECIR bearing No.ECIR/MGSZO/04/2022 on
28.03.2022. Thereafter, on 29.10.2024 vide Order
No. 1/24 the properties belonging to the Petitioner
as per the schedule to the petition were attached
and, in pursuance thereof, a show cause notice
dated 30.11.2024 has been issued, which is under
challenge.
5. Sri.D.R.Ravishankar, learned Senior Counsel
appearing for the Petitioner, submits that:
5.1. The Respondent has mechanically attached
the properties of the Petitioner without there
being any basis. There are no proceeds of
crime which the Petitioner has received in
pursuance of Crime No.90/2017 registered
Digitally Signed By:
SURAJ GOVINDA RAJ
29/10/2026, 13:40, Bengaluru
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against the Petitioner. There are no amounts
which have been received by the Petitioner
apart from partial repayment of the monies
due to the Petitioner. Even the full amount
due to the Petitioner has not been paid. It
was required for the Respondent to have
verified if there were any proceeds of crime,
identify the same, and thereafter pass an
order of attachment. Not doing so would
categorically indicate that there is complete
non-application of mind.
5.2. His submission is that there is no crime,
much less proceeds of crime. The Petitioner
is being falsely harassed by the Respondent.
There is no categorical identification as to
what is proceeds of crime. Merely because
some amount had been paid by M/s.Manipal
Global to M/s.Hanuman Minerals, and the
Petitioner was part of the transaction as a
stevedore, the Petitioner is not responsible
for any of the criminal actions, if any, by
M/s.Hanuman Minerals and/or M/s.Manipal
Global.
Digitally Signed By:
SURAJ GOVINDA RAJ
29/10/2026, 13:40, Bengaluru
Verified
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5.3. Petitioner is a third party who has nothing to
do with the said transaction. The Petitioner
only had stevedored the transaction. His
submission is that even according to the
Respondent, the transaction with
M/s.Hanuman Minerals and subsequently
with M/s.Manipal Global occurred in the year
2011-12, where the property of the Petitioner
which has been attached is one which had
been purchased between 2004 to 2008,
which was much prior to the predicate
offence, let alone the proceedings initiated by
the Respondent.
5.4. The predicate offence being subsequent to
the purchase of the property, the purchase of
the property cannot be said to be from the
proceeds of crime, and as such, the said
property of the Petitioner would not be
amenable to attachment proceedings, is the
submission. This basic issue not being
considered by the Respondent, his
submission is that it would indicate absolute
non-application of mind.
Digitally Signed By:
SURAJ GOVINDA RAJ
29/10/2026, 13:40, Bengaluru
Verified
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5.5. His further submission is that the Respondent
has, without any cause, rhyme or reason,
exercised powers under the PMLA 2002,
where the same would not be applicable to
the present transaction. His submission is
also that merely because certain of the
offences which are scheduled to the PMLA
2002 have been invoked against the
Petitioner would not ipso facto entail that the
Respondent is exercising powers under the
PMLA 2002 to attach the properties of the
Petitioner.
5.6. He refers to Section 2(1)(u) of the PMLA
2002 which is reproduced hereunder for easy
reference:
(u) “ proceeds of crime ” means any property
derived or obtained, directly or indirectly, by any
person as a result of criminal activity relating to a
scheduled offence or the value of any such
property or where such property is taken or held
outside the country, then the property equivalent
in value held within the country or abroad;
Explanation.—For the removal of doubts, it is
hereby clarified that "proceeds of crime" include
property not only derived or obtained from the
scheduled offence but also any property which
may directly or indirectly be derived or obtained
as a result of any criminal activity relatable to the
scheduled offence.
Digitally Signed By:
SURAJ GOVINDA RAJ
29/10/2026, 13:40, Bengaluru
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5.7. By referring to Section 2(1)(u), his
submission is that the proceeds of crime
would have to be any property derived or
obtained directly or indirectly by any person
as a result of criminal activity relating to a
scheduled offence or the value of any such
property. He again reiterates that the
property which has been attached is not
derived or obtained directly or indirectly by
the Petitioner as a result of any criminal
activity relating to any scheduled offence.
The purchase of the properties having
occurred between 2004 to 2008, the
scheduled offence having occurred in the
year 2011-12, the proceeds of crime can only
be subsequent to the said crime and not prior
to. Therefore, he submits that, as Section
2(1)(u) is not applicable, the question of the
Respondent exercising any powers to attach
the property of the Petitioner would not
arise.
5.8. In this regard, he refers to the sale deed
under which the property bearing Apartment
No.M401 was purchased under a registered
sale deed dated 15.12.2004 registered as
Digitally Signed By:
SURAJ GOVINDA RAJ
29/10/2026, 13:40, Bengaluru
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document No.MGC-1-04805-2004-05 stored
in CD No.MGCD19 on 15.12.2004 in the
office of the Sub-Registrar in Mangalore
Town.
5.9. He also refers to the sale deed under which
the property, namely non-agricultural
immovable property held on Warg Right in
Survey No.23-1A2 of Derebail Village of
Mangalore City within Mangalore City Sub-
Registrar District of DK District, had been
purchased under sale deed dated 28.03.2008
registered as Document No.MGC-1-05028-
2008-09 stored in CD No.MGCD88 dated
19.01.2009 in the office of Sub Registrar,
Mangalore City. Thus, he submits that both
the transactions having occurred under
registered sale deeds; first the apartment
having been purchased under a registered
sale deed dated 15.12.2004 and secondly,
the non-agricultural property having been
purchased under a registered sale deed
dated 28.03.2008 were much prior to the
predicate offence and were not amenable to
the attachment as sought to be contended by
the Respondent.
Digitally Signed By:
SURAJ GOVINDA RAJ
29/10/2026, 13:40, Bengaluru
Verified
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5.10. In this regard, he relies upon the decision of
the Hon'ble Apex Court in the case of
Pavana Dibbur vs. Directorate of
Enforcement [ ( 2023) 15 SCC 91], more
particularly paragraphs 12, 13, 15, 17, 18,
19, 27, 28, 29 and 31 thereof which are
reproduced hereunder for easy reference:
12. On a plain reading of Section 3, unless proceeds of
crime exist, there cannot be any money-laundering
offence. Clause (u) of sub-section (1) of Section 2 PMLA
defines “proceeds of crime”, which reads thus:
“ 2. Definitions .—(1) In this Act, unless the context
otherwise requires.—
*
(u) “ proceeds of crime ” means any property derived
or obtained, directly or indirectly, by any person as a
result of criminal activity relating to a scheduled offence
or the value of any such property or where such
property is taken or held outside the country, then the
property equivalent in value held within the country or
abroad;
Explanation.—For the removal of doubts, it is hereby
clarified that “proceeds of crime” include property not
only derived or obtained from the scheduled offence but
also any property which may directly or indirectly be
derived or obtained as a result of any criminal activity
relatable to the scheduled offence.”
13. Clause (v) of sub-section (1) of Section 2 PMLA
defines “property” to mean any property or assets of
every description, whether corporeal or incorporeal,
movable or immovable, tangible or intangible. To
constitute any property as proceeds of crime, it must be
derived or obtained directly or indirectly by any person
as a result of criminal activity relating to a scheduled
offence. The Explanation clarifies that the proceeds of
crime include property, not only derived or obtained
Digitally Signed By:
SURAJ GOVINDA RAJ
29/10/2026, 13:40, Bengaluru
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from scheduled offence but also any property which
may directly or indirectly be derived or obtained as a
result of any criminal activity relatable to the scheduled
offence. Clause (u) also clarifies that even the value of
any such property will also be the proceeds of crime.
Thus, the existence of “proceeds of crime” is sine qua
non for the offence under Section 3 PMLA.
15. The condition precedent for the existence of
proceeds of crime is the existence of a scheduled
offence. On this aspect, it is necessary to refer to the
decision of this Court in Vijay Madanlal Choudhary
[Vijay Madanlal Choudhary v. Union of India, (2023) 12
SCC 1] . In para 109 of the said decision [Vijay
Madanlal Choudhary v. Union of India, (2023) 12 SCC
1] , this Court held thus : (SCC p. 166)
“109. Tersely put, it is only such property which is
derived or obtained, directly or indirectly, as a result of
criminal activity relating to a scheduled offence that can
be regarded as proceeds of crime. The authorities under
the 2002 Act cannot resort to action against any person
for money laundering on an assumption that the
property recovered by them must be proceeds of crime
and that a scheduled offence has been committed,
unless the same is registered with the jurisdictional
police or pending inquiry by way of complaint
before the competent forum . For, the expression
“derived or obtained” is indicative of criminal activity
relating to a scheduled offence already accomplished.
Similarly, in the event the person named in the criminal
activity relating to a scheduled offence is finally
absolved by a court of competent jurisdiction owing to
an order of discharge, acquittal or because of quashing
of the criminal case (scheduled offence) against
him/her, there can be no action for money laundering
against such a person or person claiming through him
in relation to the property linked to the stated
scheduled offence. This interpretation alone can be
countenanced on the basis of the provisions of the 2002
Act, in particular Section 2(1)(u) read with Section 3.
Taking any other view would be rewriting of these
provisions and disregarding the express language of
definition clause “proceeds of crime”, as it obtains as of
now.”
(emphasis in original and supplied)
Digitally Signed By:
SURAJ GOVINDA RAJ
29/10/2026, 13:40, Bengaluru
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17. Coming back to Section 3 PMLA, on its plain
reading, an offence under Section 3 can be committed
after a scheduled offence is committed. For example,
let us take the case of a person who is unconnected
with the scheduled offence, knowingly assists the
concealment of the proceeds of crime or knowingly
assists the use of proceeds of crime. In that case, he
can be held guilty of committing an offence under
Section 3 PMLA. To give a concrete example, the
offences under Sections 384 to 389IPC relating to
“extortion” are scheduled offences included in Para 1 of
the Schedule to PMLA. An accused may commit a crime
of extortion covered by Sections 384 to 389IPC and
extort money. Subsequently, a person unconnected
with the offence of extortion may assist the said
accused in the concealment of the proceeds of
extortion. In such a case, the person who assists the
accused in the scheduled offence for concealing the
proceeds of the crime of extortion can be guilty of the
offence of money-laundering. Therefore, it is not
necessary that a person against whom the offence
under Section 3 PMLA is alleged must have been
shown as the accused in the scheduled offence .
What is held in para 135 of the decision of this Court in
Vijay Madanlal Choudhary [Vijay Madanlal Choudhary v.
Union of India, (2023) 12 SCC 1] supports the above
conclusion. The conditions precedent for attracting the
offence under Section 3 PMLA are that there must be a
scheduled offence and that there must be proceeds of
crime in relation to the scheduled offence as defined in
clause (u) of sub-section (1) of Section 3 PMLA.
18. In a given case, if the prosecution for the
scheduled offence ends in the acquittal of all the
accused or discharge of all the accused or the
proceedings of the scheduled offence are quashed
in its entirety, the scheduled offence will not
exist , and therefore, no one can be prosecuted for the
offence punishable under Section 3 PMLA as there will
not be any proceeds of crime. Thus, in such a case, the
accused against whom the complaint under Section 3
PMLA is filed will benefit from the scheduled offence
ending by acquittal or discharge of all the accused.
Similarly, he will get the benefit of quashing the
proceedings of the scheduled offence. However, an
accused in PMLA case who comes into the picture after
the scheduled offence is committed by assisting in the
concealment or use of proceeds of crime need not be an
accused in the scheduled offence. Such an accused
Digitally Signed By:
SURAJ GOVINDA RAJ
29/10/2026, 13:40, Bengaluru
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can still be prosecuted under PMLA so long as the
scheduled offence exists . Thus, the second
contention raised by the learned Senior Counsel
appearing for the appellant on the ground that the
appellant was not shown as an accused in the charge-
sheets filed in the scheduled offences deserves to be
rejected.
19. The allegation against the appellant in the
complaint is that she purchased the property worth
crores, though she did not have the source of income
which would generate enough money to buy the subject
properties. The allegation against the appellant is that
she allowed and facilitated Accused 1 Madhukar Angur,
to conceal the siphoned/misappropriated amounts by
using her bank account. Another allegation is that she is
shown to have purchased the second property from
Accused 1, though she did not have the resources to
pay the consideration. The allegation is that she allowed
Accused 1 to use her bank accounts to facilitate
siphoning the proceeds of the crime. Another allegation
is that both the first and second properties have been
acquired out of the proceeds of crime. The first
property, ex facie, cannot be said to have any
connection with the proceeds of crime as the acts
constituting the scheduled offence took place
after its acquisition . The case of the appellant is that
she possessed a substantial amount, as can be seen
from the declaration made by her under the Income
Declaration Scheme, 2016 in September 2016 and
therefore, at the time of the acquisition of the second
property, more than sufficient money was available with
her to acquire the second property. The issue of
whether the appellant used tainted money to acquire
the second property can be decided only after the
evidence is adduced . This is not a case where any
material is placed on record to show that the sale
consideration was paid from a particular bank account
of the appellant. Therefore, it is not possible to record a
finding at this stage that the second property was not
acquired by using the proceeds of crime. We also
make it clear that we have considered the issue
only in the context of the applicability PMLA . We
have not dealt with the issues of valuation and legality
of the sale deeds.
27. The penal statutes are required to be strictly
construed. It is true that the penal laws must be
construed according to the legislative intent as
Digitally Signed By:
SURAJ GOVINDA RAJ
29/10/2026, 13:40, Bengaluru
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expressed in the enactment. In Chapter 1 of G.P.
Singh's Principles of Statutory Interpretation (15th
Edn.), it is observed that:
“The intention of the Legislature, thus, assimilates two
aspects : In one aspect it carries the concept of
“meaning” i.e. what the words mean and in another
aspect, it conveys the concept of “purpose and object”
or the “reason and spirit” pervading through the
statute. The process of construction, therefore,
combines both literal and purposive approaches. In
other words the legislative intention i.e. the true or
legal meaning of an enactment is derived by
considering the meaning of the words used in the
enactment in the light of any discernible purpose or
object which comprehends the mischief and its remedy
to which the enactment is directed.” In the words of A.
Driedger, The Construction of Statutes, 2nd Edn,
1983:“The words of an Act are to be read in their entire
context and in their grammatical and ordinary sense
harmoniously with the Scheme of the Act, the object of
the Act, and the intent of Parliament. This formulation
later received the approval of the Supreme Court and
was called the “cardinal principle of construction”.” In
both constitutional and statutory interpretation, the
court is supposed to exercise discretion in determining
the proper relationship between the subjective and
objective purposes of the law and help the law achieve
its purpose.”
(emphasis supplied)
28. While giving effect to the legislature's intention, if
two reasonable interpretations can be given to a
particular provision of a penal statute, the Court
should generally adopt the interpretation that
avoids the imposition of penal consequences . In
other words, a more lenient interpretation of the two
needs to be adopted.
29. The legislative intent which can be gathered from
the definition of “scheduled offence” under clause (y) of
sub-section (1) of Section 2 PMLA is that every crime
which may generate proceeds of crime need not be a
scheduled offence. Therefore, only certain specific
offences have been included in the Schedule. Thus, if
the submissions of the learned Additional Solicitor
General are accepted, the Schedule will become
meaningless or redundant. The reason is that even if an
Digitally Signed By:
SURAJ GOVINDA RAJ
29/10/2026, 13:40, Bengaluru
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offence registered is not a scheduled offence, the
provisions of PMLA and, in particular, Section 3 will be
invoked by simply applying Section 120-B. If we look at
Section 120-B, only because there is a conspiracy to
commit an offence, the same does not become an
aggravated offence. The object is to punish those
involved in conspiracy to commit a crime, though they
may not have committed any overt act that constitutes
the offence. Conspiracy is an agreement between the
accused to commit an offence. If we look at the
punishments provided under Section 120-B, it becomes
evident that it is not an aggravated offence. It only
incorporates the principle of vicarious liability. If no
specific punishment is provided in the statute for
conspiracy to commit a particular offence, Section 120-
B treats a conspirator of the main accused as an
abettor for the purposes of imposing the punishment.
The interpretation suggested by ED will defeat the
legislative object of making only a few selected offences
as scheduled offences. If we accept such an
interpretation, the statute may attract the vice of
unconstitutionality for being manifestly arbitrary. It
cannot be the legislature's intention to make every
offence not included in the Schedule a scheduled
offence by applying Section 120-B. Therefore, in our
view, the offence under Section 120-BIPC included
in Part A of the Schedule will become a scheduled
offence only if the criminal conspiracy is to
commit any offence already included in Parts A, B
or C of the Schedule . In other words, an offence
punishable under Section 120-BIPC will become a
scheduled offence only if the conspiracy alleged is of
committing an offence which is otherwise a scheduled
offence.
31. While we reject the first and second submissions
canvassed by the learned Senior Counsel appearing for
the appellant, the third submission must be upheld. Our
conclusions are:
31.1. It is not necessary that a person against
whom the offence under Section 3 PMLA is
alleged, must have been shown as the accused in
the scheduled offence ;
31.2. Even if an accused shown in the complaint under
PMLA is not an accused in the scheduled offence, he will
benefit from the acquittal of all the accused in the
scheduled offence or discharge of all the accused in the
Digitally Signed By:
SURAJ GOVINDA RAJ
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scheduled offence. Similarly, he will get the benefit of
the order of quashing the proceedings of the scheduled
offence;
31.3. The first property cannot be said to have any
connection with the proceeds of the crime as the acts
constituting scheduled offence were committed after
the property was acquired;
31.4. The issue of whether the appellant has used
tainted money forming part of the proceeds of crime for
acquiring the second property can be decided only at
the time of trial ; and
31.5. The offence punishable under Section 120-BIPC
will become a scheduled offence only if the conspiracy
alleged is of committing an offence which is specifically
included in the Schedule.
… Emphasis supplied by this Court
5.11. By relying on Pavana Dibbur , learned Senior
Counsel submits that the existence of
proceeds of crime is an essential condition
for attracting Section 3 of the PMLA. Unless
the property in question is derived or
obtained, directly or indirectly, from criminal
activity relating to a scheduled offence, it
cannot be treated as proceeds of crime.
Therefore, the existence of a scheduled
offence and proceeds of crime arising from
such offence are necessary to sustain a
prosecution under the PMLA.
5.12. Learned Senior Counsel further submits that
the proceedings under the PMLA cannot be
Digitally Signed By:
SURAJ GOVINDA RAJ
29/10/2026, 13:40, Bengaluru
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sustained independently of the scheduled
offence. If all the accused in the scheduled
offence are acquitted or discharged, or if the
proceedings relating to that offence are
quashed in their entirety, the scheduled
offence ceases to exist in the eye of law. In
such circumstances, there can be no
prosecution under Section 3 of the PMLA, as
the essential basis for alleging the existence
of proceeds of crime would no longer remain.
5.13. Learned Senior Counsel also relies upon the
finding of the Hon’ble Supreme Court that
property acquired before the commission of
the acts constituting the scheduled offence
cannot be treated as proceeds of crime
merely on that account. The prosecution
must establish the necessary link between
the property and the criminal activity relating
to the scheduled offence. The mere
acquisition or possession of property, without
such a link, would not by itself be sufficient
to bring the property within the definition of
proceeds of crime.
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5.14. It is further submitted that the provisions of
the PMLA, being penal in nature, must be
interpreted strictly. Where two reasonable
interpretations of a penal provision are
possible, the interpretation that avoids the
imposition of penal consequences should
ordinarily be preferred. The provisions of the
Act cannot be extended beyond their plain
meaning so as to bring within their scope
conduct which the legislature has not
expressly included.
5.15. Learned Senior Counsel further submits that
an offence of criminal conspiracy punishable
under Section 120-B of the Indian Penal
Code does not, by itself, become a scheduled
offence under the PMLA in every case. Such
conspiracy would constitute a scheduled
offence only where the alleged conspiracy
relates to the commission of an offence
specifically included in the Schedule to the
PMLA. Any wider interpretation would defeat
the legislative intention of including only
specified offences in the Schedule.
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5.16. On the strength of the aforesaid decision,
learned Senior Counsel submits that the
continuation of proceedings under the PMLA
must be examined in the light of the
existence of a scheduled offence, the alleged
proceeds of crime and the connection
between such proceeds and the criminal
activity in question. Unless these essential
requirements are satisfied, the provisions of
the PMLA cannot be invoked merely on the
basis of suspicion or the existence of
property whose source is questioned.
5.17. The learned Senior Counsel relies on the
judgment of the Hon’ble High Court of Kerala
in the case of Satish Motilal Bidri vs.
Union of India [2024 SCC OnLine, Ker
3410], more particularly paragraphs 13, 14,
15, 16, 17 and 18 thereof, which are
reproduced hereunder for easy reference:
13. Section 5 of PMLA authorizes attachment of
proceeds of crime. The definition of the term
‘proceeds of crime’ explicitly states that when the
proceeds of a crime is a property, such property must
have been obtained or derived as a result of any
criminal activity relating to a scheduled offence. No
doubt, even if the property was obtained indirectly, it
can still be regarded as proceeds of crime. Assuming
that a property derived out of a criminal activity
mentioned is not available, still, attachment can be
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effected to the extent of the value of such property.
The term ‘value’ in section 2(1)(u) can only mean the
monetary worth of the property that was
derived from the criminal activity . If the
attachment is to be effected to the extent of the
monetary worth of a property which was not derived
out of the criminal activity, then PMLA mandates that
the property derived out of such criminal activity be
taken out of India or is held outside the country. In
other words, the only power to proceed against a
property of equivalent value, which has no link
with the predicate offence is, when the property
was taken out or held out of India . Therefore,
except when the property derived out of the criminal
activity is not inside the country, can the provisional
attachment be effected on a property purchased prior
to such criminal activity.
14. In this context, it is appropriate to refer to the
decision in Seema Garg v. Deputy Director,
Directorate of Enforcement (2020 SCC OnLine P&H
738), wherein the High Court of Punjab and Haryana
elaborately considered the concept of proceeds of
crime and held that property purchased prior to the
commission of scheduled offence, does not fall within
the ambit of the first limb of the definition of proceeds
of crime, though it certainly falls within the
purview and ambit of the third limb of the
definition . The Andhra Pradesh High Court has also
observed along the same lines in Satyam Computer
Services Limited v. Directorate of Enforcement,
Government of India (2018 SCC OnLine Hyd 787)
wherein it was observed that PMLA being a statute
which deals with substantive rights, cannot have a
retrospective effect. However, the Delhi High Court
had taken a differing stance in The Deputy Director,
Directorate of Enforcement, Delhi v. Axis Bank (Crl.A.
No. 143/2018), where it was observed that the term
value of property must be understood to have been
used in the same sense as the third limb. With
respects, I am unable to subscribe to the views of
the Delhi High Court and on the other hand wholly
concur with the views of the High Court of Punjab and
Haryana and that of Andhra Pradesh.
15. I am further fortified in the above view that I have
taken in view of the observations of the Supreme
Court as well. In the decision in Vijay Madanlal
Choudhary v. Union of India [2022 SCC OnLine SC
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929], it has been held in paragraph numbers 295 and
296 that “The precondition for being proceeds of
crime is that the property has been derived or
obtained, directly or indirectly, by any person as a
result of criminal activity relating to a scheduled
offence. ………….Be it noted that the attachment
must be only in respect of property which
appears to be proceeds of crime and not all the
properties belonging to the concerned person
who would eventually face the action of
confiscation of proceeds of crime , including
prosecution for offence of money-laundering. As
mentioned earlier, the relevant date for initiating
action under the 2022 Act - be it of attachment and
confiscation or prosecution, is linked to the inclusion
of the offence as scheduled offence and of carrying on
the process or activity in connection with the proceeds
of crime after such date. The pivot moves around
the date of carrying on the process and activity
connected with the proceeds of crime; and not
the date on which the property has been derived
or obtained by the person concerned as a result
of any criminal activity relating to or relatable to the
scheduled offence.”
16. Apart from the above, in Pavana Dibbur v.
Directorate of Enforcement (2023 SCC OnLine SC
1586), it has been observed as follows: “Another
allegation is that both the first and second properties
have been acquired out of the proceeds of crime. The
first property, exfacie cannot be said to have any
connection with the proceeds of crime as the acts
constituting the scheduled offence took place after its
acquisition. …………This is not a case where any
material is placed on record to show that the sale
consideration was paid from a particular bank account
of the appellant. Therefore, it is not possible to record
a finding at this stage that the second property was
not acquired by using the proceeds of crime.”
(emphasis supplied).
17. The aforesaid observations indicate that the
properties that can be proceeded against, exercising
the powers of attachment must be those that have
been acquired utilising the proceeds of crime. The
contention of the learned counsel for the Respondents
that the term proceeds of crime will also include the
value of the property which had been acquired even
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earlier is, according to me, too far-fetched and will not
be justifiable in the light of the constitutional
provisions of fairness and reasonableness. It is also
necessary to observe at this juncture that the purpose
of the PMLA is to remove tainted money and also to
initiate proceedings against the proceeds of crime
which have been transformed or converted into other
property or intermingled with legitimate sources and
then the value of the intermingled gain will assume
the colour of proceeds of crime. Such a provision
cannot be used to enable the authorities to
proceed against properties that are unconnected
with any of the criminal activity in question .
18. Viewed in the above perspective, as the
provisionally attached immovable property was
purchased in 2004 - more than a decade and a half
before the predicate offence was allegedly committed,
the order attaching the immovable property is ex-
facie, ultra vires the powers of the statute and
totally illegal and arbitrary to the extent of the said
attachment. Since ex facie illegal acts can be
interfered with under Article 226 of the
Constitution of India, notwithstanding the
existence of an alternative remedy , this Court is
of the view that the provisional attachment of the
immovable property as seen from schedule A to
Exhibit P11 order dated 22.05.2024 is liable to be set
aside. However, as relating to the provisional
attachment mentioned in schedule B to Exhibit P11,
i.e. those relating to the amount in the bank accounts
- the Petitioner has an effective alternative
remedy provided by the statute .
… Emphasis supplied by this Court
5.18. By relying on Satish Motilal Bidri , his
submission is that the provisional attachment
of the Petitioner’s properties is unsustainable,
as both the properties were purchased much
before the alleged scheduled offence. The
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Petitioner purchased Apartment No. M401
under a registered sale deed dated
15.12.2004 and the non-agricultural
immovable property situated in Survey No.
23-1A2 of Derebail Village, Mangalore, under
a registered sale deed dated 28.03.2008. The
alleged transactions involving M/s. Hanuman
Minerals and M/s. Manipal Global relate to
the period 2011-12. Therefore, according to
learned Senior Counsel, the properties in
question could not have been acquired from
the proceeds of the alleged criminal activity,
which allegedly took place several years after
their purchase.
5.19. Learned Senior Counsel further submits that
the Respondent has not identified any
proceeds of crime received by the Petitioner
or placed any material to establish that the
properties in question were acquired, directly
or indirectly, from such proceeds. The
Petitioner’s case is that the amounts received
from M/s. Hanuman Minerals were only part
repayments of the sum of Rs. 25,00,000/-
paid by him on 09.02.2011 towards the
supply of high-grade iron ore. It is contended
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that the Petitioner was engaged in
stevedoring activities and that the mere fact
that he was involved in the commercial
transactions in question does not establish
that the properties acquired by him in 2004
and 2008 constitute proceeds of crime.
5.20. Relying on the observations in Satish
Motilal Bidri , learned Senior Counsel
submits that the expression ‘proceeds of
crime’ under Section 2(1)(u) of the PMLA
cannot be interpreted to permit attachment
of any property belonging to the person
proceeded against, irrespective of its
connection with the alleged criminal activity.
The power to attach property of equivalent
value, which has no connection with the
scheduled offence, is also subject to the
conditions specified in the statutory
definition. In the present case, the properties
were acquired long before the alleged
scheduled offence, and the Respondent has
not established any link between those
properties and the alleged proceeds of crime.
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5.21. It is, therefore, contended that the
Respondent, merely on the basis of the
registration of Crime No. 90/2017 and the
subsequent initiation of proceedings under
the PMLA, could not have proceeded to
attach the Petitioner’s properties without first
identifying the alleged proceeds of crime and
establishing the necessary connection
between those proceeds and the properties
sought to be attached. Learned Senior
Counsel submits that the failure to consider
the dates of acquisition of the properties and
the absence of material linking them to the
alleged criminal activity demonstrate non-
application of mind. On this basis, he seeks
interference with the impugned attachment
proceedings and the consequential show
cause notice dated 30.11.2024.
5.22. The learned Senior Counsel relies on the
decision of the Co-ordinate Bench of this
Court in the case of Jayamma vs. The
Directorate of Enforcement [WP
No.28108/2025 dtd 2.6.2026], more
particularly paragraphs 26, 27, 29, 30, 31,
32, 33, 36, 38, 39, 40, 41, 42, 47, 48, 49
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and 50 which are reproduced hereunder for
easy reference:
26. Insofar as such contention is concerned, the
position of law appears to be well settled and the
Apex Court has held that under exceptional
circumstances, the available statutory remedies may
not be a bar for invocation of jurisdiction under
Article 226 of the Constitution of India as observed
in Whirlpool Corporation v. Registrar of Trade Marks,
Mumbai and Others3 (Whirlpool) infra.
