[Cites 28, Cited by 0]
Kerala High Court
Abdul Rasheed @ Dr.A.R.Babu vs The Deputy Director on 18 December, 2025
Author: V Raja Vijayaraghavan
Bench: V Raja Vijayaraghavan
W.A.Nos.1926 of 2025 & connected cases :1: 2025:KER:97426
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE RAJA VIJAYARAGHAVAN V
&
THE HONOURABLE MR.JUSTICE K. V. JAYAKUMAR
THURSDAY, THE 18TH DAY OF DECEMBER 2025 / 27TH AGRAHAYANA, 1947
WA NO. 1926 OF 2025
AGAINST THE JUDGMENT DATED 07.07.2025 IN WP(Crl.)
NO.48 OF 2025 OF HIGH COURT OF KERALA
APPELLANT/PETITIONER:
ABDUL RASHEED @ DR.A.R.BABU
AGED 68 YEARS
S/O ALIYARU KUNJU,
RESIDING AT CITADEL, GOLF LINKS ROAD, KOWDIAR P.O.
THIRUVANANTHAPURAM, PIN - 695003
BY ADVS.
SRI.P.MARTIN JOSE
SRI.P.PRIJITH
SRI.THOMAS P.KURUVILLA
SRI.R.GITHESH
SHRI.AJAY BEN JOSE
SRI.MANJUNATH MENON
SHRI.SACHIN JACOB AMBAT
SMT.ANNA LINDA EDEN
SHRI.HARIKRISHNAN S.
SMT.ANAVADYA SANIL KUMAR
SMT.ANJALI KRISHNA
SRI.S.SREEKUMAR (SR.)
W.A.Nos.1926 of 2025 & connected cases :2: 2025:KER:97426
RESPONDENTS/RESPONDENTS:
1 THE DEPUTY DIRECTOR
DIRECTORATE OF ENFORCEMENT, COCHIN ZONAL OFFICE,
KANOOS CASTLE,A.K.SESHADRI ROAD,
MULLASSERY CANAL ROAD WEST, COCHIN, PIN - 682011
2 ADJUDICATING AUTHORITY
PREVENTION OF MONEY LAUNDERING ACT,
ROOM NUMBER 26, 4TH FLOOR JEEVAN DEEP,
BUILDING PARLIAMENT STREET, NEW DELHI,
PIN - 110001
ADV. JAISHANKAR V. NAIR, SC, ENFORCEMENT DIRECTORATE
ADV. CRISTY THERASA SURESH
THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON
18.12.2025, ALONG WITH WA.1929/2025, 1938/2025, THE COURT ON
THE SAME DAY DELIVERED THE FOLLOWING:
W.A.Nos.1926 of 2025 & connected cases :3: 2025:KER:97426
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE RAJA VIJAYARAGHAVAN V
&
THE HONOURABLE MR.JUSTICE K. V. JAYAKUMAR
THURSDAY, THE 18TH DAY OF DECEMBER 2025 / 27TH AGRAHAYANA, 1947
WA NO. 1929 OF 2025
AGAINST THE JUDGMENT DATED 07.07.2025 IN WP(Crl.) NO.151 OF 2025
APPELLANT/PETITIONER:
HEERA EDUCATIONAL & CHARITABLE TRUST
PANAVOOR P.O, NEDUMANGAD,
THIRUVANANTHAPURAM, PIN - 695568
REPRESENTED BY ITS MANAGING TRUSTEE
ABDUL RASHEED @ DR.A.R.BABU, AGED 68,
S/O ALIYARU KUNJU, RESIDING AT CITADEL,
GOLF LINKS ROAD, KOWDIAR P.O.
THIRUVANANTHAPURAM, PIN - 695003
BY ADVS.
SRI.P.MARTIN JOSE
SRI.P.PRIJITH
SRI.THOMAS P.KURUVILLA
SRI.R.GITHESH
SHRI.AJAY BEN JOSE
SRI.MANJUNATH MENON
SHRI.SACHIN JACOB AMBAT
SMT.ANNA LINDA EDEN
SHRI.HARIKRISHNAN S.
SRI.S.SREEKUMAR (SR.)
