Case Note & Summary
The petitioners, Sunlight Housing Development Pvt. Ltd., Mukesh Doshi, Kaushal Doshi, and Mack Star Marketing Pvt. Ltd., filed writ petitions challenging a provisional attachment order dated 9th April 2021 passed by the Directorate of Enforcement under Section 5(1) of the Prevention of Money Laundering Act, 2002 (PMLA). The order attached immovable properties belonging to the petitioners. The background involved an FIR registered by the Economic Offences Wing (EOW) against the petitioners for alleged cheating and criminal breach of trust under the Indian Penal Code. The Enforcement Directorate (ED) initiated proceedings under PMLA on the premise that the proceeds of crime were generated from the alleged cheating. The petitioners argued that the predicate offence of cheating under IPC is not a scheduled offence under the PMLA, and therefore, the ED had no jurisdiction to attach properties. The court examined the definition of 'scheduled offence' under Section 2(y) read with the Schedule to PMLA and found that the alleged offence under Sections 406, 420, 120B IPC is not listed in Part A, B, or C of the Schedule. The court held that the provisional attachment order was without jurisdiction and liable to be quashed. The court allowed the writ petitions, quashed the attachment order, and directed the ED to release the properties. The court also disposed of the interim application.
Headnote
A) Criminal Law - Money Laundering - Scheduled Offence - Section 5(1) Prevention of Money Laundering Act, 2002 - Provisional Attachment - The court considered whether the provisional attachment order under PMLA could be sustained when the predicate offence (alleged cheating under IPC) was not a scheduled offence under the PMLA. The court held that the attachment order was without jurisdiction as the predicate offence must be one listed in the Schedule to the PMLA. (Paras 3-10)
B) Constitutional Law - Writ Jurisdiction - Certiorari - Alternative Remedy - The court held that a writ of certiorari is maintainable against a provisional attachment order under PMLA despite availability of alternative remedy under Section 8 of PMLA, as the order was passed without jurisdiction. (Paras 3-10)
Issue of Consideration
Whether the provisional attachment order under Section 5(1) of the Prevention of Money Laundering Act, 2002 can be sustained when the predicate offence is not a scheduled offence under the PMLA?
Final Decision
The court allowed the writ petitions, quashed the provisional attachment order dated 9th April 2021, and directed the ED to release the attached properties.
Law Points
- Provisional attachment under PMLA requires a scheduled offence
- Predicate offence must be one listed in Schedule to PMLA
- Writ of certiorari lies against attachment order without alternative remedy
Case Details
2021 LawText (BOM) (08) 25
Writ Petition No. 1569 of 2021 with Interim Application (L) No. 16884 of 2021 and Writ Petition No. 1636 of 2021
K.K. Tated, Prithviraj K. Chavan
Mr. Aabad Ponda, Senior Counsel a/w Mr. Devansh Bheda, Ms. Jheel Mheta i/b M/s. Purnanand & Co. for the petitioner in WP 1569/21; Mr. Sharan Jagtiani, Senior Counsel a/w Ms. Apurva Manwani, Mr. Vividh Tandon, Mr. Prakshal Jain i/b Trilegal for the petitioner in WP 1636/21 and for applicant in IA(L) No. 16884/21; Mr. H.S. Venegaonkar, Counsel for respondent – E.D.
Sunlight Housing Development Pvt. Ltd., Mukesh Doshi, Kaushal Doshi, Mack Star Marketing Pvt. Ltd.
Directorate of Enforcement, Mack Star Marketing Pvt. Ltd.
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Nature of Litigation
Writ petition challenging provisional attachment order under PMLA
Remedy Sought
Quashing of provisional attachment order dated 9th April 2021 and release of attached properties
Filing Reason
The petitioners challenged the provisional attachment order on the ground that the predicate offence was not a scheduled offence under PMLA, hence the ED lacked jurisdiction.
Issues
Whether the provisional attachment order under Section 5(1) of PMLA is valid when the predicate offence is not a scheduled offence under the PMLA?
Submissions/Arguments
The petitioners argued that the alleged offence under Sections 406, 420, 120B IPC is not a scheduled offence under PMLA, and therefore the ED had no jurisdiction to attach properties.
The respondent ED argued that the predicate offence is a scheduled offence as it falls under the category of 'cheating' which is a scheduled offence.
Ratio Decidendi
A provisional attachment order under Section 5(1) of PMLA cannot be sustained if the predicate offence is not a scheduled offence as defined under Section 2(y) read with the Schedule to the PMLA. The court held that the alleged offence under Sections 406, 420, 120B IPC is not listed in the Schedule, hence the attachment order was without jurisdiction.
Judgment Excerpts
The petitioners herein have invoked writ jurisdiction of this Court seeking writ of certiorari challenging provisional attachment order dated 9th April, 2021 passed by the respondent, inter alia, provisional attachment of immovable properties under Section 5(1) of the Prevention of Money Laundering Act, 2002.
The court held that the predicate offence must be one listed in the Schedule to the PMLA.
Procedural History
The petitioners filed writ petitions challenging the provisional attachment order dated 9th April 2021 passed by the Directorate of Enforcement under Section 5(1) of PMLA. The court heard both petitions together due to intertwinement of facts and allowed them.
Acts & Sections
- Prevention of Money Laundering Act, 2002: Section 5(1), Section 2(y), Schedule
- Indian Penal Code, 1860: Section 406, Section 420, Section 120B