27. The Apex Court in Godrej Sara Lee Ltd. v. Excise
and Taxation Officer-cum-Assessing Authority and
Others4 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.
29. Hence, it is for the court to decide as to
whether it needs to entertain the petition and
intervene or allow the proceedings under the
statutory scheme to progress to a logical
conclusion .
30. The non-following of the procedure prescribed
under the Second Proviso to Section 5(1) of PMLA
would be a jurisdictional issue that would warrant
interference in exercise of writ jurisdiction as being a
recognized exemption for waiving of statutory
remedy as made out in the case of Whirlpool
[(supra) (see exception (iii) at para-6)].
31. At the outset, it would also be necessary to
examine as to whether the statutory scheme does
provide for an alternative efficacious remedy of
redressal as regards the person aggrieved by not
following of the procedure prescribed under second
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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).
36. In terms of Section 8 of PMLA, the owner of the
property which is subject to an order of provisional
attachment is: (i) served with a notice calling upon
him to indicate sources of his income, 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.
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 procedural safeguard provided under
Second Proviso to Section 5 as in the present case
cannot be a matter of enquiry before the
Adjudicating Authority.
41. Though Sections 5, 8 and 26 of PMLA do
form a self-contained code , however, there are
certain procedural aspects leading to exercise of
power under Second Proviso of Section 5, the breach
of which are not aspects that could be a subject
matter of proceedings under Section 8. Accordingly,
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the power under Section 8 does not permit such
enquiry as is raised in the present case.
42. If that were to be so, it cannot be stated that
the power conferred under Section 8 could be an
efficacious alternative remedy to redress a grievance
regarding non-following of restrictions imposed for
exercise of power in the context of the Second
Proviso to Section 5 of PMLA. Needless to state that,
even if it was assumed that there was an alternative
remedy in terms of law enunciated in Godrej Sara
Lee Ltd. (supra), a writ petition would
nevertheless be entertainable though subject
to fulfillment of certain criteria .
47. The relevant extract of the statutory provision is
as follows:-
"5. Attachment of property involved in money-
laundering.— [(1)Where the Director or any other
officer not below the rank of Deputy Director
authorised by the Director for the purposes of this
section, has reason to believe (the reason for such
belief to be recorded in writing), on the basis of
material in his possession, that—
(a) any person is in possession of any proceeds of
crime; and
(b) such proceeds of crime are likely to be
concealed, transferred or dealt with in any manner
which may result in frustrating any proceedings
relating to confiscation of such proceeds of crime
under this Chapter, he may, by order in writing,
provisionally attach such property for a period not
exceeding one hundred and eighty days from the
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
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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 pass an order of provisional attachment is
conferred upon an Officer of the rank of Director or
any other Officer not below the rank of Deputy
Director authorized by him for the purposes
enumerated under Section 5, subject to fulfillment of
the following criteria:-
(i) Has reason to believe which is recorded in
writing and on the basis of material in his
possession .
(ii) That, if such property involved in money
laundering is not attached immediately, the
non-attachment of property is likely to
frustrate any proceedings under the Act .
49. Undoubtedly, in the present case, it is power
exercised under the Second Proviso to Section 5 (1)
which is called in question.
50. It is necessary to also note that the Respondent
has asserted at the time of arguments that
Lokayukta Police were still investigating as regards
the predicate offences against the other accused as
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on the date of passing of the provisional order of
attachment. It was further submitted by the
Respondents that though 'B' Report was filed against
some of the accused, i.e. accused Nos.1 to 4, the
pending investigation against the other accused as
at the relevant point of time has in effect indicated
the continuance of investigation and pending such
investigation power under the Second Proviso to
Section 5 of PMLA was sought to be initiated.
… Emphasis supplied by this Court
5.23. By relying on Jayamma , learned Senior
Counsel submits that the availability of an
alternative statutory remedy does not, by
itself, bar the exercise of jurisdiction under
Article 226 of the Constitution of India,
particularly where the challenge relates to
the failure to comply with the mandatory
conditions prescribed under the Second
Proviso to Section 5(1) of the PMLA.
5.24. Learned Senior Counsel submits that, in the
present case, the Petitioner has challenged
the provisional attachment of his properties
on the ground that the properties were
acquired in the years 2004 and 2008,
whereas the alleged transactions forming the
basis of the scheduled offence relate to the
period 2011-12. It is contended that the
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Respondent invoked the powers under the
Second Proviso to Section 5(1) of the PMLA
without properly considering the nature of
the properties, the dates of their acquisition
and the absence of any material establishing
their connection with the alleged proceeds of
crime.
5.25. Relying on Jayamma , learned Senior
Counsel further submits that the exercise of
power under the Second Proviso to Section
5(1) is subject to specific conditions, namely,
that the authorised officer must have reasons
to believe, recorded in writing and based on
material in his possession, that the property
involved in money laundering is required to
be attached immediately and that failure to
do so is likely to frustrate proceedings under
the PMLA. These conditions are not mere
formalities but are restrictions governing the
exercise of the power of provisional
attachment.
5.26. It is further submitted that the procedure
contemplated under Section 8 of the PMLA
does not provide an effective remedy for
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examining a grievance relating to non-
compliance with the conditions governing the
exercise of power under the Second Proviso
to Section 5(1). The proceedings under
Section 8 are primarily concerned with the
confirmation of the provisional attachment
and the question whether the attached
property has been acquired from legitimate
sources. Therefore, according to learned
Senior Counsel, relegating the Petitioner to
the proceedings under Section 8 would not
adequately address his specific grievance
regarding the legality of the exercise of
power under the Second Proviso to Section
5(1).
5.27. Applying the aforesaid principles to the
present case, learned Senior Counsel submits
that the Respondent was required to
demonstrate, on the basis of material
available on record, not only the existence of
the requisite grounds for provisional
attachment but also the necessity for
immediate attachment to prevent the
frustration of proceedings under the PMLA.
The mere registration of Crime No. 90/2017,
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the subsequent initiation of proceedings
under the PMLA or the fact that the Petitioner
has been arrayed as an accused in the
scheduled offence would not, by themselves,
dispense with the statutory requirements
governing the exercise of such power.
5.28. It is, therefore, contended that, in view of
the specific challenge raised to the exercise
of jurisdiction under the Second Proviso to
Section 5(1) of the PMLA, the Petitioner is
entitled to invoke the writ jurisdiction of this
Court under Article 226 of the Constitution of
India, notwithstanding the availability of
proceedings under Section 8 of the PMLA.
Learned Senior Counsel accordingly seeks
interference with the impugned provisional
attachment and the consequential
proceedings initiated against the Petitioner.
5.29. The learned Senior Counsel submits on facts
that M/s.Hanuman Minerals and M/s.Phoenix
International and their facilitator firm
M/s.Sino Podar Trade Ltd. had entered into
an agreement with M/s.Manipal Global
regarding export of 40,000 metric tons of
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iron ore to a Hong Kong based firm named
M/s.Devi Resources Ltd. from Alcon and
Maina Jetty of Goa port. The allegation is that
the Petitioner had issued two stock
certificates to M/s.Manipal Global certifying
that his proprietary concern,
M/s.S.S.Maritime was holding 40,000 MT iron
ore and it is on that basis that M/s.Manipal
Global had entered into a transaction with
the aforesaid persons. The allegation made
by M/s.Manipal Global in PCR No.23/2017, is
that the representative M/s.Hanuman
Minerals, M/s.Sino Podar Trade Ltd., had on
07.11.2011 visited the office of M/s.Manipal
Global and had entered into an agreement on
18.01.2012 as indicated supra.
5.30. Accused no.(2), accused No.(5) and accused
No.(7) therein had agreed to supply 40,000
metric tons of iron ore of a Fe quality 50%.
Instead of supplying 50% Fe content iron
ore, supply was made of 43.9% Fe content
iron ore, which according to the complainant
resulted in a loss of Rs.9,20,00,000/-. On
that basis, alleging the various offences
indicated supra, the PCR had been filed. The
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investigation was handed over to CID,
Bangalore, who had filed a charge sheet on
30.12.2021.
5.31. His submission is that merely because there
was a charge sheet filed in that matter, the
Petitioner could not be roped into the offence
requiring invocation of Section 5. He again
refers to clause (u) of sub-section of section
2 of the PMLA 2002, which has been
reproduced hereinabove. His submission is
that the proceeds of crime would only apply
to property derived or obtained directly or
indirectly by any person as a result of
criminal activity relating to the scheduled
offence.
5.32. As regards the second part of the provision,
his submission is that the value of any such
property or where such property is taken or
held outside the country, then the property
equivalent in value held within the country or
abroad could be said to be proceeds of crime.
There is no property held by the Petitioner
outside the country or abroad in the second
portion of clause (u) of sub-section (1) of
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section 2, as regard to attachment of value
of any property would not be applicable. On
the above grounds, he submits that the order
of attachment suffers from lack of jurisdiction
on the part of the Respondent. When the
Respondent has no jurisdiction over the
particular property attached on account of it
not being proceeds of crime, there is no
authority or jurisdiction vested with the
Respondent to attach a property which does
not come within the definition of proceeds of
crime under clause (u) of sub-section (1) of
section 2. On that ground, he submits there
being a lack of foundational jurisdiction,
Respondent could not have attached the
property of the Petitioner, purchased much
prior to the predicate offence, and on that
ground, he submits that the writ petition is
required to be allowed.
6. Ms.Anuparna Bordoloi, learned counsel for the
Respondent submits that:
6.1. There being a charge sheet which had been
laid upon investigation by the CID, where the
Petitioner was arraigned as an accused, the
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said offences being predicate offences, the
Respondent was required to exercise his
jurisdiction under Section 5 of the PMLA
2002.
6.2. She relies on Section 5 of the Act which is
reproduced hereunder for easy reference:-
5. Attachment of property involved in money-
laundering .—(1)Where the Director or any other
officer not below the rank of Deputy Director
authorised by the Director for the purposes of this
section, has reason to believe (the reason for such
belief to be recorded in writing), on the basis of
material in his possession, that—
(a) any person is in possession of any proceeds of
crime; and
(b) such proceeds of crime are likely to be concealed,
transferred or dealt with in any manner which may
result in frustrating any proceedings relating to
confiscation of such proceeds of crime under this
Chapter,
he may, by order in writing, provisionally attach such
property for a period not exceeding one hundred and
eighty days from the 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:
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Provided further that, notwithstanding anything
contained in 1[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, along with the material in his possession,
referred to in that sub-section, to the Adjudicating
Authority, in a sealed envelope, in the manner as may
be prescribed and such Adjudicating Authority shall
keep such order and material for such period as may
be prescribed.
(3) Every order of attachment made under sub-
section (1) shall cease to have effect after the expiry
of the period specified in that sub-section or on the
date of an order made under sub-section (3) of
section 8, whichever is earlier.
(4) Nothing in this section shall prevent the person
interested in the enjoyment of the immovable
property attached under sub-section (1) from such
enjoyment.
Explanation.—For the purposes of this sub-section,
“person interested”, in relation to any immovable
property, includes all persons claiming or entitled to
claim any interest in the property.
(5) The Director or any other officer who provisionally
attaches any property under sub-section (1) shall,
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within a period of thirty days from such attachment,
file a complaint stating the facts of such attachment
before the Adjudicating Authority.
6.3. By referring to Section 5 of the PMLA,
learned counsel submits that the authorised
officer is empowered to provisionally attach a
property where he has reason to believe, on
the basis of material in his possession and for
reasons recorded in writing, that any person
is in possession of proceeds of crime and that
such proceeds are likely to be concealed,
transferred or dealt with in a manner that
may frustrate the proceedings relating to
their confiscation.
6.4. The provision further empowers the
authorised officer, in the circumstances
specified under the Second Proviso to Section
5(1), to attach property immediately where
non-attachment is likely to frustrate
proceedings under the Act.
6.5. Learned counsel further submits that the
object of provisional attachment is to
preserve the property during the pendency of
proceedings under the PMLA and to prevent
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its disposal, transfer or alienation in a
manner that may defeat the eventual
proceedings for confiscation. If the property
is permitted to be transferred during the
pendency of the proceedings, third parties
may acquire an interest in the property and
may consequently be drawn into further
litigation.
6.6. The power of provisional attachment is,
therefore, intended to prevent such
eventualities and to preserve the property
until the proceedings under the Act reach
their conclusion.
6.7. It is accordingly contended that the
Respondent has exercised the power of
provisional attachment to safeguard the
property and ensure that the proceedings
under the PMLA are not rendered ineffective
by any subsequent transfer or alienation.
Learned counsel submits that the action of
the Respondent is intended to preserve the
property pending adjudication and to prevent
any act that may frustrate the proceedings
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relating to confiscation of the alleged
proceeds of crime.
6.8. She submits that the attachment under
Section 5 being provisional in nature, in
terms of sub-section (5) of Section 5, the
Director or any other officer who
provisionally attaches any property is
required to, within a period of 30 days from
such attachment, file a complaint stating the
facts of such attachment before the
Adjudicating Authority, which has been done
and therefore, she submits that the Petitioner
has an alternate efficacious remedy in terms
of adjudication under Section 8 and the
present writ petition is not maintainable on
account thereof.
6.9. The matter pending before the Adjudicating
Authority, the Petitioner has been served in
those proceedings. It is for the Petitioner to
appear before the authority and place his
submission before the Adjudicating Authority
to consider the same.
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6.10. In this regard, she relies on Section 8 of the
PMLA 2002 which is reproduced hereunder
for easy reference:
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 (10) of section 18,
if the Adjudicating Authority has reason to believe
that any person has committed an [offence under
section 3 or is in possession of proceeds of crime]
[Substituted by Act 21 of 2009, Section 5, for "offence
under section 3".], it may serve a notice of not less
than thirty days on such person calling upon him to
indicate the sources of his income, earning or assets,
out of which or by means of which he has acquired
the property attached under sub-section (1) of section
5, or, seized [or frozen] [Inserted by Act No. 2 OF
2013] under section 17 or section 18, the evidence on
which he relies and other relevant information and
particulars, and to show cause why all or any of such
properties 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);
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(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 property is not
involved in money-laundering.
(3)Where the Adjudicating Authority decides under
sub-section (2) that any property is involved in
money-laundering, he shall, by an order in writing,
confirm the attachment of the property made under
sub-section (1) of section 5 or retention of property or
[record seized or frozen under section 17 or section
18 and record a finding to that effect, whereupon such
attachment or retention or freezing of the seized or
frozen property] [Substituted for the words "record
seized under section 17 or section 18 and record a
finding to that effect, such attachment or retention of
the seized property" by Act No. 2 OF 2013] or record
shall
(a)continue during [investigation for a period not
exceeding [three hundred and sixty-five days]
[Inserted by Finance Act, 2018 (Act No. 13 of 2018)
dated 29.3.2018.] 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]
[Substituted for the words "scheduled offence before
a court; and" by Act No. 2 OF 2013]
(b)[ become final after an order of confiscation is
passed under sub-section (5) or sub-section (7) of
section 8 or section 5 8 B or sub-section (2A) of
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section 60 by the Adjudicating Authority] [Substituted
by Act No. 2 OF 2013];
[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.] [Inserted by Finance Act,
2019 (Act No. 7 of 2019) dated 21.2.2019.]
(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 have the same effect as
if the property had been taken possession of.]
[Substituted by Act No. 2 of 2013.]
(5)[ Where on conclusion of a trial of an offence under
this Act, the Special Court finds that the offence of
money-laundering has been committed, it shall order
that such property involved in the money-laundering
or which has been used for commission of the offence
of money-laundering shall stand confiscated to the
Central Government.
(6)Where on conclusion of a trial under this Act, the
Special Court finds that the offence of money-
laundering has not taken place or the property is not
involved in money-laundering, 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
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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.]
[Substituted by Act No. 2 OF 2013]
6.11. She relies on Section 8 of the PMLA, which
prescribes the procedure for adjudication of
properties attached under the Act. She
submits that, upon receipt of a complaint
under Section 5(5), the Adjudicating
Authority is required to consider whether
there are grounds to proceed against the
property alleged to be involved in money
laundering.
6.12. Learned counsel submits that the Petitioner
has an effective statutory remedy before the
Adjudicating Authority and that the present
writ petition has been filed without
exhausting that remedy. Under Section 8(2),
the Adjudicating Authority is required to
consider the Petitioner’s reply, afford an
opportunity of hearing to the concerned
parties and examine the relevant material on
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record before determining whether the
property specified in the notice is involved in
money laundering. The Adjudicating
Authority may thereafter confirm the
attachment or decline to do so. On this basis,
she contends that the writ petition is
premature.
6.13. Learned counsel further submits that
confirmation of provisional attachment is a
step in aid of the eventual confiscation of the
property and serves to preserve the property
during the pendency of the proceedings. The
ultimate question of confiscation is to be
determined in accordance with the provisions
of the Act. Upon conclusion of the trial, if the
Special Court finds that the offence of money
laundering has not been committed or that
the property is not involved in money
laundering, the property is liable to be
released in accordance with Section 8(6).
Confiscation would follow only in accordance
with the statutory provisions where the
requisite findings are recorded.
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6.14. She submits that the PMLA, 2002, provides
adequate procedural safeguards at the
stages of adjudication and trial, and that this
Court ought not to interfere at the present
stage. According to her, the Petitioner should
raise his objections concerning the
attachment before the Adjudicating
Authority, which is empowered to consider
the reply and the material placed on record.
She further contends that entertaining the
writ petition at this stage would obstruct or
derail the ongoing adjudication and
investigation. She accordingly seeks
dismissal of the petition as premature.
6.15. She submits that proceedings are pending
under Section 43 (1) of the PMLA 2002
before the Special Court in Special CC
No.53/2025 for offences of money laundering
under Section 3 and Section 4 of the PMLA
2002. The Petitioner could also raise the
issues raised in the present writ petition and
in the said proceedings.
6.16. She submits that a show cause notice has
been issued by the Adjudicating Authority
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under Section 8 wherein the Petitioner
himself had furnished his reply. The said
reply has been considered by the
Adjudicating Authority and the Adjudicating
Authority has come to a conclusion that the
Petitioner has cheated M/s.Manipal Global by
issuing bogus stock certificates to
M/s.Manipal Global, certifying that the jetties
pertaining to his concern located in Alcon and
Maina were having 40,000 metric tons of iron
ore fines. As regards which he has received a
consideration of Rs.17,00,000/-. The
Petitioner being arrayed as defendant no.3 in
those proceedings. Her submission is that
though the property has been purchased in
the year 2004 and 2008 not from the
proceeds of crime. But it is on account of the
proceeds of crime being secreted and not
being available, the value equivalent to the
same has been attached provisionally under
Section 5 and confirmed under Section 8.
6.17. The monies which had been received from
M/s.Manipal Global are not available
inasmuch as a sum of Rs.2,30,00,000/- was
received by M/s.Hanuman Minerals from
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M/s.Manipal, out of which a sum of
Rs.53,80,000/- was withdrawn in cash. An
amount of Rs.96,00,000/- was transferred to
Phoenix International. Out of which
Rs.32,55,000/- has been withdrawn in cash.
A further sum of Rs.17,00,000/- was
transferred to the Petitioner. M/s.Hanuman
Minerals, being a proprietary concern of
Girish Sangappa, Jaggal, is defendant no.1 in
the said proceedings. There are no amounts
which are available in the account of
defendant no.1. Sri.Rohan Prakash Lotlikar
is the proprietor of Phoenix International who
is defendant no.2 in the said proceedings.
6.18. Her submission is that in one of the accounts
belonging to Phoenix, there is an amount of
Rs.1,40,773/- and in another account an
amount of Rs.5,162/- which are available. In
respect of the other defendants therein,
there are partial sums which are available in
the account. No amount is available from the
original account received by M/s.Hanuman
Minerals and transferred to the other
accounts.
Digitally Signed By:
SURAJ GOVINDA RAJ
29/10/2026, 13:40, Bengaluru
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6.19. She relies on the judgment of the Co-
ordinate Bench of this Court in the case of
Sri.Krishna K.M., and others vs. The
Directorate of Enforcement and others
[ WP No.7155/2026 dated 18.03.2026] more
particularly paragraphs 2 (ii) and 4 thereof
which are reproduced hereunder for easy
reference:
2(ii) The Petitioners' vendor questioned the correctness
of the said notification in W.P.No.7102/2023. The said
writ petition was allowed and it was held that the
Circular dated 14.03.2023 issued by the State
Government cannot bar a compromise in
O.S.No.348/2020. Accordingly, the endorsement issued
by MUDA was set aside. Out of the sites that were
identified by MUDA, the owner conveyed one of the
sites to the Petitioners in terms of a sale deed dated
19.07.2023. It is contended that this land was mired in
a litigation under the provisions of the PMLA and that
several proceedings were pending before several
authorities and later, only the site allotted to the
predecessor of the Petitioners was provisionally
attached under Section 5(1) of the PMLA.
4. A perusal of the proceedings initiated against the
Petitioners' property shows that it is under Section 5(1)
of the PMLA, which is provisional in nature. The right
to challenge the order of attachment would arise
only after an order is passed under Section 8 of
the PMLA. Therefore, this petition is too
premature and this Court cannot exercise jurisdiction
to set at nought the proceedings for provisional
attachment of the property.
… Emphasis supplied by this Court
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6.20. By relying on Sri.Krishna K.M., her
submission is that the Co-ordinate Bench of
this Court has held that a provisional order of
attachment under Section 5(1) of the PMLA is
provisional in nature and that the right to
challenge the attachment would arise only
after an order is passed under Section 8 of
the Act.
6.21. By placing reliance on the said decision,
learned counsel submits that the present writ
petition, which challenges the provisional
attachment proceedings before the
Adjudicating Authority has passed an order
under Section 8, is premature. She therefore
contends that this Court ought not to
exercise its writ jurisdiction to interfere with
the provisional attachment at this stage and
that the Petitioner must pursue the statutory
proceedings before the Adjudicating
Authority.
6.22. She relies on the decision of the Hon'ble
Delhi High Court in the case of Deputy
Director, Directorate of Enforcement
of Delhi vs. Axis Bank and others
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[ 2019:DHC:1887] , more particularly
paragraph 171, which is reproduced
hereunder for easy reference:
171. It will be advantageous to summarise the
conclusions reached by the above discussion, as
under :
(i) The process of attachment (leading to
confiscation) of proceeds of crime under the
PMLA is in the nature of civil sanction which
runs parallel to investigation and criminal action
vis-a-vis the offence of money-laundering .
(ii) The empowered enforcement officer is expected to
assess, even if tentatively, the value of proceeds
of crime so as to ensure such proceeds or other
assets of equivalent value of the offender of money-
laundering are subjected to attachment, the
evaluation being open to modification in light of
evidence gathered during investigation.
(iii) The empowered enforcement officer has the
authority of law in the PMLA to attach not only a
"tainted property"—that is to say a property acquired
or obtained, directly or indirectly, from proceeds of
criminal activity constituting a scheduled offence—but
also any other asset or property of equivalent
value of the offender of money-laundering, the
latter not bearing any taint but being alternative
attachable property (or deemed tainted
property) on account of its link or nexus with
the offence (or offender) of money-laundering .
(iv) If the "tainted property" respecting which there is
evidence available to show the same to have been
derived or obtained as a result of criminal activity
relating to a scheduled offence is not traceable, or
the same for some reason cannot be reached, or
to the extent found is deficient, the empowered
enforcement officer may attach any other asset
("the alternative attachable property" or "deemed
tainted property") of the person accused of (or
charged with) offence of money-laundering provided
it is near or equivalent in value to the former ,
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the order of confiscation being restricted to take over
by the Government of illicit gains of crime.
(v) If the person accused of (or charged with) the
offence of money- laundering objects to the
attachment, his claim being that the property
attached was not acquired or obtained (directly or
indirectly) from criminal activity, the burden of
proving facts in support of such claim is to be
discharged by him .
(vi) The objective of the PMLA being distinct from the
purpose of the RDBA, SARFAESI Act and Insolvency
Code, the latter three legislations do not prevail over
the former.
(vii) The PMLA, by virtue of section 71, has the
overriding effect over other existing laws in the
matter of dealing with "money-laundering" and
"proceeds of crime" relating thereto.
(viii) The PMLA, RDBA, SARFAESI Act and Insolvency
Code (or such other laws) must co-exist, each to be
construed and enforced in harmony, without one
being in derogation of the other with regard to the
assets respecting which there is material available to
show the same to have been "derived or obtained" as
a result of "criminal activity relating to a scheduled
offence" and consequently being "proceeds of crime",
within the mischief of the PMLA.
(ix) If the property of a person other than the one
accused of (or charged with) the offence of money-
laundering, i. e., a third party, is sought to be
attached and there is evidence available to show that
such property before its acquisition was held by the
person accused of money- laundering (or his abettor),
or it was involved in a transaction which had inter-
connection with transactions concerning money-
laundering, the burden of proving facts to the
contrary so as to seek release of such property from
attachment is on the person who so contends.
(x) The charge or encumbrance of a third party in a
property attached under the PMLA cannot be treated
or declared as "void" unless material is available to
show that it was created "to defeat" the said law, such
declaration rendering such property available for
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attachment and confiscation under the PMLA, free
from such encumbrance.
(xi) A party in order to be considered as a "bona fide
third party claimant" for its claim in a property being
subjected to attachment under the PMLA to be
entertained must show, by cogent evidence, that it
had acquired interest in such property lawfully and for
adequate consideration, the party itself not being
privy to, or complicit in, the offence of money-
laundering, and that it has made all compliances with
the existing law including, if so required, by having
said security interest registered.
(xii) An order of attachment under the PMLA is not
illegal only because a secured creditor has a prior
secured interest (charge) in the property, within the
meaning of the expressions used in the RDBA and
SARFAESI Act. Similarly, mere issuance of an order of
attachment under the PMLA does not ipso facto render
illegal a prior charge or encumbrance of a secured
creditor, the claim of the latter for release (or
restoration) from the PMLA attachment being
dependent on its bona fides.
(xiii) If it is shown by cogent evidence by the bona
fide third party claimant (as aforesaid), staking
interest in an alternative attachable property (or
deemed tainted property), claiming that it had
acquired the same at a time around or after the
commission of the proscribed criminal activity, in
order to establish a legitimate claim for its release
from attachment it must additionally prove that it had
taken "due diligence" (e. g., taking reasonable
precautions and after due inquiry) to ensure that it
was not a tainted asset and the transactions indulged
in were legitimate at the time of acquisition of such
interest.
(xiv) If it is shown by cogent evidence by the bona
fide third party claimant (as aforesaid), staking
interest in an alternative attachable property (or
deemed tainted property) claiming that it had
acquired the same at a time anterior to the
commission of the proscribed criminal activity, the
property to the extent of such interest of the third
party will not be subjected to confiscation so long as
the charge or encumbrance of such third party
subsists, the attachment under the PMLA being valid
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or operative subject to satisfaction of the charge or
encumbrance of such third party and restricted to
such part of the value of the property as is in excess
of the claim of the said third party.
(xv) If the bona fide third party claimant (as
aforesaid) is a "secured creditor", pursuing
enforcement of "security interest" in the property
(secured asset) sought to be attached, it being an
alternative attachable property (or deemed tainted
property), it having acquired such interest from
person(s) accused of (or charged with) the offence of
money-laundering (or his abettor), or from any other
person through such transaction (or inter-connected
transactions) as involve(s) criminal activity relating to
a scheduled offence, such third party (secured
creditor) having initiated action in accordance with
law for enforcement of such interest prior to the order
of attachment under the PMLA, the directions of such
attachment under the PMLA shall be valid and
operative subject to satisfaction of the charge or
encumbrance of such third party and restricted to
such part of the value of the property as is in excess
of the claim of the said third party.
(xvi) In the situations covered by the preceding two
sub-paragraphs, the bona fide third party claimant
shall be accountable to the enforcement authorities
for the "excess" value of the property subjected to the
PMLA attachment.
(xvii) If the order confirming the attachment has
attained finality, or if the order of confiscation has
been passed, or if the trial of a case under section 4
of the PMLA has commenced, the claim of a party
asserting to have acted bona fide or having legitimate
interest in the nature mentioned above will be
inquired into and adjudicated upon only by the special
court.
Decision on the appeals.
… Emphasis supplied by this Court
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6.23. By relying on Axis Bank , her submission is
that the power of attachment under the
PMLA extends not only to property directly or
indirectly derived from criminal activity
relating to a scheduled offence, but also to
other assets of equivalent value belonging to
the person accused of money laundering,
subject to the principles laid down in the said
decision.
6.24. She submits that where the proceeds of
crime cannot be traced, are unavailable for
attachment, or are insufficient in value, the
authorised officer may attach other property
of equivalent value belonging to the person
accused of money laundering. Such property
need not itself have been acquired from the
proceeds of crime, provided the statutory
requirements governing attachment of
equivalent-value property are satisfied.