SMT.ANAVADYA SANIL KUMAR
SMT.ANJALI KRISHNA
W.A.Nos.1926 of 2025 & connected cases :4: 2025:KER:97426
RESPONDENTS/RESPONDENT:
1 THE DEPUTY DIRECTOR
DIRECTORATE OF ENFORCEMENT,
COCHIN ZONAL OFFICE, KANOOS CASTLE,
A.K.SESHADRI ROAD,
MULLASSERY CANAL ROAD WEST, COCHIN,
682011
2 ADJUDICATING AUTHORITY
PREVENTION OF MONEY LAUNDERING ACT,
ROOM NUMBER 26, 4TH FLOOR,
JEEVAN DEEP BUILDING, PARLIAMENT STREET,
NEW DELHI, PIN - 110001
ADV.JAISHANKAR V.NAIR, SC,ENFORCEMENT DIRECTORATE
ADV. CRISTY THERASA SURESH
THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON
18.12.2025, ALONG WITH WA.1926/2025 AND CONNECTED CASES,
THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
W.A.Nos.1926 of 2025 & connected cases :5: 2025:KER:97426
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE RAJA VIJAYARAGHAVAN V
&
THE HONOURABLE MR.JUSTICE K. V. JAYAKUMAR
THURSDAY, THE 18TH DAY OF DECEMBER 2025 / 27TH AGRAHAYANA, 1947
WA NO. 1938 OF 2025
AGAINST THE JUDGMENT DATED 07.07.2025 IN WP(Crl.)
NO.124 OF 2025 OF HIGH COURT OF KERALA
APPELLANT/PETITIONER:
HEERA SUMMER HOLIDAY HOMES PVT. LTD.
113, CITY CENTRE, PATTO PLAZA, PANAJI,
GOA, 404001,
REPRESENTED BY ITS MANAGING DIRECTOR
ABDUL RASHEED @ DR.A.R.BABU, AGED 68,
S/O ALIYARU KUNJU, RESIDING AT CITADEL,
GOLF LINKS ROAD, KOWDIAR P.O.
THIRUVANANTHAPURAM, PIN - 695003
BY ADVS.
SRI.P.MARTIN JOSE
SRI.P.PRIJITH
SRI.THOMAS P.KURUVILLA
SRI.R.GITHESH
SHRI.AJAY BEN JOSE
SRI.MANJUNATH MENON
SHRI.SACHIN JACOB AMBAT
SMT.ANNA LINDA EDEN
SHRI.HARIKRISHNAN S.
SMT.ANAVADYA SANIL KUMAR
SMT.ANJALI KRISHNA
SRI.S.SREEKUMAR (SR.)
W.A.Nos.1926 of 2025 & connected cases :6: 2025:KER:97426
RESPONDENT/RESPONDENTS:
1 THE DEPUTY DIRECTOR
DIRECTORATE OF ENFORCEMENT, COCHIN ZONAL OFFICE,
KANOOS CASTLE, A.K.SESHADRI ROAD,
MULLASSERY CANAL ROAD WEST, COCHIN, PIN - 682011
2 ADJUDICATING AUTHORITY
PREVENTION OF MONEY LAUNDERING ACT,
ROOM NUMBER 26, 4TH FLOOR,
JEEVAN DEEP BUILDING, PARLIAMENT STREET,
NEW DELHI, PIN - 110001
ADV. JAISHANKAR V. NAIR, SC, ENFORCEMENT DIRECTORATE
ADV. CRISTY THERASA SURESH
THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON
18.12.2025, ALONG WITH WA.1926/2025 AND CONNECTED CASES,
THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
W.A.Nos.1926 of 2025 & connected cases :7: 2025:KER:97426
JUDGMENT
Raja Vijayaraghavan V, J.
These appeals have been preferred against the common judgment dated
07.07.2025 passed by the learned Single Judge of this Court in W.P.(Crl) Nos. 48,
124 and 151 of 2025. The above petitions were preferred by the petitioners
challenging the orders passed by the competent authority under section 8 of the
Prevention of Money Laundering Act, 2002 ('PMLA' for the sake of brevity). The
learned Single Judge relying on the observations made in Mohankumar K. and
Another v. Union of India and Ors.1 held that when the Act provides for an
appellate remedy, against an order passed under section 8, no interference was
warranted. The Writ Petitions were accordingly dismissed granting the petitioners
the liberty to agitate their grievance before the competent authority in accordance
with law. The learned Single Judge also made it clear that the time during which
these writ petitions were pending before this Court would stand excluded while
calculating the period of limitation. The above orders are under challenge in these
Appeals.
2. W.A.No. 1938 of 2025 is filed by Heera Summer Homes Pvt. Ltd.,
represented by its Managing Director, Sri. Abdul Rasheed. W.A.No. 1926 of 2025 is
[2025 SCC OnLine Ker.4188]
W.A.Nos.1926 of 2025 & connected cases :8: 2025:KER:97426
filed by Abdul Rasheed in its personal capacity and W.A.No. 1929 of 2025 is filed by
Heera Educational and Charitable Trust, represented by its Managing Trustee, Sri.
Abdul Rasheed.
