Petition challenging attachment of Hotel Westin in Goa dismissed, as statutory adjudication process under PMLA takes precedence.
In a significant judgment, the Chhattisgarh High Court has dismissed a writ petition challenging the provisional attachment order issued by the Enforcement Directorate (ED) under the Prevention of Money Laundering Act, 2002 (PMLA). The order, dated May 28, 2026, attached Hotel Westin in Goa, considering it as property involved in money laundering, allegedly amounting to Rs.110 Crores.
The petitioners, Dr. Rahul Agrawal and another, had contested the ED's attachment on multiple grounds, including the alleged lack of jurisdiction, absence of a banking trail, and discrepancies in the figures involved. They argued that the cash component of Rs. 60 Crores used in acquiring the hotel was from legitimate business operations and had been accepted by the Income Tax authorities.
The Court, however, emphasized the existence of a comprehensive statutory mechanism under the PMLA for adjudication of such attachments. It noted that the ED had filed an Original Complaint with the Adjudicating Authority (AA), and the statutory adjudication process was already underway. The Court reiterated that the sufficiency and probative value of the evidence are matters for the AA to determine, not for summary adjudication under writ jurisdiction.
The petitioners’ contention that the Income Tax authorities had accepted the source of the Rs. 60 Crores was dismissed on grounds that proceedings under the Income Tax Act and the PMLA operate in different statutory fields. The Court underscored that the Income Tax findings did not preclude the ED from examining the criminal provenance of the funds under the PMLA.
The High Court also addressed concerns about the composition of the AA, rejecting claims that proceedings conducted by a single member amounted to coram non judice. It clarified that the provisional attachment order's validity does not depend on the subsequent composition of the AA.
The Court observed that the ED's order was based on multiple pieces of evidence, including statements from key individuals involved in the case, the IT Department's appraisal material, and the admitted cash payment by the petitioner. It concluded that there was no ground for interference under Article 226 at this stage.
The judgment reinforces the importance of the statutory adjudicatory process under the PMLA and sets a precedent for the handling of similar cases involving alleged money laundering and provisional attachments.
Bottom Line :
Provisional Attachment Orders under Section 5(1) of the Prevention of Money Laundering Act (PMLA) cannot be quashed in writ jurisdiction merely based on alleged insufficiency of material or procedural lapses. The statutory adjudicatory mechanism under Section 8 of the PMLA is the appropriate forum for resolving disputed factual issues and determining the validity of the attachment.
Statutory provision(s):
Prevention of Money Laundering Act, 2002 - Sections 2(1)(u), 3, 5(1), 5(5), 6, 8, 23, 24, 26, 42;
Income Tax Act - Sections 132, 143(3), 153A, 250, 263;
Constitution of India - Article 226
Dr. Rahul Agrawal v. Union of India, (Chhattisgarh)(DB) : Law Finder Doc id # 2968591
