Read Order: M/S KAUSHALYA INFRASTRUCTURE DEVELOPMENT CORPORATION LIMITED vs. UNION OF INDIA & ANR.

Pankaj Bajpai

New Delhi, February 14, 2022: The Supreme Court has recently affirmed that there is no express provision under the Prevention of Money Laundering Act, 2002 (PMLA) which prevents the authorized officer from passing an order of provisional attachment u/s 5(1), once a complaint is filed before the Adjudicating Authority. 

A Division Bench of Justice A.M. Khanwilkar and Justice C.T. Ravikumar observed that the fact that accused had succeeded in persuading the High Court to quash the provisional attachment order passed by the appropriate authority u/s 5(1) of PMLA, would in no way impact the adjudication process initiated before the adjudicating authority, which must proceed on its own merits in accordance with law.

The present SLP had been preferred, challenging the order passed by the High Court, whereby the matter was remanded back to the concerned authority under the Prevention of Money Laundering Act, 2002 (PMLA). A request to pass a fresh order u/s 5(1) of the PMLA was sought.

It was contended on behalf of the Kaushalya Infrastructure (Petitioner) that the High Court having acceded to its argument that the provisional attachment order served on the petitioner did not disclose proper reason, much less tangible reason and only reproduced the provisions of the subject Act, ought not to have relegated the petitioner before the concerned authority for recording of reasons.

However, the Apex Court resorting to Sections 5 & 6 of the PMLA, found that the argument of Petitioner that as the provisional attachment order was set aside by the High Court, no adjudication proceedings could be continued further against them, was misplaced. 

The fact that the petitioner had succeeded before the High Court, did not per se result in nullifying the adjudication proceedings, which, nevertheless, could proceed and need to be taken to its logical end by the Adjudicating Authority in accordance with law, added the Court. 

The Top Court noted that the satisfaction to be recorded by the authorized officer in terms of Section 5 of the PMLA is in two respects. 

The first is that the property in question had been acquired through proceeds of crime and involved in an offence of money laundering; and the second satisfaction specific in terms of Section 5(1) of the Act is that the owner/occupant of the property, who is in possession, is likely to conceal, transfer or deal with the same in any manner”, added the Court. 

This satisfaction says the Apex Court is recorded for the purpose of interim arrangement during the pendency of the adjudication proceedings for securing the property in question. 

The adjudication, on the other hand, gets triggered after the complaint u/s 5(5) is filed before the adjudicating authority or on an application u/s 17(4) and also 18(10) of the Act, added the Court. 

Hence, the Apex Court refusing to interfere in this special leave petition, however, clarified that rejection of this special leave petition would not come in the way of the petitioner in pursuing other appropriate remedy including to question the validity of fresh order of provisional attachment, if passed by the appropriate authority.

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