3. The facts revealed that Crime No. RCO3(A)/19/CBI/ACB/Cochin dated
10.04.2019 against Sri. Abdul Rasheed, his family members and an entity by name
"Heera Construction Company Pvt. Ltd." (HCCPL) in respect of a project loan
secured by HCCPL of which the family members were Directors. The said company
which was engaged in real estate was enjoying a credit facility. A project loan of
Rs.15 Crores was sanctioned to HCCPL for the project "Heera Lake Front" at
Akkulam on 27.09.2013 through the Kowdiar Branch of SBT to be repaid by
23.12.2016. The said loan was secured by the equitable mortgage of various items
of property which included certain flats in an Apartment Project by name "Heera
Lake Front" at Akkulam and an item of property having an undivided share of
30.995 cents in a total extent of 52.153 cents along with 26 shop rooms of Heera
Plaza, Kollam and situated in Kollam East Village. Based on request of the HCCPL,
the bank granted permission for part release of the mortgage property on the
premise that the security available was sufficient to cover the exposure of the bank
to the company. Later, it was revealed that HCCPL had sold the property which was
kept as collateral security and they had also not remitted the same proceeds to the
bank to bring down the liability. It was also revealed that the properties were sold
by HCCPL without the permission of the bank. The loan was classified as NPA on
W.A.Nos.1926 of 2025 & connected cases :9: 2025:KER:97426
29.5.2017. When the bank initiated action to take possession of the primary
security, being Heera Lake Front consisting of 72 apartments, it was revealed that
almost all the flats had been sold by the company. On the allegation that the acts
on the part of the accused tantamount to offences, a Crime was registered under
Section 420 r/w. Section 120B and Section 13(2) r/w. Section 13(1)(d) of the
Prevention of Corruption Act, 1988. It is based on the above FIR that the
Directorate of Enforcement registered ECIR/KCZO/08/2021 under Sections 3 and 4
of the PMLA.
4. On 15.2.2023, the ED conducted a search and seized original title
deeds in respect of the properties owned by Sri. Abdul Rasheed, Heera
Construction Company Pvt. Ltd., Heera Summer Holiday Home Pvt. Ltd. and Heera
Educational & Charitable Trust. The retention of the above properties was
confirmed by the adjudicating authority. Challenging the same, the appellant
approached this Court and filed W.P.(Crl) No. 772 of 2023. By order dated
17.08.2023, a learned Single Judge of this Court directed the ED to return the 63
original title deeds seized by them on the premise that the provisions of the PMLA
permits enjoyment of the immovable properties by the owner even if they are
attached under Section 5. Directions were however issued not to assign or carry
out any transactions to the detriment of the investigation. The petitioner asserts
that a provisional attachment order was issued under Section 5(1) of the PMLA,
2002, which stood confirmed by Ext.P5 order issued by the adjudicating authority.
W.A.Nos.1926 of 2025 & connected cases :10: 2025:KER:97426
5. Challenging Exts.P3 provisional order and Ext.P5 confirmation order,
the petitioners approached this Court and filed separate writ petitions which were
dismissed by the learned Single Judge by the impugned order. The learned Single
Judge, however, granted liberty to the petitioners to agitate before the competent
authority in accordance with law. It was ordered that if any appeal is filed, the time
during which the Writ Petitions were pending consideration before the learned
Single Judge shall be excluded while calculating the period of limitation. It appears
that acting on the liberty granted by the learned Single Judge, the appellants
preferred separate appeals before the Appellate Tribunal and the statutory fee was
also remitted. The appellants contend that the appeals were returned as defective
and no opportunity was granted to cure the same. According to the appellants, the
ED acted without jurisdiction as the properties that have been attached were all
acquired long before the alleged illegal activity. The appellants contend that the
Apex Court in Pavana Dibbur v. Directorate of Enforcement2, has held that
the property acquired before the commission of the alleged offence cannot be
proceeded under the PMLA, 2002. Reliance is also placed on the observations
made by a Three Judge Bench of the Apex Court in Vijaya Madhanlal Choudary
v. Union of India3, and it is argued that the Hon'ble Court has held that property
not derived or obtained in pursuance to a criminal activity cannot be brought within
the purview of the PMLA. It is urged that though the learned Single Judge
[(2023) 15 SCC 91]
[(2023) 12 SCC 1]
W.A.Nos.1926 of 2025 & connected cases :11: 2025:KER:97426
permitted the appellants to exhaust the alternate remedy, it is illusory as the appeal
preferred by the appellant was returned on technical issues and no proper
opportunity was granted.
6. Sri. S. Sreekumar, the learned Senior counsel appearing for the
appellants submitted that the learned Single Judge had committed a grave error in
rejecting the writ petition on the grounds of availability of alternative remedy.