6.25. Learned counsel further submits that where
the person concerned disputes the
attachment on the ground that the property
was not acquired from criminal activity, the
claim must be substantiated by evidence.
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She relies on Axis Bank to contend that the
attachment of property is not rendered
invalid merely because the property is not
itself tainted, and that the nature of the
property, its connection with the person
accused of money laundering, and the
circumstances in which it was acquired must
be considered in determining whether it is
amenable to attachment.
6.26. Applying these principles to the present case,
learned counsel submits that the mere fact
that the Petitioner’s properties were acquired
before the alleged criminal transactions
would not, by itself, conclude the issue of
their attachability. According to her, the
Petitioner’s objections regarding the dates of
acquisition and the alleged absence of any
direct link between the properties and the
proceeds of crime are matters to be
considered in the statutory adjudication
proceedings, in light of the material on
record and the principles governing
attachment under the PMLA.
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6.27. On this basis, learned counsel submits that
the attachment proceedings are not liable to
be interdicted at this stage and that the
Petitioner should raise his objections before
the Adjudicating Authority, which is
competent to examine the relevant material
and determine whether the properties are
liable to be proceeded against under the Act.
6.28. She relies on the judgment of Hon’ble High
Court of Delhi in the case of Directorate of
Enforcement vs. Prakash Industries Ltd.,
[ 2025 SCC OnLine Del 8243] more
particularly paragraphs 34, 35, 36, 37, 38,
39 & 40 which are reproduced hereunder for
easy reference:
34. In view of the aforesaid, it bears importance that
this Bench has previously examined similar questions
of law in Prakash Industries-I , wherein it was
conclusively determined that the allocation of a coal
block constitutes “property” within the meaning of
Section 2(1)(v) of the PMLA. Further, it was also
determined that any undue advantage, benefit, or
economic gain derived or obtained, directly or
indirectly, through utilisation of such property would
constitute “proceeds of crime” as defined under
Section 2(1)(u) of the PMLA, thereby rendering PIL,
prima facie, liable for the offence of money laundering
under Section 3 of the PMLA. In order to facilitate a
comprehensive understanding of the aforestated legal
principles adjudicated by this Bench as also applicable
to the present controversy, the relevant paragraphs
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from Prakash Industries-I are reproduced
hereinbelow:
“B. SECTION 2(1)(V) OF THE PMLA : WHETHER
THE ALLOCATION LETTER CONSTRUES AS
‘PROPERTY’?
31. The word ‘property’ has been defined under
Black's Law Dictionary, as, “one which is peculiar or
proper to any person; which belongs exclusively to
one; in the strict legal sense, an aggregate of rights
which are guaranteed and protected by the
government.” It also goes on to define it as, “the
word commonly used to denote everything which is
the subject of ownership, corporeal or incorporeal,
tangible or intangible, visible or invisible, real or
personal; everything that has an exchangeable value
or which goes to make up wealth or estate. It extends
to every species of valuable right and interest and
includes real and personal property, easements,
franchises and incorporeal hereditaments”.
32. The definition of ‘property’ as provided under
Section 2(1)(v) of the PMLA, is inclusive and
expansive, broadly including every description of
asset provided thereunder, in form of a deed or
instrument evidencing title or interest in such assets.
To put it simply, the definition of ‘property’ as
provided under the PMLA is broad and inclusive in its
approach towards what constitutes as property within
the contours of the Act. This statutory definition is
further supported by the constitutional jurisprudence
of India, reiterating the understanding of what
constitutes as property in India under Article 300A of
the COI, which recognizes property as inclusive of
intangible interests and rights created through
incorporeal assets.
33. Additionally, it is apposite to note that, in the
contemporary world, dominated by a commercial
landscape where economic transactions are shaped by
intangible rights and digital assets, to construe the
definition of ‘property’ in a narrow or traditional
sense, would not only amount to restricting the
approach of the Court to the innovative nuances of
the modern commercial world but also create an
impediment for the judiciary to keep up its pace with
the evolving jurisprudence. Therefore, it becomes
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essential to embrace a broader and more dynamic
understanding of what constitutes ‘property’.
34. In the modern era, as also evidenced by the
usage of terms to define property under Section
2(1)(v) of the PMLA, intangible property has assumed
immense legal and commercial significance. The
evolution of Intellectual Property laws now
comprehends rights such as copyrights, trademarks,
design rights, patents, licenses, digital assets and
contractual entitlements, all of which are firmly
recognised as valuable forms of property within the
framework of common law.
35. In view of the aforestated, an allocation letter,
especially when it confers upon the beneficiary an
exclusive right to gain commercial advantage,
enabling the beneficiary to derive economic gains,
must be examined through this widened legal lens.
39. It is pertinent to note that, the act of allocation, in
itself, may not constitute a complete offence; rather,
it is the first step in a chain of subsequent events,
carrying a cascading effect. These events begin with
the procurement of the allocation, which is then
followed by the actual extraction of coal, an act, if
done on the basis of an unauthorised allocation,
constitutes a separate illegal act. The allocation sets
in motion the process through which the State
Government is expected to act upon the
recommendation made by the Central Government
and facilitate the formalities flowing therefrom. This
process leads to an initiation of series of
administrative actions, which, if found to be tainted by
criminality at the origin, ultimately results in
usurpation of a public resource, which otherwise
would rightfully vest in the State as a natural resource
belonging to the general public at large.”
C. SECTION 2(1)(U) AND SECTION 3 OF THE
PMLA : WHETHER MISREPRESENTATION IN
ALLOCATION OF COAL BLOCK LEADS TO
PROCEEDS OF CRIME MAKING IT AN OFFENCE
OF MONEY LAUNDERING?
40. Section 2(1)(u) of the PMLA covers any property
derived or obtained, directly or indirectly, by any
person as a result of any criminal activity in relation
to a scheduled offence and includes within its
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meaning, the ‘value of such property’. As explained in
the preceding paragraphs under Part B of this
judgment, the definition of ‘property’ is broad, which
includes the tangible and intangible property and the
property used in the commission of a scheduled
offence.
41. Section 3 of the PMLA defines the offence of
money laundering as an involvement in any process
or activity connected with the proceeds of crime,
including concealment, possession, acquisition, use
and its projection as untainted or to claim it as
untainted. Whereas, explanation (ii) of the said
provision highlights that such process or activity
connected with the proceeds of crime is a continued
activity and continues till such time a person enjoys
such proceeds by concealing or being in possession or
acquiring or using or projecting or claiming it as an
untainted property.
42. The Statement of Objects and Reasons of the
PMLA also highlights certain important
recommendations made by the Financial Task Force
held in Paris in 1989, which also forms the foundation
of the present-day legislation of PMLA dealing with
offence of money laundering in India, which are:”
(i) declaration of laundering of monies carried through
serious crimes as criminal offence;
xxxx xxxx xxxx xxxx xxxx
(iii) confiscation of the proceeds of crime;
43. These two recommendations forming part of the
objects of the PMLA when read together, reveal the
legislative intent behind the Act. It means that the
offence of money laundering as envisaged under
Section 3 of the PMLA is a stand-alone offence and
not just a byproduct of crimes; rather it is a crime in
itself and the illicit financial gains arising from the
criminal activities forming a part of money laundering
is subject to confiscation. To put it succinctly, the
intent of the Act is not only to punish the accused
found to be guilty under the offence of money
laundering, but also to deprive them of the illegal
financial gains. The PMLA not only recognizes the
illegal financial gains but also sustainably targets the
conduct, in the form of serious economic offences,
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that results in the generation of such illegal financial
gains.
44. The aforestated intent of the PMLA is also
corroborated with the preamble of the Act, which
defines PMLA as, “an Act 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”.
45. Sections 2(1)(u) and 3 of the PMLA, when put
together leads us to infer that Section 3 criminalises
any process or activity connected with proceeds of
crime, which in turn includes property derived or
obtained, directly or indirectly, by any person, as a
result of criminal activity, relating to a scheduled
offence and the value of such property.
46. The aforesaid position has also been rendered by
the Supreme Court in Vijay Madanlal Chaudhary
Judgment and the relevant paragraph is reproduced
hereunder:
382.8. The offence under Section 3 of the 2002 Act is
dependent on illegal gain of property as a result of
criminal activity relating to a scheduled offence. It is
concerning the process or activity connected with
such property, which constitutes the offence of
money-laundering. The Authorities under the 2002
Act cannot prosecute any person on notional basis
or on the assumption that a scheduled offence
has been committed, unless it is so registered
with the jurisdictional police and/or pending
enquiry/trial including by way of criminal complaint
before the competent forum. If the person is finally
discharged/acquitted of the scheduled offence or the
criminal case against him is quashed by the Court of
competent jurisdiction, there can be no offence of
money-laundering against him or anyone claiming
such property being the property linked to stated
scheduled offence through him.”
47. The view taken by the Supreme Court was further
reiterated in a recent judgment passed by the
Supreme Court in Union of India through the Assistant
Director v. Kanhaiya Prasad, and the relevant
paragraph is as follows:”
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19. We also do not find any substance in the
submission made by learned Senior Advocate Ranjit
Kumar for the Respondent that the Respondent has
not been shown as an accused in the predicate
offence. It is no more res integra that the offence of
money laundering is an independent offence
regarding the process or activity connected with the
proceeds of crime, which had been derived or
obtained as a result of criminal activity relating to or
in relation to a schedule offence. Hence, involvement
in any one of such process or activity connected with
the Proceeds of Crime would constitute offence of
money laundering. This offence otherwise has nothing
to do with the criminal activity relating to a schedule
offence, except the Proceeds of Crime derived or
obtained as a result of that crime. The precise
observations made in Vijay Madanlal (supra) in this
regard may be reproduced hereunder:—
“270. Needless to mention that such process or
activity can be indulged in only after the property is
derived or obtained as a result of criminal activity (a
scheduled offence). It would be an offence of money
laundering to indulge in or to assist or being party to
the process or activity connected with the proceeds of
crime; and such process or activity in a given fact
situation may be a continuing offence, irrespective of
the date and time of commission of the scheduled
offence. In other words, the criminal activity may
have been committed before the same had been
notified as scheduled offence for the purpose of the
2002 Act, but if a person has indulged in or continues
to indulge directly or indirectly in dealing with
proceeds of crime, derived or obtained from such
criminal activity even after it has been notified as
scheduled offence, may be liable to be prosecuted for
offence of money laundering under the 2002 Act — for
continuing to possess or conceal the proceeds of
crime (fully or in part) or retaining possession thereof
or uses it in trenches until fully exhausted. The
offence of money laundering is not dependent on or
linked to the date on which the scheduled offence, or
if we may say so, the predicate offence has been
committed. The relevant date is the date on
which the person indulges in the process or
activity connected with such proceeds of crime .
These ingredients are intrinsic in the original provision
(Section 3, as amended until 2013 and were in force
till 31-7-2019); and the same has been merely
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explained and clarified by way of Explanation vide
Finance (No. 2) Act, 2019. Thus understood, inclusion
of clause (ii) in the Explanation inserted in 2019 is of
no consequence as it does not alter or enlarge the
scope of Section 3 at all.
271 to 405……………
406. It was urged that the scheduled offence in a
given case may be a non-cognizable offence and yet
rigours of Section 45 of the 2002 Act would result in
denial of bail even to such accused. This argument is
founded on clear misunderstanding of the scheme of
the 2002 Act. As we have repeatedly mentioned in the
earlier part of this judgment that the offence of
money laundering is one wherein a person, directly or
indirectly, attempts to indulge or knowingly assists or
knowingly is a party or is actually involved in any
process or activity connected with the proceeds of
crime. The fact that the proceeds of crime have been
generated as a result of criminal activity relating to a
scheduled offence, which incidentally happens to be a
non-cognizable offence, would make no difference.
The person is not prosecuted for the scheduled
offence by invoking provisions of the 2002 Act, but
only when he has derived or obtained property as a
result of criminal activity relating to or in relation to a
scheduled offence and then indulges in process or
activity connected with such proceeds of crime.
Suffice it to observe that the argument under
consideration is completely misplaced and needs to be
rejected.
xxxx xxxx xxxx xxxx xxxx
49. Subsequently, since any process or activity
connected with such proceeds of crime including
possession, use, concealment, layering, projection or
claim as untainted, constitutes money-laundering, the
aforesaid proceeds, having been possessed, used,
concealed, projected such as untainted property by
PIL, brings the case squarely within the scope of the
offence of money laundering as defined under Section
3 of the PMLA. Additionally, it is pertinent to note that
explanation (ii) to Section 3 of the PMLA clearly states
that the process of money laundering is a continuing
offence linked to the existence of proceeds of crime.
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50. The Supreme Court in Satyendar Kumar Jain v.
Directorate of Enforcement, has clarified that the
offence of money laundering is not limited to the final
act of integration and remains ongoing as long as the
proceeds are being dealt with. Accordingly, the
continuing nature of money laundering, sustains the
liability arising out of the PMLA for post-enactment
activities involving such proceeds.”
35. In substance, this Bench in Prakash Industries-
I , upheld the validity of the PAO, with a finding that
the definition of property under Section 2(1)(u) of the
PMLA is deliberately wide to include both tangible and
intangible assets, including rights and interests
resulting into economic value. Accordingly, an
allocation letter leading to an exclusive commercial
benefit, falls well within the scope of an intangible
property and as such constitutes proceeds of crime.
Further, the misrepresentation by PIL in order to
obtain such an allocation would be rendered as a
criminal activity, resultantly generating proceeds of
crime under Section 2(1)(u) of the PMLA. Against this
backdrop, it was then established that Section 3 of
the PMLA criminalises all processes connected with
such proceeds, making money laundering a distinct
and continuing offence which subsists as long as such
illicit gains are possessed or utilized by the accused.
36. Application of the aforesaid principles to the
present case becomes relevant to the extent that the
definition of proceeds of crime under Section 2(1)(u)
of the PMLA, not only includes the property derived
directly through a criminal activity related to the
scheduled offence, rather it also includes any property
derived indirectly by such a criminal activity.
37. In light of the aforestated, the LSJ, while making
an observation that the investigation and chargesheet
are confined merely to the aspect of
misrepresentation, and therefore, would not extend to
the allotment of preferential shares, has based his
findings on a fundamental misconception of the
nature, scope and legal implications provided within
the contours of the offence of money laundering
under the PMLA. While it is trite law that the offence
under Section 3 of the PMLA is predicated upon the
existence of a scheduled offence, it is of equal
importance to understand that the offence of money
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laundering is a distinct and independent offence in
itself.
38. Additionally, the essence of money laundering lies
in the proceeds of crime as defined under Section
2(1)(u) of the PMLA, wherein the usage of words
“ directly or indirectly” are of crucial importance
to demonstrate that the scope of the definition
under Section 2(1)(u) extends not only to the
immediate consequence of a crime, rather it also
includes the subsequent transformation, layers
and manifestation of the illicit financial gain . The
usage of the word “indirectly” while defining proceeds
of crime under PMLA, establishes the intentional
expansive definition provided thereunder, which goes
on to establish that once the proceeds are generated
through any criminal activity, routing it through
multiple channels or transactions, thereby creating
layers of ostensible legitimacy does not prevent the
accused from escaping liability within the rigours of
Section 3 of the PMLA.
39. To put it in other words, even if no separate
predicate offence is registered in relation to the
subsequent act of utilisation of property to acquire
funds through a legalised transaction, the
classification of the illegal gains used by means of a
legal transaction emanating from an illegal means
adopted for attaining coal block allocation would still
be construed as “proceeds of crime”. This is because
the proceeds nevertheless are traceable either directly
or indirectly, to the original criminal activity relating
to a scheduled offence.
40. Additionally, the offence of money laundering
being continuing in nature is not confined only
to the initial act of criminal acquisition but also
extends to every process or activity connected
with the proceeds including layering through
multiple transactions, integration into the legitimate
economy and projection of the acquired wealth as
lawful. For instance, if a public servant receives a
bribe, which constitutes an offence under the
provisions of the Prevention of Corruption Act, 1988,
and thereafter invests that sum in narcotics trade,
real estate, preferential shares or any other avenue,
the taint of illegality would still continue and the
entire corpus shall be liable to be attached
irrespective of the subsequent channels through which
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it has been routed or the forms it assumes
subsequently. Similarly, if the sum received as bribe
is invested in share market, which later increases or
goes beyond and above the value of actual
investment owing to market forces or corporate
actions, the entire enhanced amount shall constitute
as proceeds of crime. Meaning thereby the
appreciation in value does not cleanse or purify the
tainted origin, more so since the augmented value is
inextricably and indirectly derived from the original
illicit source of bribe.
… Emphasis supplied by this Court
6.29. By relying on Prakash Industries Ltd, she
submits that the expression “proceeds of
crime” under Section 2(1)(u) of the PMLA has
a wide ambit and includes property derived
or obtained, directly or indirectly, from
criminal activity relating to a scheduled
offence. Such property may be tangible or
intangible and may include economic benefits
arising from rights or interests acquired
through criminal activity.
6.30. She further submits that the offence of
money laundering under Section 3 of the
PMLA is distinct from the scheduled offence
and extends to processes or activities
connected with the proceeds of crime,
including their possession, use, concealment,
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layering, acquisition or projection as
untainted property. The fact that the
proceeds of crime are subsequently routed
through legitimate transactions or converted
into another form of asset does not, by itself,
extinguish their tainted character. Relying on
the observations of the Delhi High Court
concerning the continuing nature of money
laundering, she contends that the
subsequent use, investment or appreciation
of proceeds of crime does not sever their link
with the original criminal activity.
6.31. On the strength of the said decision, learned
counsel submits that the Petitioner’s
contention that the attached properties were
acquired before the alleged scheduled
offence cannot, by itself, determine their
non-attachability. According to her, the
question must be considered in the light of
the statutory definition of proceeds of crime
and the material available concerning the
alleged criminal activity and any direct or
indirect connection between such activity and
the properties sought to be attached.
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6.32. She relies on the judgment of the Hon’ble
Delhi High Court in the case of Gautam
Khaitan and anr., vs. Union of India and
anr., [ 2025 SCC OnLine Del 8434] more
particularly paragraphs 18, 19 & 22 which
are reproduced hereunder for easy
reference:
18. In this context, this Court also deems it necessary
to refer to Paragraph No. 12 of the IJ, wherein the LSJ
records that, notwithstanding a suggestion made to
the Appellants to seek redressal before the
Adjudicating Authority in response to the notice
issued, the Appellants pressed the Court to examine
the material on record to determine whether the AO
possessed sufficient material to form a reason to
believe for the issuance of the PAO. Consequently, the
submission advanced by the learned counsel for the
Appellants, that the LSJ ought not to have addressed
the merits of the case while dismissing the writ
petition on the ground of alternate remedy, is
rendered inconsequential.
19. With respect to the argument raised on behalf of
the Appellants that the PAO can only be issued
subsequent to the filing of a chargesheet under
Section 173 of CrPC, this Bench places reliance on its
recent decision in LPA 588 of 2022 titled Directorate
of Enforcement v. Hi-tech Merchantile India Pvt. Ltd.
dated 17.10.2025. This Bench in the aforesaid
judgment comprehensively examined the scope and
exercise of powers of attachment conferred under
Section 5 of the PMLA. For sake of clarity and to
underscore the principles laid down therein, the
relevant paragraphs of the judgment are reproduced
hereunder:
“58. The contention of PIL with respect to the
relevance of the date of allocation, i.e. 04.09.2003
and the findings of the LSJ restricting the actions of
the Directorate upto the given date falls short of
merit. More specifically, when Section 5 of the
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PMLA enables the Directorate to proceed with an
attachment of the properties of similar value ,
whereas first two provisos out of the three provisos to
Section 5(1) of the PMLA, highlights the statutory pre-
requisite of initiating the attachment. While the first
proviso provides for filing of a report under Section
173 of the CrPC or a complaint by an authorised
officer for initiation of attachment, the second proviso
provides for attachment on account of a “reason to
believe” based on the material available. These
provisos form a jurisdictional precondition for
issuance of the PAO; however, it does not
restrict the scope of the Directorate's
attachment to the time period covered in the
said report or complaint .
59. To put it succinctly, the report under Section 173
of the CrPC, acts as a gateway triggering the
requirement to initiate action under the proviso
to Section 5(1) of the PMLA; but does not
confine the extent of the inquiry of the
Directorate and/or the duration of the proceeds
of crime sought to be attached . Having said the
aforestated, it is also important to highlight that
there are two provisos attached to section 5(1)
of the PMLA, each operating within its own
independent domain . Therefore, it is important to
bear in mind that the filing of a report under Section
173 of the CrPC is one of the triggering conditions for
initiating attachment under first proviso to Section
5(1) of the PMLA, but not the only one, as under the
statute, other conditions may independently warrant
the initiation of attachment proceedings.”
In substance, it was observed that while the first
proviso to Section 5(1) of the PMLA constitutes a
statutory pre-requisite for initiating an attachment, it
is not to be construed that the compliance of the said
proviso is a sole pre-requisite for issuance of PAO,
which if not complied with would render the
attachment proceedings invalid or ineffectual.
22. Keeping in view the above position of law, as well
as the facts and circumstances of the present case,
this Court does not deem it appropriate to interfere
with the Impugned Judgment passed by the learned
Single Judge.
… Emphasis supplied by this Court
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6.33. By relying on Gautam Khaitan, she submits
that the existence of an alternative remedy
before the Adjudicating Authority is a
relevant consideration while deciding whether
this Court should interfere with a provisional
attachment order under the PMLA. She points
out that, in the said decision, the Delhi High
Court declined to interfere with the judgment
under challenge, notwithstanding the
challenge raised to the provisional
attachment order.
6.34. Learned counsel further submits that, as
explained in Gautam Khaitan , while the
filing of a report under Section 173 of the
Code of Criminal Procedure or a complaint,
as contemplated under the first proviso to
Section 5(1) of the PMLA, constitutes a
statutory condition for initiating attachment
proceedings under that proviso, it does not
restrict the Directorate’s inquiry to the period
or transactions referred to in such report or
complaint.
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6.35. She relies on the decision in Directorate of
Enforcement v. Hi-Tech Mercantile India
Pvt. Ltd., in [LPA 588 of 2022] dated
17.10.2025, referred to therein, to contend
that the statutory provisos to Section 5(1)
operate within their respective domains and
that the filing of such a report or complaint
does not, by itself, determine the full scope
of the properties that may be considered for
attachment.
6.36. Applying these principles to the present case,
learned counsel submits that the Petitioner
cannot rely solely on the dates on which the
properties were acquired or on the period
covered by the predicate-offence
investigation to contend that the provisional
attachment is unsustainable. She contends
that the validity of the attachment must be
examined in the context of the statutory
requirements under Section 5(1), the
material available to the authorised officer
and the grounds raised by the Petitioner.
Accordingly, she submits that no interference
with the provisional attachment is warranted
at this stage and that the Petitioner ought to
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pursue the remedy available before the
Adjudicating Authority.
6.37. She relies on the judgment of Hon’ble High
Court of Madras in the case of
P.Balamurugan and another vs.
Directorate of Enforcement, rep by
Chennai Zonal Office-II and another
[ 2025 SCC OnLine Mad 15158] more
particularly paragraphs 13, 14 & 15 which
are reproduced hereunder for easy
reference:
13. The precondition required to issue the provisional
attachment order is the reasonable believe
reduced into writing by the competent officer
that some person is in possession of the
proceeds of crime and the said proceeds of crime
are likely to be concealed, transferred or dealt with
any manner which may result in frustrating any
proceeds related to confiscation of such proceeds of
crime under Chapter III of the PMLA.
14. The yet another condition is that the said property
must be in relation to scheduled offence reported and
forwarded to the Magistrate or a complaint filed by a
person authorised to investigate the offence
mentioned in the schedule. The order of provisional
attachment issued under Section 5(1) of the PMLA will
be inforce 180 days. Once the order of provisional
attachment is issued based on the reason believe that
the property is a proceeds of crime and likely to be
concealed transferred etc., a copy of the order along
with material in possession to be sent to the
Adjudicating Authority in a sealed envelope
(emphasis applied) in the manner prescribed. The
provisional attachment does not prevent the person
interested from enjoying the property. In this case,
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the Adjudicating Authority had already informed about
the provisional attachment and it is now for the
authority to decide whether the provisional
attachment order to be confirmed or not. The writ
Petitioners has to participate in the enquiry once
they receive notice and substantiate their plea
that the property attached is not a proceeds of
crime and they have neither directly nor indirectly
aid, assist, use or conceal the said property with
knowledge and intention to project it as untainted
property.
15. In the light of Section 24 of the Act, which cast
the burden of proof on the person accused on
money laundering and the probability of
concealment of the crime proceeds loom large against
the Petitioners. The judgment if any which is contrary
to the provision of Section 5(1) of the PMLA casting
duty on the enforcement authority to issue prior
notice before passing provisional order of attachment
is to be considered as obitor.
Section 8 of PMLA is the answer to the plea of
the writ Petitioners regarding opportunity of
hearing before the attachment . The Section 5(1)
and Section 8(1) and (2) read together clearly show
that the provisional attachment is only to prevent
the attempt of concealment of the crime
proceeds to frustrate confiscation. It is a
preventive measure to be done immediately, but
at the same time only valid for 180 days . The
final order under Section 8 of the PMLA will be passed
after affording opportunity to the parties concerned.
No where in the statute either in the Act or Rule,
notice to parties prior to the provisional
attachment is contemplated . While so, there
cannot be a interpretation contrary to the law. Hence,
the writ petition stands dismissed. There is no order
as to costs. Consequently, connected miscellaneous
petition is closed.
… Emphasis supplied by this Court
6.38. By relying on P.Balamurugan , her
submission is that the provisional attachment
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under Section 5(1) of the PMLA is a
preventive measure intended to preserve
property and prevent its concealment,
transfer or disposal in a manner that may
frustrate eventual confiscation. She submits
that, where the competent officer has
recorded the requisite reasons to believe in
writing and the statutory conditions are
satisfied, provisional attachment may be
effected without prior notice to the person
concerned.
6.39. Applying the said principles to the present
case, learned counsel submits that the
Petitioner’s properties were provisionally
attached on 29.10.2024 in proceedings
arising out of ECIR/MGSZO/04/2022,
registered on 28.03.2022, following the
registration of Crime No.90/2017 and the
filing of the charge sheet in respect of the
alleged scheduled offences. She contends
that the Petitioner’s objections that he
merely acted as a stevedore, that the
amounts received from M/s Hanuman
Minerals were partial repayments of the
amount advanced by him, and that the
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properties were acquired in 2004 and 2008,
before the alleged transactions of 2011–
2012, are matters that can be raised before
the Adjudicating Authority.
6.40. Learned counsel further submits that, as
explained in P. Balamurugan , the Petitioner
has an opportunity under Section 8 of the
PMLA to respond to the notice dated
30.11.2024, place the relevant sale deeds
and other supporting material on record, and
establish that the attached properties are not
proceeds of crime or otherwise liable to be
treated as properties involved in money
laundering. She contends that the Petitioner
should participate in those proceedings and
substantiate his objections before the
Adjudicating Authority, rather than seek
interference by this Court at the provisional
stage. On that basis, she submits that the
writ petition is premature and is liable to be
dismissed.
6.41. She also relies on the judgment of Hon’ble
Supreme Court in the case of Pavana
Dibbur vs. Enforcement Directorate
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[ ( 2023) 15 SCC 91], more particularly
paragraph 18 which is reproduced hereunder
for easy reference:
18. In a given case, if the prosecution for the
scheduled offence ends in the acquittal of all the
accused or discharge of all the accused or the
proceedings of the scheduled offence are
quashed in its entirety, the scheduled offence
will not exist , and therefore, no one can be
prosecuted for the offence punishable under Section 3
PMLA as there will not be any proceeds of crime.
Thus, in such a case, the accused against whom the
complaint under Section 3 PMLA is filed will benefit
from the scheduled offence ending by acquittal or
discharge of all the accused. Similarly, he will get the
benefit of quashing the proceedings of the scheduled
offence. However, an accused in PMLA case who
comes into the picture after the scheduled offence is
committed by assisting in the concealment or use of
proceeds of crime need not be an accused in the
scheduled offence. Such an accused can still be
prosecuted under PMLA so long as the scheduled
offence exists . Thus, the second contention raised
by the learned Senior Counsel appearing for the
appellant on the ground that the appellant was not
shown as an accused in the charge-sheets filed in the
scheduled offences deserves to be rejected.
… Emphasis supplied by this Court
6.42. By relying on Pavana Dibbur , she submits
that an accused prosecuted under the PMLA
need not necessarily be an accused in the
scheduled offence, provided the scheduled
offence exists. She submits that a person
who becomes involved after the commission
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of the scheduled offence by assisting in the
concealment or use of the proceeds of crime
can also be proceeded against under the
PMLA.
