Orissa High Court
M/S. Deepak Steel And Power Ltd vs Enforcement Directorate on 22 September, 2025
Author: Aditya Kumar Mohapatra
Bench: Aditya Kumar Mohapatra
IN THE HIGH COURT OF ORISSA AT CUTTACK
CRLMC No.511 of 2025
M/s. Deepak Steel And Power Ltd., ..... Petitioner
Keonjhar
Represented By Adv. - A.S.
Nadkarni, Sr. Adv.
Along with
Shibani Shankar Pradhan,
Adv.
-versus-
Enforcement Directorate, Govt. Of ..... Opp. Party
India
Represented By Adv. -
Bibekananda Nayak, Sr.
Adv. for ED
CRLMC No.506 of 2025
M/s. Deepak Steel And Power Ltd., ..... Petitioner
Keonjhar
Represented By Adv. - A.S.
Nadkarni, Sr. Adv.
Along with
Shibani Shankar Pradhan,
Adv.
-versus-
State of Odisha (Vig.) ..... Opp. Party
Represented By Adv. - N.
Maharana, A.S.C. (Vig.)
Page 1 of 27
CORAM:
THE HON'BLE MR. JUSTICE ADITYA KUMAR MOHAPATRA
I.A. No.391 of 2025 (CRLMC No.511 of 2025)
&
I.A. No.393 of 2025 (CRLMC No.506 of 2025)
ORDER
22.09.2025
Order No.
05.
1. The aforesaid interim applications bearing I.A No.391 of 2025
(arising out of CRLMC No.511 of 2025) and I.A No.393 of 2025 (arising
out of CRLMC No.506 of 2025) have been filed by the same Petitioner
with similar prayers. As such, both the matters are taken together for
disposal.
2. The I.A No.391 of 2025 has been filed with a prayer to stay of the
proceeding pending against the petitioner in Complaint Case(PMLA)
No.40 of 2018 pending in the Special Court (PMLA)-cum-Sessions Judge,
Khurda at Bhubaneswar, arising out of ECIR No. 0I/2014/BSZO and all
proceedings emanating therefrom, along with an additional prayer seeking
stay of the order dated 3.9.2024 passed by the learned Adjudicating
Authority (under the PMLA) at New Delhi in Original Complaint No. 500
of 2015 whereby the order of provisional attachment of the movable and
immovable properties of the Petitioner-Corporation has been confirmed
and to allow operation of the plants redeeming the licenses of the units.
3. Similarly, the I.A No.393 of 2025 (arising out of CRLMC No.506
of 2025), has been filed with a prayer to stay the criminal proceeding
pending against the petitioner in V.G.R Case No.5 (c) of 2013 pending in
the Court of the learned Special Judge(Vigilance), Keonjhar, along with a
further prayer to stay the attachment and thereby allow operation of the
plants redeeming all the licenses of the plants which were cancelled.
FACTS
4. At the outset, it is pertinent to mention that the adjudication of the
parent CRLMC applications is currently underway before this Court and
the instant order is confined to the adjudication of the aforementioned two
interlocutory applications filed with the prayers as indicated here in above.
The context in which the aforesaid interlocutory applications have been
filed, is as follows; Initially, several entities involved in mining operation
in the State were directed by the judgment dated 02.08.2017, passed in the
PIL instituted upon the inquiry report of the Justice Shah Commission on
illegal mining, of the Hon'ble Supreme Court and the report of the Central
Empowerment Committee to pay compensation with regard to the illegally
extracted minerals. The present Petitioner, which is a Company
incorporated as per the Act, has purchased minerals from a lease holder,
who is one of the entities directed to furnish compensation with respect to
illegal mining activities, during the period 2004-2009.
5. Subsequently, a Vigilance case was lodged against the Petitioner,
following which an ECIR was lodged by the Director of Enforcement
which resulted in Complaint Case (PMLA) No.40 of 2018 before the
learned Sessions Judge-cum-Special Court under the Prevention of Money
Laundering Act, 2002. Thereafter a provisional order of attachment, in
respect of several scheduled properties in the name of the Petitioner-
Company, was issued by the Directorate of Enforcement on 21.05.2015. A
copy of the order is under Annexure-5 to CRLMC No.511 of 2025.
Finally, the provisional attachment order has been confirmed by the
learned Adjudicating Authority, under the PMLA, at New Delhi, vide its
order dated 03.06.2024. In the present interlocutory applications the
Petitioner has a specific prayer to allow operation of the Petitioner's
Plant(s) attached in the aforesaid provisional order of attachment, which
has been subsequently confirmed by the appropriate authority.