According to the learned counsel, the exhaustion of alternate remedy is a rule of
discretion and not one of compulsion. Though the normal rule is that the courts
may refrain from entertaining a writ petition under Article 226 of the Constitution
when alternate remedies exist, when exceptional cause is shown such as when the
the petitioner is seeking enforcement of any of his fundamental rights or where
there is violation of principles of natural justice or where the order or the
proceedings are without jurisdiction or where the vires of an Act is challenged, the
Court can exercise its Writ jurisdiction and deal with such cases. Reliance is placed
on the judgment of the Apex Court in PHR Invent Educational Society v. UCO
Bank and Ors.4 and it was urged that in cases wherein the statutory authority has
not acted in accordance with the provisions of the enactment in question, a petition
under Article 226 of the Constitution could be entertained despite the availability of
an alternate remedy. Reliance is also placed on the judgment rendered by a learned
Single Judge of this Court in Davy Varghese v. Deputy Director, Directorate
(2024) 6 SCC 579
W.A.Nos.1926 of 2025 & connected cases :12: 2025:KER:97426
of Enforcement5, Satish Motilal Bidri v. Union of India6 and it was forcefully
urged that the power of provisional attachment can be exercised in respect of
property that is derived or obtained, directly or indirectly from a criminal activity
relating to a scheduled offence and under no circumstances can properties acquired
before the commission of an alleged offence be attached under the Act as they do
not constitute proceeds of crime.
7. Sri. Jayasankar V. Nair, the learned Standing Counsel appearing for
the Enforcement Directorate, submitted that the contention advanced by the
learned Senior counsel is without reckoning the true nature and purport of the
definition of "proceeds of crime" as defined under Section 2(1)(u) of the PMLA, the
definition of "property" as defined under Section 2(1)(v) and "Value" as defined
under Section 2(zb). The attention of this Court was invited to para 11 of Ext.P3
and it is submitted that a tentative assessment of the proceeds of the crime has
been calculated to be Rs.34.82 Crores split up into Rs.21.50 Crores being the
outstanding loan amount as on 30.09.2022, 1.15 Crores being the sale proceeds of
mortgaged property and Rs.12.17 Crores being the net sale proceeds in the hands
of HCCPL. It is further submitted that the attached immovable properties were
shortlisted for provisional attachment under Section 5(1) of PMLA to recover the
proceeds of the crime, as being equivalent in value as per the second limb of
Section 2(1)(u) of PMLA. Profuse reliance was placed on paragraph 172 of Vijay
2025 (1) KHC 409
2024 SCC (OnLine ) KER 3410
W.A.Nos.1926 of 2025 & connected cases :13: 2025:KER:97426
Madanlal Choudhary (supra) wherein the argument advanced that the
attachment of the property must be equivalent in value of the proceeds with the
crime only if the proceeds with the crime are situated outside India was repelled.
It is urged that the definition of "Proceeds of Crime" was wide enough to not only
refer to the property equivalent in value of any such property. It is further
submitted that either party, including the authority, if aggrieved by the order passed
by the adjudicating authority, can file an appeal under Section 26 of the Act,
particularly under sub-section (l) of S.26. That apart, even a decision rendered by
the Appellate Tribunal is appealable under S.42 of the Act. Any person aggrieved by
the decision or order of the Appellate Tribunal would be entitled to file an appeal
before the High Court within the prescribed period of limitation. It is further
submitted that the appellants had acted upon the directions issued by the learned
Single Judge and had preferred an appeal before the Appellate Authority and had
even remitted the fees. However, on a tenuous contention that some defect was
noted, they have, without prosecuting the appeal, ventured to file an appeal.
Having elected the remedy suggested by the learned Single Judge, there was no
justification in again approaching this Court in appeal, contends the learned
Counsel.
8. We have carefully considered the submissions advanced.
9. We shall first deal with the contention advanced by the learned
Standing Counsel that the learned Single Judge was well justified in relegating the
W.A.Nos.1926 of 2025 & connected cases :14: 2025:KER:97426
parties to its statutory remedy. A perusal of the statutory framework reveals that
Chapter III of the Prevention of Money Laundering Act, 2002 deals with
attachment, adjudication, and confiscation of property. An order passed under
Section 5(1) of the Act is merely provisional in nature, and its validity extends only
for a period of 180 days, subject to confirmation by an independent Adjudicating
Authority. Under Section 5(2), the officer issuing the provisional attachment order is
mandated to forward a copy of the same to the Adjudicating Authority in a sealed
envelope. Sub-section (5) of Section 5 requires that a complaint be filed by the said
officer before the Adjudicating Authority within 30 days of the order. The said
exercise has in fact been carried out in the instant case. As per Section 8(1) of the
Act, upon receipt of the complaint, if the Adjudicating Authority has reason to
believe that any person has committed an offence under Section 3 or is in
possession of proceeds of crime, it may issue a show cause notice to such person.
