2023 (10) TMI 66 - HC - Money Laundering

Maintainability of petition - availability of effective remedy of appeal - Money Laundering - proceeds of crime - provisional attachment order - freezing the movable properties - proceeds of crime were allegedly generated in a partnership firm called 'M/s M.J Associates' in which the first petitioner held only 51% - HELD THAT - Under the scheme of the PMLA, an independent authority is constituted as the first tier to consider the claim of an aggrieved, regarding the correctness of the provisional attachment. The second tier, in the form of the Appellate Tribunal, is also authorised to consider the correctness of the order of attachment on facts as well. Significantly, even the High Court as an Appellate Court can consider, even on facts, the validity or otherwise of an order of provisional attachment and its consequent orders. When such statutory remedies are provided, including an appellate power on facts as well to the High Court, exercising the power under Article 226 of the Constitution of India would be akin to usurping the power of the Appellate Court. Such a procedure is not legally proper or justifiable, unless there are exceptional reasons to do so. The exceptional reason warranting an interference by this Court under Article 226 of the Constitution of India according to Sri. Rohatgi, the learned Senior Counsel is that the attachment could have been effected only to the extent of the percentage of share of the first petitioner in the proceeds of the crime quantified, and any excess is ex-facie a non est. Prima facie the said contention is not tenable - if the proceeds of the crime have emerged or flowed from the business of the firm, then, prima facie, all partners may have joint and several liabilities. Of course, this is an issue which requires detailed deliberation on facts as well as on law. Suffice to state, no exceptional circumstances are made out for an interference under Article 226 of the Constitution of India. Reckoning the nature of conclusion being arrived at in this writ petition, the question on the liability of the first petitioner for the entire Rs. 910.29 crores is left open for consideration. The objection of the respondents regarding the maintainability of the writ petition is upheld. The writ petition is therefore held to be not maintainable in view of the alternative remedy available - Petition dismissed.

Summary

Issues Involved:
1. Provisional attachment orders under the Prevention of Money Laundering Act (PMLA).
2. Authority and jurisdiction of the Enforcement Directorate (ED) regarding attachment orders.
3. Maintainability of the writ petition in light of alternative statutory remedies.

Issue-Wise Summary:

1. Provisional Attachment Orders under PMLA:
The petitioners challenged five different provisional attachment orders under the PMLA, specifically against the orders dated 09.06.2023 and 12.05.2022, which froze their movable properties, including mutual funds and fixed deposits. The attachments were based on the alleged proceeds of crime amounting to Rs. 910,29,87,566/- crores, attributed to a partnership firm 'M/s M.J Associates' where the first petitioner held a 51% share, and another accused, Sri. N. Jayamurugan, held 49%.

2. Authority and Jurisdiction of ED:
Petitioners contended that the ED exceeded its authority by attaching properties worth Rs. 894 crores instead of limiting it to Rs. 464.25 crores, which corresponds to the first petitioner's 51% share. The ED argued that the attachments were made after identifying properties forming part of the proceeds of crime, and the petitioners had alternative remedies under the PMLA to challenge these attachments.

3. Maintainability of the Writ Petition:
The court upheld the respondents' objection to the maintainability of the writ petition, emphasizing that the PMLA provides a comprehensive statutory mechanism for addressing grievances related to provisional attachment orders. The court noted that the petitioners have an efficacious alternative remedy through a three-tier system involving the Adjudicating Authority, the Appellate Tribunal, and the High Court. The court cited precedents emphasizing that extraordinary jurisdiction under Article 226 should not bypass statutory procedures unless exceptional circumstances are demonstrated.

Conclusion:
The court dismissed the writ petition, holding that the petitioners should pursue their remedies under the PMLA's statutory framework. The Adjudicating Authority was directed to consider the petitioners' objections or claims without being influenced by the court's observations in this judgment.