Kerala High Court
Vipul Shipping Engineering Works vs Directorate Of Enforcement on 8 July, 2025
Author: Raja Vijayaraghavan
Bench: V Raja Vijayaraghavan
WA Nos.1429/2025, 1310/2025, :1: 2025:KER:49804
1426/2025, 1428/2025
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE RAJA VIJAYARAGHAVAN V
&
THE HONOURABLE MR.JUSTICE K. V. JAYAKUMAR
TUESDAY, THE 8TH DAY OF JULY 2025 / 17TH ASHADHA, 1947
WA NO. 1429 OF 2025
AGAINST THE JUDGMENT DATED 09.05.2025 IN WP(Crl.) NO.731 OF
2024 OF THE HIGH COURT OF KERALA
APPELLANT/PETITIONER:
1 VIPUL SHIPPING ENGINEERING WORKS
HAVING ITS REGISTERED ADDRESS AT: SECOND FLOOR, QUADROS
BUILDING, SWATANTRAPTH, VASCO DA GAMA, GOA. REPRESENTED
BY ITS PARTNER, KUSUMBEN VISHNUBHAI AMIN REPRESENTED BY
HER POWER OF ATTORNEY HOLDER MR. SUDESH PANICKER, S/O.
LATE NARAYAN PANICKER, RESIDING AT H.NO. PHASE 1B 418,
SUSHEELA SEAWINDS, VANDEM, MORMUGAO, SOUTH GOA.,
PIN - 403802
2 KUSUMBEN VISHNUBHAI AMIN
AGED 92 YEARS
MIRATON GARDEN, CHICALIM, MORMUGAO, GOA. REPRESENTED BY
HER POWER OF ATTORNEY HOLDER MR. SUDESH PANICKER, S/O.
LATE NARAYAN PANICKER, RESIDING AT H.NO. PHASE 1B 418,
SUSHEELA SEAWINDS, VANDEM, MORMUGAO, SOUTH GOA,
PIN - 403802
BY ADVS.
SHRI.PAUL JACOB
SMT.SHERU JOSEPH
SHRI.MATHEW THOMAS
SMT.NIKITTA TRESSY GEORGE
WA Nos.1429/2025, 1310/2025, :2: 2025:KER:49804
1426/2025, 1428/2025
SHRI.DIPAK CHERIAN ABRAHAM
RESPONDENT/RESPONDENTS:
1 DIRECTORATE OF ENFORCEMENT
PRAVARTAN BHAWAN, APJ ABDUL KALAM ROAD,
NEW DELHI - 110 011.
REPRESENTED BY ITS DIRECTOR OF ENFORCEMENT.
2 ASSISTANT DIRECTOR
DIRECTORATE OF ENFORCEMENT, KOCHI ZONAL OFFICE, KANOOS
CASTLE, MULLASSERRY CANAL ROAD WEST, COCHIN., PIN -
682011
3 DEPUTY DIRECTOR
DIRECTORATE OF ENFORCEMENT, KOCHI ZONAL OFFICE,
KANOOS CASTLE, MULLASSERRY CANAL ROAD WEST, COCHIN,
PIN - 682011
4 THE ADJUDICATING AUTHORITY, (UNDER THE PREVENTION OF
MONEY LAUNDERING ACT)
4TH FLOOR, JEEVAN DEEP BUILDING, PARLIAMENT STREET, NEW
DELHI. REPRESENTED BY ITS CHAIRPERSON, PIN - 110001
BY ADV SHRI.JAISHANKAR V.NAIR, SC, ENFORCEMENT
DIRECTORATE
THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 08.07.2025,
ALONG WITH WA.1310/2025, 1426/2025 AND CONNECTED CASES, THE
COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
WA Nos.1429/2025, 1310/2025, :3: 2025:KER:49804
1426/2025, 1428/2025
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE RAJA VIJAYARAGHAVAN V
&
THE HONOURABLE MR.JUSTICE K. V. JAYAKUMAR
TUESDAY, THE 8TH DAY OF JULY 2025 / 17TH ASHADHA, 1947
WA NO. 1310 OF 2025
AGAINST THE JUDGMENT DATED 09.05.2025 IN WP(Crl.) NO.595 OF
2024 OF THE HIGH COURT OF KERALA
APPELLANT/PETITIONER:
MOHAN RAO
AGED 75 YEARS
S/O. LATE GOVINDA RAO, RESIDING AT 2ND FLOOR,
PARK VIEW APARTMENT, PLOT NO 36 HUDA HEIGHTS,
BANJARA HILLS ROAD NO 12, HYDERABAD., PIN - 500034
BY ADVS.
