Challenging ED's Provisional Attachment Becomes Academic After Statutory Confirmation; Parties Must Pursue PMLA Remedies: Calcutta High Court

The Calcutta High Court has held that once a provisional attachment under the Prevention of Money Laundering Act (PMLA) stands confirmed by the Adjudicating Authority and statutory appeals are pending before the Appellate Tribunal, a parallel writ challenge becomes academic and should not be entertained. Setting aside a Single Judge's order quashing the Enforcement Directorate's (ED) provisional attachment, a Division Bench of Justice Rajarshi Bharadwaj and Justice Uday Kumar emphasised that writ courts must exercise restraint where the statute provides a complete adjudicatory mechanism.The appeal arose from a challenge to a Single Judge decision that had quashed a Provisional Attachment Order (PAO) issued by the ED under Section 5(1) of the PMLA against journalist Suman Chattopadhyay and others. The ED had attached five movable properties worth about ₹63.5 lakhs and four immovable properties valued at around ₹2.23 crores, alleging that the assets were “proceeds of crime” linked to financial transactions with the I-Core Group, a chit fund entity allegedly operating a Ponzi scheme.According to the ED, the petitioners, through companies M/s Disha Productions & Media Pvt. Ltd. and M/s Ek Din Media Pvt. Ltd., had received substantial funds from I-Core under the guise of investment arrangements. The agency claimed that nearly ₹9.83 crores had been routed to the companies without legitimate business justification, and that the transactions were structured to siphon illicit deposits while leveraging the petitioner's media reputation. The funds were treated as proceeds of crime and consequently attached.Before the Single Judge, the writ petitioners argued that the attachment lacked any nexus between the properties and alleged criminal proceeds, that several assets predated the transactions in question, and that the ED had neither recorded proper “reasons to believe” nor followed due process. Accepting these submissions, the Single Judge quashed the attachment.Challenging that order, the ED contended before the Division Bench that the writ court had overstepped its jurisdiction by examining the merits of the attachment despite the statutory process being underway. It pointed out that an original complaint had already been filed before the Adjudicating Authority under Section 5(5), show cause notices were issued under Section 8(1), and the attachment was subsequently confirmed under Section 8(3). The petitioners had also availed appellate remedies before the PMLA Appellate Tribunal.The Division Bench agreed with the ED, observing that the PMLA creates a comprehensive hierarchy — provisional attachment, adjudication, appeal and trial — and ordinarily parties must exhaust these remedies. Relying on Supreme Court precedents, including Commissioner of Income Tax v. Chhabil Dass Agarwal and Vijay Madanlal Choudhary v. Union of India, the Court reiterated that writ jurisdiction should not be invoked where an efficacious alternative remedy exists, unless exceptional circumstances are demonstrated.The Court held that since the Adjudicating Authority had already confirmed the attachment and statutory appeals were pending, the controversy regarding the provisional attachment had become “purely academic”. Entertaining the writ would lead to parallel proceedings and undermine the statutory scheme meant to safeguard allegedly tainted assets.Accordingly, the Division Bench set aside the Single Judge's order and directed the parties to pursue their remedies before the Appellate Tribunal. The appeal and connected application were disposed of without costs.Case Title: Enforcement Directorate & Anr. v. Sri Suman Chattopadhyay & Ors.Case No.: MAT 1214 of 2022 with CAN 1 of 2022Click here to read order

Challenging ED's Provisional Attachment Becomes Academic After Statutory Confirmation; Parties Must Pursue PMLA Remedies: Calcutta High Court

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Srinjoy Das

Challenging ED's Provisional Attachment Becomes Academic After Statutory Confirmation; Parties Must Pursue PMLA Remedies: Calcutta High Court

Srinjoy Das

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Srinjoy Das

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