Are ED's 'Reasons To Believe' To Pass Provisional Attachment Order Confidential In Nature? Gauhati High Court Refers Issue To Larger Bench

The Gauhati High Court has referred to the larger bench to decide whether "reasons to believe" to be recorded in writing by Enforcement Directorate's Authorized Officer on the basis of material in his possession to pass a Provisional Attachment Order is confidential in character and whether it must be to be furnished to the affected person. [2026 LiveLaw (Gau) 85]Justice Manish Choudhury in his order noted that if the reasons to believe, which is to be recorded by the Authorized Officer in writing as per the mandate of Section 5[1] PMLA PMLA for issuing a Provisional Order of Attachment (PAO), is made part of the PAO or simultaneously, then it will not suffer from any jurisdictional error as such reasons to believe are not confidential in nature. Justice Choudhry noted that high court's Coordinate Bench in Aftabuddin Ahmed and another vs. Enforcement Directorate and others (2024) has expressed a contrary view holding that the reasons to believe are confidential in character and are not to be furnished to the petitioner; meaning thereby the reasons to believe cannot be part of the Provisional Attachment Order. The high court thus directed:"This Court is, therefore, also of the considered view that from the standpoint of judicial consistency, the issue requires to be referred to a larger bench for a resolution. 101. From the perspective of this Court, the points of reference are :[i] whether the reason to believe, which is to be recorded in writing by the Authorized Officer on the basis of material in his possession to pass a Provisional Attachment Order [PAO] under Section 5[1] of the PMLA, is confidential in character or not, and/or is to be furnished to the affected person or not? and[ii] if such reason to believe is made part of the PAO, whether the PAO suffers from any jurisdictional error or not?The matter is to be placed before the Hon'ble Chief Justice on the administrative side for constitution of a larger bench for the reference"The court passed the order in a plea challenging Provisional Attachment Order (PAO) passed by the Deputy Director, Directorate of Enforcement, Itanagar with respect to a money laundering case under the PMLA. By the PAO, the Deputy Director as 'the Authorized Officer' had provisionally attached hree plots of land belonging to the petitioner holding that the PAO shall remain in force for a period of 180 days from the date of the PAO. The petitioner sought for a direction to restrain the respondents from taking any coercive steps against the petitioner pursuant to or in furtherance of the PAO dated 30.03.2026 and consequential proceeding thereafter, apart from an interim order of stay of the operation and effect of a Summons dated 27.04.2026 issued by the Special Judge, Papum Pare District, Yupia, Arunachal Pradesh to the petitioner to answer a charge under Section 44[1][b] r/w Section 45[1], PMLA Act.The petitioner contended that the reason to believe to be reached by the Authorized Officer for issuing a PAO as per Section 5 [1] of the PMLA, is of confidential nature and the same are to be recorded in a separate file and such reason to believe are not to be a part of the PAO.To this the court said, "This line of reasoning is prima facie does not align with the other three contentions advanced on behalf of the petitioner. If such contention is accepted, a PAO order passed under Section 5[1] of the PMLA would be a barren order listing only the property or properties which are thereby attached and an affected person like the petitioner could not be in a position to know the reasons on which the Authorized Officer had proceeded to attach the affected person's property or properties".The petitioner meanwhile contended that since the reason to believe, which are peremptorily required to be recorded in writing by the Authorized Officer and to be kept confidential, has been made part of the PAO, a jurisdictional error has been committed. It was contented that both 'the reason to believe' and 'the material' on the basis of which such reason to believe was arrived at are to be kept out of the bounds of the affected person as per the PMLA Rules, 2005The court however observed that it does not reach a conclusion that if the reason to believe, which if recorded by the Authorized Officer to exercise the power under Section 5 [1] of the PMLA in a file at a prior point of time is made part of the PAO, the PAO would suffer from any kind of illegality. "Rather, this Court is of the view that such reason to believe is required to be furnished to the affected person, sooner or later, if a request is made to that effect by the affected person. If the reason to believe is made part of the PAO, the same would be in alignment with the constitutional principles of natural justice and fair play; and the same would lessen the possibility of subjective fishing expeditions. The Court has, thus, negates the contention advanced on behalf of the petitioner that as...

Are ED's 'Reasons To Believe' To Pass Provisional Attachment Order Confidential In Nature? Gauhati High Court Refers Issue To Larger Bench

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Are ED's 'Reasons To Believe' To Pass Provisional Attachment Order Confidential In Nature? Gauhati High Court Refers Issue To Larger Bench

Malavika Prasad

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Malavika Prasad

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