Full Judgment Text
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®
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
ND
DATED THIS THE 2 DAY OF JUNE, 2026
BEFORE
THE HON'BLE MR. JUSTICE S SUNIL DUTT YADAV
WRIT PETITION NO. 28108 OF 2025 (GM-RES)
BETWEEN:
1. SMT. JAYAMMA
W/O. LATE SRI. KALEGOWDA,
AGED ABOUT 70 YEARS,
TH
R/A NO. 2521, 5 CROSS,
K G KOPPAL,
MYSORE - 570 014.
… PETITIONER
(BY SRI. JAYSHAM JAYASIMHA RAO., ADVOCATE)
AND:
1. THE DIRECTORATE OF ENFORCEMENT
CONSTITUTED UNDER THE PMLA, 2002,
REPRESENTED BY ITS DEPUTY DIRECTOR,
RD
3 FLOOR, B BLOCK, BMTC,
SHANTINAGAR, TTMC, K H ROAD,
BENGALURU - 560 027.
… RESPONDENT
MOHANKUMAR
B SHELAR
Digitally signed by
MOHANKUMAR B SHELAR
Location: High Court of
Karnataka, Dharwad Bench
Date: 2026.06.02 17:44:16
+0530
(BY SRI. ARAVIND KAMAT, ADDL. SOLICITOR GENERAL FOR
SRI. MADHUKAR M DESHPANDE, ADVOCATE)
THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF
THE CONSTITUTION OF INDIA, PRAYING TO A. CALL FOR
RECORDS IN O.C.NO.301/2025 ON THE FILE OF THE HON'BLE
ADJUDICATING AUTHORITY (PREVENTION OF MONEY
LAUNDERING ACT, 2002) AT NEW DELHI AND ETC.
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THIS WRIT PETITION HAVING BEEN HEARD AND
RESERVED ON 05.03.2026 AND COMING ON FOR
PRONOUNCEMENT OF ORDERS AT DHARWAD BENCH THROUGH
VIDEO CONFERENCING, THIS DAY, THE COURT MADE THE
FOLLOWING:
CORAM: HON'BLE MR. JUSTICE S SUNIL DUTT YADAV
CAV ORDER
The present petition has been filed calling in question
validity of the provisional attachment order No.14/2025 in
ECIR No.ECIR/BGZO/25/2024 dated 09.06.2025, which is
the order of the respondent - Directorate of Enforcement,
exercising powers under the provisions of the Prevention
of Money Laundering Act, 2002 (hereinafter referred to as
"PMLA").
2. The factual background to appreciate the legal
controversy are as follows:
3. Sri.Bandigowda and Sri.Girigowda were the
owners of land in Sy.No.13 of Malalavadi Village and after
their demise, the petitioner and her daughter claim right
by inheritance.
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4. It is alleged by the petitioner that lands
belonging to the petitioner were utilised for formation of
Jayanagar Layout without acquisition. It is further
submitted that the petitioner had represented Mysore
Urban Development Authority (MUDA) to allot sites in lieu
of compensation and considering such request MUDA is
stated to have executed the Sale Deeds with respect to
the sites.
5. It is also made out from the facts that the
petitioner and her daughter had approached the Revenue
Authorities requesting for effecting of Katha on the basis
of Sale Deeds executed by MUDA. However, the said
request had been declined.
6. Meanwhile, Sri. Snehamayi Krishna had filed a
complaint before the Court of LXXXI Additional City Civil
and Sessions Judge (CCH-82) vide PCR No.28/2024. The
Special Court had directed the Karnataka Lokayukta Police
to register a case, investigate and file a report as
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contemplated under Section 173 of Cr.P.C. Pursuant to
such direction, the Lokayukta Police had registered FIR
bearing Crime No.11/2024 for the alleged offences
punishable under Section 120-B, 166, 403, 406, 420, 426,
465, 468, 340 and 351 of IPC r/w Section 9 and 13 of the
Prevention of Corruption Act, 1988 ("P.C. Act", for short)
and under Section 3, 53 and 54 of the Prohibition of
Benami Property Transactions Act, 1988 and Section 3 and
4 of the Karnataka Land Grabbing Prohibition Act, 2011 on
27.09.2024.
7. Subsequently, the respondent registered a
complaint bearing No.ECIR/BGZO/25/2024 on 01.10.2024.