SHRI.PAUL JACOB
SMT.SHERU JOSEPH
SHRI.MATHEW THOMAS
SMT.NIKITTA TRESSY GEORGE
SHRI.DIPAK CHERIAN ABRAHAM
RESPONDENTS/RESPONDENTS:
1 DIRECTORATE OF ENFORCEMENT
PRAVARTAN BHAWAN, APJ ABDUL KALAM ROAD NEW DELHI.
REPRESENTED BY ITS DIRECTOR OF ENFORCEMENT,
PIN - 110011
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2 ASSISTANT DIRECTOR
DIRECTORATE OF ENFORCEMENT, KOCHI ZONAL OFFICE,
KANOOS CASTLE, MULLASSERRY CANAL ROAD WEST,
COCHIN,PIN - 682011
3 DEPUTY DIRECTOR
DIRECTORATE OF ENFORCEMENT, KOCHI ZONAL OFFICE,
KANOOS CASTLE, MULLASSERRY CANAL ROAD WEST,
COCHIN, PIN - 682011
4 THE ADJUDICATING AUTHORITY, (UNDER THE PREVENTION OF
MONEY LAUNDERING ACT)
4TH FLOOR, JEEVAN DEEP BUILDING, PARLIAMENT STREET,
NEW DELHI. REPRESENTED BY ITS CHAIRPERSON, PIN - 110001
BY ADV SHRI.JAISHANKAR V.NAIR, SC, ENFORCEMENT
DIRECTORATE
THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON
08.07.2025, ALONG WITH WA.1429/2025 AND CONNECTED CASES, THE
COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
WA Nos.1429/2025, 1310/2025, :5: 2025:KER:49804
1426/2025, 1428/2025
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE RAJA VIJAYARAGHAVAN V
&
THE HONOURABLE MR.JUSTICE K. V. JAYAKUMAR
TUESDAY, THE 8TH DAY OF JULY 2025 / 17TH ASHADHA, 1947
WA NO. 1426 OF 2025
AGAINST THE JUDGMENT DATED 09.05.2025 IN WP(Crl.) NO.601 OF
2024 OF THE HIGH COURT OF KERALA
APPELLANT/PETITIONER:
DINESH PARSHURAM AMIN
AGED 51 YEARS
S/O. PARSHURAM M. AMIN, RESIDING AT: M-19, SOMESHWARA
ENCLAVE, NEAR SOUTH GUJARAT UNIVERSITY, VESU, SURAT,
PIN - 395007
BY ADVS.
SHRI.PAUL JACOB
SMT.SHERU JOSEPH
SHRI.MATHEW THOMAS
SMT.NIKITTA TRESSY GEORGE
SHRI.DIPAK CHERIAN ABRAHAM
RESPONDENTS/RESPONDENTS:
1 DIRECTORATE OF ENFORCEMENT
PRAVARTAN BHAWAN, APJ ABDUL KALAM ROAD, NEW DELHI,
PIN - 110011
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2 ASSISTANT DIRECTOR
DIRECTORATE OF ENFORCEMENT, KOCHI ZONAL OFFICE,
KANOOS CASTLE, MULLASSERRY CANAL ROAD WEST,
COCHIN,PIN - 682011
3 DEPUTY DIRECTOR
DIRECTORATE OF ENFORCEMENT, KOCHI ZONAL OFFICE, KANOOS
CASTLE, MULLASSERRY CANAL ROAD WEST, COCHIN,
PIN - 682011
4 THE ADJUDICATING AUTHORITY (UNDER THE PREVENTION OF
MONEY LAUNDERING ACT)
4TH FLOOR, JEEVAN DEEP BUILDING, PARLIAMENT STREET, NEW
DELHI, REPRESENTED BY ITS CHAIRPERSON., PIN - 110001
BY ADV SHRI.JAISHANKAR V.NAIR, SC, ENFORCEMENT
DIRECTORATE
THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 08.07.2025,
ALONG WITH WA.1429/2025 AND CONNECTED CASES, THE COURT ON THE
SAME DAY DELIVERED THE FOLLOWING:
WA Nos.1429/2025, 1310/2025, :7: 2025:KER:49804
1426/2025, 1428/2025
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE RAJA VIJAYARAGHAVAN V
&
THE HONOURABLE MR.JUSTICE K. V. JAYAKUMAR
TUESDAY, THE 8TH DAY OF JULY 2025 / 17TH ASHADHA, 1947
WA NO. 1428 OF 2025
AGAINST THE JUDGMENT DATED 09.05.2025 IN WP(Crl.) NO.721 OF
2024 OF THE HIGH COURT OF KERALA
APPELLANT/PETITIONER:
VIPUL SHIPYARD PVT. LTD.