CONTENTIONS OF THE PETITIONER-COMPANY
6. Heard Mr. A.S. Nadkarni, learned Senior Counsel along with M/s.
Shibani Shankar Pradhan, learned counsel for the Petitioner-Company.
7. Learned Senior Counsel for the Petitioner-Company at the very
outset contended that the present Petitioner has been falsely implicated in a
malicious prosecution. It was the learned Counsel's contention that the sole
allegation against the Company is that it was one of the purchasers of iron
ore from a certain lessee. It was contended that such an allegation is devoid
of merit, as the Petitioner-Company has maintained an unblemished
operational record from 1994 until 2013. The learned counsel for the
Petitioner contended that the transactions with the concerned Lessee
occurred only during a limited period between 2004 and 2009, which
constitutes a narrow window when viewed against the backdrop of the
Petitioner's long-standing lawful operations. It was further submitted that
the business activities of the Petitioner, both prior to and subsequent to the
said period in question, are entirely unblemished, which further suggests
that allegations made against the Petitioner-Company are baseless and does
not in any way warrant the initiation of the prosecution against the
Petitioner.
8. The Learned Counsel for the Petitioner, at this stage, further
contended that in V.G.R Case No.5(c) of 2013, the Investigating Officer
has filed an attachment petition bearing C.M.A No.10 of 2013, wherein the
learned District Judge, Keonjhar, vide its order dated 12.09.2013, has
issued ex-parte ad interim order of attachment with regard to the scheduled
properties belonging to the Petitioner-Company. Similarly, in in
ECIR/01/2014/BSZO, a provisional order of attachment was passed
regarding the immovable and movable assets of the Petitioner-Company,
which has later been confirmed by the Ld. Adjudicating Authority (under
the PMLA) at New Delhi, vide its order dated 03.09.2024 in Original
Complaint No.500 of 2015. It was contended that the Adjudicating
Authority has confirmed the said order of provisional attachment on the
erroneous finding that the movable and immovable properties of the
Petitioner-Company so attached are the proceeds of crime.
9. Furthermore, it is the contention of the Petitioner that in the instant
case, the trial is still pending as of today and charges have not yet been
framed against the Petitioner-Company. Moreover, in the Vigilance Case
bearing VGR Case No.05/2013, merely 57 out of a total of 178 prosecution
witnesses have been examined in the last 12 years and there are around
80,000 documents yet to be examined. The Learned Counsel for the
Petitioner contended that given the slow pace of the trial, it is highly
unlikely that the trial will be concluded any time soon. As a result, the
Petitioner-Company is facing irreparable loss and suffering due to the
attachment of the assets of the Petitioner-Company.
10. Next, referring to sections 5(1) and 5(4) of the PMLA, 2002, the
Learned Counsel for the Petitioner contended that the attachment of
property under section 5(1) shall not in any way prevent any person
interested from the enjoyment of the immovable properties as per section
5(4). Learned Senior Counsel also contended that section 5(1) of the
PMLA, 2002 is primarily intended to be a safeguard against any form of
alienation of assets allegedly acquired from the proceeds of crime.
Furthermore, since such attachment is interim in nature, the Petitioner's
ownership over such immovable properties is not automatically ousted or
extinguished by means of such attachment. The Learned Counsel for the
Petitioner further submitted that Section 5(4) of PMLA, 2002 explicitly
provides a statutory safeguard which allows a person interested in such
property to continue to enjoy and utilize the same as per his pre-attachment
entitlements.
11. In furtherance of his contentions, the Learned Senior Counsel for
the Petitioner also referred to section 8 of the PMLA, 2002 and contended
that unequivocal protection has been afforded to the persons interested in
such attached properties to enjoy the same in a lawful manner despite the
provisional attachment. It was submitted that provisional attachment, as
contemplated under the PMLA, 2002, is for the purpose of securing the
property in the event of a potential confiscation. Such attachment, is
therefore, a purely preventive measure. He further contended that section
8(4) of PMLA, 2002 contemplates physical possession only effectuating a
confiscation under the said provision. This implies that there cannot be any
premature deprivation of bonafide rights of third parties. Moreover,
Learned Counsel for the Petitioner contended that merely because the
attachment has been confirmed by the Adjudicating Authority, does not in
any way mean that the ownership or possessory rights of the Petitioner
have been extinguished as a result thereof. To further substantiate his
contentions, the Learned Counsel for the Petitioner has placed reliance on
the decision of the Hon'ble Supreme Court in Vijay Madanlal Choudhary
and Ors. Vs. Union of India and Ors. reported in (2023) 12 SCC 1; the
Hon'ble Delhi Court's decisions in SRJ Infratech Pvt. Ltd. v. Director,
reported in 2016 SCC OnLine Del 221 and Deputy Director, Directorate
of Enforcement of Delhi Vs. Axis Bank and Ors. reported in 2019 SCC
Online Del 7584; along with the decision of the Hon'ble High Court of
Madras in Kamarunnisa Ghori v. Chairperson, Prevention of Money
Laundering, reported in 2012 SCC OnLine Mad 2527.
