Rana Ayyub Money Laundering Case: Delhi High Court Restrains ED From Proceeding Further Against Provisionally Attached Properties

The Delhi High Court on Wednesday restrained the Enforcement Directorate from taking further steps under sec. 8 of the Prevention of Money Laundering Act, 2002 qua journalist Rana Ayyub's properties attached by the agency in connection with a money laundering case.

Justice Yashwant Varma issued notice on Ayyub's plea against a provisional attachment order passed on February 4 by the Adjudicating Authority under the Prevention of Money Laundering Act, 2002.

The Court also restrained Ayyub from disposing of or creating any third party rights or encumbering the property forming subject matter of the provisional attachment order.

"Till the next date of listing, the respondent shall stand restrained from taking further steps as contemplated under Section 8 of the Prevention of Money Laundering Act. 2002. The petitioner shall also stand restrained from disposing of or creating any third party rights or encumbering the property which forms subject matter of the provisional order of attachment," the Court ordered.

As per PMLA Act, once a provisional attachment order is passed, the property shall remain attached for a period of 180 days from the date of passing of such order and pending the confirmation of the attachment order by the Adjudicating Authority.

The Act further provides that if the Adjudicating Authority finds that the property is involved in money laundering, it confirms the Provisional Attachment Order under sec. 8(3). Once an order under sec. 8(3) has been passed, the property remains attached for 365 days or till the pendency of proceedings related to offence under the Act.

The plea averred that the proceedings before the Adjudicating Authority were no longer maintainable as the Authority was rendered functus officio.

The Court also sought response from the Enforcement Directorate while posting the matter for further hearing on November 17.

A Provisional Attachment Order in terms of PMLA Act was passed on February 4, 2022. Thereafter a Show Cause Notice under Sec. 8(1) of PMLA was issued to which Ayyub filed her reply on April 16.

In this backdrop, the plea argues that till date, the proceedings till the filing of Ayyub's reply had no delay and was in compliance with the timeline stipulated in the PMLA as well as the directions mentioned by the Adjudicating Authority.

It is Ayyub's case that although the impugned Provisional Attachment Order was valid only till August 2, she filed an Application before the Adjudicating Authority on August 3 to discontinue and dismiss the proceedings, however, the same was dismissed.

It has thus been argued that upon expiry of 180 days from the date of Provisional Attachment, the Adjudicating Authority was rendered functus officio and the impugned order ceased to exist in the eyes of law.

"As such, after expiry of 180 days, the Ld. Adjudicating Authority can no longer pass an order of confirmation in terms of Sec. 8(3) PMLA," the plea states.

It adds "The continuance of the provisional attachment and the proceedings u/Sec. 8 PMLA despite the validity of the Provisional Attachment Order having expired in terms of Sec. 5(1) and 5(3) PMLA, renders the attachment and the consequent proceedings illegal, and violates the Petitioner‟s constitutional right under Article 300A of the Constitution, which states that "No person shall be deprived of his property save by authority of law."

The plea accordingly seeks quashing of the impugned provisional attachment order.

Rana Ayyub was represented by Advocates Vrinda Grover and Soutik Banerjee.

Case Title: Rana Ayyub v. ED