Chhattisgarh High Court Refuses to Quash ED's ₹110 Crore Attachment of Rahul Agrawal's Westin Hotel

The Chhattisgarh High Court has declined to interfere with the Enforcement Directorate's (ED) provisional attachment of the Hotel Westin in Goa, valued at ₹110 crore, under the Prevention of Money Laundering Act (PMLA). A Division Bench comprising Chief Justice Ramesh Sinha and Justice Ravindra Kumar Agrawal dismissed a writ petition challenging the attachment, ruling that the statutory adjudication mechanism must run its course.

The Liquor Scam and the Hotel Connection

The case stems from an alleged liquor scam in Chhattisgarh, where the state-run Chhattisgarh State Marketing Corporation Limited (CSMCL) was allegedly misused to generate proceeds of crime totaling over ₹2,800 crore. The ED claimed that a portion of these funds—₹110 crore in cash—was channeled through Vijay Agrawal, the uncle of petitioner Dr. Rahul Agrawal, to acquire the five-star Westin Hotel in Goa. According to the ED, Rahul Agrawal himself admitted to paying ₹60 crore in cash for the hotel, and the balance ₹50 crore was routed through banking channels.

The petitioners, Dr. Rahul Agrawal and M/s Pacifica Hotels India Private Limited, argued that the Income Tax Department had already accepted the cash component of ₹60 crore as legitimate business income, and that the attachment was based on mere conjecture without a proper money trail.

Alt Remedy Barred Writ Jurisdiction, Court Held

The High Court emphasized that the PMLA provides a complete statutory framework for adjudicating the attachment. Under Section 5(1) of the Act, the authorised officer must have "reason to believe" based on material in his possession—a standard the Court found satisfied on the facts. The Bench noted that the ED has already filed a complaint before the Adjudicating Authority under Section 5(5), and the petitioners will have full opportunity to present their case, including the income tax orders, before that authority.

"The validity of such satisfaction is certainly amenable to judicial review," the Court observed. "But the Court, while exercising writ jurisdiction , is not required to undertake a mini-trial for determining whether the material would ultimately establish the allegation of money-laundering."

Income Tax Findings Do Not Bar PMLA Action

A key plank of the petitioners' case was that the ITAT had upheld the deletion of an addition of ₹60 crore as unaccounted cash, effectively accepting the source of funds. The Court flatly rejected this argument, holding that the two regimes operate in different fields.

"An income-tax finding that cash is adequately explained for taxation purposes does not establish that the same cash is not proceeds of crime . Section 71 of the PMLA gives the Act overriding effect ," the Bench stated. It further noted that the IT proceedings never considered the material collected by the ED in 2025, including statements from key accused linking the cash to the liquor scam.

No Constitutional Violation, No Jurisdictional Defect

The petitioners had also argued that the attachment violated their fundamental right to carry on business under Article 19(1)(g), and that the constitution of the Adjudicating Authority—currently a single member of non-legal background—rendered the proceedings coram non judice. The Court rejected both submissions.

"A provisional attachment under Section 5(1) does not, by itself, transfer title in the property to the State. Nor does it amount to confiscation," the Bench clarified. On the composition of the Authority, the Court noted that even assuming a defect, it could not retrospectively invalidate the independent provisional attachment order.

Key Observations from the Court

  • "The existence of relevant material bearing a live and rational link to the belief recorded is sufficient for Section 5(1) ; the sufficiency or adequacy of that material is a matter for the Adjudicating Authority ."
  • "The fact that a particular amount has been accepted for income-tax purposes does not, by itself, create an immunity against an inquiry under the PMLA concerning the criminal provenance of the property."
  • "The petitioners' assertion that they are strangers to the scheduled offence is a matter to be examined on evidence and cannot, without more, nullify the provisional attachment ."

Decision and Implications

The High Court dismissed the writ petition, leaving the provisional attachment in place pending adjudication by the Authority. The Court made clear that all questions of fact—including the provenance of the ₹60 crore cash, the alleged flow of funds through Vijay Agrawal, and the applicability of statutory presumptions—remain open for the statutory proceedings.

The ruling reinforces the principle that provisional attachment orders under the PMLA are not lightly interfered with at the writ stage, particularly where a comprehensive alternative remedy exists. It also settles that favourable income tax findings do not preclude a parallel inquiry into money laundering.

The petitioners may now pursue their remedies before the Adjudicating Authority and, if necessary, the Appellate Tribunal and High Court on appeal.