8. The Lokayukta Police after investigating into the
allegations had filed a Final Report ('B' Report) before the
Special Court insofar as accused nos.1 to 4 in the
proceedings relating to the predicate offence which report
was accepted by the Special Court on 28.01.2026. It is a
matter of record that as on the date of the provisional
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order of attachment further investigation as regards other
accused remained inconclusive.
9. The complaint filed by Sri Snehamayi Krishna is
on the premise that accused no.2 was allotted 14 sites by
MUDA under the undue influence of accused no.1 and in
connivance with accused No.3 and accused no.4 (reference
to the accused is in the context of proceedings before the
Special Court).
10. While the Lokayukta Police registered FIR
bearing Crime No.11/2024 for the offences as detailed at
para-6 as regards the predicate offences, while the
respondent registered ECIR/BGZO/25/2024 on 01.10.2024
for the offences punishable under Sections 120-B and 420
of IPC and Section 9 and 13 of the P.C. Act, 1988.
11. Though the petitioner is not arraigned as an
accused, however the sites allotted to the petitioner is
stated to constitute proceeds of crime, which have been
attached through the provisional order of attachment.
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12. It is also borne out from the records that the
Writ Petition was filed on 09.09.2025 challenging the order
of provisional attachment dated 09.06.2025. On the basis
of provisional attachment order, it is further stated that
complaint came to be filed under the provisions of the
PMLA on 07.07.2025.
13. It is made out from the facts that the
respondent pursuant to the provisional attachment order
has registered original complaint No.301/2025 before the
Adjudicating Authority. It is brought to the notice of this
Court that the Adjudicating Authority has passed its order
on 26.11.2025 confirming the order of provisional
attachment.
C ONTENTIONS OF THE P ETITIONER
14. The petitioner has assailed the order of
provisional attachment on the following grounds:
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15. The Director or Officer not below the rank of
Deputy Director has not applied his mind nor recorded the
essential findings as contemplated under the second
proviso to Section 5(1) of PMLA before passing an order of
provisional attachment.
16. Except for reproducing the language in the
statutory provision, no grounds were made out for passing
of provisional order of attachment that:
(i) The imminent urgency for attachment of the
properties was not made out.
(ii) Absence of material that had formed the basis
to believe that there was such urgency.
(iii) The reasons to believe as recorded in the order
of the provisional attachment is common as
regards all properties as well as all the accused
in an "omnibus and cyclostyled manner."
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17. The petitioner had placed reliance on the
judgment of the Apex Court in the case of Radha Krishan
1
Industries v. State of Himachal Pradesh and Others
wherein, the Apex Court while dealing with Section 83 of
the Himachal Pradesh Goods and Services Tax Act, 2017
had observed that, it is not mere expediency but necessity
to pass an order of provisional attachment to protect
interest of Government Revenue, that required
demonstration.
18. Reliance is also placed on the judgment of
Guwahati High Court in the case of Aftabuddin Ahmed
2
and Another v. Enforcement Directorate and Others
to contend that mere reiteration of the language of the
statute without recording the basis and on what material
belief was formed and reduced into writing, would not
amount to compliance with the procedural requirements
under Section 5(1) of the Act.
1
(2021) 6 SCC 771
2
2024 SCC Online Gau 401
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ONTENTIONS OF THE ESPONDENT
C R .-
19. The Writ Petition is not maintainable to assail
the impugned order in light of the provisions available for
legal redressal in terms of the statutory scheme of PMLA.
20. The statutory process must be allowed to
progress without interference by pre-judging the issue.
21. The order of the Adjudicating Authority has
already been passed confirming the order of the
provisional attachment against which appellate remedy is
open to be invoked.
22. The non-attachment would result in transfer
and dissipation of proceeds of crime.
23. The Court cannot sit in judgment on formation
of opinion regarding "reasons to believe". No exceptional
circumstances or mala fides are made out justifying the
intervention.
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24. There is substantial evidence to demonstrate
that the sites constituted proceeds of crime and there has
been strict adherence to procedural requirements making
out no grounds for intervention through judicial review.