HAVING ITS REGISTERED ADDRESS AT: QUADROS BUILDINGS,
2ND FLOOR, VASCO DA GAMA, SOUTH GOA, GOA - 403802.
REPRESENTED BY ITS DIRECTOR, KUSUMBEN VISHNUBHAI AMIN,
REPRESENTED BY HER POWER OF ATTORNEY HOLDER MR. SUDESH
PANICKER, S/O. LATE NARAYAN PANICKER, RESIDING AT H.NO.
PHASE 1B 418, SUSHEELA SEAWINDS, VANDEM, MORMUGAO,
SOUTH GOA- 403802
BY ADVS.
SHRI.PAUL JACOB
SMT.SHERU JOSEPH
SHRI.MATHEW THOMAS
SMT.NIKITTA TRESSY GEORGE
SHRI.DIPAK CHERIAN ABRAHAM
RESPONDENTS/RESPONDENTS:
1 DIRECTORATE OF ENFORCEMENT
PRAVARTAN BHAWAN, APJ ABDUL KALAM ROAD
NEW DELHI - 110 011.
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REPRESENTED BY ITS DIRECTOR OF ENFORCEMENT.
2 ASSISTANT DIRECTOR
DIRECTORATE OF ENFORCEMENT, KOCHI ZONAL OFFICE, KANOOS
CASTLE, MULLASSERRY CANAL ROAD WEST, COCHIN,
PIN - 682011
3 DEPUTY DIRECTOR
DIRECTORATE OF ENFORCEMENT, KOCHI ZONAL OFFICE, KANOOS
CASTLE, MULLASSERRY CANAL ROAD WEST, COCHIN,
PIN - 682011
4 THE ADJUDICATING AUTHORITY, (UNDER THE PREVENTION OF
MONEY LAUNDERING ACT)
4TH FLOOR, JEEVAN DEEP BUILDING, PARLIAMENT STREET, NEW
DELHI REPRESENTED BY ITS CHAIRPERSON., PIN - 110001
BY ADV SHRI.JAISHANKAR V.NAIR, SC, ENFORCEMENT
DIRECTORATE
THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON
08.07.2025, ALONG WITH WA.1429/2025 AND CONNECTED CASES, THE
COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
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JUDGMENT
[WA Nos.1429/2025, 1310/2025, 1426/2025, 1428/2025]
Raja Vijayaraghavan, J.
These appeals have been preferred challenging the common judgment rendered
by the learned Single Judge in W.P. (Crl.) Nos. 595 of 2024, 601 of 2024, 731 of 2024,
and 721 of 2024, whereby the said Writ Petitions were dismissed as non-maintainable
on the ground that the petitioners had failed to exhaust the statutory remedies
available under the Prevention of Money Laundering Act, 2002 (hereinafter referred to
as “the Act”). However, liberty was reserved to the appellants/petitioners to challenge
the impugned orders before the appropriate statutory authorities, and such authorities
were directed to consider the objections and claims raised by the petitioners,
untrammelled by the observations made in the impugned judgment. Being aggrieved
these appeals have been preferred.
2. The case of the appellants as projected in the Writ Petition are as under:
2.1. The Union Territory of Lakshadweep Administration (UTLA), headed by its
Administrator, is entrusted with the procurement and construction of water vessels for
the use of the UTLA. Landing barges are essential for the transportation of passengers
and cargo between the Lakshadweep Islands and the mainland.
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2.2. In 2006, the Ministry of Shipping, Government of India, accorded sanction
to the UTLA for the acquisition of two landing barges through an open tender process.
Pursuant thereto, the Shipping Corporation of India floated Tender No.
T&S/NB/UTLA/2000PAS/LB/2006 dated 04.04.2006, on behalf of UTLA, inviting bids
from experienced shipyards for the construction of six 200-PAX Passenger Landing
Barges.
2.3. Four firms submitted bids in response. One of the firms shortlisted was
Vipul Shipyard Pvt. Ltd. (‘VSPL’ for the sake of brevity), a family-owned Private Limited
Company, having its shipyard at Vasco Da Gama.
