Court Rules Procedural Lapses under PMLA Render Attachment Invalid
In a significant judgment, the Karnataka High Court has quashed the provisional attachment order issued by the Directorate of Enforcement (ED) against Smt. Jayamma under the Prevention of Money Laundering Act, 2002 (PMLA). The court held that the provisional attachment, No.14/2025, was invalid due to non-compliance with procedural safeguards outlined in the Second Proviso to Section 5(1) of the PMLA.
The writ petition, filed by Smt. Jayamma, challenged the validity of the attachment order issued on 09.06.2025, which sought to attach properties allegedly involved in money laundering. The petitioner argued that the ED failed to record specific reasons to believe that non-attachment would frustrate proceedings under the PMLA, as required by the statute.
Justice S. Sunil Dutt Yadav, presiding over the case, emphasized the necessity for strict adherence to the procedural requirements when exercising powers under the PMLA. The judgment highlighted that mere reproduction of statutory language without application of mind does not satisfy the legal requirement for provisional attachment.
The court further clarified that the writ jurisdiction under Article 226 of the Constitution of India is maintainable in challenging procedural violations under the PMLA, despite the availability of alternative remedies within the Act. The decision reinforces the principle that statutory powers must be exercised in strict compliance with prescribed procedures, and any deviation renders the exercise of power invalid.
The court also noted that the Adjudicating Authority under Section 8 of the PMLA is not competent to examine procedural lapses under the Second Proviso to Section 5(1), and such issues can only be addressed through writ jurisdiction.
The judgment sets a precedent in ensuring procedural compliance in cases involving the attachment of properties under the PMLA and highlights the judiciary's role in upholding the rule of law.
Bottom line:-
Provisional attachment under the Prevention of Money Laundering Act, 2002 (PMLA) must strictly adhere to the procedural safeguards prescribed under the Second Proviso to Section 5(1) of the Act. Failure to record reasons to believe, based on material in possession, that non-attachment would frustrate proceedings renders the attachment invalid.
Statutory provision(s):
Prevention of Money Laundering Act, 2002, Section 5(1), Article 226 of the Constitution of India.
Jayamma v. Directorate of Enforcement, (Karnataka) : Law Finder Doc id # 2913144