ANALYSIS:
25. At the outset, the respondent has contended
that the Writ Petition is not maintainable in light of the
statutory scheme of redressal provided under the PMLA
and has drawn specific attention to the order of the
Adjudicating Authority passed on 26.11.2025 confirming
the order of provisional attachment after following the
procedure contemplated under Section 8 of PMLA. It is
further contended that, as against such order of the
Adjudicating Authority, the aggrieved person has further
opportunity of redressal by filing an appeal under Section
26 of PMLA before the Appellate Authority.
26. Insofar as such contention is concerned, the
position of law appears to be well settled and the Apex
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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
3
Others (Whirlpool) infra .
27. The Apex Court in Godrej Sara Lee Ltd. v.
Excise and Taxation Officer-cum-Assessing Authority
4
and Others 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
3
(1998) 8 SCC 1
4
(2023) SCC Online SC 95
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reiterated the observations in the case of
Whirlpool
(supra) as well.
28. The observations made in Whirlpool (supra)
at paras-5 and 6 are of relevance and extracted below:
"5. A little after the dawn of the Constitution,
a Constitution Bench of this Court in its decision
reported in [1958] SCR 595 (State of Uttar Pradesh
v. Mohammad Nooh) had the occasion to observe
as follows :
"10. In the next place it must be borne in
mind that there is no rule, with regard to certiorari
as there is with mandamus, that it will lie only
where there is no other equally effective remedy. It
is well established that, provided the requisite
grounds exist, certiorari will lie although a right of
appeal has been conferred by statute, (Halsbury's
Laws of England, 3rd Edn., Vol. 11, p. 130 and the
cases cited there). The fact that the aggrieved
party has another and adequate remedy may be
taken into consideration by the superior court in
arriving at a conclusion as to whether it should, in
exercise of its discretion, issue a writ of certiorari to
quash the proceedings and decisions of inferior
courts subordinate to it and ordinarily the superior
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court will decline to interfere until the aggrieved
party has exhausted his other statutory remedies, if
any. But this rule requiring the exhaustion of
statutory remedies before the writ will be granted is
a rule of policy, convenience and discretion rather
than a rule of law and instances are numerous
where a writ of certiorari has been issued in spite of
the fact that the aggrieved party had other
adequate legal remedies.. . ."
6. At the end of the last century, this court in
paragraph 15 of its decision reported in (1998) 8
SCC 1 (Whirlpool Corporation v. Registrar of Trade
Marks, Mumbai) carved out the exceptions on the
existence whereof a writ court would be justified in
entertaining a writ petition despite the party
approaching it not having availed the alternative
remedy provided by the statute. The same read as
under :
(i) where the writ petition seeks enforcement of
any of the fundamental rights ;
(ii) where there is violation of principles of
natural justice ;
(iii) where the order or the proceedings are
wholly without jurisdiction ; or
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(iv) where the vires of an Act is challenged."
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 proviso to Section 5
before passing of an order of provisional attachment.
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32. The question of relegating an aggrieved person
to avail of statutory remedy would be only when the
statutory remedy provides for a forum for redressal of
grievance.
33. Under the scheme of PMLA, an order of
provisional attachment when passed under Section 5
would be followed by forwarding of a copy along with
material in possession of the competent Officer to the
Adjudicating Authority in terms of Section 5(2).
34. Subsequently, a complaint will have to be filed
before the Adjudicating Authority in terms of Section 5(5)
of PMLA and finally the process of adjudication is resorted
and under Section 8 an order is passed by the
Adjudicating Authority. It would be necessary to take note
of the procedure and power under Section 8 of PMLA.
35. Section 8 of PMLA reads as follows:
"8. Adjudication .—(1) On receipt of a
complaint under sub-section (5) of section 5, or
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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],
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] 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.
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(2) The Adjudicating Authority shall, after—
(a) considering the reply, if any, to the notice
issued under sub-section (1);
(b) hearing the aggrieved person and the
Director or any other officer authorised by him in
this behalf; and
(c) taking into account all relevant materials
placed on record before him, by an order, record a
finding whether all or any of the properties referred
to in the notice issued under subsection (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 subsection (1) of section 5 or retention
of property or 3[record seized or frozen under
section 17 or section 18 and record a finding to that
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effect, whereupon such attachment or retention or
freezing of the seized or frozen property] or record
shall—
(a) continue during [investigation for a period
not exceeding 2[three hundred and sixty-five days]
or] the pendency of the proceedings relating to any
[offence under this Act before a court or under the
corresponding law of any other country, before the
competent court of criminal jurisdiction outside
India, as the case may be; and]
[(b) become final after an order of
confiscation is passed under sub-section (5) or sub-
section (7) of section 8 or section 58B or sub-
section (2A) of section 60 by the [Special Court];]
[Explanation.—For the purposes of computing
the period of three hundred and sixty-five days
under clause (a), the period during which the
investigation is stayed by any court under any law
for the time being in force shall be excluded.]