6.43. Applying the said principle to the present
case, learned counsel submits that the
Petitioner’s contention that he merely
undertook stevedoring activities and was not
responsible for the alleged criminal acts of
M/s Manipal Global Services Pvt. Ltd. or M/s
Hanuman Minerals does not, by itself,
exclude the applicability of the PMLA. She
points out that the Petitioner was arrayed as
accused No.3 in the charge sheet filed in
Crime No.90/2017, which concerns the
alleged scheduled offences. She contends
that, so long as the scheduled offence exists,
the Petitioner’s liability under the PMLA must
be examined with reference to the alleged
proceeds of crime and his alleged
involvement in any process or activity
connected with them, rather than solely on
the basis of whether he committed the
scheduled offence himself.
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6.44. Learned counsel accordingly submits that the
Petitioner cannot seek to invalidate the
attachment merely by asserting that he was
engaged in commercial transactions or that
his role was limited to stevedoring. She
contends that the Petitioner’s objections
concerning the nature of the transactions,
the amounts received from M/s Hanuman
Minerals and the absence of a connection
between the attached properties and the
alleged proceeds of crime must be
considered in the statutory adjudication
proceedings.
6.45. She also refers to the judgment of the
Hon’ble Kerala High Court in Satish Motilal
Bidri v Union of India [2024 SCC OnLine
Ker 3410] more particularly paragraphs 13,
14, 15, 16, 17 and 18 thereof, which are
reproduced hereunder for easy reference:
13. Section 5 of PMLA authorizes attachment of
proceeds of crime. The definition of the term
‘proceeds of crime’ explicitly states that when the
proceeds of a crime is a property, such property must
have been obtained or derived as a result of any
criminal activity relating to a scheduled offence. No
doubt, even if the property was obtained indirectly, it
can still be regarded as proceeds of crime. Assuming
that a property derived out of a criminal activity
mentioned is not available, still, attachment can be
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effected to the extent of the value of such property.
The term ‘value’ in section 2(1)(u) can only mean the
monetary worth of the property that was
derived from the criminal activity . If the
attachment is to be effected to the extent of the
monetary worth of a property which was not derived
out of the criminal activity, then PMLA mandates that
the property derived out of such criminal activity be
taken out of India or is held outside the country. In
other words, the only power to proceed against a
property of equivalent value, which has no link
with the predicate offence is, when the property
was taken out or held out of India . Therefore,
except when the property derived out of the criminal
activity is not inside the country, can the provisional
attachment be effected on a property purchased prior
to such criminal activity.
14. In this context, it is appropriate to refer to the
decision in Seema Garg v. Deputy Director,
Directorate of Enforcement (2020 SCC OnLine P&H
738), wherein the High Court of Punjab and Haryana
elaborately considered the concept of proceeds of
crime and held that property purchased prior to the
commission of scheduled offence, does not fall within
the ambit of the first limb of the definition of proceeds
of crime, though it certainly falls within the
purview and ambit of the third limb of the
definition . The Andhra Pradesh High Court has also
observed along the same lines in Satyam Computer
Services Limited v. Directorate of Enforcement,
Government of India (2018 SCC OnLine Hyd 787)
wherein it was observed that PMLA being a statute
which deals with substantive rights, cannot have a
retrospective effect. However, the Delhi High Court
had taken a differing stance in The Deputy Director,
Directorate of Enforcement, Delhi v. Axis Bank (Crl.A.
No. 143/2018), where it was observed that the term
value of property must be understood to have been
used in the same sense as the third limb. With
respects, I am unable to subscribe to the views of
the Delhi High Court and on the other hand wholly
concur with the views of the High Court of Punjab and
Haryana and that of Andhra Pradesh.
15. I am further fortified in the above view that I
have taken in view of the observations of the
Supreme Court as well. In the decision in Vijay
Madanlal Choudhary v. Union of India [2022 SCC
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OnLine SC 929], it has been held in paragraph
numbers 295 and 296 that “The precondition for being
proceeds of crime is that the property has been
derived or obtained, directly or indirectly, by any
person as a result of criminal activity relating to a
scheduled offence. ………….Be it noted that the
attachment must be only in respect of property
which appears to be proceeds of crime and not
all the properties belonging to the concerned
person who would eventually face the action of
confiscation of proceeds of crime , including
prosecution for offence of money-laundering. As
mentioned earlier, the relevant date for initiating
action under the 2022 Act - be it of attachment and
confiscation or prosecution, is linked to the inclusion
of the offence as scheduled offence and of carrying on
the process or activity in connection with the proceeds
of crime after such date. The pivot moves around
the date of carrying on the process and activity
connected with the proceeds of crime; and not
the date on which the property has been derived
or obtained by the person concerned as a result
of any criminal activity relating to or relatable to the
scheduled offence.”
16. Apart from the above, in Pavana Dibbur v.
Directorate of Enforcement (2023 SCC OnLine SC
1586), it has been observed as follows:“Another
allegation is that both the first and second properties
have been acquired out of the proceeds of crime. The
first property, exfacie cannot be said to have any
connection with the proceeds of crime as the acts
constituting the scheduled offence took place after its
acquisition. …………This is not a case where any
material is placed on record to show that the sale
consideration was paid from a particular bank account
of the appellant. Therefore, it is not possible to record
a finding at this stage that the second property was
not acquired by using the proceeds of crime.”
(emphasis supplied).
17. The aforesaid observations indicate that the
properties that can be proceeded against, exercising
the powers of attachment must be those that have
been acquired utilising the proceeds of crime. The
contention of the learned counsel for the Respondents
that the term proceeds of crime will also include the
value of the property which had been acquired even
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earlier is, according to me, too far-fetched and will not
be justifiable in the light of the constitutional
provisions of fairness and reasonableness. It is also
necessary to observe at this juncture that the purpose
of the PMLA is to remove tainted money and also to
initiate proceedings against the proceeds of crime
which have been transformed or converted into other
property or intermingled with legitimate sources and
then the value of the intermingled gain will assume
the colour of proceeds of crime. Such a provision
cannot be used to enable the authorities to
proceed against properties that are unconnected
with any of the criminal activity in question .
18. Viewed in the above perspective, as the
provisionally attached immovable property was
purchased in 2004 - more than a decade and a half
before the predicate offence was allegedly committed,
the order attaching the immovable property is ex-
facie, ultra vires the powers of the statute and
totally illegal and arbitrary to the extent of the said
attachment. Since ex facie illegal acts can be
interfered with under Article 226 of the
Constitution of India, notwithstanding the
existence of an alternative remedy , this Court is
of the view that the provisional attachment of the
immovable property as seen from schedule A to
Exhibit P11 order dated 22.05.2024 is liable to be set
aside. However, as relating to the provisional
attachment mentioned in schedule B to Exhibit P11,
i.e. those relating to the amount in the bank accounts
- the Petitioner has an effective alternative
remedy provided by the statute .
… Emphasis supplied by this Court
6.46. By referring to Satish Motilal Bidri , she
submits that the decision discusses the
distinction between property derived or
obtained from criminal activity relating to a
scheduled offence and property of equivalent
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value, and considers the circumstances in
which property acquired before the alleged
scheduled offence may be attached. She also
refers to the discussion of the decisions in
Seema Garg v. Deputy Director,
Directorate of Enforcement [ 2020 SCC
OnLine P&H 738] , Satyam Computer
Services Limited v. Directorate of
Enforcement [2018 SCC OnLine Hyd 787]
and Deputy Director, Directorate of
Enforcement v. Axis Bank
[ 2019:DHC:1887; CRL.A. 143/2018 &
Crl.M.A. 2262/2018] , as well as the
observations of the Hon’ble Supreme Court in
Vijay Madanlal Choudhary v. Union of
India [(2023) 12 SCC 1] and Pavana
Dibbur v. Directorate of Enforcement
[(2023) 15 SCC 91].
6.47. In the context of the present case, learned
counsel submits that the Petitioner’s reliance
on the dates of acquisition of the attached
properties, Apartment M401, purchased
under a registered sale deed dated
15.12.2004, and the non-agricultural
immovable property in Survey No.23-1A2,
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Derebail Village, purchased under a
registered sale deed dated 28.03.2008, must
be considered in the light of the statutory
provisions governing attachment and the
material available in the proceedings. She
contends that the Petitioner’s assertion that
the properties were acquired before the
alleged transactions involving M/s Hanuman
Minerals and M/s Manipal Global Services
Pvt. Ltd. does not, by itself, conclude the
question of their attachability, and that the
relevant issues should be examined in the
statutory adjudication proceedings.
6.48. Learned counsel accordingly submits that the
Petitioner should place his objections and
supporting documents before the
Adjudicating Authority under Section 8 of the
PMLA, which is empowered to determine
whether the properties specified in the notice
are involved in money laundering. She
therefore contends that the writ petition
ought not to be entertained at the present
stage.
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6.49. She refers to the judgment of the Hon’ble
Supreme Court in the case of Titaghur
Paper Mills Co. Ltd. and another vs.
State of Orissa and Others, [(1983) 2 SCC
433], more particularly paragraph 6 thereof,
which is reproduced hereunder for easy
reference:
6. We are constrained to dismiss these petitions on
the short ground that the Petitioners have an equally
efficacious alternative remedy by way of an appeal
to the Prescribed Authority under sub-section (1) of
Section 23 of the Act, then a second appeal to the
Tribunal under sub-section (3)(a) thereof, and
thereafter in the event the Petitioners get no relief, to
have the case stated to the High Court under Section
24 of the Act. In Raleigh Investment Company Limited
v. Governor-General in Council [AIR 1947 PC 78 :
(1947) 74 IA 50 : 231 IC 1] Lord Uthwatt, J. in
delivering the judgment of the Board observed that in
the provenance of tax where the Act provided for a
complete machinery which enabled an assessee to
effectively raise in the courts the question of the
validity of an assessment denied an alternative
jurisdiction to the High Court to interfere. It is true
that the decision of the Privy Council in Raleigh
Investment Company case [AIR 1947 PC 78 : (1947)
74 IA 50 : 231 IC 1] was in relation to a suit brought
for a declaration that an assessment made by the
Income Tax Officer was a nullity, and it was held by
the Privy Council that an assessment made under the
machinery provided by the Act, even if based on a
provision subsequently held to be ultra vires, was not
a nullity like an order of a court lacking jurisdiction
and that Section 67 of the Income Tax Act, 1922
operated as a bar to the maintainability of such a suit.
In dealing with the question whether Section 67
operated as a bar to a suit to set aside or modify an
assessment made under a provision of the Act which
is ultra vires, the Privy Council observed:
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“In construing the section it is pertinent, in their
Lordships' opinion, to ascertain whether the Act
contains machinery which enables an assessee
effectively to raise in the courts the question whether
a particular provision of the Income Tax Act bearing
on the assessment made is or is not ultra vires. The
presence of such machinery, though by no means
conclusive, marches with a construction of the section
which denies an alternative jurisdiction to inquire into
the same subject-matter.”
… Emphasis supplied by this Court
6.50. By relying on Titaghur Paper Mills, she
submits that where a statute provides a
complete and efficacious mechanism for
redressal of grievances, the High Court ought
not ordinarily to exercise its writ jurisdiction
under Article 226 of the Constitution of India,
thereby bypassing the statutory remedies
available to the aggrieved party. She
contends that the Petitioner has an effective
alternative remedy under Section 8 of the
Prevention of Money Laundering Act, 2002,
before the Adjudicating Authority, which is
competent to consider the Petitioner’s
objections to the provisional attachment and
determine whether the properties in question
are involved in money laundering. On that
basis, she submits that the present writ
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petition is premature and is liable to be
dismissed on the ground of availability of an
efficacious alternative remedy.
6.51. She refers to the judgment of Hon’ble
Supreme Court in the case of Assistant
Collector of Central Excise, Chandan
Nagar, West Bengal v Dunlop India Ltd.,
and others [(1985) 1 SCC 260], more
particularly paragraph 3 thereof, which is
reproduced hereunder for easy reference:
3. In Titaghur Paper Mills Co. Ltd. v. State of Orissa
A.P. Sen, E.S. Venkataramiah and R.B. Misra, JJ. held
that where the statute itself provided the Petitioners
with an efficacious alternative remedy by way of an
appeal to the Prescribed Authority, a second appeal to
the tribunal and thereafter to have the case stated to
the High Court, it was not for the High Court to
exercise its extraordinary jurisdiction under Article
226 of the Constitution ignoring as it were, the
complete statutory machinery. That it has become
necessary, even now, for us to repeat this admonition
is indeed a matter of tragic concern to us. Article
226 is not meant to short-circuit or circumvent
statutory procedures . It is only where statutory
remedies are entirely ill-suited to meet the demands
of extraordinary situations, as for instance where the
very vires of the statute is in question or where
private or public wrongs are so inextricably
mixed up and the prevention of public injury and
the vindication of public justice require it that
recourse may be had to Article 226 of the
Constitution. But then the Court must have good and
sufficient reason to bypass the alternative remedy
provided by statute. Surely matters involving the
revenue where statutory remedies are available are
not such matters. We can also take judicial notice of
the fact that the vast majority of the petitions under
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Article 226 of the Constitution are filed solely for the
purpose of obtaining interim orders and thereafter
prolong the proceedings by one device or the other.
The practice certainly needs to be strongly
discouraged.
… Emphasis supplied by this Court
6.52. She refers to the judgment of the Hon’ble
Supreme Court in Bank of India v.
Satyawati Tandon and others, [(2010) 8
SCC 110], paragraphs 43 and 44 thereof,
which are reproduced hereunder for easy
reference:
43. Unfortunately, the High Court overlooked the
settled law that the High Court will ordinarily not
entertain a petition under Article 226 of the
Constitution if an effective remedy is available
to the aggrieved person and that this rule applies
with greater rigour in matters involving recovery of
taxes, cess, fees, other types of public money and the
dues of banks and other financial institutions. In our
view, while dealing with the petitions involving
challenge to the action taken for recovery of the
public dues, etc. the High Court must keep in mind
that the legislations enacted by Parliament and State
Legislatures for recovery of such dues are a code unto
themselves inasmuch as they not only contain
comprehensive procedure for recovery of the dues but
also envisage constitution of quasi-judicial bodies for
redressal of the grievance of any aggrieved person.
Therefore, in all such cases, the High Court must
insist that before availing remedy under Article 226 of
the Constitution, a person must exhaust the remedies
available under the relevant statute.
44. While expressing the aforesaid view, we are
conscious that the powers conferred upon the High
Court under Article 226 of the Constitution to issue to
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any person or authority, including in appropriate
cases, any Government, directions, orders or writs
including the five prerogative writs for the
enforcement of any of the rights conferred by Part III
or for any other purpose are very wide and there is no
express limitation on exercise of that power but, at
the same time, we cannot be oblivious of the
rules of self-imposed restraint evolved by this
Court, which every High Court is bound to keep
in view while exercising power under Article 226
of the Constitution .
… Emphasis supplied by this Court
6.53. She refers to the judgment of the Hon’ble
Supreme Court in the case of Punjab
National Bank vs. OC Krishnan and
others [(2001) 6 SCC 569], more
particularly paragraphs 5 and 6 thereof which
are reproduced hereunder for easy
reference:
5. In our opinion, the order which was passed by the
Tribunal directing sale of mortgaged property was
appealable under Section 20 of the Recovery of Debts
Due to Banks and Financial Institutions Act, 1993 (for
short “the Act”). The High Court ought not to have
exercised its jurisdiction under Article 227 in view of
the provision for alternative remedy contained in the
Act. We do not propose to go into the correctness of
the decision of the High Court and whether the order
passed by the Tribunal was correct or not has to be
decided before an appropriate forum.
6. The Act has been enacted with a view to provide a
special procedure for recovery of debts due to the
banks and the financial institutions. There is a
hierarchy of appeal provided in the Act, namely, filing
of an appeal under Section 20 and this fast-track
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procedure cannot be allowed to be derailed either by
taking recourse to proceedings under Articles 226 and
227 of the Constitution or by filing a civil suit, which is
expressly barred. Even though a provision under
an Act cannot expressly oust the jurisdiction of
the court under Articles 226 and 227 of the
Constitution, nevertheless, when there is an
alternative remedy available, judicial prudence
demands that the Court refrains from exercising
its jurisdiction under the said constitutional
provisions . This was a case where the High Court
should not have entertained the petition under Article
227 of the Constitution and should have directed the
Respondent to take recourse to the appeal mechanism
provided by the Act.
… Emphasis supplied by this Court
6.54. She relies on judgment of the Hon’ble
Supreme Court in the case of Raj Kumar
Shivhare v Assistant Director,
Directorate of Enforcement and another
[(2010) 4 SCC 772] more particularly
paragraphs 31, 32 and 37, which are
reproduced hereunder for easy reference:
31. When a statutory forum is created by law for
redressal of grievance and that too in a fiscal
statute, a writ petition should not be entertained
ignoring the statutory dispensation . In this case
the High Court is a statutory forum of appeal on a
question of law. That should not be abdicated and
given a go-by by a litigant for invoking the forum of
judicial review of the High Court under writ
jurisdiction. The High Court, with great respect, fell
into a manifest error by not appreciating this aspect of
the matter. It has however dismissed the writ petition
on the ground of lack of territorial jurisdiction.
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32. No reason could be assigned by the appellant's
counsel to demonstrate why the appellate jurisdiction
of the High Court under Section 35 of FEMA does not
provide an efficacious remedy. In fact there could
hardly be any reason since the High Court itself is the
appellate forum.
37. In view of such consistent opinion of this Court
over several decades we are constrained to hold that
even if the High Court had territorial jurisdiction it
should not have entertained a writ petition which
impugns an order of the Tribunal when such an order
on a question of law, is appealable before the High
Court under Section 35 of FEMA.
… Emphasis supplied by this Court
6.55. By placing reliance on the aforesaid
judgments in Dunlop India Ltd., Satyawati
Tandon, O.C. Krishnan and Raj Kumar
Shivhare , she submits that, where a statute
provides an efficacious alternative remedy
and prescribes a comprehensive mechanism
for adjudication and appellate redressal, the
High Court ought ordinarily to exercise
restraint in entertaining a petition under
Article 226 of the Constitution of India. She
contends that the availability of an
alternative remedy does not oust the
constitutional jurisdiction of this Court, but
ordinarily warrants its exercise only where
exceptional circumstances justify bypassing
the statutory mechanism. In the present
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case, the Petitioner can raise his objections
to the provisional attachment before the
Adjudicating Authority in the proceedings
under Section 8 of the Prevention of Money
Laundering Act, 2002. If aggrieved by the
order passed by the Adjudicating Authority,
the Petitioner may prefer an appeal to the
Appellate Tribunal under Section 26 of the
Act and, thereafter, an appeal to the High
Court under Section 42 against the order of
the Appellate Tribunal. She therefore submits
that the Petitioner ought to pursue the
remedies available under the Act and that, in
the absence of exceptional circumstances
warranting interference, the present writ
petition ought not to be entertained.
6.56. She refers to the judgment of Hon’ble
Supreme Court in the case of Vijay
Madanlal Choudhary vs. Union of India
[(2023) 12 SCC 1] paragraphs 162, 163,
172, 173 and 174, which are reproduced
hereunder for easy reference:
162. As a matter of fact, prior to the amendment of
2015, the first proviso acted as an impediment for
taking such urgent measure even by the authorised
officer, who is no less than the rank of Deputy
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Director. We must hasten to add that the nuanced
distinction must be kept in mind that to initiate
“prosecution” for offence under Section 3 PMLA
registration of scheduled offence is a prerequisite, but
for initiating action of “provisional attachment”
under Section 5 there need not be a pre-
registered criminal case in connection with
scheduled offence . This is because the machinery
provisions cannot be construed in a manner which
would eventually frustrate the proceedings under the
2002 Act. Such dispensation alone can secure the
proceeds of crime including to prevent and regulate
the commission of offence of money laundering. The
authorised officer would, thus, be expected to and,
also in a given case, justified in acting with utmost
speed to ensure that the proceeds of
crime/property is available for being proceeded
with appropriately under the 2002 Act so as not to
frustrate any proceedings envisaged by the 2002 Act.
163. In case the scheduled offence is not already
registered by the jurisdictional police or complaint
filed before the Magistrate, it is open to the
authorised officer to still proceed under Section 5 of
the 2002 Act whilst contemporaneously sending
information to the jurisdictional police under Section
66(2) of the 2002 Act for registering FIR in respect of
cognizable offence or report regarding non-cognizable
offence and if the jurisdictional police fails to respond
appropriately to such information, the authorised
officer under the 2002 Act can take recourse to
appropriate remedy, as may be permissible in law to
ensure that the culprits do not go unpunished and the
proceeds of crime are secured and dealt with as per
the dispensation provided for in the 2002 Act. Suffice
it to observe that the amendment effected in 2015 in
the second proviso has reasonable nexus with the
object sought to be achieved by the 2002 Act.
172. It was also urged before us that the
attachment of property must be equivalent in
value of the proceeds of crime only if the
proceeds of crime are situated outside India .
This argument, in our opinion, is tenuous. For,
the definition of “proceeds of crime” is wide
enough to not only refer to the property derived
or obtained as a result of criminal activity
relating to a scheduled offence, but also of the
value of any such property . If the property is taken
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or held outside the country, even in such a case, the
property equivalent in value held within the country or
abroad can be proceeded with. The definition of
“property” as in Section 2(1)(v) is equally wide
enough to encompass the value of the property
of proceeds of crime . Such interpretation would
further the legislative intent in recovery of the
proceeds of crime and vesting it in the Central
Government for effective prevention of money
laundering.
173. We find force in the stand taken by the Union of
India that the objectives of enacting the 2002 Act was
the attachment and confiscation of proceeds of crime
which is the quintessence so as to combat the evil of
money laundering. The second proviso, therefore,
addresses the broad objectives of the 2002 Act
to reach the proceeds of crime in whosoever's
name they are kept or by whosoever they are
held . To buttress this argument, reliance has been
placed on the dictum in Attorney General for India
[Attorney General for India v. Amratlal Prajivandas,
(1994) 5 SCC 54 : 1994 SCC (Cri) 1325] and Raman
Tech. & Process Engg. Co. v. Solanki Traders [Raman
Tech. & Process Engg. Co. v. Solanki Traders, (2008)
2 SCC 302 : (2008) 1 SCC (Civ) 539] .
174. The procedural safeguards provided in respect of
provisional attachment are effective measures to
protect the interest of the person concerned who is
being proceeded with under the 2002 Act, in the
following manner as rightly indicated by the Union of
India:
174.1. For invoking the second proviso, the Director
or any officer not below the rank of Deputy
Director will have to first apply his mind to the
materials on record before recording in writing
his reasons to believe is certainly a sufficient
safeguard to the invocation of the powers under the
second proviso to Section 5(1) of the 2002 Act.
174.2. There has to be a satisfaction that if the
property involved in money laundering or
“proceeds of crime” are not attached
“immediately”, such non-attachment might
frustrate the confiscation proceedings under the
2002 Act .
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174.3. The order passed under Section 5(1) of the
2002 Act is only provisional in nature. The life of this
provisional attachment order passed under Section
5(1) of the 2002 Act is only for 180 days, subject to
confirmation by an independent Adjudicating
Authority.
174.4. Under Section 5(2) officer passing provisional
attachment order has to immediately forward a copy
of this order to the Adjudicating Authority in a sealed
envelope.
174.5. Under Section 5(5) of the 2002 Act, the officer
making such order must file a complaint before the
Adjudicating Authority within 30 days of the order of
provisional attachment being made.
174.6. Section 5(3) of the 2002 Act provides that the
provisional attachment order shall cease to have
effect on the expiry of the period specified in Section
5(1) i.e. 180 days or on the date when the
Adjudicating Authority makes an order under Section
8(2), whichever is earlier.
174.7. Under Section 8(1), once the officer making
the provisional attachment order files a complaint and
if the Adjudicating Authority “has a reason to believe
that any person has committed an offence under
Section 3 or is in possession of the proceeds of
crime”, the Adjudicating Authority may serve a show-
cause notice of not less than 30 days on such person
calling upon him to indicate the sources of his income,
earning or assets or by means of which he has
acquired the property attached under Section 5(1) of
the 2002 Act.
174.8. The above SCN would require the noticee to
produce evidence on which he relies and other
relevant information and particulars to show cause
why all or any of the property “should not be declared
to be the properties involved in money laundering and
confiscated by the Central Government”.
174.9. Section 8(2) requires the Adjudicating
Authority to consider the reply to the SCN issued
under Section 8(1) of the 2002 Act. The section
further provides to hear the aggrieved person as well
as the officer issuing the order of provisional
attachment and also take into account “all relevant
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materials placed on record before the Adjudicating
Authority”. After following the above procedure, the
Adjudicating Authority will record its finding whether
all the properties referred to in the SCN are involved
in money laundering or not.
174.10. While passing order under Section 8(2) read
with Section 8(3) there are two possibilities which
might happen:
174.10.1. The Adjudicating Authority may confirm
the order of provisional attachment, in which case
again, the confirmation will continue only up to
(i) the period of investigation not exceeding 365 days,
or
(ii) till the pendency of any proceedings relating to
any offence under the 2002 Act or under the
corresponding law of any other country before the
competent court of criminal jurisdiction outside India.
174.10.2. The Adjudicating Authority may disagree
and not confirm the provisional attachment, in which
case attachment over the property ceases.
174.11. Under Section 8(4) of the 2002 Act, upon
confirmation of the order of provisional attachment,
the Director or other officer authorised by him shall
take the possession of property attached.
174.12. Under Section 8(5) of the 2002 Act, on the
conclusion of a trial for an offence under the 2002 Act
if the Special Court finds that the offence of money
laundering has been committed it will order that the
property involved in money laundering or the property
which has been involved in the commission of the
offence of money laundering shall stand confiscated to
the Central Government.
174.13. However, under Section 8(6) if the Special
Court on the conclusion of the trial finds that no
offence of money laundering has taken place or the
property is not involved in money laundering it will
release the property which has been attached to the
person entitled to receive it.
174.14. Under Section 8(7), if the trial before the
Special Court cannot be conducted because of the
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death of the accused or because the accused is
declared proclaimed offender, then the Special Court
on an application of the Director or a person claiming
to be entitled to possession of a property in respect of
which an order under Section 8(3) is passed either to
confiscate the property or release the property to the
claimant, after considering the material before it.
174.15. Under Section 8(8), when a property is
confiscated, the Special Court may direct the Central
Government to restore the property to a person with
the legitimate interest in the property, who may have
suffered a quantifiable loss as a result of money
laundering. Provided that the person must not have
been involved in money laundering and must have
acted in good faith and has suffered a considerable
loss despite taking all reasonable precautions.
174.16. The order passed by the Adjudicating
Authority is also subject to appeal before the
Appellate Tribunal which is constituted under Section
25 of the 2002 Act. Thus, the Adjudicating
Authority is not the final authority under the
2002 Act as far as the attachment of proceeds of
crime or property involved in money laundering
is concerned .
174.17. Any person aggrieved of an order
confirming the provisional attachment order can
file an appeal before the Appellate Tribunal
under Section 26(1) of the 2002 Act . The
Appellate Tribunal on receipt of an appeal after giving
the parties an opportunity of being heard will pass an
order as it thinks fit either confirming or modifying or
setting aside the provisional attachment order
appealed against.
174.18. Further, the order passed by the Appellate
Tribunal is further appealable before the High Court
under Section 42 of the 2002 Act on any question of
fact or question of law arising out of the order
passed by the Appellate Tribunal .
… Emphasis supplied by this Court
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6.57. By relying on Vijay Madanlal Choudhary ,
she submits that the initiation of provisional
attachment proceedings under Section 5 of
the Prevention of Money Laundering Act,
2002, does not invariably require a criminal
case in respect of the scheduled offence to
have been registered beforehand, as the
authorised officer may act to secure the
proceeds of crime and prevent the
proceedings under the Act from being
frustrated. She further submits that the
expression “proceeds of crime” is sufficiently
wide to encompass the value of property
derived or obtained, directly or indirectly,
from criminal activity relating to a scheduled
offence, and that the statutory scheme is
intended to reach such proceeds irrespective
of the person in whose name they are held.
She contends that provisional attachment is
preventive in nature and is subject to the
safeguards prescribed under the Act,
including scrutiny by the Adjudicating
Authority under Section 8, which considers
the noticee’s objections and the relevant
material to determine whether the properties
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are involved in money laundering. She
further points out that an order confirming
the provisional attachment is appealable
before the Appellate Tribunal under Section
26, with a further appeal to the High Court
under Section 42. On this basis, she submits
that the Petitioner should raise his objections
regarding the source and date of acquisition
of the attached properties before the
Adjudicating Authority and pursue the
statutory remedies available under the Act,
rather than seek premature interference
under Article 226 of the Constitution of India.