12. As such, the Learned Senior Counsel for the Petitioner contended
that by not allowing the Petitioner to enjoy/ use the properties attached, the
Opposite Parties are acting in contravention of the legislative intent of the
statute. The Learned Senior Counsel for the Petitioner further submitted
that the Court must strike a balance between preventing alienation of the
property and avoiding unjust deprivation or destruction of its economic
utility. Denial of the Petitioner's right to operate the plants, particularly in
the absence of a final finding of guilt or criminal liability, amounts to pre-
trial punishment. It was contended that the Petitioner-Company has a legal
right to operate and maintain the attached plants in the ordinary course of
business, and in the event the plants are not kept operational then the same
shall lead to not only an unmitigated deterioration of the plants and loss of
revenue and livelihood, but also result in a loss of around Rs.300 crore per
annum to the State exchequer. Accordingly, it was contended by the
Learned Counsel for the Petitioner that the present Interim Applications be
allowed and the Petitioner be permitted to resume operations of its plants
that have been attached and the relevant licenses necessary for such
operation may also be redeemed and in such event the Petitioner shall
unequivocally undertake to not to alienate or transfer the ownership in any
such properties in any manner whatsoever.
CONTENTIONS OF THE OPPOSITE PARTIES
13. Heard Mr.Bibekananda Nayak, learned retainer counsel appearing
for the Enforcement Directorate and Mr.N.Maharana, learned A.S.C for the
Vigilance Department.
14. At the outset, Mr.Bibekananda Nayak, Learned Counsel for the
Enforcement Directorate contended that the Petitioner has no prima facie
case made out in the present CRLMC applications since the matter has
already been adjudicated by this Court in CRLMC No.775 of 2019. It was
submitted by the learned senior counsel that earlier, vide CRLMC No.775
of 2019 the Petitioner had challenged the order of cognizance dated
21.08.2025. However, such application was dismissed on 01.08.2019.
Therefore, since an application under Section 482 of the Cr.P.C on behalf
of the Petitioner was earlier dismissed, the present application under
Section 482 of the Cr.P.C by the same Petitioner is not maintainable before
this Court. To further substantiate his contentions, the Learned counsel for
the ED has placed reliance on the decision of the Hon'ble Supreme Court
in Bhisham Lal Verma v. State of UP & Anr., reported in 2023 INSC 955.
15. Next, referring to the PMLA, 2002, the learned counsel for the
E.D. submitted before this Court that the order of provisional attachment,
under Annexure-4 to the CRLMC No.511 of 2025, has already been
confirmed by the Adjudicating Authority under Section-8(3) of the Act,
vide order dated 03.09.2024 under Annexure-5 to the aforesaid CRLMC
application. It was further contended that as per Section 26 of the PMLA,
2002, the aforesaid order of confirmation of provisional attachment is an
appealable order. Moreover, the order which would eventually be passed
under Section 26 is further appealable under Section 42 of PMLA, 2002,
before this Court. To lend credence to his arguments, the Learned Senior
Counsel for the Enforcement Directorate has referred to the decision of the
High Court of Madras in G. Srinivasan v. Chairperson, reported in 2011
SCC OnLine Mad 2909, specifically paragraphs 19 and 20, and A. John
Kennedy v. Joint Director reported in 2020 SCC OnLine Mad 28044.
16. Further, referring to Section-8(4) of the PMLA, 2002, the Learned
counsel for the ED submitted before this Court that under the aforesaid
provision, after the order of confirmation of provisional attachment has
been made under Section 8(3), the Director appointed under the Act shall
take into possession such property which has been attached under Section
5 of the Act or frozen under Section 17(1A) of the Act. Additionally, in the
event it is not practicable to take into possession the property frozen under
Section 17(1A) of the Act, then the order of confiscation shall have the
same effect as if the property has been taken possession of. Thereafter, the
Learned counsel for the E.D. went on to argue that in view of the provision
contained in Section 8(7) of the Act, the present interlocutory applications
are not maintainable before this Court. Consequently, the Learned counsel
submitted that the balance of convenience in the instant case tilts heavily in
favour of the Enforcement Directorate since the provisional order of
attachment has already been confirmed by the Adjudicating Authority,
under Annexure-5.