The notice shall call upon the noticee to disclose the sources of his income,
earnings, or assets through which the property under provisional attachment was
acquired, and to produce supporting evidence, relevant particulars, and
information, demonstrating why such property should not be declared as involved
in money laundering and consequently confiscated by the Central Government.
Section 8(2) further mandates the Adjudicating Authority to consider the reply
submitted by the noticee, provide an opportunity of hearing to both the notice and
the officer issuing the provisional attachment, and take into account all materials on
record before arriving at a conclusion. Upon due consideration, the Adjudicating
W.A.Nos.1926 of 2025 & connected cases :15: 2025:KER:97426
Authority may record its findings on whether all or any of the properties mentioned
in the notice are involved in money laundering. The Authority may either confirm or
decline to confirm the provisional attachment order accordingly. Under Section 8(4),
upon confirmation of the provisional attachment, the authorised officer shall take
possession of the attached property. Under Section 8(5), upon conclusion of the
trial, if the Special Court finds that the offence of money laundering has been
committed, it shall order that the property involved in such offence shall stand
confiscated to the Central Government. Conversely, under Section 8(6), if the Court
finds that no offence of money laundering has taken place, or that the property is
not involved in money laundering, it shall order release of the property.
10. Section 26 of the PMLA speaks about Appeals to the Appellate
Tribunal. It says that the Director or any person aggrieved by an order passed by
the Adjudicating Authority under this Act may prefer an appeal to the Appellate
Tribunal, and any reporting entity aggrieved by an order of the Director passed
under sub-section (2) of Section 13 may likewise file an appeal before the Appellate
Tribunal. Every such appeal shall be filed within forty-five days from the date of
receipt of a copy of the order of the Adjudicating Authority or the Director, as the
case may be, in the prescribed form and accompanied by the prescribed fee;
however, the Appellate Tribunal may, after affording an opportunity of being heard,
entertain an appeal filed after the expiry of the said period if it is satisfied that
there was sufficient cause for the delay. Upon receipt of an appeal, the Appellate
W.A.Nos.1926 of 2025 & connected cases :16: 2025:KER:97426
Tribunal shall, after giving the parties an opportunity of being heard, pass such
orders as it deems fit, including confirming, modifying, or setting aside the order
appealed against, and shall communicate a copy of every such order to the parties
to the appeal as well as to the concerned Adjudicating Authority or the Director, as
applicable. The Appellate Tribunal is to endeavour to dispose of the appeal finally
within six months from the date of its filing.
11. A further appeal is provided to the High Court under Section 42 of the
Act. The said provision provides that any person aggrieved by a decision or order of
the Appellate Tribunal may prefer an appeal to the High Court within sixty days
from the date on which the decision or order is communicated to him, on any
question of law or fact arising out of such decision or order. The High Court may, if
it is satisfied that the appellant was prevented by sufficient cause from filing the
appeal within the said period, permit the appeal to be filed within a further period
not exceeding sixty days.
12. In the case on hand, in terms of the directions issued by the learned
Single Judge, an appeal was preferred by the Appellants before the Appellate
Tribunal . Requisite Court fee was also remitted. It is contended that some defect
was noted and hence it is urged that the appeal provisions are illusory. As to what
was the defect noted, or what prevented the appellants from curing the defect or in
approaching the learned Single Judge complaining of inaction in complying with the
directions is not mentioned in the petition.
W.A.Nos.1926 of 2025 & connected cases :17: 2025:KER:97426
13. As rightly held by the learned Single Judge, the Act provides an
efficacious alternative remedy through a tiered appellate mechanism, including a
second appeal and further recourse to the High Court. It is well-settled that the
extraordinary writ jurisdiction under Article 226 of the Constitution of India is not to
be invoked to circumvent or short-circuit statutory procedures, save in exceptional
and extraordinary circumstances where statutory remedies are wholly inadequate
or ill-suited to address the grievance, and even then, only for compelling reasons.
14. In United Bank Of India v. Satyawati Tondon And Others7, the
Hon'ble Supreme Court observed as under in paragraph 43 of the judgment:
43. Unfortunately, the High Court overlooked the settled law
that the High Court will ordinarily not entertain a petition under Article
226 of the Constitution if an effective remedy is available to the
aggrieved person and that this rule applies with greater rigour in
matters involving recovery of taxes, cess, fees, other types of public
money and the dues of banks and other financial institutions. In our
view, while dealing with the petitions involving challenge to the action
taken for recovery of the public dues, etc. the High Court must keep in
mind that the legislations enacted by Parliament and State Legislatures
for recovery of such dues are a code unto themselves inasmuch as
they not only contain comprehensive procedure for recovery of the
dues but also envisage constitution of quasi-judicial bodies for
redressal of the grievance of any aggrieved person. Therefore, in all
such cases, the High Court must insist that before availing remedy
under Article 226 of the Constitution, a person must exhaust the
remedies available under the relevant statute.
