Reason to believe recorded in Provisional Attachment Order does not violate PMLA or confidentiality requirements.

The petitioner, proprietor of M/s Fama Marketing, challenged a Provisional Attachment Order (PAO) dated 30.03.2026 issued by the Directorate of Enforcement (ED)

The PAO attached three plots of land in Guwahati on the grounds that they represented the "value" of Proceeds of Crime (PoC)

The case originated from FIR No. 182/2024 involving M/s Siddhi Vinayak Trade Merchants, which allegedly passed on fraudulent Input Tax Credit (ITC) worth ₹99.31 Crores through shell entities without supply of goods

Investigation revealed the petitioner’s firm availed ₹52.66 Lakhs of this fraudulent ITC from two shell entities

The petitioner contended that the attached properties were purchased in 2022, prior to the alleged criminal activity (2023-2024), and that recording "reasons to believe" within the PAO itself violated confidentiality requirements

The court applied Section 5(1) regarding provisional attachment and the "Second Proviso" for emergency attachment

It relied on Section 2(1)(u) of the PMLA, which defines "Proceeds of Crime" to include the "value of any such property"

The court followed Vijay Madanlal Choudhary v. Union of India, establishing that the PMLA is an independent offence and attachment can extend to property of equivalent value if PoC is untraceable

Regarding "reason to believe," the court distinguished S. Narayanappa v. CIT and applied Arvind Kejriwal v. ED and Aslam Mohammad Merchant v. Competent Authority, which emphasize transparency and the furnishing of reasons to the affected person to satisfy natural justice

The court held that while alternative remedies exist under Section 8, a writ is maintainable if the challenge goes to the root of the authority’s jurisdiction

On the merits, the court found that the ED had sufficient material—including GST returns and Section 50 statements—to link the petitioner to a ₹52.66 Lakh portion of the ₹99.31 Crore PoC

Crucially, the court rejected the "date of acquisition" argument, holding that under Section 2(1)(u), if the actual PoC is integrated into the economy and unavailable, the ED can attach any property of the person of equivalent value, regardless of when it was purchased

Finally, the court dismissed the petitioner’s "confidentiality" argument, reasoning that recording reasons within the PAO enhances transparency and allows the noticee to defend their rights, aligning with modern jurisprudence on procedural fairness

It held that the ED is authorized to attach properties acquired prior to the crime as "value" equivalent to PoC

However, noticing a conflict with a coordinate bench decision in Aftabuddin Ahmed v. ED (which held "reasons to believe" must remain confidential), the court referred the legal question to a Larger Bench

The matter was placed before the Hon’ble Chief Justice for constitution of a Larger Bench