Case Note & Summary
The judgment concerns six criminal writ petitions filed by various individuals and companies challenging provisional attachment orders passed by the Directorate of Enforcement under Section 5(1) of the Prevention of Money Laundering Act, 2002 (PMLA). The petitioners, including Ashok Sunderlal Daga, Govinddas Daga, Nandkishore Sarda, and others, were involved in businesses and had properties attached by the Enforcement Directorate on allegations of money laundering. The core issue was that the provisional attachment orders were not served on the petitioners, and the Adjudicating Authority confirmed the attachments without giving the petitioners an opportunity to be heard. The court examined the provisions of Section 5(1) and Section 8(3) of PMLA, emphasizing that the requirement of service of the order is mandatory. The court held that the failure to serve the order and the failure of the Adjudicating Authority to consider objections before confirmation violated principles of natural justice. Consequently, the court allowed the petitions, quashed the provisional attachment orders, and directed the release of the attached properties. The court also noted that the Enforcement Directorate must comply with the statutory requirements strictly.
Headnote
A) Prevention of Money Laundering Act, 2002 - Provisional Attachment Order - Section 5(1) - Service of Order - The provisional attachment order under Section 5(1) PMLA must be served on the person affected; failure to serve the order renders the attachment invalid as it violates principles of natural justice. The court held that the requirement of service is mandatory and not directory. (Paras 10-15) B) Prevention of Money Laundering Act, 2002 - Confirmation of Attachment - Section 8(3) - Adjudicating Authority - The Adjudicating Authority must consider the objections of the person affected before confirming the provisional attachment order under Section 8(3) PMLA. Failure to do so vitiates the confirmation order. (Paras 16-20) C) Prevention of Money Laundering Act, 2002 - Recording of Reasons - Section 5(1) - The Director or authorized officer must record reasons in writing before issuing a provisional attachment order, and a copy of the order must be furnished to the person affected. Non-compliance with this requirement makes the order unsustainable. (Paras 10-12)
Issue of Consideration
Whether the provisional attachment orders passed under Section 5(1) of the Prevention of Money Laundering Act, 2002 (PMLA) are valid when the orders were not served on the petitioners and when the Adjudicating Authority confirmed the orders without considering the petitioners' objections.
Final Decision
The court allowed the petitions, quashed the provisional attachment orders, and directed the release of the attached properties. The court held that the failure to serve the orders and the failure to consider objections before confirmation violated Section 5(1) and Section 8(3) of PMLA.
Law Points
- Provisional attachment order under Section 5(1) of PMLA must be served on the person affected
- failure to serve renders the order invalid
- Adjudicating Authority must consider objections before confirming attachment
- Section 5(1) requires recording of reasons in writing and communication to the person affected
- Section 8(3) requires the Adjudicating Authority to consider representation before confirming order
