2024 (8) TMI 99 - HC - Money Laundering

Money Laundering - Seeking to revoke and release the attachment and seizure of all the movable and immovable properties of the petitioners - HELD THAT - When the authorities of the ED have reasons to believe, on the basis of the material, that any person in possession of any proceeds of crime and are likely to conceal or create any encumbrance in order to frustrate any proceedings relating to confiscation of proceeds of crime, the ED would be justified in issuing a provisional attachment order of such properties and thereafter seek for confirmation of the attachment by making a complaint before the Adjudicating Authority. The provisional attachment order under Section 5(1) of PMLA shall be valid only for a period of 180 days. Under Sub-section 3 of Section 5, the provisional attachment made under Sub-section 1, ceased to have effect after a period of 180 days. Admittedly, when the ED has sought for confirmation of the provisional attachment of movable and immovable properties of the petitioners before the Adjudicating Authority and the same has been dropped, the provisional attachment also would lapse, in view of the limitation prescribed under Section 5(1). Consequently, it requires to be declared that as on date, there is no attachment at all over the subject properties. There shall be a direction to the Enforcement Directorate/4th respondent herein to revoke and release the attachment and seizure of all the movable and immovable properties of the petitioners, within a period of two (2) weeks from the date of receipt of a copy of this order - Petition allowed.

Summary

Issues:
Request to revoke and release attachment and seizure of properties under ECIR/CEZO-I/63/2022.

Analysis:
The judgment involves multiple issues related to the Enforcement Directorate's attachment and seizure of properties under ECIR/CEZO-I/63/2022. The petitioners sought directions to revoke and release the attachment and seizure of their movable and immovable properties. The Enforcement Directorate had initiated proceedings under the Prevention of Money Laundering Act (PMLA) based on scheduled offences, leading to the issuance of a Provisional Attachment Order dated 25.05.2023. Subsequently, the complainant withdrew the complaint related to the scheduled offences, resulting in the closure of the case in FIR No.187/2022.

The petitioners challenged the summons issued by the ED, arguing that with the closure of the predicate offences, the PMLA proceedings could not be legally continued. A Division Bench of the Court allowed the petitions and quashed the ECIR summons, emphasizing the importance of legal principles from previous cases. Despite the quashing of the ECIR proceedings, the ED did not respond to requests for releasing the attached properties, leading to the filing of Criminal Original Petitions.

The petitioners contended that once the criminal case for predicate offences was dropped, further proceedings under the PMLA could not be sustained. The ED, however, indicated its intention to appeal the court's decision. The judgment highlighted the ED's authority to issue provisional attachment orders to prevent the concealment of proceeds of crime. It was noted that the provisional attachment order would lapse after 180 days if not confirmed by the Adjudicating Authority.

The Court emphasized that with the dropping of the complaint and closure of the predicate offences, the proceedings under PMLA should also lapse. The final direction of the Court was for the Enforcement Directorate to revoke and release the attachment and seizure of all properties under ECIR/CEZO-I/63/2022 within two weeks from the date of the order, thereby allowing all the Criminal Original Petitions.