2.4. The petitioner in W.P.(Crl.) No. 721 of 24 is VSPL, the petitioner in
W.P.(Crl) No. 601 of 2024 is Sri. Dinesh Parshuram Amin, who was a non-participating
Director, and the petitioner in W.P.(Crl.) No. 595 of 2024 is Sri. Mohan Rao, who was the
non-participating CEO of VSPL. After technical scrutiny, two were shortlisted, and M/s.
VSPL was identified as L1. However, the construction agreement with M/s. VSPL, Surat,
was not executed until 20.10.2007.
2.5. VSPL has a sister concern by name ‘Vipul Shipping Engineering Works’
(‘VSEW’ for the sake of brevity), a partnership concern, which is the petitioner in
W.P.(Crl) No. 731 of 24 and the 2nd petitioner in the above Writ Petition is Kusumben
Vishnubhai Amin, a partner of the above concern.
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2.6. In July 2007, M/s. VSPL informed the Shipping Corporation of India that
their Surat yard was being taken over by ABG Shipyard Pvt. Ltd., but assured that the
contract could be fulfilled using their Goa yard. The acquisition process was completed
in August 2007, and the VSPL Surat yard was officially taken over by ABG Shipyard.
Construction of the vessels commenced, and payments were released in instalments.
2.7. In 2010, a team of UTLA officials inspected the vessels under construction
at VSPL, Goa, and found the dimensions to be inconsistent with the requirement of
UTLA.
2.8. Based on a letter received from Sri. Vadodaria Karanjeet, Director of the
Lakshadweep Administration, the CBI, ACB, Cochin, registered Preliminary Enquiry
No.2/2014 dated 17.10.2014. The letter alleged criminal negligence, malpractices, and
corruption involving officials of the Lakshadweep Administration, the Shipping
Corporation of India Ltd. (SCIL), and M/s. VSPL, in relation to the construction of the
two landing barges.
2.9. Pursuant to the enquiry, the CBI registered an FIR alleging offences under
Sections 120B, 420, and 471 of the IPC, and Section 13(2) r/w. Section 13(1)(d) of the
Prevention of Corruption Act, 1988.
2.10. An Enforcement Case Information Report (ECIR) No. ECIR/KCZO/04/2021
was subsequently recorded for investigation under the Act. Upon completion of the
investigation, the CBI filed the final report.
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2.11. The final report was challenged before this Court by filing Crl. M.C.
No.3306 of 2017, and by order dated 19.05.2017, the proceedings were stayed. The
petition is still pending.
2.12. The investigation under the Act is alleged to have revealed that the
accused, by the commission of scheduled and related offences, had derived proceeds of
crime in the form of immovable properties (lands, houses, etc.) and movable properties
(barges, bank balances, securities, deposits, etc.).
2.13. While so, on 03.04.2024, the Assistant Director, Director of Enforcement,
issued notices exercising powers under Section 54 of the Act to the Nodal Officers of
the Axis Bank, Union Bank, Andhra Bank (Union Bank), Bank of Baroda, Standard
Chartered Bank, State Bank of India, the Surat Peoples Cooperative Bank Ltd, and HSBC
and calling for information and statements of all accounts relating to individuals for the
purpose of investigation in the case of VSPL and more importantly, the above Banks
were directed not to allow any debit transactions from the said account without prior
intimation in writing of the Assistant Director.
2.14. Immediately thereafter, the Deputy Director, competent authority in the
Enforcement Directorate, initiated proceedings under Section 5 of the Act r/w. Rule 3 of
the Prevention of Money-Laundering (Issuance of Provisional Attachment Order) Rules,
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2013. Vide order dated 10.05.2024 (Ext. P14), the Deputy Director, Enforcement
Directorate, provisionally attached the properties belonging to the appellants.
2.15. The aforesaid proceedings were under challenge in the Writ Petitions.
3. The appellants raised various contentions before the learned Single Judge.
It was contended that there was an arbitration agreement and in tune with the same,
VSPL had initiated arbitration proceedings. The dispute was adjudicated and an award
had been passed as per which, a sum in excess of Rs.13 Crores is due to VSPL. In that
view of the matter, initiation of proceedings under the PMLA is a malicious exercise. As
the predicate offences/scheduled offences stood stayed by this Court, the respondents
were not justified in proceeding against the shipping company and its officers under the
PMLA.
