Back
IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD
SUREPALLI NANDA, J.
Dhara Prasad & Another - Petitioners
Versus
Union of India & Another - Respondents
W.P. No. 42048 of 2022
Decided On : 03-06-2024
Mandamus - Writ Petition - Prevention of Money Laundering Act, 2002 - Sections 5(4), 8(4) - The court held that the action of taking possession of properties under Section 8(4) without a formal order of confiscation is unwarranted and violates the petitioners' rights under Section 5(4).
Fact of the Case:
The petitioners challenged the issuance of a notice for taking possession of their properties under the Prevention of Money Laundering Act, arguing it was illegal and violated their constitutional rights.
Finding of the Court:
The court found that the notice for taking possession was issued without a formal order of confiscation and violated the petitioners' rights under Section 5(4) of the PMLA, which protects their enjoyment of the property.
Issues: Whether the notice for taking possession of properties under Section 8(4) of the PMLA was lawful in the absence of a formal confiscation order.
Ratio Decidendi: The court ruled that Section 8(4) can only be invoked in exceptional circumstances and not as a standard procedure, especially when the petitioners had not been formally deprived of their property rights.
Result: The writ petition was allowed, and the notice for taking possession was set aside.
ORDER :
Surepalli Nanda, J.
Heard Mr. Pasham Mohith, learned counsel appearing on behalf of the petitioners, Mr. Gadi Praveen Kumar, learned Deputy Solicitor General of India, appearing on behalf of respondent No.1 and Mr. Anil Prasad Tiwari, learned counsel appearing on behalf of respondent No.2.
PRAYER:
2. The Petitioners approached the Court seeking prayer as under :
3. PERUSED THE RECORD :
(A) The impugned Notice F.No.ECIR/CEZO-I/09/2021 dated 10.10.2022 reads as under :
| FORM I
[sub-rule (1) of rule 6 of the Prevention of Money Laundering (Taking Possession of Attached or Frozen Properties Confirmed by Adjudicating Authority) Rules, 2013]
NOTICE FOR TAKING POSSESSION UNDER SUB-SECTION (4) OF SECTION (8) OF THE PREVENTION OF MONEY LAUNDERING ACT, 2002 READ WITH RULE 5 OF THE PREVENTION OF MONEY LAUNDERING (TAKING POSSESSION OF ATTACHED OR FROZEN PROPERTIES CONFIRMED BY ADJUDICATING AUTHORITY) RULES, 2013
Whereas the immovable properties mentioned in the annexure have been provisionally attached under sub-section (1) of Section 5 of the Prevention of Money Laundering Act, 2002 (15 of 2003) vide Provisional Attachment Order No. 06/2022 dated 28.02.2022 issued by the Deputy Director of the Directorate of Enforcement, Chennai Zonal Office-I, Chennai.
Whereas the said Provisional Attachment Order was subsequently confirmed by the Adjudicating Authority constituted under Section 6 of the Act, vide order dated 22.08.2022 in O.C. No. 1663/2022.
Whereas, in compliance of the provisions contained under sub-section (4) of the Section 8 of the Act (15 of 2003), the undersigned has taken possession of the said properties, which shall be at the disposal of the Directorate of Enforcement until further order and such properties shall be kept intact by all concerned for further proceedings under the Act; and
I, Dr. Rama Gopala Reddy K., Deputy Director, Directorate of Enforcement, Chennai Zonal Office-I, Chennai, therefore, order that all concerned are hereby prohibited and restrained until further order of the undersigned from transferring or charging the aforesaid properties by sale, gift, mortgage, pledge, or otherwise in any manner whatsoever and that all persons be and that they are hereby prohibited and restrained from receiving the same by purchase, gift, mortgage, pledge or otherwise in any manner whatsoever.
Issued on this 10th Day of October, 2022 |
(B) Counter affidavit has been filed by the 2nd Respondent, in particular, at Paras 11, 21 read as under :
21. With regard to the averments of the petitioner in para 15 and 17 of the affidavit, it is humbly submitted that as per Section 8(4) of PMLA, it is clear that once the O.C is confirmed by the Adjudicating Authority then the 2nd Respondent herein may take possession of the property attached. It is in this regard, the impugned order has been issued.”
(C) This Court on 01.12.2022 passed orders in the favour of the Petitioners directing the Respondent No.2 not to give effect to the imp
AI
Possession under Section 8(4) of the PMLA should be an exception, not a rule, and requires careful consideration of the case's specific circumstances.
The court established that mandatory notice requirements under the Prevention of Money Laundering Act must be adhered to, or the attachment order is invalid.
The court emphasized the necessity of communicating judicial orders to affected parties, particularly when they are in custody, as a fundamental aspect of natural justice.
The court established that failure to provide notice to a lawful property owner before attachment under the Prevention of Money Laundering Act violates legal requirements and principles of natural ju....
Properties acquired before the commission of an alleged offence cannot be attached under the Prevention of Money Laundering Act, and due process must be followed in such proceedings.
The court emphasized the availability of an alternate efficacious remedy within the scope of the PMLA Act and upheld the decision to relegate the Appellant/Bank to the Adjudicating Authority.
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