(2010) 8 SCC 110
W.A.Nos.1926 of 2025 & connected cases :18: 2025:KER:97426
44. While expressing the aforesaid view, we are conscious that
the powers conferred upon the High Court under Article 226 of the
Constitution to issue to any person or authority, including in
appropriate cases, any Government, directions, orders or writs
including the five prerogative writs for the enforcement of any of the
rights conferred by Part III or for any other purpose are very wide and
there is no express limitation on exercise of that power but, at the
same time, we cannot be oblivious of the rules of self-imposed
restraint evolved by this Court, which every High Court is bound to
keep in view while exercising power under Article 226 of the
Constitution.
45. It is true that the rule of exhaustion of alternative remedy
is a rule of discretion and not one of compulsion, but it is difficult to
fathom any reason why the High Court should entertain a petition filed
under Article 226 of the Constitution and pass interim order ignoring
the fact that the petitioner can avail effective alternative remedy by
filing application, appeal, revision, etc. and the particular legislation
contains a detailed mechanism for redressal of his grievance.
15. In the case on hand the appellants have elected to approach the
Appellate Remedy and after remitting the requisite fee have approached this Court
with the Writ Petition. The situation in the said circumstances is even more
precarious. On that preliminary ground itself, we find no reason to entertain the
Writ Petition.
16. In order to persuade this Court that the order passed by the
adjudicating authority is fraught with a jurisdictional error, it was contended that
the immovable properties which have now been attached have all been purchased
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before the commission of the alleged crime and therefore will not fall within the
ambit of "proceeds of crime" as defined under Section 2(1)(u) of the PMLA Act. In
view of the vehement submissions made before us, we shall deal with the said
question to clear the issues.
17. "Proceeds of Crime" has been defined under Section 2(1)(u) of the
Act. The said provision reads as under:
Section 2 (1) (u)- "proceeds of crime" means any property
derived or obtained, directly or indirectly, by any person as a result of
criminal activity relating to a scheduled offence or the value of any
such property or where such property is taken or held outside the
country, then the property equivalent in value held within the country
or abroad;
[Explanation.--For the removal of doubts, it is hereby clarified
that "proceeds of crime" include property not only derived or obtained
from the scheduled offence but also any property which may directly
or indirectly be derived or obtained as a result of any criminal activity
relatable to the scheduled offence. ( emphasis supplied )
18. The word "property" which is classified as a noun, finds a place in
Section 2(1)(u). The said provision reads as under:
Section 2(1) (v)- "property" means any property or assets of every
description, whether corporeal or incorporeal, movable or immovable,
tangible or intangible and includes deeds and instruments evidencing
title to, or interest in, such property or assets, wherever located;
W.A.Nos.1926 of 2025 & connected cases :20: 2025:KER:97426
[Explanation.--For the removal of doubts, it is hereby clarified that the
term "property" includes property of any kind used in the commission
of an offence under this Act or any of the scheduled offences;
19. Value has been defined under Section 2 (1) (zb). It reads as under:
2 (1) (zb)- "value" means the fair market value of any property
on the date of its acquisition by any person, or if such date cannot be
determined, the date on which such property is possessed by such
person.
20. Now we shall come to the provisions dealing with attachment.
Section 5 of the Act provides for Attachment. The said provision reads as under:
Section 5: Attachment of property involved in
money-laundering.--
(1)Where the Director or any other officer not below the rank of
Deputy Director authorised by the Director for the purposes of this
section, has reason to believe (the reason for such belief to be
recorded in writing), on the basis of material in his possession, that--
(a) any person is in possession of any proceeds of crime; and
(b) such proceeds of crime are likely to be concealed, transferred or
dealt with in any manner which may result in frustrating any
proceedings relating to confiscation of such proceeds of crime under
this Chapter, he may, by order in writing, provisionally attach such
property for a period not exceeding one hundred and eighty days from
the date of the order, in such manner as may be prescribed:
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Provided that no such order of attachment shall be made unless, in
relation to the scheduled offence, a report has been forwarded to a
Magistrate under section 173 of the Code of Criminal Procedure, 1973
(2 of 1974), or a complaint has been filed by a person authorised to
investigate the offence mentioned in that Schedule, before a
Magistrate or court for taking cognizance of the scheduled offence, as
the case may be, or a similar report or complaint has been made or
filed under the corresponding law of any other country:
Provided further that, notwithstanding anything contained in 1 [first
proviso], any property of any person may be attached under this
section if the Director or any other officer not below the rank of
Deputy Director authorised by him for the purposes of this section has
reason to believe (the reasons for such belief to be recorded in
writing), on the basis of material in his possession, that if such
property involved in money-laundering is not attached immediately
under this Chapter, the non-attachment of the property is likely to
frustrate any proceeding under this Act.