6.58. She relies on the judgment of Hon’ble High
Court of Madras in the case of Vijayraj
Surana vs. Assistant Director,
Enforcement Directorate [ 2024 SCC
OnLine Mad 8404] more particularly
paragraphs 27, 28, 29, 31, 36, 37, 39, 40,
41 and 44, which are reproduced hereunder
for easy reference:
27. ECIR is born from FIR, but once the ECIR is
born, the umbilical cord that connects the ECIR
with FIR losses its relevance and the ECIR
becomes an independent document in itself .
Consequently, a new life in the form of ECIR emerges,
which can breath on its own without the support of
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FIR. So, the FIR and ECIR become two different
documents and both tend to take shape on its own,
independent of each other.
28. “Proceeds of Crime” is the focal point for an ECIR,
whereas scheduled offence is dealt with under the
FIR. Further reliance is also placed with the aid of
judgments delivered by the Hon'ble Supreme Court of
India in the case of Vijay Madanlal Choudhary v.
Union of India cited supra and Rajinder Singh Chada
3
v. Union of India . Both these judgments have noted
the distinction between FIR and ECIR. More so, ECIR
is treated as an internal document.
29. In Vijay Madanlal's case (supra), the relevant
portion to support this contention is as extracted
below;
“ 457. Suffice it to observe that being a special
legislation providing for special mechanism regarding
inquiry/investigation of offence of moneylaundering,
analogy cannot be drawn from the provisions of 1973
Code, in regard to registration of offence of money-
laundering and more so being a complaint procedure
prescribed under the 2002 Act. Further, the
authorities referred to in Section 48 of the 2002 Act
alone are competent to file such complaint. It is a
different matter that the materials/evidence collected
by the same authorities for the purpose of civil action
of attachment of proceeds of crime and confiscation
thereof may be used to prosecute the person involved
in the process or activity connected with the proceeds
of crime for offence of money-laundering. Considering
the mechanism of inquiry/investigation for proceeding
against the property (being proceeds of crime) under
this Act by way of civil action (attachment and
confiscation), there is no need to formally register an
ECIR, unlike registration of an FIR by the jurisdictional
police in respect of cognizable offence under the
ordinary law. There is force in the stand taken by the
ED that ECIR is an internal document created by the
department before initiating penal action or
prosecution against the person involved with process
or activity connected with proceeds of crime. Thus,
ECIR is not a statutory document, nor there is any
provision in 2002 Act requiring Authority referred to in
Section 48 to record ECIR or to furnish copy thereof
to the Accused unlike Section 154 of the 1973 Code.
The fact that such ECIR has not been recorded, does
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not come in the way of the authorities referred to in
Section 48 of the 2002 Act to commence
inquiry/investigation for initiating civil action of
attachment of property being proceeds of crime by
following prescribed procedure in that regard.”
31. When there are findings arrived at
independently in both the FIR and ECIR, can the
Court completely disregard those findings and
bring the proceedings to an unjustified end just
because one of the proceedings was quashed on
procedural/technical grounds without due
impetus to the substantive grounds? This
question requires an in-depth consideration.
36. The Court's observations above hold that where a
person is acquitted or absolved of a criminal activity
relating to a scheduled offence and on establishing in
a Court of law that the crime property is in legitimate
ownership, such property cannot be termed as crime
property and in consequence the PMLA offences loses
its significance. Hence, to warrant a quashing of the
ECIR, mere quashing of the FIR on technical grounds
by itself does not make the ECIR liable to be quashed.
That is not the observations set out in the Vijay
Madanlal case. Rather in proceedings pertaining
to the quashing of the FIR in a scheduled
offence, the Court must have dealt with not
mere procedural irregularities, but something
more in the nature of substantive grounds.
37. The exact wordings of the Court culls out the
object. That the accused person should have been
acquitted or absolved from the allegations of criminal
activity relating to the scheduled offence and that the
crime property should be rightfully owned and
possessed by him. So the essence of the observations
made herein is that the accused person should be
exonerated from the charges levelled against him.
39. Further, when the PMLA proceedings is set in
motion and prima facie findings are already made,
including completion of filing of chargesheet, then an
FIR quashed after this stage cannot be a viable
ground to quash the ECIR also. More so, the PMLA
requires the presence of a scheduled offence to
initiate proceedings under the Act. So it also becomes
a mandate that the grounds on which scheduled
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offence was quashed is thoroughly examined before
rendering the PMLA offence ineffective.
40. This Court is not venturing into the grounds of
quashing an FIR as the principles pertaining to the
same has already been laid down elaborately by the
Hon'ble Supreme Court. But the rationale here is to
cull out the level of bearing that a quashed FIR has on
an proceedings challenging the ECIR. This Court feels
that all cases where FIR is quashed shall not
automatically become a ground for quashing an
ECIR . Instead a case to case analysis is a pre
requisite for deciding on the sustenance of an ECIR.
To put it in comprehensive terms, When the Court in
an FIR quash proceedings has not delved into the
merits of the offence, but rather found technical
errors on the face of it, then the Court directs the
quashing of the said FIR. The accused then goes on to
challenge the ECIR by placing reliance on the said FIR
Quash order to quash the ECIR also. But a reading of
relevant paragraphs in the Vijay Madanlal's case
clearly showcases that this is not the object behind
the said judgment. The final summarisation, when
read in tandem with the observations set out in
paragraphs of the judgment and also keeping in line
with the explanation to Section 44 of the PMLA,
2002 , this Court comes to the irresistible conclusion
that cases where FIR pertaining to the scheduled
offence is quashed it does not automate the
exoneration of the accused from the predicate
offence. Rather FIR quashes on grounds of mere
technicalities or procedural irregularities in the FIR,
cannot by itself form a basis to grant an automatic
quash of ECIR. Also in the aforementioned instance,
there needs to be a case to case examination of the
offence registered under the PMLA before the offence
is rendered ineffectual.
41. Hence, the moot point for consideration whether
all cases where FIR has been quashed can pave way
for quashing of ECIR? This Court feels that each case
must be tested on its own, in consonance with the
Vijay madanlal judgment and a blanket application of
the principle without due regard to the facts of each
and every case shall render both the judgment and
the object of the PMLA ineffective.
44. Due to the above development, since the SFIO
was already entrusted with the investigation by the
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Central Government vide order dated 09.04.2019 on
the same set of allegations, the present FIR registered
by the CBI was quashed by the High Court citing the
aforementioned reason. Hence, it is amply clear that
the High Court has quashed the FIR only on the
ground that another Investigating Agency is seized off
the matter. The Court has not dealt with the
allegations nor tested the merits of the offences
charged in the FIR. The Court restricted itself only to
the ground of want of jurisdiction. Hence the FIR was
quashed purely on this technical or procedural
issue and not on substantive grounds and has not
made any findings as to the offences or the prima
facie allegations in the FIR. Therefore, the quashing of
the FIR shall not warrant an automatic quashing of
ECIR. All the more, the predicate offence under
Section 447 of the Companies Act, 2013, which is also
a scheduled offence under the PMLA still stands good
and requires further investigation. Therefore, in view
of the above ECIR is not liable to be quashed.
… Emphasis supplied by this Court
6.59. By relying on Vijayraj Surana , her
submission is that the Hon’ble Madras High
Court has held that the quashing of an FIR
relating to a scheduled offence does not, by
itself, automatically warrant the quashing of
the corresponding ECIR or termination of
proceedings under the Prevention of Money
Laundering Act, 2002. She submits that the
effect of quashing the FIR would depend
upon the grounds on which it was quashed
and that a distinction must be drawn
between quashing on technical or procedural
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grounds and exoneration on substantive
grounds concerning the alleged criminal
activity. She further submits that the
challenge to the said judgment before the
Hon’ble Supreme Court in Diary No. 43775 of
2024 came to be dismissed as withdrawn on
18.12.2024. Relying on this subsequent
development, she seeks to support the
proposition laid down by the Madras High
Court regarding the independent
consideration of proceedings under the PMLA.
6.60. She relies on the judgment of the Hon’ble
Supreme Court in the case of Dr.Manik
Bhattacharya vs. Ramesh Malik and
others [ 2022 SCC OnLine SC 1465] , more
particularly paragraph 7 thereof which is
reproduced hereunder for easy reference:
7. We cannot hold the arrest of the Petitioner by
the Enforcement Directorate illegal as the issue
of money-laundering or there being proceeds of
crime had not surfaced before the Single Judge
or the Division Bench of the High Court. Before
us, however, it had been brought to our notice
by Mr. Rohatgi in course of hearing on the
question of interim order passed in the instant
special leave petitions, that the Petitioner had
been cooperating with investigation by the
Enforcement Directorate and the CBI. While
testing the legality of an arrest made by an
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agency otherwise empowered to take into
custody a person against whom such agency
considers subsistence of prima facie evidence of
money-laundering, we do not think a general
protective order directed at another investigating
agency could have insulated the Petitioner from
any coercive action in another proceeding started
by a different agency, even if there are factual
similarities vis-a-vis the allegations. Under The
Prevention of Money-Laundering Act, 2002
(“2002 Act”), money-laundering is an
independent offence and in the event there is
any allegation of the Enforcement Directorate
having acted beyond jurisdiction or their act of
arrest is not authorized by law, the Petitioner
would be entitled to apply before the appropriate
Court of law independently. But that question
could not be examined in a Special Leave Petition
arising from the proceedings in which the
question of Money Laundering were not involved.
… Emphasis supplied by this Court
6.61. By relying on Dr.Manik Bhattacharya , she
submits that the offence of money laundering
under the Prevention of Money Laundering
Act, 2002, is an independent offence and
that proceedings initiated by the Enforcement
Directorate are required to be considered
independently of proceedings initiated by
another investigating agency, even where the
allegations in the two proceedings have
factual similarities. She further submits that
any challenge to the jurisdiction of the
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Enforcement Directorate or the legality of its
action under the PMLA must be
independently examined in appropriate
proceedings and cannot be determined in
proceedings arising out of an unrelated
matter in which the question of money
laundering was not involved. On this basis,
she contends that the proceedings initiated
by the Enforcement Directorate in the
present case must be considered
independently in accordance with the
provisions of the PMLA.
6.62. She relies on the judgment of Hon’ble High
Court of Punjab & Haryana at Chandigarh in
the case of Surjeet Kumar Bansal vs.
Central Bureau of Investigation and
another [ 2024:PHHC:045226], dtd
04.04.2024 , more particularly paragraphs
15, 16 and 18 which are reproduced here
under for easy reference:
15. Learned senior counsel for the Petitioner has also
asserted that since the proceedings in the FIR
pertaining to the scheduled offence have been stayed
by a Division Bench of this Court, the proceedings
under PMLA would also have to be kept in abeyance to
await the final outcome of the decision of the Division
Bench of this Court. However, this plea is bereft of
any merit and deserves to be rejected. While the
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scheduled offence is pivotal to the accusations of
money laundering as has been held by Hon'ble the
Supreme Court in 23 of 25 Neutral Citation
No:=2024:PHHC:045226 2024:PHHC:045226 CRM-M-
57266-2023 (O&M) -24- Vijay Madanlal Choudhary's
case (supra), the proceedings under PMLA are
distinct and independent . Therefore, a stay on
criminal proceedings in the FIR initiated by
Respondent No.1-CBI would not extend to the
proceedings for offences under PMLA, and they would
have to await the outcome of the writ petition
independently.
16. Furthermore, in the case of Sikandar Singh's case
(supra) a Division Bench of this Court while relying
upon Dr. Manik Bhattacharya's case (supra) concluded
that Enforcement Directorate is not bound by the
protective orders passed in FIRs of scheduled
offences. Hence, in the light of the ratio of law laid
down by Hon'ble Supreme the Court and a Division
bench of this Court, the case laws relied upon by the
learned senior counsel for the Petitioner on this issue
would not advance his cause, and this Court
respectfully would disagree with those judgments.
18. Before parting, it needs to be emphasized that
offences under PMLA constitute a category of their
own and must be viewed 24 of 25 Neutral Citation
No:=2024:PHHC:045226 2024:PHHC:045226 CRM-M-
57266-2023 (O&M) -25- with utmost seriousness as
such offences not only pose a serious danger to the
economic health of the nation but also impede the
progress of the country. Such offences are committed
with intense planning and calculation, and
camouflaged surreptitiously, necessitating the
investigating agency to go through the material
collected with a fine comb so as to uncover the such
scams which, if left unaddressed, would without doubt
be fatal to economic health of the country. Thus, the
rigors of Section 45 of the PMLA which lay down an
exceptionally high yardstick for grant of bail under
PMLA, must not be given a go-by.
… Emphasis supplied by this Court
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6.63. By relying on Surjeet Kumar Bansal, she
submits that proceedings under the
Prevention of Money Laundering Act, 2002,
are distinct and independent of the
proceedings relating to the scheduled
offence. She contends that any stay or
protective order operating in the proceedings
concerning the scheduled offence does not,
by itself, extend to or operate as a bar
against proceedings initiated by the
Enforcement Directorate under the PMLA.
She further submits that the proceedings
under the PMLA must be considered
independently and that the statutory
mandate of the Act, having regard to the
serious economic consequences of money
laundering, cannot be circumvented merely
because the proceedings relating to the
scheduled offence have been stayed or are
pending adjudication. On this basis, she
contends that the proceedings initiated
against the Petitioner under the PMLA are
required to be considered independently, in
accordance with the provisions of the Act.
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6.64. Though there are copies of several other
judgments which have been produced,
learned counsel for Respondent is not
adverted to it.
6.65. She concluded by submitting that the petition
is required to be dismissed be relegating the
Petitioner to the statutory remedies
available.
7. Heard Sri D. R. Ravishankar, learned Senior
counsel for the Petitioner and Ms. Anuparna
Bordoloi, learned counsel for the Respondent and
perused papers.
8. The points that would arise for consideration are:
(i) Whether the present writ petition is
maintainable and deserves to be
entertained under Articles 226 and 227
of the Constitution of India,
notwithstanding the statutory
proceedings under Section 8 of the
Prevention of Money Laundering Act,
2002, and the availability of alternative
remedies, particularly when the
Petitioner challenges the exercise of
power under the Second Proviso to
Section 5(1) of the said Act?
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(ii) Whether the provisional attachment of
the Petitioner’s properties, acquired
under registered sale deeds dated
15.12.2004 and 28.03.2008, is
sustainable in law when the alleged
scheduled offence and the transactions
said to have generated the proceeds of
crime relate to the period 2011–2012,
and whether such properties can be
attached as properties of equivalent
value under Section 2(1)(u), read with
Section 5 of the PMLA, 2002?
(iii) Whether the Respondent has complied
with the statutory conditions governing
provisional attachment under Section
5(1) of the PMLA, 2002, including the
requirement of recording reasons to
believe on the basis of material in its
possession and, where the Second
Proviso is invoked, the requirement that
non-attachment of the property
immediately is likely to frustrate
proceedings under the Act?
(iv) Whether the impugned attachment is
vitiated by non-application of mind or
want of a demonstrable nexus between
the properties sought to be attached and
the alleged proceeds of crime, having
regard to the Petitioner’s contention
that the amounts received from M/s.
Hanuman Minerals represented partial
repayment of monies advanced by him
and that the properties were acquired
before the alleged scheduled offence?
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(v) Whether the Petitioner is entitled to the
relief sought for quashing the impugned
attachment order dated 29.10.2024 and
the consequential proceedings initiated
under Section 8 of the PMLA, 2002?
(vi) What Order?
9. This Court answers the above points as follows:
10. Answer to Point No (i): Whether the present
writ petition is maintainable and deserves to
be entertained under Articles 226 and 227 of
the Constitution of India, notwithstanding
the statutory proceedings under Section 8 of
the Prevention of Money Laundering Act,
2002, and the availability of alternative
remedies, particularly when the Petitioner
challenges the exercise of power under the
Second Proviso to Section 5(1) of the said
Act?
10.1. Sri D.R. Ravishankar, learned Senior Counsel
appearing for the Petitioner, submits that the
availability of a remedy before the
Adjudicating Authority does not, by itself, bar
this Court from exercising its jurisdiction
under Articles 226 and 227 of the
Constitution of India.
10.2. He relies on the decision of the Co-ordinate
Bench of this Court in Jayamma v. The
Directorate of Enforcement , [W.P.
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No.28108/2025], decided on 02.06.2026,
particularly paragraphs 26, 27, 29, 30, 31,
32, 33, 36, 38 to 42 and 47 to 50. Relying on
Whirlpool Corporation v. Registrar of
Trade Marks, Mumbai and Others [ (1998)
8 SCC 1] and Godrej Sara Lee Ltd. v.
Excise and Taxation Officer-cum-
Assessing Authority and Others, [ (2023)
SCC OnLine SC 95], as discussed in
Jayamma , he submits that the existence of
an alternative remedy does not oust the
constitutional jurisdiction of this Court.
Whether a writ petition should be entertained
is a matter of judicial discretion.
10.3. Learned Senior Counsel further submits that
non-compliance with the Second Proviso to
Section 5(1) of the “PMLA” is a jurisdictional
defect. Relying on paragraphs 30, 36 and 38
to 42 of Jayamma , he contends that the
proceedings under Section 8 are directed at
determining whether the attached property is
involved in money-laundering and whether
the attachment should be confirmed. They do
not provide an effective remedy for
examining whether the statutory conditions
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for invoking the Second Proviso to Section
5(1) were satisfied. He therefore submits
that the Petitioner may invoke Article 226 to
challenge the provisional attachment on that
ground.
10.4. Applying the principle in Jayamma to the
present case, learned Senior Counsel submits
that the two properties were purchased in
2004 and 2008, whereas the alleged
transactions relate to 2011–2012. According
to him, the Respondent invoked the Second
Proviso to Section 5(1) without adequately
considering the dates and nature of the
properties or identifying material connecting
them with the proceeds of crime. He submits
that the authorised officer must have reasons
to believe, recorded in writing and based on
material in his possession, that immediate
attachment is necessary because non-
attachment is likely to frustrate proceedings
under the PMLA. The registration of Crime
No.90/2017, the initiation of proceedings
under the PMLA or the inclusion of the
Petitioner as an accused does not dispense
with these statutory requirements.
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10.5. He also relies on Satish Motilal Bidri v.
Union of India , [2024 SCC OnLine Ker
3410], particularly paragraph 18, in which
the Hon’ble High Court of Kerala set aside an
attachment of immovable property acquired
in 2004, holding that an attachment which is
ex facie beyond the authority of the statute
may be challenged under Article 226
notwithstanding an alternative remedy.
10.6. Finally, learned Senior Counsel submits that
the properties were acquired long before the
alleged predicate offence and were not held
outside India. He contends that they do not
fall within the definition of “proceeds of
crime” under Section 2(1)(u) of the PMLA
and that the attachment is therefore without
foundational jurisdiction. On these grounds,
he seeks interference under Article 226 of
the Constitution of India.
10.7. Ms. Anuparna Bordoloi, learned counsel
appearing for the Respondent, submits that
provisional attachment under Section 5(1) of
the PMLA is an interim measure intended to
preserve the property pending adjudication.
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Under Section 5(5), the authorised officer
must file a complaint before the Adjudicating
Authority within thirty days of attachment.
She submits that the complaint has been
filed, notice has been issued to the Petitioner
and the Petitioner must pursue his objections
before the Adjudicating Authority.
10.8. Learned counsel explains that, under Section
8, the Adjudicating Authority considers the
noticee’s reply, hears the parties and
examines the relevant material before
deciding whether the property is involved in
money-laundering. It may confirm the
attachment or decline to do so. She further
relies on Section 8(6), under which the
property is to be released if the trial
establishes that no offence of money-
laundering has taken place or that the
property is not involved in the offence. She
submits that these statutory safeguards
make the remedy under the PMLA effective
and that the Petitioner’s objections should be
considered through that process.
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10.9. Ms. Bordoloi also refers to the pending
proceedings before the Hon’ble Special Court
in Special C.C. No.53/2025 under Sections 3
and 4 of the PMLA. She submits that the
Petitioner’s objections concerning the source
and acquisition of the properties, and their
alleged connection with the proceeds of
crime, should be raised before the
appropriate statutory forum. Entertaining the
writ petition, she contends, would interrupt
the statutory process.
10.10. She relies on Sri Krishna K.M. and Others
v. The Directorate of Enforcement and
Others , [W.P. No.7155/2026], decided on
18.03.2026, particularly paragraph 4, in
which a Co-ordinate Bench observed that a
challenge to provisional attachment was
premature before an order under Section 8
had been passed. She submits that the
Petitioner should follow the statutory
procedure prescribed by the PMLA.
10.11. Learned counsel further relies on the
following decisions of the Hon’ble Supreme
Court:
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10.12. Titaghur Paper Mills Co. Ltd. and
Another v. State of Orissa and Others ,
[(1983) 2 SCC 433], paragraph 6;
10.13. Assistant Collector of Central Excise,
Chandan Nagar, West Bengal v. Dunlop
India Ltd. and Others , [(1985) 1 SCC
260], paragraph 3;
10.14. Bank of India v. Satyawati Tandon and
Others , [(2010) 8 SCC 110], paragraphs 43
and 44;
10.15. Punjab National Bank v. O.C. Krishnan
and Others , [(2001) 6 SCC 569],
paragraphs 5 and 6; and
10.16. Raj Kumar Shivhare v. Assistant
Director, Directorate of Enforcement and
Another, [(2010) 4 SCC 772], paragraphs
31, 32 and 37.
10.17. Relying on these decisions, she submits that
where a statute provides an effective remedy
through a specialised adjudicatory and
appellate mechanism, the High Court should
ordinarily decline to entertain a writ petition.
Although the existence of an alternative
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remedy does not oust the jurisdiction under
Article 226, exceptional circumstances must
be shown to justify bypassing the statutory
process. In the present case, the Petitioner
may raise his objections before the
Adjudicating Authority, appeal to the
Appellate Tribunal under Section 26 and,
thereafter, invoke Section 42 of the PMLA.
10.18. Ms. Bordoloi also relies on Vijay Madanlal
Choudhary v. Union of India , [(2023) 12
SCC 1], particularly paragraphs 174.16
onwards, regarding the statutory safeguards
and appellate remedies available against
provisional attachment. She refers to
Gautam Khaitan and Another v. Union of
India and Another , [2025 SCC OnLine Del
8434], paragraphs 18, 19 and 22, in support
of her submission that the availability of an
alternative remedy is a relevant
consideration when deciding whether to
entertain a writ petition. She also relies on P.
Balamurugan and Another v. Directorate
of Enforcement, represented by Chennai
Zonal Office-II and Another , [2025 SCC
OnLine Mad 15158], paragraphs 13 to 15, to
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submit that the Petitioner should participate
in the Section 8 proceedings and substantiate
his contention that the attached properties
are not proceeds of crime.
10.19. This Point requires the Court to consider two
distinct questions: first, whether the writ
petition is maintainable despite the remedies
provided under the PMLA; and second,
whether the petition should be entertained at
this stage. The challenge concerning
compliance with the Second Proviso to
Section 5(1) must be considered against the
general principles governing alternative
remedies.
10.20. The relevant facts are that the Respondent
passed Provisional Attachment Order
No.01/2024 dated 29.10.2024 in
ECIR/MGSZO/04/2022 under Section 5(1) of
the PMLA read with Rule 3 of the Prevention
of Money-Laundering (Issuance of Provisional
Attachment Order) Rules, 2013. The order
provisionally attached properties belonging to
four persons, including the two properties of
the Petitioner, for a period of 180 days. A
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notice under Section 8, bearing OC
No.2482/2024 and dated 30.11.2024, was
issued by the Registrar of the Adjudicating
Authority. The Petitioner is arrayed as
defendant No.3 in the notice, which refers to
a complaint filed under Section 5(5).
Proceedings under Sections 3 and 4 of the
PMLA are also pending in Special C.C.
No.53/2025.
The statutory scheme
10.21. Section 5(5) of the PMLA provides:
“(5) The Director or any other officer who
provisionally attaches any property under sub-
section (1) shall, within a period of thirty days
from such attachment, file a complaint stating
the facts of such attachment before the
Adjudicating Authority.”
10.22. Section 8(1) empowers the Adjudicating
Authority, upon receipt of the complaint, to
issue notice calling upon the person
concerned to explain the sources of income,
earnings or assets from which the property
was acquired, produce supporting evidence
and show cause why the property should not
be declared involved in money-laundering.
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10.23. Section 8(2) provides that the Adjudicating
Authority shall consider the reply, hear the
affected person and the authorised officer,
and examine the relevant material before
recording a finding on whether the property
is involved in money-laundering. If the
statutory conditions are satisfied, Section
8(3) provides for confirmation of the
attachment.
10.24. An order of the Adjudicating Authority may
be challenged before the Appellate Tribunal
under Section 26(1). Section 26(3)
prescribes a period of forty-five days from
receipt of the order and permits the Tribunal
to entertain a delayed appeal where sufficient
cause is shown. Section 26(4) empowers the
Tribunal to confirm, modify or set aside the
order appealed against. Section 42 provides
for a further appeal to the High Court within
sixty days on a question of law or fact arising
from the Tribunal’s decision.
10.25. Section 8(6) also provides for release of the
property in the circumstances specified
therein if the trial establishes that no offence
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of money-laundering has taken place or that
the property is not involved in the offence.
10.26. The PMLA thus provides for provisional
attachment, adjudication by the Adjudicating
Authority, an appeal to the Appellate Tribunal
and a further appeal to the High Court. The
existence of this statutory mechanism is
central to deciding whether the present
petition should be entertained.
Maintainability and entertainability
10.27. Maintainability and entertainability are
distinct. The availability of an alternative
remedy does not, by itself, exclude the
jurisdiction of this Court under Article 226 of
the Constitution. It is, however, a relevant
consideration when deciding whether that
jurisdiction should be exercised.
10.28. In Jayamma, (paragraph 27), the Co-
ordinate Bench observed that “though a writ
petition would be maintainable, however,
whether the same could be entertained is a
matter of judicial discretion ” paragraph 29
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further states “it is for the court to decide as
to whether it needs to entertain the petition
and intervene or allow the proceedings under
the statutory scheme to progress to a logical
conclusion.”
10.29. The same principle emerges from the
decisions of the Hon’ble Supreme Court
relied upon by the Respondent. In Punjab
National Bank v. O.C. Krishnan [(2001) 6
SCC 569] (paragraph 6), the Hon’ble
Supreme Court observed “Even though a
provision under an Act cannot expressly oust
the jurisdiction of the court under Articles
226 and 227 of the Constitution,
nevertheless, when there is an alternative
remedy available, judicial prudence demands
that the Court refrains from exercising its
jurisdiction under the said constitutional
provisions.”
10.30. In Bank of India v. Satyawati Tandon
[(2010) 8 SCC 110] (paragraph 44), the
Hon’ble Supreme Court recognised the wide
scope of the High Court’s jurisdiction while
emphasizing “we cannot be oblivious of the
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rules of self-imposed restraint evolved by
this Court, which every High Court is bound
to keep in view while exercising power under
Article 226 of the Constitution.”
10.31. This Court therefore holds that the writ
petition is maintainable. The question that
remains is whether the circumstances justify
entertaining it despite the remedies available
under the PMLA.
The rule of restraint and the statutory remedy
10.32. In Satyawati Tandon (paragraph 43), the
Hon’ble Supreme Court stated that “the High
Court will ordinarily not entertain a petition
under Article 226 of the Constitution if an
effective remedy is available to the aggrieved
person”.
10.33. In Assistant Collector of Central Excise v.
Dunlop India Ltd. [(1985) 1 SCC 260]
(paragraph 3), the Hon’ble Supreme Court
cautioned that “Article 226 is not meant to
short-circuit or circumvent statutory
procedures.”
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10.34. The decisions recognise that interference
may nevertheless be warranted in
exceptional circumstances, including where
the vires of a statute is challenged or where
the circumstances provide sufficient reason
to bypass the statutory remedy.
10.35. Similarly, Titaghur Paper Mills Co. Ltd.
(paragraph 6) emphasises the need to use an
equally efficacious alternative remedy where
the statute provides a chain of appeals. In
Raj Kumar Shivhare (paragraph 31), the
Hon’ble Supreme Court observed “When a
statutory forum is created by law for
redressal of grievance and that too in a fiscal
statute, a writ petition should not be
entertained ignoring the statutory
dispensation.”
10.36. These decisions arose in different statutory
contexts, but the general principle applies
here: where the legislature has provided an
effective adjudicatory and appellate
mechanism, that mechanism should
ordinarily be followed unless the case falls
within a recognised exception.
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10.37. The PMLA itself provides such a mechanism.
As noted by the Co-ordinate Bench in
Jayamma (paragraph 41), Sections 5, 8 and
26 form a self-contained statutory scheme.
In Vijay Madanlal Choudhary , paragraphs
174.16 to 174.18, the Hon’ble Supreme
Court explained that the Adjudicating
Authority is not the final authority on
attachment; an order confirming provisional
attachment may be appealed against before
the Appellate Tribunal under Section 26(1),
followed by a further appeal to the High
Court under Section 42 on a question of law
or fact. The safeguards under Section 8 and
the appellate remedies are therefore integral
to the statutory scheme.