4. The learned Single Judge after evaluation of the entire facts and relying
on the observations in Titaghur Paper Mills Co. Ltd. v. State of Orissa1, and
Radha Krishnan Industries v State of H.P.2, held that where the PMLA is a
self-contained code providing statutory remedies at every stage of the proceedings, this
Court will not be justified in short circuiting the procedure. The parties were relegated
to the remedies under the Code.
1 [(1983) 2 SCC 433] 2 [(2021) 6 SCC 771) WA Nos.1429/2025, 1310/2025, :14: 2025:KER:49804 1426/2025, 1428/2025 5. We have had the advantage of hearing Sri. Paul Jacob, the learned
counsel appearing for the appellants and Sri.Jaishankar V. Nair, the learned counsel
appearing for the respondents.
6. Having considered the submissions and after perusal of the entire records,
we are of the considered view that the challenge mounted by the appellants against the
provisional order of attachment was rightly rejected by the learned Single Judge. We
shall record our reasons for the same.
7. 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
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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 noticee 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 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. The
legislature has ensured that the order of the Adjudicating Authority is not final. It is
appealable under Section 26(1) of the Act before the Appellate Tribunal constituted
under Section 25 of the Act. Furthermore, the order of the Appellate Tribunal is itself
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subject to further appeal before the High Court under Section 42 on any question of law
or fact arising therefrom.
8. In Vijay Madanlal Choudhary v. Union of India3, the Apex Court has
held that Section 5 of the Act provides 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 Act. This provision has a reasonable nexus
with the objectives sought to be achieved by the Act, namely, the effective prevention
and regulation of money laundering.
9. 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. If any precedents are
required, one only needs to refer to the judgment of the Apex Court in Special
Director and Another v. Mohmmad Ghulam Ghouse4, wherein despite the
existence of alternate remedies under Foreign Exchange Regulation Act (FERA), 1973
3
[(2023) 12 SCC 1]
4
[(2004) 3 SCC 440]
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and Foreign Exchange Management Act (FEMA), 1999, it was observed by the Apex
Court as under:
“This Court in a large number of cases has deprecated the
practice of the High Courts entertaining writ petitions questioning
legality of the show-cause notices stalling enquiries as proposed and
retarding investigative process to find actual facts with the
participation and in the presence of the parties. Unless the High
Court is satisfied that the show-cause notice was totally non est in
the eye of the law for absolute want of jurisdiction of the authority
to even investigate into facts, writ petitions should not be
entertained for the mere asking and as a matter of routine, and the
writ petitioner should invariably be directed to respond to the
show-cause notice and take all stands highlighted in the writ
petition. Whether the show-cause notice was founded on any legal
premises, is a jurisdictional issue which can even be urged by the
recipient of the notice and such issues also can be adjudicated by
the authority issuing the very notice initially, before the aggrieved
could approach the court. Further, when the court passes an interim
order it should be careful to see that the statutory functionaries
specially and specifically constituted for the purpose are not
denuded of powers and authority to initially decide the matter and
ensure that ultimate relief which may or may not be finally granted
in the writ petition is not accorded to the writ petitioner even at the
threshold by the interim protection granted”
In view of the above principles of law, we have no doubt in our mind that the
learned Single Judge was justified in refusing interference.
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10. However, one of the contentions advanced by the learned counsel
deserves consideration. It is pointed out by the learned counsel that the notices issued
by the Assistant Director under Section 54 of the PMLA prior to the issuance of the
order of provisional attachment has resulted in serious prejudice. It is submitted that
Section 54 only enables the officers mentioned therein to assist the authorities in the
enforcement of this Act. However, in the instant case, interdictory orders have been
issued by the Assistant Director prior to the issuance of the provisional attachment
order by the Deputy Director. The Banks have now restrained the appellants from
operating their accounts or from carrying out transactions. It is submitted that the
Assistant Director is not vested with any such powers and Section 54 of the Act will not
empower any of the officers to pass any interdictory order or impose restrictions on
bank transactions. It is further submitted that when an order of provisional attachment
is made under Section 5 of the Act in respect of the property involved in money
laundering, any interdictory orders passed by an officer who is not empowered will not
have any binding effect over the property of the individual.
11. Having considered the submissions, we find that the submission deserves
merit. Section 54 of the Act empowers certain officers to assist in inquiry, etc. The
officers of various Government Departments have been included in Section 54 of the
Act.