[Provided also that for the purposes of computing the period of one
hundred and eighty days, the period during which the proceedings
under this section is stayed by the High Court, shall be excluded and a
further period not exceeding thirty days from the date of order of
vacation of such stay order shall be counted.;
(2) The Director, or any other officer not below the rank of Deputy
Director, shall, immediately after attachment under sub-section (1),
forward a copy of the order, along with the material in his possession,
referred to in that sub-section, to the Adjudicating Authority, in a
sealed envelope, in the manner as may be prescribed and such
Adjudicating Authority shall keep such order and material for such
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period as may be prescribed.
(3) Every order of attachment made under sub-section (1) shall cease
to have effect after the expiry of the period specified in that
sub-section or on the date of an order made under 3 [sub-section (3)]
of section 8, whichever is earlier.
(4) Nothing in this section shall prevent the person interested in the
enjoyment of the immovable property attached under sub-section (1)
from such enjoyment. Explanation.--For the purposes of this
sub-section, "person interested", in relation to any immovable property,
includes all persons claiming or entitled to claim any interest in the
property.
(5) The Director or any other officer who provisionally attaches any
property under sub-section (1) shall, within a period of thirty days from
such attachment, file a complaint stating the facts of such attachment
before the Adjudicating Authority
21. The learned counsel appearing for the appellant, relying upon the
observations of the learned Single Judge in Satish Motilal Bidri (supra),
contended that the expression "value" occurring in Section 2(1)(u) can only refer to
the monetary worth of the property directly derived from criminal activity. It was
further argued that attachment to the extent of the monetary value of a property
not derived from criminal activity is permissible under the PMLA only where the
property derived from such criminal activity has been taken out of India or is held
outside the country. In other words, according to the appellant, the power to
W.A.Nos.1926 of 2025 & connected cases :23: 2025:KER:97426
proceed against property of equivalent value, having no nexus with the predicate
offence, arises only when the tainted property is located abroad.
22. The aforesaid submission appears to have been advanced without due
consideration of the binding pronouncement of the Constitution Bench of the
Supreme Court in Vijay Madanlal Choudhary (supra). In that case, an identical
contention that attachment of property equivalent in value is permissible only when
the proceeds of crime are situated outside India was expressly raised and rejected.
Paragraph 172 of the judgment reads thus:
"It was also urged before us that the attachment of property
must be equivalent in value of the proceeds of crime only if the
proceeds of crime are situated outside India. This argument, in our
opinion, is tenuous. For, the definition of 'proceeds of crime' is wide
enough to not only refer to the property derived or obtained as a result
of criminal activity relating to a scheduled offence, but also of the
value of any such property. If the property is taken or held outside the
country, even in such a case, the property equivalent in value held
within the country or abroad can be proceeded with. The definition of
'property' as in Section 2(1)(v) is equally wide enough to encompass
the value of the property of proceeds of crime. Such interpretation
would further the legislative intent in recovery of the proceeds of crime
and vesting it in the Central Government for effective prevention of
money-laundering."
23. To place the issue beyond doubt, it is apposite to deconstruct the
definition of "proceeds of crime" into three distinct components:
W.A.Nos.1926 of 2025 & connected cases :24: 2025:KER:97426
(i) property derived or obtained, directly or indirectly, as a result of criminal
activity relating to a scheduled offence;
(ii) the value of any such property; and
(iii) where such property has been taken or held abroad, any other property of
equivalent value, whether held in India or abroad.
24. It is evident that the legislature has consciously incorporated the
mechanism of provisional attachment to address situations of urgency. A person
engaged in criminal activity, intending to project the proceeds of crime as legitimate
or untainted, would ordinarily act swiftly to place such assets beyond the reach of
law. At the initial stage of investigation, the full extent and contours of the offence
are often unclear. Such crimes are typically committed in secrecy and through
layered transactions that may appear lawful on the surface. The true nature of the
offence emerges only after a detailed investigation, which necessarily takes time.
Until then, the precise quantum of wrongful gain cannot be accurately determined.
Provisional attachment is therefore intended to secure suspect assets and ensure
their availability for effective enforcement.
