Court Rules Petitioners Have No Statutory Right to Replace Attached Properties with Fixed Deposit; Emphasizes Availability of Statutory Appeal Remedies
In a significant judgment delivered on August 31, 2026, the Chhattisgarh High Court, presided over by Justice Bibhu Datta Guru, dismissed a writ petition filed by Hrishabh Soni and another, who sought to substitute six immovable properties provisionally attached under the Prevention of Money Laundering Act, 2002 (PMLA), with an equivalent Fixed Deposit of Rs.4.36 crore. The petitioners had challenged the refusal of the PMLA Appellate Tribunal (PMLAT) to allow such substitution during the pendency of appeals against the confirmation of attachment orders.
The petitioners, proprietors and partners in business entities engaged in government supplies and project works, faced attachment of eleven immovable properties as allegedly representing the "equivalent value of proceeds of crime" in connection with investigations related to misuse of District Mineral Fund (DMF) monies. Although the properties were attached under Section 5 of the PMLA and confirmed by the Adjudicating Authority, the petitioners argued that the continued attachment caused undue financial hardship and impaired their legitimate business activities. They offered to furnish a Fixed Deposit equivalent to the value of the six properties to secure the enforcement authorities' interests.
The High Court carefully examined the statutory provisions under the PMLA and the Prevention of Money Laundering (Taking Possession of Attached or Frozen Properties Confirmed by the Adjudicating Authority) Rules, 2013. The Court noted that Rule 5(5) of the 2013 Rules, which permits substitution by Fixed Deposit, applies only in specific situations where the property is under joint ownership and even then, acceptance of such substitution is discretionary ("may accept") and not a mandatory right.
Rejecting the petitioners' claim of an absolute right to substitute the attached immovable properties with a Fixed Deposit, the Court upheld the PMLAT's order dismissing their application. It observed that the statutory framework does not contemplate a general right for such substitution and that the validity of the attachment itself was subject to ongoing appeals before the PMLAT.
The Court also emphasized the existence of an alternative statutory remedy under Section 42 of the PMLA, which allows appeal to the High Court against orders of the Appellate Tribunal. It held that the petitioners could not bypass this remedy by invoking writ jurisdiction under Article 226 of the Constitution without demonstrating exceptional circumstances. The Court found no jurisdictional errors or violations of principles of natural justice in the PMLAT's decision and declined to interfere.
In its reasoning, the Court cited several precedents, including authoritative Supreme Court judgments, reinforcing the principle that writ jurisdiction is discretionary and should not be exercised to circumvent efficacious statutory remedies. It further highlighted that hardship caused by attachment, while regrettable, does not confer a right to subvert the statutory scheme.
The judgment clarifies that the attachment of property under the PMLA is a preservatory measure to safeguard the value of alleged proceeds of crime until final adjudication and does not automatically entitle the owner to substitute the property with alternative security. The Court's refusal to permit substitution underscores the strict compliance with the statutory framework intended by the PMLA and its Rules.
This ruling sends a clear message to litigants under the PMLA framework that reliefs such as substitution of attached properties with Fixed Deposits are tightly circumscribed by law and that the appropriate course is to exhaust statutory appeals rather than seek extraordinary relief from High Courts.
Bottom Line:
Prevention of Money Laundering Act (PMLA) - Substitution of attached immovable property with a Fixed Deposit - Petitioners are not entitled to substitution of attached properties in lieu of furnishing an equivalent Fixed Deposit as such substitution is not permissible under the statutory framework of PMLA and the 2013 Rules.
Statutory provision(s):
Prevention of Money Laundering Act, 2002 Sections 2(1)(u), 5, 8, 24, 42; Prevention of Money Laundering (Taking Possession of Attached or Frozen Properties Confirmed by the Adjudicating Authority) Rules, 2013 Rule 5(5); Constitution of India Article 226