17. Additionally, the learned A.S.C for the Vigilance Department has
specifically opposed the prayer of the Petitioner in I.A. No.393 of 2025 for
staying the criminal proceeding bearing VGR. Case No.5(c) of 2023
pending in the court of learned Special Judge (Vigilance), Keonjhar on the
ground that the trial in the said case is going on and there is also a statutory
bar under the P.C. Act, as such, staying of the aforesaid criminal
proceeding at this stage would be against the larger interest of justice. So
far as the prayer of the Petitioner to allow operation of the Plants is
concerned, the learned A.S.C has opposed said prayer of the Petitioner on
the ground that in the event the Petitioner-Company is allowed to operate
the Plants then there is every Possibility that the Petitioner might transfer
the ownership of the said plants by taking advantage of the order of this
Court.
18. In such view of the matter, the learned Counsel for the Opposite
Parties contended that since the Petitioner has neither availed the alternate
remedy of appeal nor he has approached before the learned Trial Court
under Section 8(7) of the Act before approaching this Court for relief, and
also the fact that the Petitioner-Company had earlier filed a petition under
Section 482 Cr.P.C, which was dismissed by a Coordinate Bench of this
Court, the present Writ Petition on behalf of the Petitioner-Company is not
maintainable. As such, it was contended that the present interlocutory
applications are liable to be dismissed at the threshold.
ANALYSIS OF THE COURT
19. Heard the learned Sr. Counsel for the petitioner and learned
counsels appearing for E.D. as well as the ASC, Vigilance Dept. Perused
the interlocutory applications filed. As is evident from record, the I.A.
No.391 of 2025 filed in CRLMC No.511 of 2025 and the I.A. No.393 of
2025 filed in CRLMC No.506 of 2025, have been filed by the same
Petitioner-Company with a prayer essentially claiming a four-fold relief;
firstly, to stay the proceeding against Petitioner in Complaint Case
(PMLA) No.40 of 2018 pending in the Special Court (PMLA)-cum-
Sessions Judge, Khurda, Bhubaneswar, arising out of ECIR
No.01/2014/BSZO and all proceedings emanating therefrom; secondly, to
stay the order dated 3.9.2024 passed by the learned Adjudicating Authority
(under the PMLA) at New Delhi in Original Complaint No.500 of 2015;
thirdly, to stay the criminal proceeding pending against the petitioner in
V.G.R Case No.5 (c) of 2013 pending in the Court of the learned Special
Judge(Vigilance), Keonjhar; fourthly, to allow the operation of the
Petitioner's Plant(s) by redeeming the licenses of the said units.
20. On the contrary, the Opposite Parties-ED and Vigilance
Department, at the threshold, have challenged the maintainability of the
CRLMC No.511 of 2025 on the ground that earlier another CRLMC
No.775 of 2019 was filed by the same Petitioner and it has been dismissed
by a Coordinate Bench of this Court. Therefore, this Court is first required
to ascertain whether the instant CRLMC No.511 of 2025 is maintainable
before this Court.
21. It is a settled position of law that a second petition under Section
482 of the Cr.P.C would be maintainable in the event there has been some
change in circumstances or there exists a fresh cause of action which has
led to the filing of the second CRLMC application (reference maybe had to
the judgement of the Hon'ble Supreme Court in Superintendent and
Remembrancer of Legal Affairs, West Bengal v. Mohan Singh reported
in (1975) 3 SCC 706 ). Similarly, in Vinod Kumar, IAS. v. Union of
India, reported in 2021 SCC OnLine SC 559, the Hon'ble Supreme Court
has clarified that merely because the earlier CRLMC application was
dismissed, the same would not be a sufficient bar to filing a subsequent
application thereunder if the facts in the subsequent case so justify.
However, that said, it must also be kept in mind that while filing a
subsequent CRLMC application in light of changed circumstances, the
Petitioner has not tried to raise his pleas in a piecemeal manner, i.e., the
Petitioner must have honestly exhausted all the relief available to him in
the prior application and has not withheld a part thereof to seek relief later.
