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2023 Supreme(Online)(MAD) 32300
MADRAS HIGH COURT
M.Muruganandam – Appellant
Versus
The Joint Director – Respondent
WP/33285/2022
The Enforcement Directorate cannot encumber and attach the properties of a person by way of a communication to the Sub Registrar and thereafter forget about it.
Headnote:
PMLA - ATTACHMENT OF PROPERTY - [The Enforcement Directorate cannot, by way of a communication to the Sub Registrar, encumber and attach the properties of a person and thereafter, completely forget about it. The power of the Enforcement Directorate to issue a provisional order of attachment flows from Section 5 of the PMLA and the same has to be confirmed by the adjudicating authority within 180 days thereafter. There is no provision under the PMLA for the Enforcement Directorate to issue communications in lieu of provisional orders of attachment and attach one's properties.]
Fact of the Case:
The petitioner challenged the communications of the Enforcement Directorate (ED) to the Sub Registrars, directing them not to allow any further transactions in respect of the petitioner's properties. The ED had issued the communications based on a criminal complaint against the petitioner for offences under the IPC, and a subsequent case registered by the ED under the Prevention of Money Laundering Act (PMLA). The petitioner was not put on notice about the communications and learned about them when he went to the Sub Registrars' Office to sell some of his properties.
Finding of the Court:
The court held that the ED cannot encumber and attach the properties of a person by way of a communication to the Sub Registrar and thereafter forget about it. The power of the ED to issue a provisional order of attachment flows from Section 5 of the PMLA and the same has to be confirmed by the adjudicating authority within 180 days thereafter. There is no provision under the PMLA for the ED to issue communications in lieu of provisional orders of attachment and attach one's properties.
Issues: Whether the ED can encumber and attach the properties of a person by way of a communication to the Sub Registrar and thereafter forget about it.
Ratio Decidendi: The court relied on Section 5 of the PMLA, which provides that the ED can issue a provisional order of attachment, which has to be confirmed by the adjudicating authority within 180 days thereafter. The court held that there is no provision under the PMLA for the ED to issue communications in lieu of provisional orders of attachment and attach one's properties.
Final Decision: The court allowed the writ petition and quashed the communications of the ED to the Sub Registrars.
W.P.No.33285 of 2022
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 09..01..2023
Coram
The Honourable Mr. Justice P.N.PRAKASH
and
The Honourable Mr. Justice N.ANAND VENKATESH
Writ Petition No.33285 of 2022
and
W.M.P.No.32725 & 33971 of 2022
Shri M.Muruganandam
..... Petitioner
-Versus-
1.The Joint Director,
Directorate of Enforcement,
Chennai Zonal Office, Zone-1,
2nd and 3rd Floor, Murugesa Naicker Complex,
84, Greams Road, Thousand Lights,
Chennai 600 006.
2.The Assistant Director,
Directorate of Enforcement,
Chennai Zonal Office, Zone-1,
2nd and 3rd Floor, Murugesa Naicker Complex,
84, Greams Road, Thousand Lights,
Chennai 600 006.
3.The Sub-Registrar,
Vembakkam Sub-Registrar Office,
2/249, Pound Street, Vembakkam,
Tiruvannamalai District 604 410.
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W.P.No.33285 of 2022
4.The Sub-Registrar,
Dusi Sub Registrar Office,
247/3, Main road, Dusi,
Tiruvannamalai District 631 702.
.... Respondents
Petition filed under Article 226 of the Constitution of India to issue a
Writ of Certiorarified Mandamus calling for the records relating to the letters
with F.No.ECIR/CEZO-1/06/2018(B) dated 02.05.2018 and the subsequent
reminder letter with F.No.ECIR/CEZO-1/06/2018(B) dated 25.05.2022 sent
by the office of the 2nd respondent to Offices of the 3rd and 4th respondents
and to quash the same and consequently, direct respondents 1 and 2 to
accept the Fixed Deposit amounting to Rs.1,57,62,000/- in lieu of the
properties illegally encumbered vide the said letters.
For Petitioner
: Mr.Hari Radhakrishnan for
Mr.K.Hemanathan
For Respondents
: Mr.Rajnish Pathiyil,
Special Public Prosecutor [ED
Cases) for RR1 and 2
Mr.R.Kumaravel,
Additional Government Pleader
for RR3 and 4
ORDER
[Order of the Court was made by P.N.PRAKASH.J.,]
Challenging the communications of the 2nd respondent in letter
F.No.ECIR/CEZO-1/06/2018(BR) dated 02.05.2018 and the subsequent
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W.P.No.33285 of 2022
reminders dated 25.05.2022 sent by the office of the 2nd respondent to the
offices of the 3rd and 4th respondents requesting them not to allow any further
transactions in respect of the properties mentioned in the list attached to the
communications, the petitioner has come up with the present writ petition.
2. The minimum facts that are required for deciding this writ
petition are as under:-
(i) The petitioner and one Balaravichandurudu had a civil dispute
which got converted into a criminal complaint and a case in Crime No.83 of
2017 was registered by Central Crime Branch, Chennai, on the complaint of
the latter against the former for the offence u/s 420, 294(b) and 506 (ii) of
IPC.
(ii) It is reported that the aforesaid FIR has been stayed by this court
by order dated 16.03.2018 in Crl.O.P.No.6077 of 2018. While that being so,
since the FIR in Cr.No.83 of 2017 disclosed a scheduled offence under the
Prevention of Money Laundering Act, 2002 (for short “the PMLA”) , the
Enforcement Directorate, registered a case in ECIR/CEZO-1/06/2018 and
issued two impugned communications dated 02.05.20218 and reminders
dated 25.05.2022 to the Sub Registrars viz., respondents 3 and 4 herein,
directing them not to register any properties covered under the two
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W.P.No.33285 of 2022
communications belonging to the petitioner. The petitioner was not put on
notice about the same and when he went to the Sub Registrars' Office to sell
some of his properties, he was shocked to learn that his properties have been
encumbered by the Enforcement Directorate based on the aforesaid two
communications. Hence, the petitioner has filed the present Writ Petition.
3. On notice, Enforcement Directorate has filed counter affidavit dated
09.01.2023 wherein in para 3 and 4 they have admitted that they have not
passed any provisional orders