12. In the case on hand, it is in purported exercise of powers under Section
54 of the Act that the Assistant Director has issued a notice dated 03.04.2024 (for
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instance Ext.P11 in W.P.(Crl) No.1310 of 2024) to various banks, the relevant portion of
which reads as under:
” This office is conducting an investigation in the case M/s. Vipul
Shipyard Pvt. Ltd., in file No. ECIR/KCZO/04/2021.
In this connection, it is requested that the following documents
may be furnished to this office by return of mail today i.e.,
30.042024. Hard copy of the same should reach this office within 2
(two) days from the date of receipt of this letter certifying u/s. 2A of
Bankers Book Evidence Act, 1981.
Bank Account Statements of all accounts maintained (including
closed) by the following persons/entities starting from opening of
accounts to till date in MS Excel only in the proforma attached
alongwith closing balance as of today 03.04.2024. You are further
directed that any debit transaction from the said account should not
be allowed without prior intimation in writing of the undersigned.”
(emphasis supplied by us)
Practically, by issuing the above notice, the banks are interdicted from permitting
the appellants from operating the accounts without prior intimation to the department.
13. It needs to be noted at this juncture that it is pursuant to the issuance of
the above notice that a provisional order of attachment was passed under sub section
(1) of Section 5 of PMLA, 2002. In all the notices, as required under the provisions of
law, the properties in respect of which provisional attachment has been ordered has
been enumerated as a table in the body of the provisional attachment order. The
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moment the order under Section 5 (1) of the Act is issued, the earlier notice issued by
the Assistant Director purportedly under Section 54 of the Act will not have any effect
over the properties not included in the table attached to the provisional attachment
order.
14. Furthermore, the provisional attachment of property involved in money
laundering can be effected only by the officers specifically empowered under Section 5
of the Prevention of Money Laundering Act, 2002. This statutory insistence serves a
salutary purpose, as laid down by the Hon’ble Supreme Court in Vijay Madanlal
Choudhary (supra). In matters relating to search and seizure under the 2002 Act, such
powers can be exercised only by the Director or by an officer not below the rank of
Deputy Director duly authorised by him. These officers are not only high-ranking but
are also required to be fully satisfied, on the basis of information in their possession,
that there exists reason to believe in the commission of the offence of money
laundering or that certain property constitutes proceeds of crime. These requirements
form part of the inbuilt safeguards under the Act. It has also been held that only such
property which is derived or obtained, directly or indirectly, as a result of criminal
activity relating to a scheduled offence, qualifies as “proceeds of crime.” The authority
of an authorised officer under the 2002 Act to initiate prosecution for the offence of
money laundering is triggered only when the property in question satisfies the definition
under Section 2(1)(u), and is involved in any process or activity connected with the
offence. Mere existence of undisclosed income, regardless of its magnitude, will not
WA Nos.1429/2025, 1310/2025, :21: 2025:KER:49804
1426/2025, 1428/2025
attract the definition of “proceeds of crime” unless it has a nexus with criminal activity
relating to a scheduled offence.
15. In that view of the matter, any action taken by the Assistant Director
under Section 54 of the Act will have no legal effect once a provisional attachment
order is duly made in respect of properties that qualify as “proceeds of crime.” With
respect to properties included in such an order, the appellants are at liberty to raise all
their contentions before the Adjudicating Authority and other forums provided under
the Act, and to exhaust their remedies in accordance with law. We find that by an
interim order dated 04.07.2024 passed by the learned Single Judge, the proceedings
before the adjudicating authority were stayed. In that view of the matter, 30 days time
granted by the adjudicating authority under Section 8(1) of the Act to file a reply shall
start to run only from today; i.e., on 08.07.2024. If reply is filed within such time as
ordered, the adjudicating authority shall consider the same and pass orders in
accordance with law.
16. In light of the above, these appeals stand dismissed, granting liberty to
the appellants to pursue their contentions in terms of the statutory scheme. The second
respondent is directed to forthwith issue a clarification to the concerned banks against
which interdictory directions were earlier issued by the Assistant Director (Ext. P11 in
the writ petitions) stating that the enforcement authorities have no objection to the
appellants operating their respective bank accounts, except in respect of amounts or
WA Nos.1429/2025, 1310/2025, :22: 2025:KER:49804
1426/2025, 1428/2025
properties that are specifically covered by the provisional attachment order under
Section 5(1) and the complaint filed under Section 5(5) of the Act.
Sd/-
RAJA VIJAYARAGHAVAN V,
JUDGE
Sd/-
K.V.JAYAKUMAR,
PS/2/7/2025 JUDGE
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