The aforesaid observation has also been made by the High Court Madras in
S. Madan Kumar v. K. Arjunan, reported in 2006 SCC OnLine Mad 94.
22. In the instant case, on perusal of the Order dated 01.08.2019 passed
in CRLMC No.775 of 2019, it can be seen that the said CRLMC
application was filed with a singular prayer to quash the order taking
cognizance dated 21.08.2018 by the learned Special Court under
Prevention of Money-Laundering Act, 2002 at Bhubaneswar in Criminal
Misc. (PMLA) Case No.40 of 2018 taking cognizance of offence under
Section 4 of the Act. In the instant case, the parent CRLMC applications
have been filed by the Petitioner-Company with a different prayer to quash
the entire PMLA and Vigilance proceeding qua the Petitioner. As such, it
would appear that the present CRLMC applications and the resulting I.As
are maintainable. Nevertheless, at the moment since the hearing in the
main CRLMC applications is on-going, this Court shall confine its
adjudication to the relief claimed in the aforementioned I.As only which
have been filed with a prayer to stay the vigilance and PMLA proceedings
against the Petitioner-Company and to allow the Petitioner-Company to
operate the attached plant(s). So far as challenge to the order of
confirmation of provisional appeal is considered, this Court is aware of the
fact that the Act makes it incumbent upon the Petitioner to approach the
Appellate Tribunal under Section 26 of the Act by arraying the order
confirming the provisional order of attachment, and, then approach the
High Court against the order of the Appellate Tribunal under Section 42 of
the Act. However, in the present interlocutory applications, the Petitioner
has not challenged the order of the adjudicating authority confirming the
provisional attachment order. Instead, it is the prayer of the Petitioner that
the Petitioner-Company be allowed to operate the plant(s) attached under
the Act. In the instant case, this Court is aware of the alternate and
efficacious remedy available to the Petitioner. However, given the peculiar
facts and circumstances of the case, this Court is of the considerate view
that it is necessary to adjudicate the grievance of the Petitioner in the
interlocutory applications filed herein.
23. Reverting back to the grievance of the Petitioner in the present
interlocutory applications, a careful scrutiny of Sections 5 & 8 of the Act
would reveal that the primary objective of attachment of properties under
the Act is to ensure that the proceeding for confiscation of the proceeds of
crime is not frustrated by the said property being transferred or alienated in
any manner. Once such a property is attached, in the event there is any
attempt to alienate such property, then the same would be null and void.
Therefore the Act is preventive in nature. The aforesaid position was
clarified by the Hon'ble Supreme Court in Vijay Madanlal Choudhary v.
Union of India, reported in (2023) 12 SCC 1 in its analysis contained in
paragraph 97 through till paragraph 146. The relevant paragraphs 97 and
146 are quoted hereinbelow;
"97. Even the Preamble to the Act reinforces the background
in which the Act has been enacted by Parliament being
commitment of the country to the international community. It
is crystal clear from the Preamble that the Act has been
enacted to prevent money laundering and to provide for
confiscation of property derived from or involved in money
laundering and for matters connected therewith or incidental
thereto. It is neither a pure regulatory legislation nor a pure
penal legislation. It is an amalgam of several facets essential
to address the scourge of money laundering as such. In one
sense, it is a sui generis legislation.
***
146. Accordingly, the phrase ―and projecting it as untainted
property‖ was added the initial definition in the 2002 Act.
However, it can also be inferred from here that since the
initial strokes of drafting the Act, the intention was always to
have a preventive Act and not simply a money laundering
(penal) Act. Today, if one dives deep into the financial
systems, anywhere in the world, it is seen that once a financial
mastermind can integrate the illegitimate money into the
bloodstream of an economy, it is almost indistinguishable. In
fact, the money can be simply wired abroad at one click of the
mouse. It is also well known that once this money leaves the
country, it is almost impossible to get it back. Hence, a
simplistic argument or the view that Section 3 should only find
force once the money has been laundered, does not commend
to us. That has never been the intention of Parliament nor the
international conventions.‖
(Emphasis supplied)
24. In fact, Section 5(4) of the Act makes it clear that nothing in
Section 5 shall prevent the person interested in the enjoyment of the
immovable property attached under sub-section (1) from such enjoyment.
Therefore, it is clear that the legislative intent behind attachment of
properties under the Act is not to deprive the persons interested in the said
property from enjoying the immovable property, especially since the
Authorities can always take symbolic possession of the property under
Section 8(4). Additionally, the term "attachment" has been defined under
Section 2(1)(d) of the Act to specifically denote the prohibition of transfer,
conversion, disposition or movement of the property in question and does
not in any way restrict the right of the owner of the property for enjoyment
of such property. For better appreciation, the relevant sections of the Act
are quoted hereinbelow;
"2. Definitions.--(1) In this Act, unless the context otherwise
requires,--
(d) "attachment" means prohibition of transfer,
conversion, disposition or movement of property by an order
issued under Chapter III;
***
5. Attachment of property involved in money-laundering.--
(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.
