PMLA Does Not Intend To Attach Or Confiscate All Properties Of A Person Connected With Crime: Kerala High Court

The Kerala High Court has observed that the Prevention of Money Laundering Act 2002 (PMLA) does not intend to attach or confiscate all properties of a person connected with crime, especially those properties that were acquired before even the commission of the crime.A senior citizen and his wife have approached the Court seeking to quash an order of provisional attachment issued under the PMLA. Justice Bechu Kurian Thomas thus set aside the order of provisional attachment of properties purchased by the petitioners in 1997, 1999 and 1987 which is much prior to the commission of the crime in 2014. The Court also noted that the PMLA came into existence only in 2002. “The statute never intends to attach or confiscate all properties of a person connected with the crime. Moreover, the consequences of a crime cannot have a retroactive implication. Arbitrariness will loom large if the implication of a crime is extended to anything done before the crime itself was committed. The principle of ex post facto law, enshrined in Article 20 of the Constitution of India, protects against punishment or penalty for anything which was not an offence at the time it was committed. Though the said principle may not have application stricto senso in relation to proceeds of crime, still the the philosophy behind the concept cannot be brushed aside.”Respondents contended that several loans were sanctioned to the petitioner against the limit of the bank using same security and by giving fake addresses by altering the bank's software without even the knowledge of the owner of the property.It was stated that the crime was registered under sections 406, 420, 409 and 465 read with section 34 of the IPC and ED was conducting inquiry. ED stated that loans were availed illegally and hence properties purchased using the proceeds of crime were attached under section 5(1) of the PML Act. It was further stated that certain other properties were also attached since they were mortgaged for obtaining fraudulent loans and also because proceeds of crime were not available for attachment. ED also submitted that petitioner has alternative remedy under the PMLA and that writ petition was not maintainable. The Court observed writ petition is maintainable when an order of attachment of a property was issued without jurisdiction or is non est in law. The Court noted that five properties of the petitioners were attached, which were purchased in 1997, 1999, 1987 and two of the properties in 2015. It also noted that the alleged predicate offences were committed between 2014 to 2020. Section 5 of the Act enables authorities to provisionally attach properties which are 'proceeds of crime'. The Court interpreted the term 'proceeds of crime' defined under the PMLA to state that there were three types of proceeds of crime; “(i). property derived or obtained from a criminal activity, (ii) value of any such property and, (iii) if the property is taken or held outside India, then a property equivalent in value held within India.”The Court observed that properties could be attached if such property was obtained or derived as a result of any criminal activity relating to a scheduled offence. It observed that even properties obtained indirectly could be attached under the PMLA. It further stated that properties unconnected with the criminal activity could only be attached when the property derived out of the criminal activity was taken out of India or is held outside the country. Court thus said, “Under no other circumstance does the statute mandate attaching a property unconnected with the proceeds of crime.”Further, Relying Upon N Vijay Madanlal Choudhary And Others V. Union Of India And Others (2022) and Pavana Dibbur Vs. Directorate Of Enforcement (2023), It stated powers of attachment under the PMLA cannot be exercise for attaching properties acquired prior to the commission of the predicate offences, unless proceeds of crime were to be taken out of the country. The Court thus set aside the order of provisional attachment purchased by petitioner prior to 2014 and allowed the writ petition in part. Regarding the properties attached which were purchased in 2015, the Court relegated the petitioners to avail alternative remedies under the PMLA. “In such circumstances, the attachment of properties purchased by the petitioners prior to 2014, under the provisions of section 5(1) of PML Act is ex-facie null and void and wholly without jurisdiction.”Counsel for Petitioners: Advocates A.S.Dileep, Suseela Dileep, P.Binod, K.Y.Sudheendran, Sudeep Aravind PanickerCounsel for Respondents: Additional ASGI ARL Sundaresan, Central Government Counsel Jaishankar V.NairCase Number: WP(CRL.) NO. 1354 OF 2023Case Title: Davy Varghese v The Deputy DirectorCitation: 2024 LiveLaw (Ker) 806Click here to Read/Download Order

PMLA Does Not Intend To Attach Or Confiscate All Properties Of A Person Connected With Crime: Kerala High Court

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