(4) Where the provisional order of attachment
made under sub-section (1) of section 5 has been
confirmed under sub-section (3), the Director or
any other officer authorised by him in this behalf
shall forthwith take the [possession of the property
attached under section 5 or frozen under sub-
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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.]
[(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 moneylaundering 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
moneylaundering 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
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an application moved by the Director or a person
claiming to be entitled to possession of a property
in respect of which an order has been passed under
sub-section (3) of section 8, pass appropriate
orders regarding confiscation or release of the
property, as the case may be, involved in the
offence of money-laundering after having regard to
the material before it.]
[(8) Where a property stands confiscated to
the Central Government under sub-section (5), the
Special Court, in such manner as may be
prescribed, may also direct the Central Government
to restore such confiscated property or part thereof
of a claimant with a legitimate interest in the
property, who may have suffered a quantifiable loss
as a result of the offence of money laundering:
Provided that the Special Court shall not
consider such claim unless it is satisfied that the
claimant has acted in good faith and has suffered
the loss despite having taken all reasonable
precautions and is not involved in the offence of
money laundering:]
[Provided further that the Special Court may,
if it thinks fit, consider the claim of the claimant for
the purposes of restoration of such properties
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during the trial of the case in such manner as may
be prescribed.]
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.
37. The Adjudicating Authority may under
Section 8(2) after perusal of reply is theoretically vested
with the power to drop the proceedings or to proceed
under Section 8(3) to confirm the attachment of property.
Needless to state, the Adjudicating Authority is required to
record a finding as to whether the properties are involved
in money laundering.
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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
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of Section 5, the breach of which are not aspects that
could be a subject matter of proceedings under Section 8.
Accordingly, 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.
43. The respondent has relied on the order passed
in JSW Steel Ltd. v. Deputy Director, Directorate of
5
Enforcement etc. requesting the court to relegate the
5
(2025) SCC Online SC 2150
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petitioner to avail of remedy under proceedings prescribed
under the statute. However, the observations made by
the Apex Court regarding the requirement for the parties
to avail of the statutory remedy as the Act provided for a
“…..comprehensive and self contained adjudicatory
mechanism.” The observations must be looked at in the
context of the facts. The Apex Court was considering a
factual and legal matrix where there was a challenge to
the proceedings emanating from the ECIR and the taking
of cognizance of offences. However, in the present case
the challenge is to the jurisdiction to pass an order under
second proviso to Section 5 without following the
procedure. Such fact of the order being passed under the
second proviso to Section 5 which requires certain
procedural safeguards to be adhered to and such
non-adherence being challenged would present a factual
matrix different from that before the Apex Court.
Accordingly, the judgment of the Apex Court cannot be
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made applicable to the case on hand in light the discussion
made.
44. The respondent has relied on the judgment in
Dyani Antony Paul and Others v. Union of India,
Department of Directorate of Enforcement and
6
Another to contend that the Court ought not to entertain
the writ petition, as the PMLA provides for a
comprehensive scheme for redressal of grievance.
However, in Dyani Antony Paul (supra), the
Co-ordinate Bench though recognizes the statutory
scheme, however, has proceeded to entertain the writ
petition observing that grounds urged touch upon the
jurisdiction of the Authority to adjudicate and the
procedural aspects alleging violation of principles of
natural justice. The observations at para-161 would be
relevant and the same is extracted herein below:-
"161. In the writ petitions filed at Sl. No. I, II,
III, IV, VI, VIII and IX, the challenge is not only to
6
2020 SCC OnLine Kar 4995
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the provisional order of attachment but also to the
confirmation order of attachment, notice issued
seeking information from the Banks and financial
institutions, consequential notices issued to comply
with the confirmation order of attachment,
consequential notice for handing over possession of
the properties issued, summons issued under
Section 50(3) and the remand application filed
before the Special Judge of PMLA Court and as such
on the short ground of the petitioners having not
availed the remedy provided under Section 8, 26
and 42 of the PML Act, the writ petitions are liable to
be dismissed. However, this court desist from doing
so for the reason, the grounds urged in some of the
writ petitions would touch upon the very jurisdiction
of the authority to adjudicate and the procedural
aspects alleging violation of principles of natural
justice being involved and as such this court has
proceeded to adjudicate the writ petitions on merits
also. Hence, in the facts obtained in the present
case Point No. (v) is answered in the negative."
