2024 (10) TMI 390 - HC - Money Laundering

Provisional Attachment Order - time limitation - whether it is appropriate to entertain the present writ petition against the Provisional Attachment Order (PAO) issued by the Directorate of Enforcement on 28.08.2024 before the statutory period of 30 days elapsed when the Adjudicating Authority is required to examine the same under Section 5 (5) of the Prevention of Money Laundering Act, 2002? - HELD THAT - The Supreme Court, in Vijay Madanlal Choudhary Others v. Union of India Others 2022 (7) TMI 1316 - SUPREME COURT , while examining the constitutional validity of various provisions of the 2002 Act, has also examined the validity of Section 5. It has been found that the adequate safeguards have been provided in the 2002 Act in order to give an opportunity to the aggrieved person to file his response/objections before the Adjudicating Authority. The 2002 Act has also ensured that the PAO will be passed either by the Director or any other officer not below the rank of Deputy Director authorized by the Director for the purpose of this Section while giving reasons to believe on the basis of material in his possession. Once the sufficient provisions have been made in the 2002 Act to ensure availability of the adequate remedies, it would not be appropriate for this Court to entertain the petition even before the statutory 30 days period from the date when PAO has been passed. It is only in the rare and exceptional cases, the Constitutional Court would entertain the petition before the expiry of the period of 30 days. This Court disposes of the writ petition relegating the petitioner to avail its alternative remedy. Needless to observe that this Court has not made any observation on the merits of the case and the Adjudicating Authority will make efforts to expedite the matter. Petition disposed off.

Summary

Issues Involved:
1. Whether the writ petition against the Provisional Attachment Order (PAO) issued by the Directorate of Enforcement can be entertained before the statutory 30-day period under Section 5(5) of the Prevention of Money Laundering Act, 2002, has elapsed.
2. The validity and applicability of the statutory alternative remedy available under the Prevention of Money Laundering Act, 2002.
3. The jurisdiction of Constitutional Courts in entertaining writ petitions when statutory remedies are available.

Issue-wise Detailed Analysis:

1. Entertainability of Writ Petition Against PAO Before Statutory Period:
The primary issue is whether the High Court should entertain a writ petition against the PAO before the statutory period of 30 days has elapsed, as mandated by Section 5(5) of the Prevention of Money Laundering Act, 2002. The petitioner argued that the attachment order was fundamentally flawed, claiming no connection with the proceeds of crime due to a demerger of companies, and challenged the methodology used by the Enforcement Directorate (ED) in calculating the proceeds of crime. The petitioner cited judgments such as Radha Krishan Industries v. State of Himachal Pradesh and Godrej Sara Lee Limited v. Excise and Taxation Officer-cum-Assessing Authority to support their position. However, the court noted that the statutory period had not ended, and the PAO was subject to confirmation by the Adjudicating Authority within 180 days.

2. Validity and Applicability of Statutory Alternative Remedy:
The court emphasized the availability of a statutory alternative remedy under Section 5(5) of the 2002 Act, which allows the petitioner to file objections to the PAO. The Act provides a structured process for addressing grievances, including filing objections and producing evidence before the Adjudicating Authority. The court highlighted that the exhaustion of statutory remedies is the rule, with exceptions only in cases of jurisdictional errors, violations of natural justice, or abuse of process. The petitioner did not claim any of these exceptions, and thus, the court found no basis to bypass the statutory remedy.

3. Jurisdiction of Constitutional Courts:
The court reiterated that while Constitutional Courts have plenary jurisdiction, self-imposed limitations require adherence to statutory remedies unless exceptional circumstances exist. The court referenced the Supreme Court's decision in Vijay Madanlal Choudhary & Others v. Union of India, which upheld the constitutional validity of Section 5, highlighting the safeguards provided in the 2002 Act. These safeguards include the requirement for the ED to file a complaint before the Adjudicating Authority within 30 days of the PAO, ensuring fairness and accountability.

Decision:
The court concluded that given the sufficient provisions and remedies available under the 2002 Act, it was inappropriate to entertain the writ petition before the statutory 30-day period had elapsed. The court disposed of the writ petition, directing the petitioner to avail themselves of the alternative remedy. The court made no observations on the merits of the case, leaving it to the Adjudicating Authority to expedite the matter. Any pending miscellaneous applications were also disposed of.