25. Of the three categories of attachable property, the first unmistakably
falls into the category of property that is tainted. This category comprises property
for which there is prima facie material showing that its source or consideration is
traceable to criminal activity relating to a scheduled offence. The essence of the
offence of money-laundering lies in the projection of such tainted property as
W.A.Nos.1926 of 2025 & connected cases :25: 2025:KER:97426
untainted. This category also includes property acquired by using tainted property
as consideration, whether directly or indirectly. For instance, a bribe or illegal
gratification received by a public servant in cash constitutes tainted property and,
therefore, proceeds of crime. If such cash is used to purchase immovable property
or is converted into cryptocurrency or any other valuable asset, the resultant
asset/property would equally constitute proceeds of crime, having been indirectly
derived from criminal activity.
26. The second and third categories ordinarily consist of property that
may be untainted in origin and acquired through legitimate means. Such property is
nonetheless brought within the statutory fold where the tainted assets are
untraceable, unreachable, or insufficient to account for the pecuniary advantage
derived from the criminal activity. It is for this reason that the statute mandates
equivalence in value when such property is attached. Before confirmation of
attachment, there must therefore be at least a tentative assessment of the value of
the wrongful gain, unless such assessment is impracticable at that stage due to the
complexity of the case. The final order of confiscation must always be confined to
the value of the illicit gains.
27. The use of the expression "such property" in the second category
clearly refers back to property of the nature described in the first category, the
legislative intent being to permit attachment of other property of equivalent value
where the tainted property itself cannot be traced. The absence of the words "any
W.A.Nos.1926 of 2025 & connected cases :26: 2025:KER:97426
other property of equivalent value" in the second category does not dilute this
intent, particularly when read in harmony with the third category. It would be
apposite to remember that property would mean any property or assets of every
description, whether corporeal or incorporeal, movable or immovable, tangible or
intangible and includes deeds and instruments evidencing title to, or interest in,
such property or assets, wherever located, and is not limited to immovable
property.
28. Consequently, where the enforcement authority is unable to trace the
tainted property, it is lawfully entitled to proceed against other property of the
accused under the second or third category, provided such property is of near or
equivalent value to the proceeds of crime. To ensure fairness and proportionality,
the authorised officer must assess, even if tentatively, and periodically re-evaluate
the quantum of proceeds of crime as the investigation progresses. Attachment
must be limited to assets of equivalent value, and eventual confiscation must be
strictly confined to the illicit gains. The burden of proving facts to the contrary lies
on the person asserting them.The above view taken by us gets support from the
law laid down by the Delhi High Court in The Deputy Director Directorate of
Enforcement Delhi v. Axis Bank 8.
29. Though the Two Judge Bench of the Apex Court in Pavana Dibbur
(supra), held that the property acquired before the commission of the alleged
2019:DHC:1887
W.A.Nos.1926 of 2025 & connected cases :27: 2025:KER:97426
offence cannot be proceeded under the PMLA, 2002, the above view was taken
without reckoning the interpretation of law laid down by the binding Three Judge
Bench of the Apex Court in paragraph 172 of Vijay Madanlal (supra). The Hon'ble
Supreme Court in Vijay Madanlal (supra) repelled the argument that the
attachment of property must be equivalent in value of the proceeds of crime only if
the proceeds of crime are situated outside India and went on to hold that the
definition of "proceeds of crime" is of wide amplitude and includes not only
property directly derived from criminal activity but also the value of such property.
If the property is taken or held outside the country, even in such a case, the
property equivalent in value held within the country or abroad can be proceeded
with. The definition of 'property' as in Section 2(1)(v) is equally wide enough to
encompass the value of the property of proceeds of crime. Such an interpretation
advances the legislative objective of attachment and confiscation of proceeds of
crime, which is the core purpose of the PMLA. The Court emphasised that the
statutory scheme is designed to reach the proceeds of crime regardless of the form
they take or the person in whose name they are held, and that statutory
interpretation must further the object of the legislation rather than defeat it by a
narrow or pedantic construction.
30. In the case on hand, it can be seen from the impugned orders that
the competent authority has assessed the tentative value of the wrongful gain and
has also determined the value of the property which is required to be attached for
W.A.Nos.1926 of 2025 & connected cases :28: 2025:KER:97426
the purpose of eventual confiscation, if required. The said exercise is in tune with
the statutory provisions.
In view of the discussion above, we find no reason to interfere with the
judgment rendered by the learned Single Judge. These appeals are dismissed. It
would be open to the appellants to pursue the appeals before the Appellate
Tribunal in accordance with law, if so advised.
sd/-
RAJA VIJAYARAGHAVAN V,
JUDGE
Sd/-
K.V. JAYAKUMAR,
JUDGE
PS/18/12/25