(emphasis supplied)
45. Accordingly, noticing that the contention
regarding non-following of procedure prescribed under
Second Proviso to Section 5 of PMLA being a jurisdictional
issue, the entertainment of the writ petition would be on
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the same lines as made out in
Dyani Antony Paul
(supra).
46. The challenge in the present writ petition is as
regards the validity of the provisional attachment order
dated 09.06.2025. The petitioner has specifically assailed
the exercise of power vested in the Authority in terms of
Second Proviso to Section 5 (1) of the PMLA.
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
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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:
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
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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:-
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(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 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
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indicated the continuance of investigation and pending
such investigation power under the Second Proviso to
Section 5 of PMLA was sought to be initiated.
51. The Second Proviso to Section 5 confers power
and contains a non obstante clause and provides that
notwithstanding the First Proviso, the competent Officer
could attach property provided such officer has reason to
believe on the basis of material in his possession that if
such property involved in money laundering is not
attached immediately the non-attachment of property is
likely to frustrate under the PMLA.
52. Insofar as the contention that the Authority has
failed to adhere to the statutory mandate provided under
the Second Proviso to Section 5, the matter requires
consideration.
53. As noticed above, there must be a written
record of reason to believe on the basis of material that, if
the property involved in money laundering is not attached,
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then such non-attachment of the property is likely to
frustrate proceedings under the PMLA.
54. A detailed perusal of the order of provisional
attachment would reveal that the Authority no doubt has
evaluated the evidence relating to commission of offence
of money laundering, however, insofar as the requirement
under the Second Proviso to Section 5(1) of PMLA as
referred to supra, the finding recorded at para-9 of the
provisional attachment order does not satisfy the legal
requirement.
55. The observations made at para-9 relating to the
provisional attachment reads as follows:
"9. I have reasons to believe that the
proceeds of crime involved in the subject case as
discussed in this PAO, if the said identified
immovable properties are not attached under the
Act immediately, the non-attachment of the
properties are likely to frustrate any further
proceedings under the Act. In addition, if the
Proceeds of Crime which are involved in Money
Laundering are not attached, I have reasons to
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believe that such Proceeds of Crime would further
be laundered; that it will bear effect on the
financial system and can break the economic
backbone of the country and which will derail the
Indian Economic Systems badly."
56. Except para-9, there is no recording of any
finding that the competent Officer has reason to believe on
the basis of material in his possession that if property
involved in money laundering is not attached immediately,
such non-attachment would be likely to frustrate the
proceedings under the PMLA.
57. It is necessary that where the statute provides
for exercise of power in a particular manner, power must
be exercised strictly in accordance with such procedure or
not at all. Such principle has consistently been followed
and the observations of the Apex Court in Chief
Information Commissioner and Another v. State of
7
Manipur and Another reads as follows:
7
(2011) 15 SCC 1
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"40. It is well known that when a procedure is
laid down statutorily and there is no challenge to the
said statutory procedure the Court should not, in the
name of interpretation, lay down a procedure which
is contrary to the express statutory provision. It is a
time-honoured principle as early as from the decision
8
in Taylor v. Taylor that where a statute provides for
something to be done in a particular manner it can
be done in that manner alone and all other modes of
performance are necessarily forbidden. This principle
has been followed by the Judicial Committee of the
9
Privy Council in Nazir Ahmad v. Emperor and also by
10
this Court in Deep Chand v. State of Rajasthan ,
AIR at para 9 and also in State of U.P. v. Singhara
11
Singh reported in AIR at para 8."
58. There must be adherence to the procedure
prescribed under the Second Proviso to Section 5 of PMLA.
Any deviation from the procedure prescribed would vitiate
the order of the provisional attachment without the
petitioner having to prove any further.
