₹110-crore alleged liquor-scam trail: Chhattisgarh HC refuses to quash provisional attachment of Westin Goa

The petitioners challenged, under Article 226 of the Constitution, the Provisional Attachment Order dated 28.05.2026 issued by the Enforcement Directorate (“ED”) under Section 5(1) of the Prevention of Money Laundering Act, 2002 (“PMLA”), attaching Hotel Westin, Goa, to the extent of ₹110 crores.

The ED alleged that ₹110 crores in proceeds of crime generated through the Chhattisgarh liquor-scam had been delivered to Vijay Kumar Agrawal, the paternal uncle of petitioner No. 1, and thereafter used in the acquisition of the hotel.

Neither petitioner had been arrayed as an accused in the FIR, charge-sheets or prosecution complaints.

The ED relied on statements of Laxmi Narayan Bansal, Probir Kumar Sharma, Sameer Biyani, Vishal Saxena and petitioner No. 1, along with income-tax appraisal material and other investigative evidence.

The statutory complaint under Section 5(5) had already been filed before the Adjudicating Authority (“AA”).

Whether the writ petition under Article 226 was maintainable for challenging a provisional attachment order under Section 5(1) of the PMLA when the statutory adjudicatory process under Sections 5(5) and 8 had already commenced?

Whether the provisional attachment order was vitiated by absence of relevant material, failure to establish a money trail, non-application of mind, or failure to record valid “reasons to believe” under Section 5(1) of the PMLA?

Whether the Income Tax authorities’ acceptance of the source of the ₹60-crore cash payment precluded the ED from treating the property as proceeds of crime under the PMLA?

Whether the alleged invalid composition of the AA or its functioning through a single member retrospectively invalidated the provisional attachment order?

Whether the petitioners’ non-impleadment as accused in the predicate offence or the alleged absence of a direct connection with the liquor scam rendered the attachment without jurisdiction?

The Court applied Section 5(1) of the PMLA, under which an authorised officer may provisionally attach property upon recording reasons to believe, based on material in possession, that a person possesses proceeds of crime likely to be concealed, transferred or dealt with so as to frustrate confiscation proceedings.

Sections 5(5) and 8 provide a statutory mechanism for complaint, notice, hearing and adjudication by the AA, with appeals under Sections 26 and 42.

Judicial review under Article 226 examines the legality of the decision-making process, existence of relevant material and rational nexus, but not the sufficiency or ultimate evidentiary value of that material; disputed factual questions should ordinarily be decided by the statutory authority.

The Court relied on Whirlpool Corporation v. Registrar of Trade Marks for the recognised exceptions to the alternative-remedy rule, and on Vijay Madanlal Choudhary v. Union of India regarding the provisional nature of attachment and the safeguards under Sections 5 and 8.

The Court also applied the distinction between income-tax adjudication and PMLA proceedings, holding that acceptance of an explanation for fiscal purposes does not determine the criminal provenance of property under the PMLA.

The Court referred to J. Sekar v. Union of India , G. Gopalakrishnan v. Deputy Director , Mr. Sourabh v. Directorate of Enforcement and Tushar Sahu v. Deputy Director, Directorate of Enforcement in considering the competence of a single-member AA bench.

The Court held that the petition primarily challenged the sufficiency, credibility and probative value of the ED’s evidence rather than the existence of jurisdiction.

The PAO referred to a scheduled offence, the ECIR, statements of multiple witnesses, income-tax appraisal material, the alleged ₹110-crore payment to Vijay Kumar Agrawal, the hotel acquisition and petitioner No. 1’s alleged admission regarding the ₹60-crore cash payment.

Accordingly, relevant material and a rational basis for the recorded satisfaction existed, even though the ultimate strength of the evidence remained open to adjudication.

The Court declined to conduct a mini-trial concerning the alleged cash trail, the family settlement, the resignation of Vijay Kumar Agrawal, the genuineness of the petitioners’ business-source explanation or the effect of the income-tax orders.

It found that the Income Tax proceedings addressed whether the amount was unexplained for tax purposes, whereas the PMLA enquiry concerned whether the property was derived from criminal activity relating to a scheduled offence; therefore, the income-tax orders did not bar subsequent PMLA proceedings based on later-collected material.

The petitioners’ absence from the predicate-case charge-sheets did not by itself defeat attachment, since the proceedings under Sections 5 and 8 are property-oriented and do not require the property-holder to be an accused in the scheduled offence.

The alleged defect in the AA’s composition was held to be subsequent and severable: even if the AA proceedings were later found defective, that would not retrospectively invalidate the independent PAO issued under Section 5(1).

Since the ED’s complaint had already been filed before the AA and the petitioners had an opportunity to raise all factual and legal objections there, the Court declined to bypass the statutory mechanism.

It held that the PAO was not shown to be wholly without jurisdiction, mechanically issued, unsupported by relevant material, or invalid merely because the petitioners were not accused in the predicate offence, because the Income Tax authorities had accepted the cash explanation, or because the composition of the AA was disputed.

The Court clarified that it expressed no final opinion on the provenance of the ₹60 crores, the alleged receipt of ₹110 crores by Vijay Kumar Agrawal, the connection between those funds and the hotel, or the ultimate applicability of the relevant PMLA provisions; those matters remained open before the competent statutory authorities.

Pending applications were disposed of and there was no order as to costs.