Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Online)(Kar) 26647

THE HIGH COURT OF KARNATAKA
S Sunil Dutt Yadav, J
Jayamma – Appellant
Versus
Directorate of Enforcement – Respondent
WP No. 28108 of 2025

Advocates:
For the Appellants/Petitioners: Jaysham Jayasimha Rao
For the Respondents: Aravind Kamat, Madhukar M Deshpande

An order of provisional attachment under the second proviso to Section 5(1) of the Act is invalid if the authority fails to record specific, objective reasons based on material evidence demonstrating that failure to attach the property would realistically frustrate the proceedings, rather than merely repeating statutory language.

Headnote:(A) Prevention of Money Laundering Act, 2002 - Section 5(1) Second Proviso - Provisional attachment of property - Requirement of recording 'reasons to believe' that non-attachment would frustrate proceedings - Mere mechanical reproduction of statutory language without demonstrating nexus between material in possession and potential frustration of proceedings renders attachment order legally infirm. (Paras 16, 17, 24, 25)

(B) Constitution of India - Article 226 - Writ jurisdiction - Maintainability - Alternative remedy - While exhaustion of statutory remedies is a rule of discretion, a writ petition is entertainable where the challenge touches upon jurisdictional authority or procedural lapses that the statutory forum lacks the power to adjudicate. (Paras 12, 14, 15, 20)

Facts of the case:
The petitioner challenged a provisional attachment order of property alleged to be proceeds of crime. The authority passed the order under the second proviso to Section 5(1) of the Act without waiting for a final report under the scheduled offence investigation. The authority claimed that non-attachment would frustrate enforcement proceedings. The petitioner argued that the order was passed in an 'omnibus' manner without independent application of mind to the specific factual matrix regarding the impossibility of transferring the property.

Findings of Court:
The Court held that the authority failed to record specific reasons demonstrating why immediate attachment was necessary to prevent frustration of proceedings. The internal notes merely mirrored the statutory language without any objective link to the factual situation where the property could not be legally alienated due to lack of mutation/title records. Consequently, the attachment order was found to be procedurally defective.

Issues: Whether the writ petition was maintainable despite the existence of appellate forums under the Act, and whether the authority satisfied the mandatory procedural requirements under the second proviso to Section 5(1) of the Act in passing the provisional attachment order.

Ratio Decidendi: Where a statute mandates a specific procedure for exercising power, it must be performed in that precise manner; failure to record specific reasons demonstrating the likelihood of frustration of proceedings based on actual material constitutes a jurisdictional error. The procedural safeguards provided in the statute cannot be bypassed by mechanical reiteration of legal provisions.

Result: Petition allowed; provisional attachment order and all consequential proceedings set aside with liberty to the authority to initiate fresh proceedings in accordance with law.

THIS WRIT PETITION HAVING BEEN HEARD AND RESERVED ON 05.03.2026 AND COMING ON FOR PRONOUNCEMENT OF ORDERS AT DHARWAD BENCH THROUGH VIDEO CONFERENCING, THIS DAY, THE COURT MADE THE FOLLOWING:

CORAM: HON'BLE MR. JUSTICE S SUNIL DUTT YADAV

CAV ORDER

The present petition has been filed calling in question validity of the provisional attachment order No.14/2025 in ECIR No.ECIR/BGZO/25/2024 dated 09.06.2025, which is the order of the respondent - Directorate of Enforcement, exercising powers under the provisions of the Prevention of Money Laundering Act, 2002 (hereinafter referred to as "PMLA").

The factual background to appreciate the legal controversy are as follows:

Sri.Bandigowda and Sri.Girigowda were the owners of land in Sy.No.13 of Malalavadi Village and after their demise, the petitioner and her daughter claim right by inheritance.

It is alleged by the petitioner that lands belonging to the petitioner were utilised for formation of Jayanagar Layout without acquisition. It is further submitted that the petitioner had represented Mysore Urban Development Authority (MUDA) to allot sites in lieu of compensation and considering such request MUDA is stated to have executed the Sale Deeds with respect to the sites.

It is also made out from the facts that the petitioner and her daughter had approached the Revenue Authorities requesting for effecting of Katha on the basis of Sale Deeds executed by MUDA. However, the said request had been declined.

Meanwhile, Sri. Snehamayi Krishna had filed a complaint before the Court of LXXXI Additional City Civil and Sessions Judge (CCH-82) vide PCR No.28/2024. The Special Court had directed the Karnataka Lokayukta Police to register a case, investigate and file a report as contemplated under Section 173 of Cr.P.C. Pursuant to such direction, the Lokayukta Police had registered FIR bearing Crime No.11/2024 for the alleged offences punishable under Section 120-B , 166, 403, 406, 420, 426, 465, 468, 340 and 351 of IPC r/w Section 9 and 13 of the Prevention of Corruption Act, 1988 ("P.C. Act", for short) and under Section 3, 53 and 54 of the Prohibition of Benami Property Transactions Act, 1988 and Section 3 and 4 of the Karnataka Land Grabbing Prohibition Act, 2011 on 27.09.2024.

Subsequently, the respondent registered a complaint bearing No.ECIR/BGZO/25/2024 on 01.10.2024.

The Lokayukta Police after investigating into the allegations had filed a Final Report ('B' Report) before the Special Court insofar as accused nos.1 to 4 in the proceedings relating to the predicate offence which report was accepted by the Special Court on 28.01.2026. It is a matter of record that as on the date of the provisional order of attachment further investigation as regards other accused remained inconclusive.

The complaint filed by Sri Snehamayi Krishna is on the premise that accused no.2 was allotted 14 sites by MUDA under the undue influence of accused no.1 and in connivance with accused No.3 and accused no.4 (reference to the accused is in the context of proceedings before the Special Court).

While the Lokayukta Police registered FIR bearing Crime No.11/2024 for the offences as detailed at para-6 as regards the predicate offences, while the respondent registered ECIR/BGZO/25/2024 on 01.10.2024 for the offences punishable under Sections 120-B and 420 of IPC and Section 9 and 13 of the P.C. Act, 1988.

Though the petitioner is not arraigned as an accused, however the sites allotted to the petitioner is stated to constitute proceeds of crime, which have been attached through the provisional order of attachment.

It is also borne out from the records that the Writ Petition was filed on 09.09.2025 challenging the order of provisional attachment dated 09.06.2025. On the basis of provisional attachment order, it is further stated that complaint came to be filed under the provisions of the PMLA on 07.07.2025.

It is made out from the facts that the respondent pursuant to the provisional attachment order has registered origina

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2026 Supreme(Online)(Kar) 26647

THE HIGH COURT OF KARNATAKAS Sunil Dutt Yadav, JJayamma – AppellantVersusDirectorate of Enforcement – RespondentWP No. 28108 of 2025

THE HIGH COURT OF KARNATAKA
S Sunil Dutt Yadav, J
Jayamma – Appellant
Versus
Directorate of Enforcement – Respondent
WP No. 28108 of 2025