2023 (10) TMI 67 - HC - Money Laundering

Money Laundering - Maintainability of writ petition under Article 226 of the Constitution of India - availability of alternative efficacious remedy available to the appellants - adjudication of the provisional attachment of properties is in progress, as provided under Section 8 of the Prevention of Money-Laundering Act, 2002 - decision of such adjudicating authority would be subject to appeal under the Act itself. HELD THAT - It is true that there is no provision for challenging an order of provisional attachment, passed under Section 5(1) of the PMLA Act. In the absence of any statutory appeal being provided to challenge a provisional attachment order, a petition under Article 226 of the Constitution of India may be maintainable on its own merits, and the Court may examine the case on hand and may or may not entertain the writ petition on its merit. However, dealing with the present facts of the case, it is undisputed that the complaint under Section 5(5) of the PMLA Act has already been made before the adjudicating authority, and notices have already been issued. The provision u/s 6 of PMLA makes it clear that the Chairman or Members of the Committee are persons with sufficient experience in the field of law, administration, finance, and accountancy. Only a person having the qualification for appointment as a District Judge or has been a Member of the Indian Legal Services and has held a post in Grade I of the service will be appointed as a Member. Therefore, there is expected to be judicial scrutiny of a complaint filed under Section 5(5) of the PMLA Act - As per the aforesaid provision, the adjudicating authority must either accept the complaint and proceed further with the same or refuse to accept the complaint. The adjudicating authority has to follow the procedure prescribed in Section 8, which suggests that detailed scrutiny would be carried out and that too, at the earliest. The Court may exercise its extraordinary powers under Article 226 of the Constitution of India under exceptional circumstances like; an order passed without jurisdiction, breach of fundamental rights, violation of the principles of natural justice, excess of jurisdiction, or a challenge to the vires of a statute or delegated legislation. However, in the present appeal, when the authority empowered under Section 5 of the PMLA Act has scrutinised the materials relied on while passing the provisional attachment order dated 09.06.2023, and when the adjudicating authority is going to examine all such issues and pass appropriate orders, we do not find any justifiable reason to reconsider the same, that too, in this intra court appeal. Therefore, this appeal is dismissed.

Summary

Issues Involved:
1. Justifiability of High Court's intervention under Article 226 during ongoing adjudication under Section 8 of the PMLA Act.
2. Validity of provisional attachment orders and the freezing of assets.
3. Availability and adequacy of alternative remedies.

Summary:

Issue 1: Justifiability of High Court's intervention under Article 226 during ongoing adjudication under Section 8 of the PMLA Act

The primary issue is whether the High Court should entertain a writ petition under Article 226 when adjudication of provisional attachment of properties is in progress under Section 8 of the PMLA Act. The court noted that the adjudicating authority, which is an independent body with judicial members, is already scrutinizing the issues raised in the writ petition. The court emphasized that the adjudicating authority has the power to deal with the complaint submitted under Section 5(5) of the PMLA Act, and its decision is subject to appeal under Section 26 of the Act. Therefore, the court found no justifiable reason to reconsider the provisional attachment order dated 09.06.2023 in this intra-court appeal.

Issue 2: Validity of provisional attachment orders and the freezing of assets

The appellants challenged the provisional attachment orders and the freezing of assets on the grounds that the Enforcement Directorate (ED) acted in excess of its jurisdiction and without relevant material. They argued that the provisional attachment order dated 09.06.2023 was unreasonable and perverse, as the ED had already determined that the proceeds of crime derived by the 1st appellant amounted to Rs. 464.25 Crores. The court observed that the adjudicating authority is expected to scrutinize all materials and pass appropriate orders, and thus, it did not find any reason to interfere with the provisional attachment order under Article 226.

Issue 3: Availability and adequacy of alternative remedies

The court noted that the appellants had an alternative remedy available through the adjudicating authority under Section 8 of the PMLA Act and subsequent appeals under Section 26. The court referred to various Supreme Court judgments, emphasizing that the High Court should not entertain a writ petition when an efficacious alternative remedy is available. The court concluded that the learned Single Judge rightly refused to entertain the writ petition, as the issues were being scrutinized by the competent authority established under the PMLA Act.

Conclusion:

The appeal was dismissed, and the court did not express any opinion on the findings of the authority in the provisional attachment order dated 09.06.2023. The adjudicating authority is expected to adjudicate the complaint filed under Section 5(5) of the PMLA Act at the earliest, without being prejudiced by any observations made by the learned Single Judge or the appellate court.