Copy-Pasting Statutory Language Without Application of Mind Not Sufficient: Karnataka High Court Sets Aside Provisional Attachment Of A Widow's Property Under PMLA
The Bench noted that material indicating prima facie commission of money laundering offence is distinct from material justifying urgency of attachment.
Justice S Sunil Dutt Yadav, Karnataka High Court
The Karnataka High Court has held that mere reproduction of statutory language in a provisional attachment order passed under the second proviso to Section 5(1) of the Prevention of Money Laundering Act, 2002 does not constitute compliance with the procedural mandate of the provision. Further, that there must be genuine application of mind to the particular facts demonstrating that the material in possession of the competent officer indicates that non-attachment would likely frustrate proceedings under the PMLA.
While setting aside the provisional attachment order issued by the Directorate of Enforcement against a 70-year-old widow whose sites allotted by Mysore Urban Development Authority (MUDA) in lieu of compensation for her land were attached, the Court held that the order suffered from a fundamental failure to satisfy the statutory requirements of the second proviso.
The Court further drew a critical distinction between two categories of material, material indicating prima facie commission of a money laundering offence, and material enabling the competent authority to entertain a reason to believe that non-attachment would frustrate proceedings. The two cannot be conflated, and only the latter satisfies the second proviso to Section 5(1) of the Act.
Justice S. Sunil Dutt Yadav observed, “In the guise of adherence to law mere copy-paste of statutory language to indicate compliance would not be sufficient. There must be application of mind to the particular facts to demonstrate that material in possession would indicate the failure of passing an order for provisional attachment would likely frustrate the proceedings under the PMLA”.
“There must be adherence to the procedure prescribed under the Second Proviso to Section 5 of PMLA. Any deviation from the procedure prescribed would vitiate the order of the provisional attachment without the petitioner having to prove any further”, the Bench further observed.
Advocate Jaysham Jayasimha Rao appeared for the petitioner and Aravind Kamat, Additional Solicitor General, with Advocate Madhukar M. Deshpande appeared for the respondent.
In the present matter, the petitioner a 70-year-old widow, inherited a piece of land, the land was utilised by MUDA for formation of Jayanagar Layout without acquisition.
In lieu of compensation, MUDA executed Sale Deeds in favour of the petitioner for certain sites on June 14, 2024. The petitioner sought mutation of katha on the basis of these Sale Deeds, which was declined. A complaint was filed by Sri Snehamayi Krishna before the Sessions Court in 2024 alleging that 14 sites were allotted to another accused under undue influence.
The Lokayukta Police registered an FIR for predicate offences, while the Enforcement Directorate registered an ECIR and passed provisional attachment order, dated June 9, 2025 under the second proviso to Section 5(1) of PMLA, invoked because the Lokayukta Police had not yet filed a final report under Section 173 CrPC, a prerequisite for attachment under the first proviso.
The petitioner, though not arraigned as an accused, had her sites attached as alleged proceeds of crime.
Therefore, now upon examining the facts and circumstances, the Court held that the second proviso to Section 5(1) requires the competent officer to record in writing, on the basis of material in possession, a reason to believe that if the property is not attached immediately, such non-attachment would likely frustrate proceedings under the PMLA.
The Court held that the order followed a copy-paste approach which cannot substitute genuine application of mind. Crucially, the Court noted that the Sale Deeds were executed on June 14, 2024 and the katha had not yet been effected, meaning the property could not be transferred or dealt with to create third party rights.
Accordingly, the very basis for urgency, risk of transfer of proceeds of crime, was absent on the material facts. The Court also rejected the argument that the subsequent confirmation order of the Adjudicating Authority dated November 26, 2025 had rendered the petition infructuous, relying on its earlier order of October 31, 2025 subjecting all subsequent proceedings to the outcome of the writ petition.
The provisional attachment order dated June 9, 2025 was set aside and all further proceedings pursuant to the said order as regards the petitioner's rights were also set aside. Liberty was reserved to ED to initiate fresh proceedings if circumstances under the second proviso to Section 5(1) are made out and warrant such action.
Cause Title: Jayamma v. Directorate of Enforcement (Neutral Citation: 2026:KHC:25829)
Appearances:
Petitioner: Jaysham Jayasimha Rao, Advocate.
Respondent: Aravind Kamat, Additional Solicitor General, Madhukar M. Deshpande, Advocate.