The exceptions relied upon by the Petitioner
10.38. The Petitioner relies principally on three
grounds to justify entertaining the writ
petition despite the alternative remedy: (i)
alleged non-compliance with the Second
Proviso to Section 5(1), relying on
Jayamma ; (ii) ex facie illegality, relying on
Satish Motilal Bidri ; and (iii) an alleged
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absence of foundational jurisdiction because
the properties are said not to fall within
Section 2(1)(u) of the PMLA.
The Second Proviso to Section 5(1) and
Jayamma
10.39. In Jayamma , the Co-ordinate Bench held
that a challenge alleging non-compliance
with the Second Proviso to Section 5(1)
raises a jurisdictional issue (paragraph 30). It
further reasoned that the proceedings under
Section 8 do not provide a forum to examine
that particular objection (paragraphs 38 to
41). Accordingly, the existence of an
alternative remedy would not, by itself,
prevent a writ petition raising such a
jurisdictional challenge from being
entertained, subject to the circumstances of
the case (paragraph 42).
10.40. This Court accepts the principle that an
alleged failure to satisfy a statutory
precondition governing the power to attach
property may warrant judicial review, even
where an alternative remedy exists. Whether
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the exception applies, however, depends on
the facts and the applicable statutory
provisions.
10.41. In the present case, the Court’s conclusion
on the applicability of the Second Proviso is
based on its consideration of the statutory
requirements and the material discussed
under Point No. (iii). For the reasons
recorded there, the Court concludes that the
First Proviso to Section 5(1) was satisfied
and that invocation of the Second Proviso
was not required in the circumstances of this
case. The distinction from Jayamma is that,
in that case, no final report had been
forwarded to the Magistrate when the
attachment was made, as noted in paragraph
48 of that decision.
10.42. On that basis, the exception founded on the
alleged non-compliance with the Second
Proviso does not arise for consideration in
the manner urged by the Petitioner. The
related submission that the Adjudicating
Authority cannot examine that particular
procedural objection does not, by itself,
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establish a ground for entertaining the
present petition.
Ex facie illegality and Satish Motilal Bidri
10.43. In Satish Motilal Bidri (paragraph 18), the
Hon’ble High Court of Kerala set aside the
attachment of immovable property after
holding that it was “ex-facie, ultra vires the
powers of the statute”. The Court observed
that “ex facie illegal acts can be interfered
with under Article 226 of the Constitution of
India, notwithstanding the existence of an
alternative remedy”.
10.44. The decision therefore recognises that an
alternative remedy does not prevent
interference where the impugned action is
demonstrably beyond the authority conferred
by statute. Whether that principle applies
here depends on the scope of Section 2(1)(u)
and the legal basis on which the Respondent
seeks to attach the properties.
10.45. It is not the Respondent’s case that the two
properties themselves were directly derived
or obtained from the alleged criminal activity.
Her case, as presented, rests on the value
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limb of the definition of “proceeds of crime”.
Whether the statutory requirements for such
attachment are satisfied, including the
availability of the original proceeds and the
value that may lawfully be attached, requires
consideration of the applicable law and the
material relating to the flow of funds. In
these circumstances, the attachment cannot,
at this stage, be treated as ex facie beyond
the statute merely because the properties
were acquired before the alleged predicate
transactions.
The alleged absence of foundational jurisdiction
10.46. The Petitioner contends that the dates of
acquisition place the properties outside
Section 2(1)(u) of the PMLA. The
Respondent, however, relies on the value
limb of that provision rather than asserting
that the properties were themselves acquired
directly from the alleged criminal activity.
10.47. The question is therefore not resolved solely
by the dates of purchase. It also requires
consideration of the statutory basis for
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equivalent-value attachment and the material
relied upon by the Respondent. For the
reasons discussed under Point No. (ii), this
Court does not accept that acquisition of the
properties before the alleged predicate
offence, by itself, establishes that the
Respondent lacked jurisdiction to attach
them. The Petitioner has consequently not
demonstrated, on this ground alone, a clear
absence of jurisdiction warranting
interference under Article 226 at this stage.
Disputed facts and the appropriate forum
10.48. The Petitioner’s remaining objections concern
the nature of the amounts received from M/s.
Hanuman Minerals, his role as a stevedore,
and whether the original proceeds of crime
remain traceable or have been exhausted.
The parties advance differing positions on
these matters, which require examination of
the relevant evidence.
10.49. Section 8(1) expressly provides for the
person concerned to explain the sources from
which the property was acquired and to
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produce supporting evidence. The
Adjudicating Authority must consider that
material in accordance with Section 8(2). An
adverse order may then be challenged before
the Appellate Tribunal under Section 26(1),
which has the power under Section 26(4) to
confirm, modify or set aside the order.
10.50. In these circumstances, the disputed factual
questions are appropriately considered
through the statutory process rather than
determined in the present writ petition.
The other decisions relied upon by the
Respondent
10.51. In Sri Krishna K.M. (paragraph 4), the Co-
ordinate Bench observed “The right to
challenge the order of attachment would
arise only after an order is passed under
Section 8 of the PMLA. Therefore, this
petition is too premature”.
10.52. The decision supports the principle that
objections to attachment should ordinarily be
pursued through the statutory process. The
precise stage of the Section 8 proceedings in
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the present case must, however, be
determined from the relevant record.
10.53. In P. Balamurugan (paragraphs 13 to 15),
the Hon’ble High Court of Madras emphasised
that the affected person “has to participate in
the enquiry once they receive notice and
substantiate their plea that the property
attached is not a proceeds of crime”. That
decision reinforces the importance of placing
the relevant evidence before the Adjudicating
Authority.
10.54. In Gautam Khaitan (paragraphs 18, 19 and
22), the Hon’ble High Court of Delhi
considered the material placed before it but
declined to interfere in view of the alternative
remedy. These decisions support the view
that the statutory remedy should ordinarily
be pursued where the objections require
examination of the evidence.
Proceedings before the Special Court
10.55. Ms. Bordoloi submits that the Petitioner may
also raise his objections in Special C.C.
No.53/2025. Section 8(6) provides for
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release of the property in the circumstances
specified therein, and Vijay Madanlal
Choudhary (paragraph 174.13) recognises
the role of the Special Court in determining
whether the property is involved in money-
laundering.
10.56. It is unnecessary in this Point to determine
the precise extent to which the Special Court
may reconsider an attachment already
confirmed by the Adjudicating Authority. The
statutory appeal against the Adjudicating
Authority’s order remains the principal
remedy for challenging the confirmation of
attachment.
Limitation and the appropriate appellate forum
10.57. Section 26(3) provides forty-five days from
receipt of the Adjudicating Authority’s order
for filing an appeal and permits the Appellate
Tribunal to condone delay where sufficient
cause is shown. The Petitioner would,
however, be entitled to the benefit of Section
14 of the Limitation Act.
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10.58. The submission of Ms. Bordoloi that
entertaining the writ petition would derail the
adjudication and investigation is not, by
itself, a legal bar to the exercise of
jurisdiction under Article 226. It is, however,
a relevant consideration in deciding whether
the Court should permit the statutory process
to proceed.
10.59. For the reasons stated above, this Court
answers Point No. (i) by holding that the writ
petition is maintainable under Articles 226
and 227 of the Constitution of India, since
the remedies under Sections 8, 26 and 42 of
the PMLA do not oust the constitutional
jurisdiction of this Court. However, the
Petitioner has not established an exceptional
circumstance warranting interference at this
stage. The alleged failure to comply with the
Second Proviso to Section 5(1) does not, for
the reasons recorded under Point No. (iii),
warrant intervention in the present case. Nor
has the Petitioner established an ex facie
want of jurisdiction. The remaining objections
substantially concern disputed facts and the
application of the PMLA to the properties,
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which should be pursued through the
statutory process.
10.60. Accordingly, though the writ petition is
maintainable it does not warrant
entertainment at this stage, subject to the
directions in the operative order.
11. Answer to Point No (ii): Whether the
provisional attachment of the Petitioner’s
properties, acquired under registered sale
deeds dated 15.12.2004 and 28.03.2008, is
sustainable in law when the alleged
scheduled offence and the transactions said
to have generated the proceeds of crime
relate to the period 2011–2012, and whether
such properties can be attached as properties
of equivalent value under Section 2(1)(u),
read with Section 5 of the PMLA, 2002?
11.1. Sri D.R. Ravishankar, learned Senior Counsel
for the Petitioner, submits that Apartment
No. M401 was purchased under a registered
sale deed dated 15.12.2004 (Document No.
MGC-1-04805-2004-05, CD No. MGCD19,
Sub-Registrar, Mangalore Town). The non-
agricultural immovable property held on
Warg Right in Survey No. 23-1A2 of Derebail
Village, Mangalore, was purchased under a
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registered sale deed dated 28.03.2008
(Document No. MGC-1-05028-2008-09, CD
No. MGCD88 dated 19.01.2009, Sub-
Registrar, Mangalore City). The transactions
involving M/s. Hanuman Minerals and M/s.
Manipal Global took place in 2011–2012. He
contends that property acquired before the
alleged criminal activity cannot be treated as
proceeds of crime arising from that activity.
11.2. Relying on Section 2(1)(u) of the PMLA
learned Senior Counsel submits that
“proceeds of crime” means property derived
or obtained, directly or indirectly, as a result
of criminal activity relating to a scheduled
offence, the value of such property, or, where
such property is taken or held outside the
country, property of equivalent value held
within the country or abroad. According to
him, neither property was derived or
obtained from criminal activity. He further
contends that the value limb cannot be
invoked because the Petitioner holds no
property outside India. The attachment is
therefore contended to be without
foundational jurisdiction.
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11.3. Learned Senior Counsel also submits that the
Petitioner acted only as a stevedore and was
a third party to the transactions between
M/s. Hanuman Minerals and M/s. Manipal
Global. He denies receiving proceeds of crime
and maintains that the amounts received
from M/s. Hanuman Minerals were part
repayments of the sum of Rs.25,00,000 paid
by him on 09.02.2011. He contends that the
mere invocation of scheduled offences
against him does not establish that his
properties are liable to attachment under the
PMLA. He further submits that the
Respondent failed to consider the dates of
acquisition and identify material linking the
properties to the alleged proceeds of crime.
11.4. He relies on Pavana Dibbur v. Directorate
of Enforcement, [(2023) 15 SCC 91],
particularly paragraphs 12, 13, 15, 17, 18,
19, 27, 28, 29 and 31, and advances the
following propositions:
11.4.1. The existence of proceeds of crime is
a necessary condition for an offence
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under Section 3 of the PMLA
(paragraphs 12 and 13).
11.4.2. If all accused in the scheduled offence
are acquitted or discharged, or the
proceedings concerning the scheduled
offence are quashed in their entirety,
the scheduled offence ceases to exist
for the purposes as explained in
paragraph 18. The decision also refers
to paragraph 109 of Vijay Madanlal
Choudhary v. Union of India
[(2023) 12 SCC 1].
11.4.3. Property acquired before the acts
constituting the scheduled offence
cannot, merely by reason of its
ownership, be treated as proceeds of
crime without the necessary
connection (paragraphs 19 and 31.3).
11.4.4. Penal statutes must be strictly
construed. Where two reasonable
interpretations are available, the
interpretation avoiding penal
consequences should ordinarily be
preferred (paragraphs 27 and 28).
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11.4.5. An offence of criminal conspiracy
under Section 120-B of the Indian
Penal Code is a scheduled offence only
where the conspiracy relates to the
commission of an offence included in
the Schedule (paragraphs 29 and
31.5).
11.4.6. Proceedings under the PMLA must rest
on the existence of a scheduled
offence and proceeds of crime
connected with it; suspicion alone is
insufficient.
11.5. Learned Senior Counsel also relies on Satish
Motilal Bidri v. Union of India , [2024 SCC
OnLine Ker 3410], paragraphs 13 to 18. He
submits that the Hon’ble High Court of Kerala
held that property acquired before the
scheduled offence could not be attached as
property of equivalent value where the
proceeds of crime had not been taken or held
outside India. In paragraph 18, the Hon’ble
High Court of Kerala set aside the
attachment of immovable property purchased
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in 2004, long before the alleged predicate
offence.
11.6. Applying that decision, he contends that the
Petitioner’s properties, purchased in 2004
and 2008, are not attachable. He further
submits that the Respondent has neither
identified proceeds of crime received by the
Petitioner nor established a link between the
properties and such proceeds. He maintains
that the failure to consider these matters
shows non-application of mind.
11.7. Ms. Anuparna Bordoloi, learned counsel for
the Respondent, states that the Respondent
does not allege that the properties purchased
in 2004 and 2008 were themselves acquired
from proceeds of crime. Her submission is
that the original proceeds have been
secreted or are no longer available and that
the properties have therefore been
provisionally attached as properties of
equivalent value under Section 5 and,
according to her, confirmed under Section 8.
11.8. Learned counsel submits that M/s. Hanuman
Minerals received Rs.2,30,00,000 from M/s.
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Manipal Global. Of this amount, Rs.53,80,000
was withdrawn in cash and Rs.96,00,000 was
transferred to M/s. Phoenix International,
from whose accounts Rs.32,55,000 was
withdrawn in cash. A further sum of
Rs.17,00,000 was transferred to the
Petitioner.
11.9. M/s. Hanuman Minerals, a proprietary
concern of Girish Sangappa Jaggal, is
defendant No.1 in the Section 8 proceedings.
Sri Rohan Prakash Lotlikar, proprietor of M/s.
Phoenix International, is defendant No.2, and
the Petitioner is defendant No.3. Learned
counsel submits that no substantial amount
remains in the accounts of M/s. Hanuman
Minerals or M/s. Phoenix International and
that the original funds are no longer available
in those accounts.
11.10. Ms. Bordoloi relies on Deputy Director,
Directorate of Enforcement, Delhi v. Axis
Bank and Others, [ 2019:DHC:1887] ,
paragraph 171. She submits that the PMLA
permits attachment not only of property
directly or indirectly derived from criminal
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activity relating to a scheduled offence, but
also of other assets of equivalent value
where the original proceeds cannot be
traced, reached or are deficient. Such
alternative property need not itself have
been acquired from proceeds of crime. She
further submits that the dates of acquisition
do not, by themselves, determine whether
property of equivalent value may be
attached, and that the relevant factual
objections should be examined by the
Adjudicating Authority.
11.11. She also relies on Directorate of
Enforcement v. Prakash Industries Ltd.,
[2025 SCC OnLine Del 8243], paragraphs 34
to 40. She submits that the definition of
“proceeds of crime” under Section 2(1)(u) is
broad and covers property derived or
obtained directly or indirectly, whether
tangible or intangible. Money-laundering
under Section 3 is a distinct and continuing
offence that extends to processes or
activities connected with the concealment,
possession, acquisition or use of proceeds of
crime, including their projection as untainted
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property. According to her, the
transformation or routing of tainted funds
through other transactions does not
necessarily remove their tainted character.
The date on which the attached property was
acquired is therefore not, by itself, decisive.
11.12. Relying on Pavana Dibbur (paragraph 18),
learned counsel submits that a person
prosecuted under the PMLA need not also be
an accused in the scheduled offence,
provided the scheduled offence exists. She
further points out that the Petitioner is
named as accused No.3 in the charge sheet
in Crime No.90/2017. She contends that the
Petitioner’s claim that he acted only as a
stevedore does not, by itself, exclude the
applicability of the PMLA.
11.13. She also refers to Vijay Madanlal
Choudhary (paragraphs 172 and 173),
which recognises that the definition of
“proceeds of crime” includes the value of
property derived from a scheduled offence
and that the statutory scheme seeks to reach
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such proceeds irrespective of the person in
whose name they are held.
11.14. Ms. Bordoloi refers to Satish Motilal Bidri
(paragraphs 13 to 18), including its
discussion of Seema Garg, Satyam
Computer Services Limited and Axis
Bank , as well as Vijay Madanlal
Choudhary and Pavana Dibbur . She
submits that the question of attachment
must be decided in accordance with the
statutory provisions and the material
available in the proceedings.
11.15. Learned counsel also relies on Vijayraj
Surana v. Assistant Director,
Enforcement Directorate, [2024 SCC
OnLine Mad 8404], paragraphs 27, 28, 29,
31, 36, 37, 39, 40, 41 and 44; Dr. Manik
Bhattacharya v. Ramesh Malik and
Others , [2022 SCC OnLine SC 1465],
paragraph 7; and Surjeet Kumar Bansal v.
Central Bureau of Investigation and
Another , [2024:PHHC:045226], decided on
04.04.2024, paragraphs 15, 16 and 18.
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11.16. Relying on these decisions, she submits that
proceedings under the PMLA are independent
of proceedings relating to the scheduled
offence. In particular, Vijayraj Surana holds
that quashing an FIR on a technical ground
does not automatically result in quashing the
ECIR. The challenge to that decision before
the Hon’ble Supreme Court was dismissed as
withdrawn on 18.12.2024. Learned counsel
submits that the PMLA proceedings must
therefore be considered independently on
their own material.
11.17. The issue has two aspects: whether
properties acquired in 2004 and 2008 can be
attached when the alleged scheduled offence
and the transactions said to have generated
the proceeds of crime relate to 2011–2012;
and whether those properties may be
attached as properties of equivalent value
under Section 2(1)(u), read with Section 5 of
the PMLA.
11.18. The Court must determine the scope of the
statutory power. It is not required in this
Point to decide disputed questions of fact
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that fall for consideration before the
statutory authorities.
The Respondent’s case and the statutory
provisions
11.19. The Respondent’s case, as presented by Ms.
Bordoloi, is that the properties were not
acquired from proceeds of crime but were
attached as properties of equivalent value
because the original proceeds are no longer
available. The dates of purchase support the
distinction between the properties
themselves, and the alleged proceeds
generated in 2011–2012. The question is
whether the PMLA permits attachment of the
properties on the alternative basis as
advanced by the Respondent.
11.20. Section 2(1)(u) of the PMLA defines
“proceeds of crime” as follows:
“ ‘proceeds of crime ’ means any property
derived or obtained, directly or indirectly, by any
person as a result of criminal activity relating to
a scheduled offence or the value of any such
property or where such property is taken or held
outside the country, then the property equivalent
in value held within the country or abroad;”
11.21. The Explanation to Section 2(1)(u) provides:
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“For the removal of doubts, it is hereby clarified
that ‘proceeds of crime’ include property not only
derived or obtained from the scheduled offence
but also any property which may directly or
indirectly be derived or obtained as a result of
any criminal activity relatable to the scheduled
offence;”
11.22. The definition thus addresses property
derived or obtained from criminal activity, the
value of such property, and property of
equivalent value in the circumstances
specified in the provision. The Explanation
clarifies that the definition also covers
property derived or obtained indirectly from
criminal activity relating to a scheduled
offence.
11.23. Section 2(1)(v) defines “property” broadly
as:
“any property or assets of every description,
whether corporeal or incorporeal, movable or
immovable, tangible or intangible and includes
deeds and instruments evidencing title to, or
interest in, such property or assets, wherever
located”.
11.24. The two immovable properties in question fall
within the general meaning of “property”.
Whether they are attachable depends on the
applicable limb of Section 2(1)(u) and the
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conditions governing attachment under
Section 5.
11.25. Section 3 defines the offence of money-
laundering as follows:
“Whosoever directly or indirectly attempts to
indulge or knowingly assists or knowingly is a
party or is actually involved in any process or
activity connected with the proceeds of crime
including its concealment, possession, acquisition
or use and projecting or claiming it as untainted
property shall be guilty of offence of money-
laundering.”
11.26. Explanation (ii) to Section 3 states that:
“the process or activity connected with proceeds
of crime is a continuing activity and continues till
such time a person is directly or indirectly
enjoying the proceeds of crime by its
concealment or possession or acquisition or use
or projecting it as untainted property or claiming
it as untainted property in any manner
whatsoever.”
11.27. These provisions distinguish the criminal
activity that generates proceeds of crime
from the subsequent processes or activities
connected with those proceeds.
Existence of a scheduled offence
11.28. The Petitioner submits that there is no basis
for invoking the PMLA against him. The
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record, however, shows that Crime
No.90/2017 was registered on 02.06.2017
and that a charge sheet was filed in which
the Petitioner is arrayed as accused No.3.
Paragraph 2.2 of the attachment order refers
to charge sheet No.08/2021 dated
30.12.2021, filed by the Deputy
Superintendent of Police, FIU, CID,
Bengaluru, before the Hon’ble Additional Civil
Judge and ACJM Court, Udupi, against Sri
Girish Jaggal, Sri Rohan Prakash Lotlikar and
Sri S. Mahadevan. The order records that the
offences fall within paragraph 1 of Part A of
the Schedule. Learned Senior Counsel for the
Petitioner also accepts that certain scheduled
offences have been invoked.
11.29. In Pavana Dibbur (paragraph 18), the
Hon’ble Supreme Court held:
“if the prosecution for the scheduled offence ends
in the acquittal of all the accused or discharge of
all the accused or the proceedings of the
scheduled offence are quashed in its entirety, the
scheduled offence will not exist”
11.30. The same paragraph further states:
“Such an accused can still be prosecuted under
PMLA so long as the scheduled offence exists.”
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11.31. Paragraph 15 of Pavana Dibbur , referring to
paragraph 109 of Vijay Madanlal
Choudhary , also addresses the requirement
that the scheduled offence be registered with
the jurisdictional police or be pending inquiry
by way of a complaint before the competent
forum. Paragraph 382.8 of Vijay Madanlal
Choudhary , as reproduced in paragraph 34
of Prakash Industries , states that the
authorities cannot proceed:
“on notional basis or on the assumption that a
scheduled offence has been committed, unless it
is so registered with the jurisdictional police
and/or pending enquiry/trial”.
11.32. In the present case, the registration of the
crime and filing of the charge sheet satisfy
that threshold. If the scheduled offence later
ends in one of the ways described in Pavana
Dibbur , the legal consequences identified in
that decision will follow. Nothing in this
finding prejudges the outcome of the criminal
proceedings.
Independence of proceedings under the PMLA
11.33. The Respondent relies on Vijayraj Surana,
Dr. Manik Bhattacharya and Surjeet
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Kumar Bansal to submit that proceedings
under the PMLA are distinct from those
concerning the scheduled offence.
11.34. In Vijayraj Surana (paragraph 27), the
Hon’ble High Court of Madras observed:
“ECIR is born from FIR, but once the ECIR is
born, the umbilical cord that connects the ECIR
with FIR losses its relevance and the ECIR
becomes an independent document in itself”
11.35. Paragraph 40 further states:
“all cases where FIR is quashed shall not
automatically become a ground for quashing an
ECIR.”
11.36. Paragraph 29 refers to paragraph 457 of
Vijay Madanlal Choudhary , which
describes the ECIR as an internal document
of the Enforcement Directorate. Paragraph 28
of Vijayraj Surana also refers to Rajinder
Singh Chada v. Union of India [ W.P. (CRL)
562/2023 & CRL.M.A. 5126/2023] .
11.37. In Dr. Manik Bhattacharya (paragraph 7),
the Hon’ble Supreme Court stated that:
“money-laundering is an independent offence”.
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11.38. In Surjeet Kumar Bansal (paragraphs 15
and 16), the Hon’ble High Court of Punjab
and Haryana held that proceedings under the
PMLA are distinct and independent and that
the Enforcement Directorate is not bound
merely by protective orders passed in
proceedings concerning the scheduled
offence. Paragraph 18 discusses the
seriousness of PMLA offences and Section 45,
which is not directly in issue here.
11.39. The challenge to Vijayraj Surana was
dismissed as withdrawn by the Hon’ble
Supreme Court. That order does not amount
to an affirmation of the reasoning on merits.
The decision is considered here for its
persuasive value.
11.40. These authorities support the proposition
that proceedings under the PMLA must be
examined independently on the material
relevant to that Act. They do not, by
themselves, establish that the Petitioner
committed money-laundering or that the
properties are liable to attachment. Those
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questions must be determined under the
PMLA and on the relevant evidence.
The Petitioner’s role and the scheduled offence
of conspiracy
11.41. In Pavana Dibbur (paragraph 17), the
Hon’ble Supreme Court held that:
“it is not necessary that a person against whom
the offence under Section 3 PMLA is alleged must
have been shown as the accused in the
scheduled offence”
11.42. Paragraph 18 reiterates the principle that a
person need not be an accused in the
scheduled offence for proceedings under the
PMLA to be maintained, provided the
scheduled offence exists.
11.43. The Petitioner is, in any event, arrayed as
accused No.3 in the charge sheet. His
contention that he acted only as a stevedore
and was a stranger to the underlying
transactions involves factual questions that
cannot be resolved merely on the competing
submissions in this writ petition. Whether the
material establishes the requisite connection
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with proceeds of crime remains to be
considered in the statutory proceedings.
11.44. The Petitioner also relies on Pavana Dibbur
(paragraphs 29 and 31.5) concerning Section
120-B of the Indian Penal Code. The Hon’ble
Supreme Court held that:
“the offence under Section 120-B IPC included in
Part A of the Schedule will become a scheduled
offence only if the criminal conspiracy is to
commit any offence already included in Parts A,
B or C of the Schedule.”
11.45. This proposition is accepted. Paragraph 2.1 of
the attachment order records that Crime
No.90/2017 was registered under Sections
120-B, 406, 417, 420, 465, 466, 467, 468,
471, 474 and 34 of the Indian Penal Code.
Paragraph 2.2 records that the charge sheet
invokes Sections 406, 417, 420, 465, 468
and 120-B read with Section 37, as stated in
the order. The order identifies Sections 417,
420, 467, 471 and 120-B as scheduled
offences under paragraph 1 of Part A of the
Schedule.
11.46. Sections 417 and 420, relating to cheating,
are included in paragraph 1 of Part A of the
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Schedule. The allegations recorded in the
attachment order concern a conspiracy to
cheat M/s. Manipal Global. On the face of the
order, therefore, the requirement identified in
Pavana Dibbur is met. This finding concerns
only the existence of the scheduled offence
for the present purpose; it does not
determine whether the charge sheet will
succeed.
Properties acquired before the alleged criminal
activity
11.47. The Petitioner is correct to the extent that
property purchased in 2004 or 2008 cannot
itself have been derived or obtained from
criminal activity alleged to have occurred in
2011–2012.
11.48. In Pavana Dibbur (paragraph 19), the
Hon’ble Supreme Court observed:
“The first property, ex facie, cannot be said to
have any connection with the proceeds of crime
as the acts constituting the scheduled offence
took place after its acquisition.”
11.49. Paragraph 31.3 reiterates that conclusion.
This Court accepts that principle in relation to
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the first limb of Section 2(1)(u). On the
Respondent’s own case, the two properties
were not acquired from the alleged proceeds
generated in 2011–2012.
11.50. That, however, does not conclude the present
issue. The Respondent relies on the value
limb of the definition and does not claim that
the properties themselves were purchased
with tainted funds. The question is whether
the PMLA permits other property to be
attached as property of equivalent value.
11.51. The context of Pavana Dibbur must also be
noted. The Hon’ble Supreme Court
considered whether the properties in that
case were proceeds of crime and stated in
paragraph 19 that it had considered the issue
“only in the context of the applicability
PMLA”. It also held, in relation to the second
property, that whether tainted money had
been used could be decided only after
evidence was adduced (paragraph 19 and
paragraph 31.4). Those observations support
the distinction between a property’s direct
derivation from criminal activity and factual
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questions requiring evidence. They do not,
by themselves, resolve the separate question
of equivalent-value attachment addressed in
Vijay Madanlal Choudhary .
11.52. The propositions in Pavana Dibbur
(paragraphs 12 and 13) that proceeds of
crime are essential to the operation of
Section 3 are accepted. The existence and
amount of the alleged proceeds, and their
connection with the persons concerned,
remain matters to be established on the
evidence.
The value limb of Section 2(1)(u)
11.53. Sri Ravishankar, learned Senior Counsel,
submits that property of equivalent value
may be attached only where the proceeds of
crime have been taken or held outside India.
The Hon’ble Supreme Court considered this
argument in Vijay Madanlal Choudhary
(paragraph 172), observing:
“It was also urged before us that the attachment
of property must be equivalent in value of the
proceeds of crime only if the proceeds of crime
are situated outside India”
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11.54. The Hon’ble Supreme Court rejected that
submission, holding:
“This argument, in our opinion, is tenuous. For,
the definition of ‘proceeds of crime’ is wide
enough to not only refer to the property derived
or obtained as a result of criminal activity
relating to a scheduled offence, but also of the
value of any such property.”
11.55. The same paragraph states:
“The definition of ‘property’ as in Section 2(1)(v)
is equally wide enough to encompass the value
of the property of proceeds of crime.”
11.56. Paragraph 173 further explains that the
statutory scheme:
“addresses the broad objectives of the 2002 Act
to reach the proceeds of crime in whosoever's
name they are kept or by whosoever they are
held.”