8
(1875) 1 Ch D 426 (CA)
9
(1935-36) 63 IA 372 : AIR 1936 PC 253 (2)
10
AIR 1961 SC 1527 : (1961) 2 Cri LJ 705
11
AIR 1964 SC 358 : (1964) 1 Cri LJ 263 (2)
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59. In the guise of adherence to law mere
copy-paste of statutory language to indicate compliance
would not be sufficient. There must be application of mind
to the particular facts to demonstrate that material in
possession would indicate the failure of passing an order
for provisional attachment would likely frustrate the
proceedings under the PMLA.
60. In the present case, the proceeds of crime is
stated to be the allotment of sites which was made in lieu
of cash compensation in light of utilization of petitioner's
property by the authority without acquisition.
61. The petitioner has filed a memo dated
20.11.2025 and has enclosed copy of the memorandum of
writ petition in W.P.No.36147/2024 and would contend
that the katha of the sites have still not been effected
pursuant to the Sale Deeds executed.
62. A perusal of the petition enclosed would
indicate that the petitioner had sought for a direction to
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the MUDA for effecting transfer of katha with respect to
sites transferred vide Sale Deeds dated 14.06.2024. In
terms of the oral submission made, the said writ petition is
still pending finalisation. If that were to be so, the
question of transferring the proceeds of crime and layering
such proceeds would not arise.
63. Any immovable property in the absence of
mutation entries (katha) cannot be dealt with by way of
transfer. Accordingly, the apprehension of the competent
Officer that if provisional attachment is not resorted to,
there would be a likelihood of frustrating the proceedings
is not based on any objective material having a nexus with
frustration of proceedings under the PMLA.
64. It is necessary to note that the material in
possession of the competent Officer must be the basis for
the reason to believe the necessity of attachment which if
not resorted to would be likely to frustrate the
proceedings.
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65. The discussion in the provisional order of
attachment relates to material that would throw light on
probable commission of offence of money laundering
which material cannot constitute material for reason to
believe as regards the requirement under
Second Proviso
to Section 5 of PMLA.
66. There is clear distinction between the material
that would indicate prima facie commission of offence of
money laundering on one hand vis-à-vis the material that
would enable the competent Authority to entertain reason
to believe that the material in possession would
necessitate attachment of property involved in money
laundering which if not attached would frustrate the
proceedings.
67. Further, it is also necessary to notice that the
Sale Deeds executed in favour of the petitioner by MUDA
relate to the period of 14.06.2024 and till date, the
property has not been dealt with. As rightly pointed out
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by the learned counsel for petitioner, there was no
possibility of dealing with the property so as to create third
party rights in light of absence of katha and it could be
stated that there was no possibility of dealing with the
property so as to frustrate the proceedings under the
PMLA.
68. No doubt, the respondent would submit that the
Adjudicating Authority has passed an order on 26.11.2025
which would render the present proceedings infructuous.
69. However, it is necessary to note that this court
by order dated 31.10.2025 had observed as follows:
"Needles to state, any proceedings taken
would be subject to the outcome of the
present petition."
70. Such order was passed at the stage of
arguments of the petitioner having been concluded and
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the matter was posted for arguments of respondent as is
evidenced from the order passed on 25.10.2025.
71. If the stage of the proceedings had reached an
advanced stage of consideration and in such context, order
of 31.10.2025 passed by this court, ought to be construed
as the court having intended that any order passed
pursuant to the impugned order of provisional attachment
would be subject to the outcome of the present petition.
72. If that were to be so, it cannot now be
contended that the order of adjudication passed on
26.11.2025 would have the effect of eclipsing the present
proceedings.
73. It is also settled position that an order passed
during the earlier stage of proceedings, if it forms the
basis for subsequent orders to be passed and proceedings
to be taken and it is found that the earlier order is legally
defective, the corollary would be that the subsequent
proceedings would also fail.
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74. Accordingly, the order of provisional attachment
at Annexure-'K' dated 09.06.2025 is set aside and
consequently all further proceedings pursuant to such
order passed as regards the rights of the petitioner would
stand set aside, while reserving liberty to the Authority to
initiate fresh proceedings, if circumstances under the
Second Proviso to Section 5(1) of PMLA are made out and
the circumstances warrant initiating such proceedings as is
permissible in law.
75. Accordingly, the petition is disposed of.
Sd/-
(S SUNIL DUTT YADAV)
JUDGE
NP/ VGR
CT:MHP
LIST NO.: 19 SL NO.: 2