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2026 Supreme(Mad) 1111
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
N.ANAND VENKATESH, K.K.RAMAKRISHNAN, JJ.
P.K.Selvaraj – Petitioner
Versus
The Deputy Director, Directorate of Enforcement – Respondent
W.P.Crl.(MD).No.2416 of 2026 and WMP.(MD).590 of 2026
Decided On : 28-04-2026
For the Petitioners: Mr.Sharath chandran for Mr.Gowtham Thilak
For the Respondent: Mr.K.R.Laxman, Mr.A.Thiruvadi Kumar, Additional Public Prosecutor, Mr.M.Senthil Kumar
Once an order under Section 8(3) of the Prevention of Money Laundering Act is challenged before a higher forum, encumbrance entries cannot continue reflecting the original attachment which no longer subsists.
Headnote:(A) Prevention of Money Laundering Act, 2002 - Section 8(3) and Section 8(7) - Writ of mandamus - Letter of no objection - Removal of attachment entries in encumbrance certificates - Appeal to Appellate Tribunal - Once an order under Section 8(3) is challenged before a higher forum, a deemed embargo operates on the conclusion of proceedings under Section 8(7) - Encumbrance entries cannot continue to reflect original attachment order which no longer subsists. (Paras 7, 8)
(B) Writ jurisdiction - Power to issue mandamus - Scope of - Courts exercising writ jurisdiction can direct authorities to act in consonance with subsisting orders of appellate tribunal - Failure to act upon final order constitutes actionable grievance. (Para 6)
Facts of the case:
Criminal proceedings were initiated against the petitioners, followed by attachment of properties under the Act treating scheduled offences as predicate offences. Provisional attachment order attaching 45 immovable properties was confirmed by the Adjudicating Authority. 10 properties were mortgaged to secured creditors. The secured creditors challenged the attachment before the Appellate Tribunal, which set aside the attachment for mortgaged properties holding that they were not acquired from proceeds of crime. The said order became final and was not challenged. Despite this, encumbrance entries reflecting attachment continued in encumbrance certificates affecting disbursement of compensation awarded for acquisition of one property.
Findings of Court:
The court held that once an order under Section 8(3) is challenged before a higher forum, the deemed embargo operates on conclusion of proceedings under Section 8(7). The original attachment order no longer subsists and encumbrance entries cannot continue to reflect it. The court directed the first respondent to issue letter of no objection and consequent removal of entries within six weeks.
Issues: Whether encumbrance entries can continue to reflect attachment order despite final order of Appellate Tribunal setting aside attachment and whether the court can issue mandamus directing removal of encumbrance entries.
Ratio Decidendi: Once an order under Section 8(3) is challenged before a higher forum, the deemed embargo operates on conclusion of proceedings under Section 8(7) and the encumbrance entries cannot continue to reflect the original attachment order which no longer subsists.
Result: Writ petition allowed. Direction issued to the first respondent to issue letter of no objection and to respondents 2 to 4 to remove the entries within six weeks.
| Table of Content |
|---|
| 1. counsel heard on both sides (Para 2) |
| 2. attachment of mortgaged properties set aside by appellate tribunal (Para 3 , 4 , 5) |
| 3. petitioners seek removal of subsisting encumbrance entries (Para 6) |
| 4. once attachment order is set aside encumbrance must be expunged (Para 7 , 8) |
ORDER :
N.ANAND VENKATESH, J.
This writ petition has been filed for the issue of writ of mandamus directing the first respondent to issue a letter of no objection to respondent Nos.2 to 6 in the light of the order dated 27.03.2019 passed by the Appellate Tribunal for PMLA and consequently to direct the respondent Nos.2 to 4 to remove the entries regarding the attachment under the Prevention of Money Laundering Act (hereinafter referred to as “the Act”) in the respective encumbrance certificates for the eight properties which have been described in the schedule.
2. Heard the learned counsel on either side.
3. In the year 2012, multiple criminal cases came to be filed against the petitioners. Thereafter, in the year 2015, proceedings were initiated under the Act by treating the scheduled offences as the predicate offences culminating in the registration of ECIR / CEZO/ 14 /2015. A provisional attachment order came to be passed on 26.07.2017 by attaching 45 immovable properties belonging to the petitioners, which was confirmed by the Adjudicating Authority by order dated 17.01.2018. Out of those properties, 10 of the properties were mortgaged to the secured creditors.
4. The secured creditors challenged the attachment order before the Appellate Tribunal for PMLA, which by order dated 27.03.2019 set aside the attachment insofar as the mortgaged properties are concerned by holding that they are not acquired from the proceeds of crime. The said order has not been put to challenge and it has become final.
5. The grievance of the petitioners is that despite the order passed by the Appellate Tribunal, the attachment continued to be reflected in the Encumbrance Certificates. As a matter of fact, in the year 2022, the compensation was awarded for acquisition of one of the property, but, however, the disbursement was not made by citing the subsisting encumbrance that is reflected pursuant to the original attachment order. Hence, W.P.(MD).No.16026 of 2024 came to be filed before this Court for a direction to the concerned authority to pay the entire compensation amount in favour of the creditors to whom the property had been mortgaged. This writ petition came to be allowed by an order dated 25.07.2024 and the relevant portion is extracted hereunder.
“2. The petitioner had availed loan and various credit facilities from R2 & R3. He had also mortgaged his assets. Proceedings under PMLA were initiated against the petitioner and others by the Enforcement Directorate. The assets that were mortgaged in favour of R2 & R3 were attached by the Enforcement Directorate. Questioning the same, the second respondent herein as well as the third respondent filed appeals before the appellate tribunal for PMLA Act cases, New Delhi. Their appeals were allowed on 27.03.2019. A portion of the secured assets was acquired by the first respondent. Compensation payable to the petitioner has also been determined. Award has been passed. But the amount had not been released in view of the attachment effected by the Enforcement Directorate.
3. The case of the petitioner is that since the attachment effected by the Enforcement Directorate had been lifted by the appellate tribunal in favour of the respondents 2 & 3, compensation amount has to be necessarily disbursed to the respondents 2 & 3. (*)The learned Senior counsel appearing for the petitioner submits that the petitioner has received an offer from the second respondent on 03.07.2024 that they would accept a sum of Rs.7 ½ crores as One Time Settlement (OTS amount) and that the petitioner had also accepted to pay the said amount vide letter dated 04.07.2024 and that the second respondent had written to the jurisdictional Tahsildar on 10.