***
8. Adjudication.--
(4) Where the provisional order of attachment made
under sub-section (1) of section 5 has been confirmed under
sub-section (3), the Director or any other officer authorised by
him in this behalf shall forthwith take the 7 [possession of the
property attached under section 5 or frozen under sub-section
(1A) of section 17, in such manner as may be prescribed:
Provided that if it is not practicable to take possession of
a property frozen under sub-section (1A) of section 17, the
order of confiscation shall have the same effect as if the
property had been taken possession of.]‖
Therefore it is clear that it cannot be the intention of the
legislatures to completely deprive the Petitioner of his right of enjoying the
property attached. Especially before the proceeding in the PMLA case is
finalized. Since, completely restricting the Petitioner from enjoying its
attached Plant(s) would amount to a punitive and penal action and the
same is contrary to the stipulation in the Act, as is evident from the
aforesaid sections.
25. As has been already clarified, the proceeding in the PMLA case
involving the plant(s) of the Petitioner-Company is currently underway and
has not yet been finalized, and, as such, the Petitioner-Company's right of
enjoyment of its attached properties cannot be completely restricted in
view of the provisions enumerated in the Statute. Moreover, it is needless
to emphasize here that any curtailment of legal right or deprivation to
enjoy the property has to be in terms of the Statute and not otherwise. Such
observation of this Court is also supported by the observations of the
Hon'ble Supreme Court in Vijay Madanlal's case (supra), wherein the
Hon'ble Apex Court has stressed on the right of the person interested to
enjoy the attached property by clarifying that the power to take over
possession of the attached property under Section 8(4) of the Act must not
be resorted to at the drop of the hat, rather it is to be used judiciously. The
Hon'ble Supreme Court has also emphasized on the principle enshrined in
Section 5(4) of the Act. The relevant paragraphs are quoted hereinbelow;
"175. It is, thus, clear that the provision in the form of Section
5 provides for a balancing arrangement to secure the interest
of the person as well as to ensure that the proceeds of crime
remain available for being dealt with in the manner provided
by the 2002 Act. This provision, in our opinion, has reasonable
nexus with the objects sought to be achieved by the 2002 Act in
preventing and regulating money laundering effectively. The
constitutional validity including interpretation of Section 5 has
already been answered against the petitioners by different High
Courts [ (1) Bombay High Court in Radha Mohan
Lakhotia v. Enforcement Directorate, 2010 SCC OnLine Bom
1116; (2) High Court of Andhra Pradesh in B. Rama
Raju v. Union of India, 2011 SCC OnLine AP 152; (3) High
Court of Gujarat in Alive Hospitality and Food (P)
Ltd. v. Union of India, 2013 SCC OnLine Guj 3909; (4) High
Court of Karnataka in K. Sowbaghya v. Union of India, 2016
SCC OnLine Kar 282; (5) High Court of Sikkim at Gangtok
in Usha Agarwal v. Union of India, 2017 SCC OnLine Sikk 146;
and Delhi High Court in J. Sekar v. Union of India, 2018 SCC
OnLine Del 6523] . We do not wish to dilate on those decisions
for the view already expressed hitherto.
***
179. The other grievance of the petitioners is in reference to
the stipulation in sub-section (4) of Section 8 providing for
taking possession of the property. This provision ought to be
invoked only in exceptional situation keeping in mind the
peculiar facts of the case. In that, merely because the
provisional attachment order passed under Section 5(1) is
confirmed, it does not follow that the property stands
confiscated; and until an order of confiscation is formally
passed, there is no reason to hasten the process of taking
possession of such property. The principle set out in Section
5(4) of the 2002 Act needs to be extended even after
confirmation of provisional attachment order until a formal
confiscation order is passed.
***
180. Section 5(4) clearly states that nothing in Section 5
including the order of provisional attachment shall prevent
the person interested in the enjoyment of immovable property
attached under sub-section (1) from such enjoyment. The need
to take possession of the attached property would arise only
for giving effect to the order of confiscation. This is also
because sub-section (6) of Section 8 postulates that where on
conclusion of a trial under the 2002 Act which is obviously in
respect of offence of money laundering, the Special Court finds
that the offence of money laundering has not taken place or the
property is not involved in money laundering, it shall order
release of such property to the person entitled to receive it.
Once the possession of the property is taken in terms of sub-
section (4) and the finding in favour of the person is rendered
by the Special Court thereafter and during the interregnum if
the property changes hands and title vest in some third party, it
would result in civil consequences even to third party. That is
certainly avoidable unless it is absolutely necessary in the
peculiar facts of a particular case so as to invoke the option
available under sub-section (4) of Section 8.
