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2022 (12) TMI 1381 - HC - Money LaunderingAttachment of Immovable properties - proceeds of crime - contention is that the Enforcement Directorate has no right to attach the properties of the petitioners and continue with the attachment proceedings in the teeth of the interim order granted by this Court - HELD THAT - In the event the submission of the learned counsel for the petitioners is accepted it would defeat the very power of attachment under sub-section (1) of Section 5 of the PMLA and if the Enforcement Directorate is permitted to move on with the attachment by seeking a confirmation order or proceeding to sell the attached properties it would defeat the very proceedings pending before this Court in the predicate offences and the judgment of the Apex Court in the case of VIJAY MADANLAL CHOUDARY 2022 (7) TMI 1316 - SUPREME COURT . Therefore to keep the right of the petitioners and the respondent/Enforcement Directorate alive I deem it appropriate to stall further proceedings in the impugned attachment order i.e. the provisional attachment order directing it not to be confirmed or it being taken any further however it would not mean that there can be release of the subjects of attachment in favour of the petitioners. If status quo has to be maintained in the proceedings under the IPC for the reason that there is an interim order; status quo has to be maintained in the proceedings of ECIR as well i.e. the impugned proceedings all of which would mean that they are mutual to each other. The writ petition is allowed in part.
Issues Involved:
1. Provisional attachment of immovable properties. 2. Validity of proceedings under the Prevention of Money Laundering Act (PMLA) in light of a stay order on predicate offences. 3. The interplay between proceedings under the PMLA and predicate IPC offences. Issue-wise Detailed Analysis: 1. Provisional Attachment of Immovable Properties: The petitioners challenged the provisional attachment order dated 11-08-2022, which attached their immovable properties worth Rs.300,43,93,475. This attachment was made under Section 5(1) of the PMLA, based on the alleged proceeds of crime equivalent to the attached amount. The petitioners contended that the Enforcement Directorate (ED) had no right to attach their properties while an interim stay on the predicate offences under the IPC was in place. The court examined the application of Section 5 of the PMLA, which allows for the provisional attachment of properties suspected to be involved in money laundering. The court found that the order of attachment was valid and in tune with the PMLA, indicating that the Adjudicating Authority had applied its mind appropriately. 2. Validity of Proceedings under the PMLA in Light of a Stay Order on Predicate Offences: The petitioners argued that since the predicate offences under the IPC were stayed by the court, the ED could not initiate or continue proceedings under the PMLA. The court noted that the foundation of the PMLA proceedings was the predicate offences alleged in Crime No.163 of 2020. The court referenced the Supreme Court's judgment in Vijay Madanlal Choudary, which established that if the accused in the predicate offence is acquitted, discharged, or the proceedings are quashed, the PMLA proceedings cannot be sustained. However, since the predicate offences were stayed and not quashed, the court held that the PMLA proceedings should also be stayed and not extinguished, maintaining the status quo until a final determination in the predicate offences. 3. The Interplay between Proceedings under the PMLA and Predicate IPC Offences: The court emphasized the interdependence between the predicate offences and the PMLA proceedings. It highlighted that the PMLA proceedings could not logically continue if the predicate offences were stayed. The court cited a Division Bench judgment of the Madras High Court in B. Shanmugam's case, which held that the ED should refrain from proceeding under the PMLA when the predicate offences are stayed. The court agreed with this view, stating that allowing the ED to proceed with attachment or other actions under the PMLA while the predicate offences were stayed would contradict the findings of the Supreme Court in Vijay Madanlal Choudary. The court concluded that the ED could not proceed further with the provisional attachment order until the final resolution of the predicate offences. Conclusion: The court partially allowed the writ petition, restraining the ED from proceeding further with the provisional attachment and other actions under the PMLA until the disposal of Writ Petition No.10258 of 2020 and Crime No.163 of 2020. The court maintained that the properties subject to attachment could not be released to the petitioners nor confirmed or sold by the ED during the pendency of the stay on the predicate offences. The court's decision was aimed at preserving the rights of both the petitioners and the ED, ensuring that the proceedings under the PMLA and IPC remained in sync.
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