11.57. These observations answer the Petitioner’s
argument that the value limb can operate
only where the original proceeds are held
outside India. This Court is bound by the
interpretation adopted by the Hon’ble
Supreme Court. Accordingly, the absence of
property held abroad does not, by itself,
exclude attachment of other property of
equivalent value under the PMLA.
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11.58. This conclusion does not mean that any
property belonging to an accused may be
attached without satisfying the statutory
requirements. The legal basis for equivalent-
value attachment and the conditions
governing its exercise must still be
established.
Satish Motilal Bidri and Axis Bank
11.59. The Petitioner relies strongly on Satish
Motilal Bidri (paragraphs 13 to 18). In
paragraph 13, the Hon’ble High Court of
Kerala held that:
“the only power to proceed against a property of
equivalent value, which has no link with the
predicate offence is, when the property was
taken out or held out of India”.
11.60. In paragraph 18, it held that the attachment
of immovable property purchased in 2004,
long before the alleged predicate offence,
was:
“ex-facie, ultra vires the powers of the statute”.
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11.61. The judgment records that the Hon’ble High
Court of Kerala was unable to agree with the
view taken by the Hon’ble High Court of Delhi
in Axis Bank . The two decisions therefore
differ on whether property unconnected with
the predicate offence may be attached as
property of equivalent value where the
proceeds are not held outside India.
11.62. This Court resolves that conflict by applying
the interpretation in Vijay Madanlal
Choudhary (paragraph 172). Satish Motilal
Bidri and Axis Bank are decisions of Hon’ble
High Courts and are persuasive. The
interpretation of Section 2(1)(u) in paragraph
172 of Vijay Madanlal Choudhary ,
however, is binding on this Court and directly
addresses the argument that equivalent-
value attachment is permissible only when
the proceeds are outside India. The Hon’ble
Supreme Court expressly rejected that
restriction.
11.63. Accordingly, this Court does not follow
Satish Motilal Bidri to the extent that it
restricts equivalent-value attachment to
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cases where the original proceeds are taken
or held outside India. The principle in that
decision that the PMLA cannot be used to
attach properties unconnected with criminal
activity without satisfying the statutory
requirements remains relevant. The
attachment must still have a lawful basis
under the Act and cannot extend
indiscriminately to all properties of an
accused.
11.64. Paragraphs 295 and 296 of Vijay Madanlal
Choudhary , on which Satish Motilal Bidri
also relies, emphasise that:
“the attachment must be only in respect of
property which appears to be proceeds of crime
and not all the properties belonging to the
concerned person who would eventually face the
action of confiscation of proceeds of crime”.
11.65. That principle is not inconsistent with
paragraph 172 of Vijay Madanlal
Choudhary . Read together, the provisions
do not permit the indiscriminate attachment
of all property belonging to an accused. They
permit attachment of property falling within
the statutory definition, which includes the
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value of proceeds of crime, subject to the
applicable requirements.
11.66. The extract from Vijay Madanlal
Choudhary also states:
“The pivot moves around the date of carrying on
the process and activity connected with the
proceeds of crime; and not the date on which the
property has been derived or obtained by the
person concerned”.
11.67. Similarly, Prakash Industries (paragraph
34), reproducing the discussion in Vijay
Madanlal Choudhary and Union of India
through the Assistant Director v.
Kanhaiya Prasad , refers to the relevant
date as:
“The relevant date is the date on which the
person indulges in the process or activity
connected with such proceeds of crime.”
11.68. These observations do not make the date of
acquisition irrelevant in every case. They
show that the date of purchase alone does
not determine whether property may be
attached under the value limb of Section
2(1)(u).
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11.69. The discussion of Seema Garg and Satyam
Computer Services Limited in paragraph
14 of Satish Motilal Bidri does not require a
different conclusion. As described in Satish
Motilal Bidri , Seema Garg held that
property acquired before the scheduled
offence falls outside the first limb of the
definition, while recognising that it may fall
within the value limb. That distinction is
consistent with the conclusion reached
above.
11.70. Satyam Computer Services Limited holds
that the PMLA, being a statute dealing with
substantive rights, has no retrospective
effect. Retrospective application has not been
advanced as a separate ground of challenge
in the present case. The attachment was
made in 2024, in proceedings arising from an
alleged scheduled offence of 2011–2012 and
an ECIR of 2022. The issue before this Court
is whether the properties may be attached
under the statutory provisions applicable to
the attachment, not whether a provision has
been retrospectively applied. Paragraph 16 of
Satish Motilal Bidri quotes Pavana Dibbur
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(paragraph 19), which has been considered
above.
Axis Bank and the limits of equivalent-value
attachment
11.71. In Axis Bank (paragraph 171), the Hon’ble
High Court of Delhi described attachment
under the PMLA as follows:
“The process of attachment (leading to
confiscation) of proceeds of crime under the
PMLA is in the nature of civil sanction which runs
parallel to investigation and criminal action vis-a-
vis the offence of money-laundering.”
11.72. Paragraph 171(iii) states that the
enforcement officer may attach:
“any other asset or property of equivalent value
of the offender of money-laundering, the latter
not bearing any taint but being alternative
attachable property (or deemed tainted property)
on account of its link or nexus with the offence
(or offender) of money-laundering.”
11.73. Paragraph 171(iv) further provides that
where the tainted property:
“is not traceable, or the same for some reason
cannot be reached, or to the extent found is
deficient, the empowered enforcement officer
may attach any other asset…of the person
accused of offence of money-laundering,
provided it is near or equivalent in value to the
former”.
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11.74. Paragraph 171(ii) requires the officer:
“to assess, even if tentatively, the value of
proceeds of crime”
11.75. Paragraph 171(v) states that:
“the burden of proving facts in support of such
claim is to be discharged by him.”
11.76. These principles are consistent with the
interpretation of Section 2(1)(u) in paragraph
172 of Vijay Madanlal Choudhary .
Equivalent-value attachment is permissible
where the statutory conditions are met, but it
is not an unrestricted power to attach any
asset belonging to an accused.
11.77. The Petitioner also relies on the principle of
strict construction of penal statutes. In
Pavana Dibbur (paragraph 28), the Hon’ble
Supreme Court observed:
“if two reasonable interpretations can be given to
a particular provision of a penal statute, the
Court should generally adopt the interpretation
that avoids the imposition of penal
consequences.”
11.78. The principle of strict construction stated in
paragraph 27 of Pavana Dibbur is accepted.
However, the interpretation advanced by the
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Petitioner, that equivalent-value attachment
is available only when the original proceeds
are held outside India, cannot be accepted in
view of paragraph 172 of Vijay Madanlal
Choudhary .
11.79. The remaining clauses of paragraph 171 of
Axis Bank , concerning the RDBA, the
SARFAESI Act, the Insolvency Code, secured
creditors and bona fide third-party claimants,
do not arise for decision here. The Petitioner
is not claiming as a creditor or as a bona fide
purchaser from the accused. He is arrayed as
accused No.3 in the scheduled offence and
defendant No.3 in the Section 8 proceedings.
In any event, the statutory basis and
conditions for attachment must be
established by the Respondent; the
Petitioner’s objections must be assessed in
accordance with the applicable provisions
and the evidence.
Prakash Industries
11.80. The Respondent relies on Prakash
Industries (paragraphs 34 to 40).
Paragraph 38 states that the words “directly
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or indirectly” are important because the
definition under Section 2(1)(u) extends
beyond the immediate consequence of the
crime to the subsequent transformation,
layering and manifestation of illicit financial
gain. Paragraph 40 states that:
“the offence of money laundering being
continuing in nature is not confined only to the
initial act of criminal acquisition but also extends
to every process or activity connected with the
proceeds”.
11.81. These observations support the broad
meaning of property and the continuing
nature of processes or activities connected
with proceeds of crime. They do not establish
that the Petitioner’s properties, acquired in
2004 and 2008, are themselves tainted
property. The Respondent does not advance
that case. The decision is relevant only to the
extent that it explains the breadth of the
statutory definition and the continuing nature
of the processes connected with proceeds of
crime.
11.82. Whether the conditions for equivalent-value
attachment are satisfied in the present case
depends on the material relating to the
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alleged flow of funds and the availability of
the original proceeds. Under Axis Bank
(paragraph 171(ii) to (v)), the authorised
officer must have a basis to conclude that the
tainted property is untraceable, cannot be
reached or is deficient, and must make a
tentative assessment of its value.
11.83. The Respondent relies on the alleged
movement of funds from M/s. Manipal Global
to M/s. Hanuman Minerals, M/s. Phoenix
International and the Petitioner. The
Petitioner, on the other hand, contends that
the Rs.17,00,000 received by him
represented part repayment of his advance.
Whether that amount constitutes proceeds of
crime, whether the original proceeds are
unavailable, and whether the value of the
attached properties is within the value of the
alleged proceeds are factual matters to be
examined by the Adjudicating Authority and,
where appropriate, the Appellate Tribunal.
11.84. Paragraph 3.6 of the attachment order
records the Respondent’s calculation of the
alleged proceeds of crime as Rs.2,20,00,000,
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being an advance of Rs.2,30,00,112 less
Rs.10,00,000 repaid. It records that the
money was withdrawn in cash or transferred
to others and that, as on 28.10.2024, the
balances in the accounts of M/s. Hanuman
Minerals and M/s. Phoenix International were
Rs.70,608.37 and Re.1, respectively. The
order records that assets valued at
Rs.1,02,02,223 were attached “in lieu of” the
alleged proceeds of crime.
11.85. The Petitioner’s two properties are valued in
the order, at cost price, at Rs.6,97,000 and
Rs.10,00,000, respectively, aggregating
Rs.16,97,000. The Petitioner has not
contended that the value of these properties
exceeds the alleged proceeds of crime. The
figures recorded in the order show the basis
on which the Respondent claims to have
invoked the value limb of Section 2(1)(u).
11.86. These figures are recorded as the
Respondent’s case; this Court does not make
a final finding that the amounts, account
balances or valuations are correct. Their
evidentiary basis and the satisfaction of the
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statutory conditions remain matters for the
statutory authorities. The limited conclusion
here is that the properties’ dates of
acquisition and the absence of property held
abroad do not, by themselves, place the
attachment outside the scope of Sections
2(1)(u) and 5 of the PMLA.
11.87. The provisional attachment of the Petitioner’s
properties is not unsustainable in law merely
because they were purchased under
registered sale deeds dated 15.12.2004 and
28.03.2008, before the alleged scheduled
offence and the transactions of 2011–2012.
The properties cannot themselves be treated
as having been derived or obtained from
criminal activity that occurred later, and the
Respondent does not claim that they were
directly acquired from the alleged proceeds
of crime.
11.88. However, Section 2(1)(u), read with Section
5 of the PMLA, permits attachment of
property of equivalent value where the
statutory requirements are satisfied. That
interpretation follows from Vijay Madanlal
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Choudhary (paragraphs 172 and 173) and
Axis Bank (paragraph 171). This Court does
not follow Satish Motilal Bidri to the extent
that it restricts equivalent-value attachment
to cases where the original proceeds of crime
are taken or held outside India.
11.89. Whether the original proceeds are
unavailable, whether the amounts received
by the Petitioner constitute proceeds of
crime, and whether the statutory conditions
for attachment are otherwise satisfied must
be determined on the evidence by the
Adjudicating Authority and, subject to the
statutory remedies, the Appellate Tribunal.
11.90. Accordingly, this Court answers Point No. (ii)
by holding that the dates of acquisition do
not, by themselves, invalidate the
attachment as one of equivalent value; the
factual and statutory conditions for such
attachment remain subject to adjudication
under the PMLA.
12. Answer to Point No (iii): Whether the
Respondent has complied with the statutory
conditions governing provisional attachment
under Section 5(1) of the PMLA, 2002,
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including the requirement of recording
reasons to believe on the basis of material in
its possession and, where the Second Proviso
is invoked, the requirement that non-
attachment of the property immediately is
likely to frustrate proceedings under the Act?
12.1. Sri D.R. Ravishankar, learned Senior Counsel
for the Petitioner, submits that the
Respondent attached the properties
mechanically and without sufficient basis.
According to him, the Respondent was
required to identify the proceeds of crime
before attaching any property. Failure to do
so, he contends, demonstrates non-
application of mind.
12.2. In brief, the learned Senior Counsel submits
that the officer must record in writing, on the
basis of material in his possession, reasons
to believe that failure to attach the property
immediately is likely to frustrate proceedings
under the Act. These are mandatory
conditions and not mere formalities. The
registration of Crime No.90/2017, the
commencement of proceedings under the
PMLA, or the Petitioner’s inclusion as an
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accused cannot, by themselves, dispense
with these requirements.
12.3. Ms. Anuparna Bordoloi, learned counsel for
the Respondent, submits that the CID filed a
charge sheet after investigation, arraigning
the Petitioner as an accused in respect of
scheduled offences. The Respondent was,
therefore, entitled to exercise its powers
under Section 5 of the PMLA. She relies on
Section 5 in support of the attachment.
12.4. Learned counsel submits that an authorised
officer may provisionally attach property
where, on the basis of material in his
possession and for reasons recorded in
writing, he has reason to believe that a
person possesses proceeds of crime and that
those proceeds are likely to be concealed,
transferred or otherwise dealt with in a
manner that may frustrate confiscation
proceedings. The Second Proviso permits
immediate attachment where non-
attachment is likely to frustrate proceedings
under the Act.
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12.5. The purpose of provisional attachment, she
submits, is to preserve the property and
prevent its transfer or disposal while the
proceedings are pending. Otherwise, third
parties may acquire interests in the property,
complicating subsequent recovery. She
further submits that the complaint was filed
before the Adjudicating Authority within the
period of 30 days prescribed by Section 5(5).
12.6. Learned counsel relies on Gautam Khaitan
and Another v. Union of India and
Another , [2025 SCC OnLine Del 8434]
(paragraphs 18, 19 and 22), which
reproduces paragraphs 58 and 59 of
Directorate of Enforcement v. Hi-Tech
Mercantile India Pvt. Ltd . , [LPA
No.588/2022], decided on 17.10.2025. She
submits that the First Proviso is a statutory
precondition where that proviso applies, but
it does not confine the Respondent’s inquiry
to the period or transactions covered by the
report or complaint. The First and Second
Provisos operate independently. Accordingly,
the dates on which the Petitioner acquired
the properties, or the period covered by the
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investigation into the scheduled offence, do
not by themselves invalidate the attachment.
Its legality must be examined with reference
to Section 5(1), the material available to the
officer and the grounds raised by the
Petitioner.
12.7. Learned counsel also relies on P.
Balamurugan and Another v. Directorate
of Enforcement, represented by Chennai
Zonal Office-II and Another , [2025 SCC
OnLine Mad 15158] (paragraphs 13 to 15).
She submits that provisional attachment is a
preventive measure intended to prevent the
concealment, transfer or disposal of property.
Where the authorised officer has recorded
the requisite reasons to believe and the
statutory conditions are satisfied, attachment
may be ordered without prior notice. The
affected person is afforded an opportunity to
respond at the stage of proceedings under
Section 8.
12.8. Relying on Vijay Madanlal Choudhary v.
Union of India, [(2023) 12 SCC 1]
(paragraphs 162, 163 and 174), learned
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counsel submits that provisional attachment
under Section 5 need not invariably await
prior registration of a criminal case
concerning the scheduled offence. The
authorised officer may act to preserve the
proceeds of crime and prevent the
proceedings from being frustrated. The
expression “proceeds of crime” includes the
value of property derived from the scheduled
offence, and the statutory scheme applies
irrespective of the person in whose name
such proceeds are held.
12.9. She further submits that provisional
attachment is subject to the safeguards
under the Act. The Adjudicating Authority
considers the objections under Section 8, and
an order confirming attachment may be
challenged before the Appellate Tribunal
under Section 26 and thereafter before this
Court under Section 42. The Petitioner can
raise his objections concerning the source
and date of acquisition of the properties
before the Adjudicating Authority.
Scope of this Point
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12.10. Point No. (ii) concerns the nature of property
that may be attached. The present Point
concerns compliance with the statutory
requirements governing the exercise of the
power of provisional attachment under
Section 5(1).
12.11. The provisional attachment order dated
29.10.2024 (Annexure-A) is on record and
has been examined. This Point is decided
with reference to that order, the statutory
provisions and the submissions of learned
counsel.
Statutory requirements
12.12. Section 5(1) of the PMLA reads:
“Where the Director or any other officer not
below the rank of Deputy Director authorised by
the Director for the purposes of this section, has
reason to believe (the reason for such belief to
be recorded in writing), on the basis of material
in his possession, that— (a) any person is in
possession of any proceeds of crime; and (b)
such proceeds of crime are likely to be
concealed, transferred or dealt with in any
manner which may result in frustrating any
proceedings relating to confiscation of such
proceeds of crime under this Chapter, he may,
by order in writing, provisionally attach such
property for a period not exceeding one hundred
and eighty days from the date of the order, in
such manner as may be prescribed:”
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12.13. The First Proviso states:
“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:”
12.14. The Second Proviso states:
“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.”
12.15. These provisions require the authorised
officer to act on material in his possession
and record in writing reasons to believe that
a person is in possession of proceeds of
crime and that the statutory conditions for
attachment are satisfied. The First Proviso
ordinarily requires a report or complaint
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concerning the scheduled offence to have
been filed before attachment. The Second
Proviso permits attachment notwithstanding
that requirement, but only where the officer
records the prescribed reasons for believing
that non-attachment immediately is likely to
frustrate proceedings under the Act.
12.16. Section 5(2) requires the officer,
“immediately after attachment under sub-
section (1)” , to “forward a copy of the order,
along with the material in his possession” to
the Adjudicating Authority in a sealed
envelope. Section 5(4) provides that
“Nothing in this section shall prevent the
person interested in the enjoyment of the
immovable property attached under sub-
section (1) from such enjoyment.” Section
5(5), considered under Point No. (i), requires
the complaint to be filed before the
Adjudicating Authority within 30 days.
12.17. The relevant questions are, therefore,
whether the order was made by an
authorised officer; whether reasons to
believe were recorded in writing on the basis
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of material in his possession; whether the
statutory conditions under the applicable
proviso were met; and whether the
procedural requirements were complied with.
The attachment order and the material
considered
12.18. The Provisional Attachment Order
No.01/2024 is signed by Sri J. Sarveshwaran,
Deputy Director, Mangaluru Sub-Zonal Office.
It states that the order was made under
Section 5(1), pursuant to Notification No.
GSR 441(E) dated 01.07.2005 and an
authorisation dated 07.02.2007. On its face,
therefore, the order identifies the officer and
the authority under which he acted.
12.19. The order refers to the FIR, the charge sheet,
the ECIR recorded on 28.03.2022,
statements recorded under Section 50 of the
PMLA, including the Petitioner’s statement
dated 28.03.2024, the relevant bank
accounts and the movement of funds.
12.20. At paragraph 5.1, the officer records that he
considered the facts and material placed
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before him by the Investigating Officer and
identifies 36 documents. These include the
FIR, the charge sheet, stock certificates
dated 23.01.2012, statements recorded
under Section 50, bank statements,
registered documents and encumbrance
certificates relating to the Petitioner’s
properties, and a debtor-based search report
dated 26.10.2024.
12.21. The officer records his “reasons to believe”
that the accused, including the Petitioner,
possess the “value of any such property” in
lieu of proceeds of crime. He further records
that failure to attach the properties
immediately may frustrate confiscation
proceedings under Chapter III. The reasons
given include the possibility of funds in bank
accounts being diverted or withdrawn, the
likely duration of the trial and the risk that
transfers of properties to third parties could
make recovery difficult. The order directs
attachment for 180 days and states that it
may cease to have effect after that period or
upon an order under Section 8(3), whichever
is earlier.
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Compliance with the First Proviso
12.22. The record establishes that Crime
No.90/2017 was registered on 02.06.2017
and that a charge sheet was subsequently
filed, naming the Petitioner as accused No.3.
12.23. Paragraph 2.2 of the attachment order, as
well as document No.3 in its list of
documents, records that the Deputy
Superintendent of Police, FIU, CID,
Bengaluru, filed charge sheet No.08/2021
dated 30.12.2021 before the Hon’ble
Additional Civil Judge and ACJM Court, Udupi.
12.24. On the material available, the statutory
precondition under the First Proviso was
satisfied before the attachment order was
made.
Applicability of Jayamma and the Second
Proviso
12.25. In Jayamma v. Directorate of
Enforcement [W.P. No.28108/2025, decided
on 02.06.2026], the Co-ordinate Bench
considered the requirements of the Second
Proviso in circumstances where “no Final
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Report has been forwarded to the Magistrate”
(paragraph 48). It identified the
requirements that the officer “Has reason to
believe which is recorded in writing and on the basis
of material in his possession” and that “if such
property involved in money laundering is not
attached immediately, the non-attachment of
property is likely to frustrate any proceedings under
the Act.”
12.26. Paragraph 49 of Jayamma confirms that the
challenge in that case concerned the exercise
of power under the Second Proviso. This
Court accepts the stated requirements.
However, the material circumstance here is
different: the charge sheet in the scheduled
offence had already been filed before the
attachment order was made. The First
Proviso was, therefore, satisfied, and the
Respondent did not need to rely on the
Second Proviso to overcome the absence of a
report or complaint.
12.27. The Petitioner’s contention that the
Respondent invoked the Second Proviso is
not borne out by an express reference to that
proviso in the attachment order. The order
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refers to Section 5(1), records the filing of
the charge sheet and sets out reasons
concerning the risk of frustration of
confiscation proceedings. The Respondent’s
case is that the attachment was made after
the charge sheet had been filed.
12.28. Even if the order’s reference to the need for
immediate attachment is treated as an
additional reliance on the Second Proviso, it
records the relevant belief in writing and
identifies the material considered at
paragraph 5.1. The order also states why the
officer considered attachment necessary to
prevent transfers that could impede recovery.
On the face of the order, therefore, the
requirements identified in Jayamma have
been addressed.
12.29. Paragraph 50 of Jayamma , concerning the
investigation by the Lokayukta Police and the
‘B’ report in respect of certain accused,
relates to the facts of that case and does not
affect the present analysis. The other
paragraphs relied upon by the Petitioner,
concerning alternative remedy and the
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scheme of Sections 5 and 8, have been
considered under Point No. (i).
Relationship between the two provisos
12.30. The Respondent relies on Gautam Khaitan
(paragraph 19), which reproduces
paragraphs 58 and 59 of Hi-Tech
Mercantile . The relevant extract states:
“These provisos form a jurisdictional precondition
for issuance of the PAO; however, it does not
restrict the scope of the Directorate's attachment
to the time period covered in the said report or
complaint.”
12.31. It further states that the report under
Section 173 “acts as a gateway triggering the
requirement to initiate action under the proviso to
Section 5(1) of the PMLA; but does not confine the
extent of the inquiry of the Directorate and/or the
duration of the proceeds of crime sought to be
attached” and that “there are two provisos attached
to section 5(1) of the PMLA, each operating within its
own independent domain.”
12.32. This Court accepts that the two provisos
operate within their respective fields. The
First Proviso is satisfied in the present case
because the charge sheet had been filed
before attachment. Further, neither the date
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on which a property was acquired nor the
period covered by the investigation into the
scheduled offence, by itself, restricts the
Respondent’s inquiry or determines the
validity of an attachment. As observed in Hi-
Tech Mercantile , the Enforcement
Directorate may proceed against properties
of equivalent value, subject to the statutory
requirements discussed under Point No. (ii).
Reasons to believe and material in the officer’s
possession
12.33. The Petitioner contends that the attachment
was mechanical and that the Respondent was
required to identify the proceeds of crime
before attaching the properties. The question
at this stage is whether the officer considered
material in his possession and recorded the
reasons required by Section 5(1). It is not
whether this Court would independently have
formed the same belief on that material.
12.34. In Vijay Madanlal Choudhary (paragraph
174.1), the Hon’ble Supreme Court observed
that:
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“the Director or any officer not below the rank of
Deputy Director will have to first apply his mind
to the materials on record before recording in
writing his reasons to believe is certainly a
sufficient safeguard”.
12.35. Similarly, P. Balamurugan (paragraph 13)
refers to the requirement of:
“the reasonable believe reduced into writing by
the competent officer that some person is in
possession of the proceeds of crime”.
12.36. The attachment order records reasons at
paragraphs 3 to 5 and identifies the material
considered. The Petitioner has not identified
any specific document or fact, apart from the
dates of acquisition of the properties, that
the officer overlooked. Those dates have
been considered under Points Nos. (ii) and
(iv).
12.37. The Section 8 notice (Annexure-G) states
that a complaint under Section 5(5) was filed
against the Petitioner and encloses the
reasons recorded under Section 8(1). The
notice does not specify the date on which the
complaint was filed, and the Petitioner has
not contended that it was filed beyond the
prescribed 30-day period. On the present
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record, no breach of Section 5(5) is
established.
12.38. The Act does not require the officer to reach
a final adjudicatory finding on the proceeds
of crime before making a provisional
attachment. The officer must have the
requisite reason to believe, based on material
in his possession. As observed in Deputy
Director, Directorate of Enforcement v.
Axis Bank and Others, [ 2019:DHC:1887] ,
(paragraph 171(ii)), the value of the
proceeds may be assessed “even if
tentatively”.
12.39. The present question is whether the officer
recorded the required reasons on the basis of
identified material. The order demonstrates
that he did so. This Court finds no
jurisdictional defect in the recording of
reasons on the material presently available.
Likelihood of frustration of proceedings
12.40. The Petitioner has not separately
demonstrated that the requirement in
Section 5(1)(b) was ignored. His objection is,
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in substance, that the officer failed to apply
his mind to the relevant material.
12.41. In Vijay Madanlal Choudhary (paragraph
174.2), the Hon’ble Supreme Court explained
the requirement of immediacy under the
Second Proviso:
“There has to be a satisfaction that if the
property involved in money laundering or
‘proceeds of crime’ are not attached
‘immediately’, such non-attachment might
frustrate the confiscation proceedings under the
2002 Act.”
12.42. As already noted, the First Proviso was
satisfied in this case, and the Respondent
was not required to rely on the Second
Proviso to overcome the absence of a report
or complaint. In any event, the attachment
order records the officer’s concern that
transfers to third parties could make
recovery difficult. Although the reasons
concerning withdrawal or diversion of funds
in bank accounts do not directly apply to the
Petitioner’s immovable properties, the stated
risk of their transfer to third parties is
relevant to those properties.
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12.43. Section 5(4) also preserves the right of a
person interested in immovable property to
continue enjoying it despite attachment. The
provisional attachment therefore does not,
by itself, prevent the Petitioner from
continuing to use the properties. Having
regard to the reasons recorded in the order,
this Court cannot conclude that the officer
failed altogether to consider the risk of
frustration of proceedings.
Requirement of prior notice
12.44. The Petitioner has not separately contended
that Section 5(1) required a hearing before
provisional attachment.
12.45. In P. Balamurugan (paragraph 15), the
Madras High Court observed “No where in the
statute either in the Act or Rule, notice to parties
prior to the provisional attachment is contemplated”
and further held that “Section 8 of PMLA is the
answer to the plea of the writ Petitioners regarding
opportunity of hearing before the attachment.”
12.46. Section 5(1) does not provide for prior notice
before provisional attachment. The
safeguards instead operate through the
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subsequent process: the order and material
must be forwarded to the Adjudicating
Authority, the complaint must be filed within
the prescribed period, and the affected
person is given an opportunity to respond in
the proceedings under Section 8. The
Adjudicating Authority must consider the
objections and determine whether the
attachment should be confirmed.
12.47. The provisional nature of the attachment, the
statutory time limit and the subsequent
adjudicatory process are material safeguards.
This Court finds no basis to read a
requirement of prior hearing into Section
5(1). The final sentence of paragraph 15 of
P. Balamurugan , concerning decisions said
to be contrary to Section 5(1) being obiter, is
not necessary for deciding this Point and is
not considered.
Effect of paragraphs 162 and 163 of Vijay
Madanlal Choudhary
12.48. Paragraph 162 of Vijay Madanlal
Choudhary states that “for initiating action of
‘provisional attachment’ under Section 5 there need
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not be a pre-registered criminal case in connection
with scheduled offence” and that the authorised
officer may be “justified in acting with utmost speed
to ensure that the proceeds of crime/property is
available for being proceeded with appropriately”.
12.49. Paragraph 163 similarly recognises that
action under Section 5 may be initiated even
before registration of the scheduled offence,
subject to the statutory requirements.
12.50. These observations concern the
circumstances in which provisional
attachment may be initiated before
registration of a criminal case. In the present
case, a charge sheet had already been filed
before attachment. The decisions support the
proposition that Section 5 does not require
the Respondent to complete the entire
investigation or establish the allegations
finally before taking provisional measures.
They do not, however, dispense with the
obligation to record reasons to believe on the
basis of material in the officer’s possession.
As discussed above, the attachment order
records those reasons and identifies the
material considered.
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12.51. On the material before this Court, the
Petitioner has not established that the
Respondent failed to comply with the
statutory conditions governing provisional
attachment under Section 5(1) of the PMLA.
