PMLA: Provisional Attachment order Quashed by the HC will in

Published by Amit sharma on February 13, 2022

Background

The special leave petition takes exception to the order passed by the High Court remanding the matter to the concerned authority under the Prevention of Money Laundering Act, 2002, to pass a fresh order under Section 5(1), in light of the observations made in the impugned judgment.

Argument

The petitioner, contended that the High Court having acceded to the argument of the petitioner that the provisional attachment order served on the petitioner did not disclose proper reason, much less tangible reason and only reproduced the provisions of the subject Act, ought not to have relegated the petitioner before the concerned authority for recording of reasons.

The petitioner urged that the provisional attachment order triggers the adjudication proceedings and as the provisional attachment order is set aside by the High Court, no adjudication proceedings can be continued further against the petitioner.

Decision

The division bench of Justice A.M. Khanwilkar and Justice C.T. Ravikumar said that the petitioner has succeeded before the High Court, does not per se result in nullifying the adjudication proceedings, which, nevertheless, can proceed and need to be taken to its logical end by the Adjudicating Authority in accordance with law.

The court stated that there is no express provision in the Act, to indicate that once a complaint is filed before the Adjudicating Authority, the authorized officer is prevented from passing a provisional attachment order under Section 5(1) of the Act.

The court added that the power to provisionally attach tainted property is only of the authorized officer upon being satisfied about the existence of circumstances referred to in Section 5(1). The adjudication under Section 8 entails finally in confiscation of the tainted property or release thereof.

The court declined to interfere in the special leave petition and made it clear that rejection of the special leave petition will not come in the way of the petitioner in pursuing other appropriate remedy including to question the validity of fresh order of provisional attachment, if passed by the appropriate authority.

Case title: M/S Kaushalya Infrastructure Development Corporation limited v/s Union of India & Anr.

Citation: Special Leave to Appeal (Crl.) No(s). 565/2022

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