***
183. It is unfathomable as to how the action of confiscation can
be resorted to in respect of property in the event of his acquittal
or discharge in connection with the scheduled offence.
Resultantly, we would sum up by observing that the provision
in the form of Section 8(4) can be resorted to only by way of
an exception and not as a rule. The analogy drawn by the
Union of India on the basis of decisions of this Court in Divl.
Forest Officer v. G.V. Sudhakar Rao [Divl. Forest
Officer v. G.V. Sudhakar Rao, (1985) 4 SCC 573 : 1986 SCC
(Cri) 34] , Biswanath Bhattacharya [Biswanath
Bhattacharya v. Union of India, (2014) 4 SCC 392 : (2014) 2
SCC (Cri) 342] , Yogendra Kumar Jaiswal v. State of
Bihar [Yogendra Kumar Jaiswal v. State of Bihar, (2016) 3
SCC 183 : (2016) 2 SCC (Cri) 1] , will be of no avail in the
context of the scheme of attachment, confiscation and vesting of
proceeds of crime in the Central Government provided for in
the 2002 Act."
(Emphasis Supplied)
26. The Hon'ble High Court of Madras in Kamarunnisa Ghori v.
Chairperson, Prevention of Money Laundering, reported in 2012 SCC
OnLine Mad 2527 had infact taken not of the same at a much prior in
point of time as thus;
"73. A careful scrutiny of Sections 5 & 8 would show that the
object of attachment is to ensure that the proceedings for
confiscation of proceeds of crime, are not frustrated. By retaining
symbolic, legal and constructive possession of the property, the
Government can always ensure that the proceedings for
confiscation are not frustrated. Once a property is attached and
necessary encumbrances are entered in the records of the Sub-
Registrar and once a prohibitive order is also passed, no alienation
can take place. Even if any alienations take place, they would be
null and void. Therefore, merely because physical possession is
retained by a person Accused of the scheduled offences under the
Prevention of Money Laundering Act, 2002, it does not mean that
the proceedings for confiscation may get frustrated. Section 5(4) of
the Act, in fact, makes it clear that nothing in Section 5 shall
prevent the person interested in the enjoyment of the immovable
property attached under sub-section (1) from such enjoyment. It
must be noted that Section 5(4) uses the expression "enjoyment of
the immovable property". Therefore, without depriving persons
interested, from enjoying the immovable property, the Respondents
can always take symbolic possession under Section 8(4)."
A similar view has been taken by the Hon'ble High Court of Delhi
in Deputy Director, Directorate of Enforcement of Delhi Vs. Axis Bank
and Ors. reported in 2019 SCC Online Del 7584 and in the case of M/s.
SRJ Infratech Pvt. Ltd. v. Director reported in 2016 SCC online Del 221.
27. In so far as, the judgements relied upon by the Ld. Counsel for the
Enforcement Directorate are concerned, the same are to no avail as
the same deal with a situation where a party intends to get his order of
attachment lifted or vacated. In the present case the Ld. Sr. Counsel for the
petitioner has in fact abandoned such a prayer at this stage and has
confined his argument to the proposition that it is a statutory right that
enjoyment of his property cannot be denied until the conclusion of the trial.
Thus, these judgments relied upon by the Ld. Counsel for the enforcement
directorate are not applicable to the facts of the case.
28. Ultimately, considering the submissions of the learned counsels
for both the parties, and taking into consideration the aforesaid analysis
and the peculiar facts and circumstances of the present case, this Court is
of the considered view that in the event the property attached is left
unattended, then it might lead to the deterioration and destruction of the
property in question and eventually leading to depreciation of the value of
the property in question. This will ultimately render futile the entire
objective of attachment of the Property, which is to preserve the property
so that necessary action can be taken under the Act in the event the Special
Court, under Section 8(5) of the Act, finds that the offence of money
laundering has indeed been committed. Moreover, it has also been brought
to the notice of the Court that that the livelihoods of many of the locals in
the region are directly connected to the operation of the attached plant(s).
If such plant(s) is not allowed to be operated, the locals engaged/ employed
therein are likely to suffer great hardships and they would be rendered
jobless.