The First Proviso was satisfied because the
charge sheet in the scheduled offence had
been filed before the attachment order was
made. The Respondent was, therefore, not
required to invoke the Second Proviso to
overcome the absence of a report or
complaint.
12.52. The attachment order records the reasons to
believe in writing and identifies the material
considered by the authorised officer. The
order also records the perceived risk that
transfer of the properties to third parties
could impede recovery. The sufficiency and
effect of that material on the ultimate merits
of the attachment are distinct questions
considered under Point No. (iv); they do not,
on the present record, establish a
jurisdictional defect in the recording of
reasons.
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12.53. Section 5(1) does not require a hearing
before provisional attachment. The statutory
scheme provides for the subsequent
consideration of the affected person’s
objections by the Adjudicating Authority
under Section 8.
12.54. Accordingly, this Court answers Point No. (iii)
by holding that the Respondent complied
with the statutory conditions governing
provisional attachment under Section 5(1) of
the PMLA, 2002, including the requirement to
record reasons to believe on the basis of
material in its possession and, the First
Proviso being satisfied the Second Proviso
was not invoked, hence the requirement that
non-attachment of the property immediately
is likely to frustrate proceedings under the
Act, was not required to be recorded.
13. Answer to Point No (iv): Whether the
impugned attachment is vitiated by non-
application of mind or want of a
demonstrable nexus between the properties
sought to be attached and the alleged
proceeds of crime, having regard to the
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Petitioner’s contention that the amounts
received from M/s. Hanuman Minerals
represented partial repayment of monies
advanced by him and that the properties
were acquired before the alleged scheduled
offence?
13.1. Sri D.R. Ravishankar, learned Senior Counsel
for the Petitioner, submits that the properties
have been attached without sufficient basis.
He contends that the Petitioner did not
receive any proceeds of crime in connection
with Crime No.90/2017. The amounts
received from M/s. Hanuman Minerals,
according to him, were part repayments of
money advanced by the Petitioner, which
remains unpaid in part. He submits that the
Petitioner merely carried on stevedoring
activities and cannot be held responsible for
the acts of M/s. Hanuman Minerals or M/s.
Manipal Global. He further contends that the
Respondent has not clearly identified the
alleged proceeds of crime or established a
connection between those proceeds and the
attached properties.
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13.2. Learned Senior Counsel submits that the
Respondent failed to consider the dates on
which the properties were acquired,
demonstrating non-application of mind.
Relying on Satish Motilal Bidri v. Union of
India , [2024 SCC OnLine Ker 3410]
(paragraphs 13 to 18), he argues that no
material establishes that the Petitioner
received proceeds of crime or acquired the
properties from such proceeds. The
registration of Crime No.90/2017 and the
commencement of PMLA proceedings, he
submits, do not by themselves justify
attachment. The Respondent must identify
the alleged proceeds and establish the legally
required nexus.
13.3. On the underlying transactions, learned
Senior Counsel submits that M/s. Hanuman
Minerals and M/s. Phoenix International, with
the assistance of M/s. Sino Podar Trade Ltd.,
entered into an agreement with M/s. Manipal
Global for the export of 40,000 metric tonnes
of iron ore to M/s. Devi Resources Ltd., Hong
Kong, from Alcon and Maina Jetties in Goa.
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13.4. The allegation in the complaint is that the
Petitioner issued two stock certificates stating
that his proprietary concern, M/s. S.S.
Maritime, held 40,000 metric tonnes of iron
ore, on which M/s. Manipal Global relied.
According to the complaint in PCR
No.23/2017, representatives of M/s.
Hanuman Minerals and M/s. Sino Podar Trade
Ltd. visited M/s. Manipal Global on
07.11.2011 and entered into the agreement
on 18.01.2012. It is further alleged that
certain accused agreed to supply 40,000
metric tonnes of iron ore with an iron content
of 50% but supplied ore with an iron content
of 43.9%, causing an alleged loss of
Rs.9,20,00,000. The complaint led to
registration of offences under the Indian
Penal Code and, after investigation by the
CID, a charge sheet was filed on 30.12.2021.
13.5. Learned Senior Counsel submits that the
filing of a charge sheet does not, by itself,
establish the Petitioner’s liability under
Section 5 of the PMLA. Relying on Pavana
Dibbur v. Directorate of Enforcement ,
[(2023) 15 SCC 91], he contends that the
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Act cannot be invoked on mere suspicion or
simply because the source of property is
questioned; the required connection between
the alleged proceeds and the criminal activity
must be established.
13.6. Ms. Anuparna Bordoloi, learned counsel for
the Respondent, relies on the facts and
money trail discussed under Point No. (ii).
She submits that, after considering the
Petitioner’s reply to the notice under Section
8, the Adjudicating Authority concluded that
the Petitioner had cheated M/s. Manipal
Global by issuing false stock certificates
stating that 40,000 metric tonnes of iron ore
fines were held at the jetties of M/s. S.S.
Maritime. According to the Respondent, the
Petitioner received Rs.17,00,000 in
connection with those transactions. The
alleged proceeds are no longer available
because the funds were withdrawn in cash or
transferred elsewhere.
13.7. Learned counsel submits that the Petitioner’s
contentions, that he acted only as a
stevedore, that the amounts received from
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M/s. Hanuman Minerals were part
repayments, and that the properties were
acquired in 2004 and 2008, will be
considered in the proceedings before the
Adjudicating Authority. Relying on P.
Balamurugan and Another v. Directorate
of Enforcement, represented by Chennai
Zonal Office-II and Another , [2025 SCC
OnLine Mad 15158] (paragraphs 13 to 15),
she submits that the Petitioner must
participate in the inquiry.
13.8. She also relies on Deputy Director,
Directorate of Enforcement v. Axis Bank
and Others , [ 2019:DHC:1887] , (paragraph
171), concerning the assessment of the
nature of the property, its connection with
the offence or offender, and the
circumstances in which it was acquired.
13.9. Learned counsel further relies on
Directorate of Enforcement v. Prakash
Industries Ltd., [2025 SCC OnLine Del
8243] (paragraphs 34 to 40), on the need to
examine direct and indirect connections
between property and criminal activity under
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the statutory definition of proceeds of crime.
Relying on Pavana Dibbur (paragraph 18),
she submits that the Petitioner’s claim that
he performed only stevedoring work does
not, by itself, exclude the application of the
PMLA. His alleged liability must be examined
with reference to the proceeds of crime and
his alleged involvement in the relevant
transactions.
13.10. She also relies on Dr. Manik Bhattacharya
v. Ramesh Malik and Others , [2022 SCC
OnLine SC 1465] (paragraph 7), and Surjeet
Kumar Bansal v. Central Bureau of
Investigation and Another , [2024:PHHC:
045226], decided on 04.04.2024 (paragraphs
15, 16 and 18), to submit that proceedings
under the PMLA must be considered
independently on their own facts and
material.
Scope of the inquiry
13.11. The question is whether the attachment
order is vitiated by non-application of mind
or by the absence of the required nexus
between the attached properties and the
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alleged proceeds of crime. The effect of the
dates on which the properties were acquired
has already been considered under Point No.
(ii) and need not be repeated.
13.12. In examining non-application of mind, this
Court must determine whether the officer
acted without material, relied on irrelevant
material, or failed to consider a matter that
the statute required him to consider. The fact
that the Petitioner disputes the officer’s
conclusion does not, by itself, establish non-
application of mind. In writ jurisdiction, this
Court examines the legality of the exercise of
power; it does not decide disputed factual
questions requiring evidence or substitute its
assessment for that of the statutory
authority.
Whether the purchase dates were overlooked
13.13. The Petitioner relies on the fact that the
properties were acquired before the alleged
scheduled offence. As held under Point No.
(ii), the date of acquisition does not, by itself,
exclude property from attachment as
property of equivalent value under Section
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2(1)(u) of the PMLA. Failure to treat that
date as conclusive, therefore, does not
establish non-application of mind.
13.14. The attachment order itself records the dates
and particulars of both properties. The
schedule refers to registered Document
No.4805/2004-05 dated 15.12.2004 and
Document No.5028/2008-09 dated
19.01.2009. The list of documents includes
the registered documents and encumbrance
certificates relating to both properties as
documents 30 and 31, and a debtor-based
search report concerning the Petitioner dated
26.10.2024 as document 35.
13.15. The order thus shows that the officer had the
relevant property records before him. It
treats the properties as being attached in lieu
of proceeds of crime, rather than as
properties directly acquired from those
proceeds. The record does not support the
contention that the purchase dates were
overlooked.
The nexus required for attachment of
equivalent-value property
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13.16. The Petitioner relies on Satish Motilal Bidri
(paragraph 17), which states that the
provision:
“cannot be used to enable the authorities to
proceed against properties that are unconnected
with any of the criminal activity in question”.
13.17. As explained under Point No. (ii), that
observation must be considered alongside
paragraph 172 of Vijay Madanlal
Choudhary v. Union of India , [(2023) 12
SCC 1], which recognises the statutory basis
for attaching property of equivalent value.
This Court has already addressed the
difference between those decisions under
Point No. (ii).
13.18. In Axis Bank (paragraph 171(iii)), the
relevant nexus is described as:
“its link or nexus with the offence (or offender) of
money-laundering.”
13.19. In the case of equivalent-value property, the
required connection is not necessarily that
the very funds used to purchase the property
can be traced to the criminal activity. The
authority must, however, establish the
statutory basis for treating the property as
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equivalent-value property connected with the
alleged proceeds of crime.
13.20. Here, the Respondent relies on the alleged
movement of funds from M/s. Manipal Global
to M/s. Hanuman Minerals and M/s. Phoenix
International, followed by a transfer of
Rs.17,00,000 to the account of M/s. S.S.
Maritime. The Petitioner is also accused No.3
in the charge sheet and is proceeded against
in the Section 8 proceedings. These
circumstances form the basis of the
Respondent’s asserted connection between
the Petitioner and the alleged proceeds.
Whether that connection is established on
the evidence must be determined in the
statutory proceedings.
Identification and tracing of the alleged
proceeds
13.21. The contention that the Respondent did not
identify the alleged proceeds of crime is not
borne out by the attachment order.
13.22. At paragraph 3.6, the order records that M/s.
Manipal Global paid an advance of
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Rs.2,30,00,112 in three instalments between
28.01.2012 and 02.02.2012. After
accounting for repayment of Rs.10,00,000,
the order identifies Rs.2,20,00,000 as the
alleged proceeds of crime.
13.23. Paragraph 3.4 traces the movement of the
funds. It records a cash withdrawal of
Rs.53,80,000, a transfer of Rs.96,00,000 to
M/s. Phoenix International, of which
Rs.32,55,000 was withdrawn in cash, and a
transfer of Rs.17,00,000 to the account of
M/s. S.S. Maritime. Paragraph 3.5(iii) records
the Respondent’s allegation that the
Petitioner received Rs.17,00,000 as
consideration for his alleged collusion in the
offence.
13.24. The Petitioner’s own account of the
transactions identifies payments of
Rs.10,00,000 on 30.01.2012 and
Rs.7,00,000 on 02.02.2012 from M/s.
Hanuman Minerals. He does not deny
receiving these amounts. The dispute
concerns their character and purpose, not
their identification.
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13.25. The Petitioner submits that he paid
Rs.25,00,000 to M/s. Hanuman Minerals on
09.02.2011 towards the purchase of iron ore,
which was not supplied, and that the
amounts received in January and February
2012 were part repayments of that advance.
He maintains that the balance remains
unpaid.
13.26. The Respondent’s case is that the
Rs.17,00,000 was consideration for the two
stock certificates allegedly issued by the
Petitioner to M/s. Manipal Global. The
attachment order records the Petitioner’s
statement dated 28.03.2024 at paragraph
3.3(i). As summarised in the order, the
Petitioner stated that he had paid
Rs.25,00,000 to Sri Girish Sangappa Jaggal
in 2010–11 for iron ore, which was neither
supplied nor refunded, and that, at Sri
Jaggal’s insistence, he issued two stock
certificates in January 2012 despite there
being no iron ore stock.
13.27. Paragraph 3.4(d) of the order also refers to
the certificates as having been issued in
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connection with recovery of the earlier
advance. The material therefore records the
Petitioner’s claim that money was owed to
him and that the certificates were issued
while the advance remained unpaid. The
central dispute is whether the Rs.17,00,000
represented repayment of the Petitioner’s
own money or consideration for his alleged
assistance in cheating M/s. Manipal Global.
13.28. That dispute cannot be resolved in writ
jurisdiction without evaluating the relevant
documents, bank records and other
evidence. This Court does not treat the
Petitioner’s statement as proof of guilt or
decide its admissibility or evidentiary weight.
It is relevant here only to show that the
officer had material concerning the
Petitioner’s explanation when forming his
belief.
Role of the Adjudicating Authority and the
burden of establishing the source of the
property
13.29. In Pavana Dibbur (paragraphs 19 and
31.4), as discussed under Point No. (ii), the
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question whether tainted money was used is
one to be determined on the evidence. A writ
petition is not the appropriate forum to
decide that disputed question in the first
instance.
13.30. Section 8(1), considered under Point No. (i),
requires the Adjudicating Authority to call
upon the person concerned to indicate the
source of income, earnings or assets from
which the attached property was acquired
and to produce the relevant evidence.
Section 24 provides:
“In any proceeding relating to proceeds of crime
under this Act,—
(a) in the case of a person charged with the
offence of money-laundering under section 3, the
Authority or Court shall, unless the contrary is
proved, presume that such proceeds of crime are
involved in money-laundering; and
(b) in the case of any other person the Authority
or Court, may presume that such proceeds of
crime are involved in money-laundering.”
13.31. The record does not clearly establish whether
the Petitioner has been charged under
Section 3 in Special C.C. No.53/2025. The
Respondent has stated that proceedings for
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offences under Sections 3 and 4 are pending.
It is, therefore, unnecessary to decide which
limb of Section 24 applies.
13.32. Axis Bank (paragraph 171(v)) and P.
Balamurugan (paragraph 15), which refers
to Section 24 as casting “the burden of proof on
the person accused on money laundering”,
recognise the relevance of the affected
person’s evidence concerning the source and
nature of the property. The Petitioner’s
explanation and supporting documents must
be considered in the statutory proceedings.
The present writ petition cannot be allowed
merely on the basis of his assertion that the
amounts were repayments, without resolving
the disputed facts through the prescribed
process.
Allegation of no crime, harassment and the
Petitioner’s role as a stevedore
13.33. The Petitioner’s submission that there was no
crime cannot be accepted as a basis to
invalidate the attachment at this stage, for
the reasons discussed under Point No. (ii),
including the effect of the registered offence,
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the charge sheet, Pavana Dibbur
(paragraph 18) and Vijay Madanlal
Choudhary (paragraph 109). Whether the
Petitioner is guilty of the alleged offences is
for the competent criminal court to
determine.
13.34. The allegation of harassment is unsupported
by specific material on record. Likewise,
whether the Petitioner merely performed
stevedoring work, or knowingly participated
in the transactions alleged by the
Respondent, is a disputed question of fact.
His asserted commercial role does not, by
itself, resolve whether the statutory
requirements of the PMLA are met.
13.35. The principles in Dr. Manik Bhattacharya
(paragraph 7) and Surjeet Kumar Bansal
(paragraphs 15, 16 and 18), considered
under Point No. (ii), require the PMLA
proceedings to be examined independently
on their own material. They do not establish
the Petitioner’s guilt; nor do they dispense
with the need for the Adjudicating Authority
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to assess the evidence relevant to the
attachment.
Whether the attachment rests on mere
suspicion
13.36. The Petitioner relies on Pavana Dibbur to
contend that the PMLA cannot be invoked
merely on suspicion or because the source of
property is questioned. This Court accepts
that the statutory requirements cannot be
satisfied by suspicion alone.
13.37. However, the attachment order does not rest
solely on the fact that the source of the
property is disputed. It refers to the
registered crime, the charge sheet, the ECIR,
statements recorded under Section 50, bank
records and the alleged trail of funds. The
Respondent also submits that the
Adjudicating Authority considered the
Petitioner’s reply to the Section 8 notice.
13.38. Whether this material ultimately proves the
Respondent’s allegations is a matter for the
statutory authority. Prakash Industries
(paragraphs 34 to 40), relied upon by the
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Respondent, supports examining the alleged
direct or indirect connection under the
statutory definition; it does not dispense with
the requirement to establish that connection
on the material available.
Opportunity to establish the Petitioner’s case
13.39. In P. Balamurugan (paragraph 14), the
Hon’ble Madras High Court observed that the
affected persons:
“has to participate in the enquiry once they
receive notice and substantiate their plea”.
13.40. The Respondent states that the Petitioner
filed a reply to the notice under Section 8.
Annexure-G calls upon him to disclose the
source of income, earnings or assets from
which the attached properties were acquired
and to produce supporting evidence. It also
requires him to show cause why the
attachment should not be confirmed. The
notice specified 07.01.2025 for the written
reply and 14.02.2025 for the Respondent’s
rejoinder.
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13.41. The Section 8 proceedings are the
appropriate forum for considering the
registered sale deeds relating to the
properties, the Petitioner’s explanation
concerning the earlier advance and the
nature of the Rs.17,00,000 received. If the
Petitioner considers that his reply or
supporting documents have not been
properly considered, the statutory appellate
remedies under Sections 26 and 42 remain
available, as discussed under Point No. (i).
13.42. The material on record does not establish
that the attachment order is vitiated by non-
application of mind. The order records the
acquisition particulars of the properties,
identifies the alleged proceeds of crime as
Rs.2,20,00,000, traces the alleged transfer of
Rs.17,00,000 to M/s. S.S. Maritime and lists
the material considered by the authorised
officer.
13.43. The date of acquisition does not, by itself,
invalidate attachment of property as
equivalent-value property. The Respondent
has set out a case connecting the Petitioner
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to the alleged proceeds. Whether that
connection is established, and whether the
Rs.17,00,000 received by the Petitioner was
repayment of his earlier advance or
consideration for the stock certificates, are
disputed questions of fact to be determined
in the statutory proceedings.
13.44. Accordingly, this Court answers Point No. (iv)
by holding that the impugned attachment is
not vitiated by non-application of mind or the
absence of a demonstrable nexus between
the properties attached and the alleged
proceeds of crime, the contention that the
amounts received from M/s. Hanuman
Minerals were part repayments of money
advanced by the Petitioner would have to
determined during enquiry. Petitioner’s right
to establish his case before the Adjudicating
Authority and pursue the statutory remedies
available under the PMLA remains
undisturbed.
14. Answer to Point No (v): Whether the
Petitioner is entitled to the relief sought for
quashing the impugned attachment order
dated 29.10.2024 and the consequential
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proceedings initiated under Section 8 of the
PMLA, 2002?
14.1. Sri D.R. Ravishankar, learned Senior Counsel
for the Petitioner, submits that the
provisional attachment order dated
29.10.2024 in ECIR/MGSZO/04/2022
(Annexure-A) is without jurisdiction because
the attached properties were acquired long
before the alleged scheduled offence. He
therefore seeks a writ of certiorari or any
other appropriate writ, order or direction
quashing the attachment order in respect of
the scheduled properties, along with such
other relief as this Court considers
appropriate in the interests of justice and
equity.
14.2. The Petitioner is also aggrieved by the show
cause notice dated 30.11.2024 issued under
Section 8 of the PMLA. However, the petition
does not contain a separate prayer to quash
that notice.
14.3. Ms. Anuparna Bordoloi, learned counsel for
the Respondent, submits that the writ
petition is premature and ought to be
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dismissed in view of the statutory remedies
available under the PMLA. Her submissions
concerning the alternative remedy, the
statutory safeguards and the authorities
relied upon have been considered under
Points (i) to (iv) and need not be repeated.
She further submits that interference at this
stage would obstruct the ongoing
adjudication and investigation.
14.4. The relief sought under Point (v) depends on
the findings under Points (i) to (iv). Those
issues need not be reconsidered. This Court
must determine the consequences of those
findings for the reliefs sought and whether
the impugned orders and proceedings can be
quashed in this writ petition.
Effect of the provisional attachment order
14.5. Prayer (i) seeks to quash the order dated
29.10.2024 passed under Section 5(1) of the
PMLA. Such an order is provisional and is
subject to the time limits prescribed by the
Act. Section 5(3) provides:
“Every order of attachment made under sub-
section (1) shall cease to have effect after the
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expiry of the period specified in that sub-section
or on the date of an order made under sub-
section (3) of section 8, whichever is earlier.”
14.6. The provisional attachment order remains in
force for a maximum period of 180 days,
unless it ceases earlier upon an order under
Section 8(3). The period may exclude the
time during which proceedings under Section
5 are stayed by the High Court, together with
the further period permitted by the third
proviso to Section 5(1) after the stay is
vacated.
14.7. The impugned order is dated 29.10.2024 and
has been stayed by this Court by an interim
order, which continues to remain in force.
Accordingly, the period during which the stay
operates must be excluded while computing
the 180-day period under the third proviso to
Section 5(1) of the PMLA, together with any
further period permitted by that proviso after
the stay is vacated. The provisional
attachment cannot, therefore, be held to
have lapsed merely on the basis of the
passage of 180 days from the date of the
order.
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Test for interference under Article 226
14.8. The authorities relied upon by the Petitioner
recognise that the High Court may interfere
in an appropriate case despite the availability
of an alternative remedy. In Jayamma v.
Directorate of Enforcement [W.P.
No.28108/2025, decided on 02.06.2026],
paragraph 42, the Hon’ble Co-ordinate Bench
held that a petition of this nature may be
entertained “though subject to fulfillment of
certain criteria”. The criteria discussed in that
decision concern the statutory requirements
under the Second Proviso to Section 5(1), as
explained in paragraph 30.
14.9. Similarly, in Satish Motilal Bidri v. Union
of India , [2024 SCC OnLine Ker 3410],
paragraph 18, the Hon’ble High Court of
Kerala observed that “ex facie illegal acts can
be interfered with under Article 226 of the
Constitution of India, notwithstanding the
existence of an alternative remedy ”.
14.10. The question, therefore, is whether the
impugned attachment suffers from a defect
going to the root of the authority’s
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jurisdiction or is ex facie illegal. A disputed
factual issue, or a question of law on which
competing views are possible, does not by
itself establish such a defect.
Application of the test to the grounds urged
14.11. The grounds urged by the Petitioner do not
establish a defect of that nature.
14.12. As held under Points (i) and (iii), the charge
sheet in the scheduled offence had been filed
before the impugned attachment order was
passed. The First Proviso to Section 5(1) was
satisfied. For the reasons already stated, the
Second Proviso was not required to sustain
the attachment in the circumstances of this
case. The decision in Jayamma is therefore
distinguishable.
14.13. The attachment of properties acquired in
2004 and 2008 is defended on the basis of
the value of the alleged proceeds of crime. In
Vijay Madanlal Choudhary v. Union of
India, [(2023) 12 SCC 1], paragraph 172,
the Hon’ble Supreme Court approved the
value-based approach recognised in Deputy
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Director, Directorate of Enforcement v.
Axis Bank and Others ,[ 2019:DHC:1887] ,
paragraph 171. The fact that the properties
were acquired before the alleged scheduled
offence, or that no property is held abroad,
does not by itself render the attachment ex
facie illegal. This also answers the Petitioner’s
reliance on strict construction of penal
provisions, as discussed under Point (ii).
14.14. The scheduled offence remains on record, a
charge sheet has been filed, and there is
nothing before this Court to show that the
proceedings have ended in discharge or
acquittal or that the scheduled offence has
been quashed. The condition discussed in
Pavana Dibbur v. Directorate of
Enforcement , [(2023) 15 SCC 91],
paragraph 18, for the PMLA proceedings to
fall away is therefore not established.
14.15. As held under Point (iii), the attachment
order records reasons to believe and refers to
the material relied upon. The Petitioner’s
explanation that the sums received from M/s.
Hanuman Minerals were part repayments,
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that he acted only as a stevedore, and that
the attached properties have no sufficient
nexus with the alleged proceeds of crime
raises disputed factual issues. Those issues
are required to be appropriately considered
by the Adjudicating Authority and, if
necessary, the Appellate Tribunal. For the
reasons stated under Point (i), the material
placed before this Court does not establish a
clear absence of foundational jurisdiction.
Prayer (i) cannot therefore be granted.
Whether part of the attachment can be set
aside
14.16. In Satish Motilal Bidri (paragraph 18), the
Hon’ble High Court of Kerala set aside the
attachment of immovable property while
leaving the attachment relating to bank
accounts to the statutory remedy, noting that
an effective alternative remedy was available
for the latter.
14.17. In the present case, both properties are
immovable properties acquired under
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registered sale deeds, and the same grounds
are urged against both. Since those grounds
do not justify setting aside either
attachment, there is no basis to grant partial
relief. The Petitioner has also not contended
that the value of the two properties exceeds
the value of the proceeds of crime alleged
against him. That issue was considered under
Point (ii), and no finding on it is called for
here.
Show cause notice dated 30.11.2024 and
consequential proceedings
14.18. The question also refers to the consequential
proceedings under Section 8 of the PMLA.
Although the Petitioner expresses grievance
against the show cause notice dated
30.11.2024, the petition does not contain a
separate prayer seeking its quashing. The
challenge to the notice is consequential upon
the challenge to the attachment. Since the
attachment has not been set aside, the
notice cannot be quashed on that basis
alone. No independent ground of illegality in
the notice has been established.
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14.19. The notice at Annexure-G, bearing O.C.
No.2482/2024 and dated 30.11.2024, was
issued by the Registrar of the Adjudicating
Authority at New Delhi. It names the
Petitioner as Defendant No.3, refers to the
complaint filed under Section 5(5), encloses
the reasons recorded under Section 8(1), and
calls upon the Petitioner to explain the source
of his income, earnings or assets used to
acquire the attached properties and to show
cause why the attachment should not be
confirmed. It required a reply by 07.01.2025
and bears an endorsement of receipt dated
09.12.2024.
14.20. The notice substantially follows the terms of
Section 8(1). The Petitioner has not alleged
that the time allowed caused prejudice, and
the Respondent submits that he filed a reply.
In these circumstances, this Court makes no
finding on whether the period allowed for
responding complied with Section 8(1).
14.21. If the attachment has since been confirmed,
as the Respondent submits, the appropriate
remedy against the confirmation order is an
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appeal under Section 26(1) of the PMLA.
Since neither the confirmation order nor its
date is before this Court, no finding is
recorded on its validity. The material before
this Court does not justify quashing the
proceedings under Section 8.
14.22. The Court recognises that confirmation of
attachment may have serious consequences
for the Petitioner, including the taking of
possession under Section 8(4). The Petitioner
is, however, at liberty to approach the
Appellate Tribunal and seek such interim
protection as may be available in law. This
Court expresses no opinion on the merits of
any such request.
Availability of an alternative remedy
14.23. The Petitioner is not left without a remedy.
Before the appropriate statutory forum, he
may raise all contentions, including those
based on the registered sale deeds of 2004
and 2008, his explanation for the amounts
received from M/s. Hanuman Minerals, and
his claim that he acted only as a stevedore.
The present decision does not determine
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those disputed matters on their merits. It
only holds that the grounds urged do not
warrant the relief sought in this writ petition.
14.24. The Petitioner has not established a ground
for quashing the provisional attachment
order dated 29.10.2024 or the consequential
proceedings under Section 8 of the PMLA in
this writ petition. The contentions concerning
the source of the amounts received, the
nexus between the properties and the
alleged proceeds of crime, and the validity of
any confirmation order remain subject to the
remedies available under the Act. Point No.
(v) is answered accordingly.
15. Answer to Point No (vi): What Order?
15.1. The answers to Points (i) to (v) lead to one
result. The writ petition is maintainable but is
not entertained, and no ground has been
found for quashing the attachment. In the
result, and for the reasons given above, this
Court passes the following order:
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ORDER
(i) The writ petition is dismissed.
(ii) All remedies available to the Petitioner under
the Prevention of Money Laundering Act,
2002 remain undisturbed.
(iii) The authorities shall decide the matter on its
own merits, without being influenced by any
observation in this judgment, which is
confined to the question whether this Court
should entertain the writ petition.
(iv) The Petitioner would be entitled to the
benefit of Section 14 of the Limitation Act for
time spent in prosecuting this Writ Petition.
(v) The benefit of the interim order which has
been in force from the year 2024 is extended
by a period of 30 days to enable the
Petitioner to approach the appropriate
authority and seek for interim relief. It is
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made clear that if the Petitioner were not to
approach the appropriate authority within 30
days of the receipt of a certified copy of this
Order, the above benefit would stand
automatically rescinded.
This Court has been assisted by Mr. Sourav, Law
Clerk, in the formulation of this Judgment.
Digitally Signed By:
SURAJ GOVINDA RAJ
29/10/2026, 13:43, Bengaluru
Verified
(SURAJ GOVINDARAJ)
JUDGE
PRS
List No.: 1 Sl No.: 66