Court emphasizes Supreme Court's Article 142 framework, prioritizing investor restitution over PMLA provisions.
In a significant judgment, the Delhi High Court has quashed the attachment orders issued by the Directorate of Enforcement (ED) concerning the assets linked to PACL Ltd., and has directed that the management of these assets be handed over to the Justice R.M. Lodha Committee. This ruling underscores the precedence of the Supreme Court's framework under Article 142 of the Constitution over the statutory provisions of the Prevention of Money Laundering Act (PMLA), 2002.
The court's decision came in light of the contrasting objectives between the PMLA, which aims to vest confiscated properties with the Central Government, and the Supreme Court's scheme, which seeks to ensure restitution to the defrauded investors of PACL. The ED's provisional attachment orders, initially issued in 2022, were found to be inconsistent with the Supreme Court's directives, which had appointed the Lodha Committee to oversee the restitution of assets.
Justice Purushaindra Kumar Kaurav, presiding over the matter, noted that the ED had previously cooperated with the Lodha Committee, providing investigative findings that facilitated the recovery of assets for investor restitution. The court observed that the ED's unilateral action in issuing attachment orders without consulting the Lodha Committee was contrary to the established framework by the Supreme Court.
The petitioners, DDPL Global Infrastructure Private Limited and others, supported the court's decision to transfer the matter to the Lodha Committee, highlighting the delay in adjudication since the impugned orders were passed. The court emphasized the need for expedited resolution to protect investor interests, which have been compromised due to the prolonged pendency of the matter.
The court further directed that the petitioners must not alienate or create any charge on the properties involved until the Lodha Committee reaches a final adjudication. This undertaking ensures the preservation of the assets pending the committee's decision.
The judgment reinforces the authority of the Supreme Court's directions under Article 142 and its commitment to safeguarding investor interests in the PACL fraud case. The decision marks a pivotal moment in the ongoing efforts to address the fallout from the PACL scam and restore confidence among affected investors.
Bottom line:-
Prevention of Money-Laundering Act (PMLA) - Impugned attachment orders by ED set aside - Matter relegated to Justice R.M. Lodha Committee under Supreme Court's Article 142 framework for PACL assets - PMLA scheme contrasted with Supreme Court's restitution mechanism.
Statutory provision(s):
Prevention of Money Laundering Act, 2002 Sections 5, 8(8); Rule 3A of Confiscation Rules; Article 142 of the Constitution of India.