29. It is a well-established principle which cannot be controverted that
while the State has the right to secure properties suspected to be proceeds
of crime, such attachment ought not to result in complete paralysis of a
company's legitimate business operations. More so, when the trial has
remained pending for over 10 years and no finding of guilt has been
arrived at. It appears from the record that the plants and immovable
properties of the Petitioner have been attached since 2013. The charges are
yet to be framed and the trial is far from conclusion given the number of
witnesses and voluminous records. In such facts of the case equities have
to be balanced between preventing alienation of the property and avoiding
unjust deprivation or destruction of its economic utility. Denying the
Petitioner the right to operate the plants, particularly in the absence of a
final finding of guilt or criminal liability, amounts to pre-trial punishment
and defeats the very object of the attachment, which is merely to secure the
property and not to punish.
30. In the aforesaid factual background, this court is also required to
take into consideration the economic cost of closure of the unit before even
they are found guilty of the offences alleged against them. It is apposite to
mention here that the industrial production adds to the economic growth of
the nation besides adding to the overall progress of the GDP of the
Country. Once a unit is closed by order of the court at an interim stage, it is
very difficult to revive the same at a later stage. Moreover, the order of
attachment being preventive in nature, the same cannot be given effect to
in a manner that is akin to a punitive action even before the trial gets over.
In such a scenario, the courts are required to take a balanced approach.
While preventing alienation, transfer, or disposition of the unit in question
in furtherance of the object of the statute, the courts must also ensure that
till the time the trial is concluded the property in question doesn't lose its
value and that the such orders passed by the court should not have an
adverse impact on the economy apart from safeguarding the interest of the
countless number of workers engaged in such industry before the final
verdict is delivered by the trial court.
31. Additionally, this Court is also of the observation that the
attachment of Property under Section 5(1) the PMLA and the confirmation
thereof by the Adjudicating Authority under Section 8(3), is merely
provisional in nature and is meant to be a measure to safeguard the
property for being confiscated at a later stage in the event it is found by the
trial court that such property has been acquired with the proceeds of crime.
In the instant case, the proceedings in both the PMLA and Vigilance case
are on-going. Therefore, in the meantime, in order to preserve the attached
plant(s) from being deteriorated and to safeguard the livelihood of the
locals that depend on the operation of the plant(s) for their subsistence, this
Court is of the view that in the larger interest of justice the attached
plant(s) of the Petitioner in the present PMLA and Vigilance proceedings
should be allowed to be operated by the Petitioner-Company.
32. At this juncture, Mr. Nadkarni, learned Sr. Counsel appearing on
behalf of the Petitioner-Company very fairly submitted before this Court
that he doesn't want to press the applications filed for stay of further
proceedings. He also contended that the Petitioner doesn't want to
challenge the attachment order. Finally, learned Senior Counsel confined
his prayer to grant of permission to operate the unit subject such terms and
conditions as would be deemed just and proper by this court in the given
facts and circumstances of the present case. In view of such submission,
the prayer for stay of the further proceedings in both PMLA as well as the
Vigilance Case stands disposed of as not pressed. Since the order of
attachment has not been challenged in the CRLMC application, no order is
required to be passed in that regard.
33. Finally, keeping in view the prayer of the Petitioner-Company only
to the extent of grant of permission to operate the units in question and in
view of the aforesaid analysis of the factual as well the legal position, this
court is convinced with regard to the prayer and right of the Petitioner to
enjoy the property by maintaining and operating the plants, while the same
continues to remain attached. Accordingly, this court is inclined to allow
the present applications with certain directions. The Petitioner is permitted
to operate and carry on the commercial activities in respect of the plants/
units located in Topadihi and Uliburu in Keonjhar District Keonjhar in the
following manner;
(a) The attachment orders as imposed by the ED and Vigilance
department respectively will continue to be in effect and remain
undisturbed. The present order is limited to the use and operation of
only the 2 units as above-mentioned. It is clarified again at the cost
of repetition that all attachments with regard to all properties
(movable and immovable) of the Petitioner-Company shall continue
to remain in force till conclusion of the trial. The Opposite Parties,
however, are expected to provide all reasonable assistance in order
to enable the Petitioner-Company to operate and maintain the two
plants/units concerned,
(b) The Petitioner-Company shall not, in any manner, alienate or
transfer the plants/ units in question,
(c) The Petitioner-Company shall seek and obtain all requisite
statutory/governmental permissions and licenses prior to operating
such units,
(d) The Petitioner-Company shall allow the prosecution to inspect
the units/ records at all reasonable time,
(e) Needless to say, the prosecution is at liberty to move an
application immediately in the event the Petitioner-Company
violates the conditions imposed by this court in any manner
whatsoever.
34. Accordingly, the present I.As are disposed of.
(A.K. Mohapatra)
Judge
Anil
Designation: Junior Stenographer
Reason: Authentication
Location: High Court of Orissa
Date: 22-Sep-2025 18:57:34
