- Delhi High Court has affirmed PMLA as a comprehensive law against money laundering
- ED's property attachment follows a fair, multi-step legal process under PMLA, the court has said
- Writ petitions against attachment orders are discouraged at initial stages, the court has added
In a significant judgment on money laundering laws, the Delhi High Court has made detailed observations on the Enforcement Directorate's powers, the process of property attachment, and the interpretation of the Prevention of Money Laundering Act, 2002.
The court emphasized that PMLA is a self-contained, stringent, and comprehensive law designed to prevent the legitimization of illegally earned money, trace and confiscate the proceeds of crime, and ensure financial integrity.
PMLA Ensures a Fair, Multi-Tier Legal Process
The court noted that the ED's actions under PMLA follow a well-defined and just procedure that adheres to the principles of natural justice. The process includes:
* Issuance of notice
* Opportunity for hearing
* Adjudication and confirmation
* Provision for appeal
This ensures that no property is attached without giving the concerned individual a fair chance to present their side and submit evidence.
Writ Petitions Against Attachment Orders Not Maintainable at Initial Stage
The High Court cautioned against the growing trend of filing writ petitions directly under Article 226 to challenge Provisional Attachment Orders.
The court clarified that since the law already provides appellate and adjudicatory mechanisms, approaching the High Court prematurely amounts to misuse of legal provisions and adds unnecessary burden on the judicial system.
A writ petition is maintainable only in cases of jurisdictional error or manifest illegality, the court said.
Broad Definition of "Proceeds of Crime"
Interpreting Section 2(1)(u) of PMLA, the court held that "Proceeds of Crime" is not limited to assets directly obtained from crime but also includes assets indirectly linked or derived from such proceeds.
For instance, if a corrupt official invests bribe money in real estate or shares and earns profit, the entire amount-including appreciation-is considered proceeds of crime, as its source remains unlawful.
Money Laundering is a Continuing Offence
The court reiterated that money laundering is a continuing offence - it persists as long as the tainted money is concealed, layered, or projected as untainted.
Each subsequent transaction or reinvestment made to disguise the illicit origin of funds is part of the laundering chain and is prosecutable under PMLA.
Attachment of Property Under Section 5 is Lawful
Addressing arguments regarding Section 66(2), the court clarified that information-sharing provisions are procedural, not preconditions for attachment.
The ED has independent powers under Section 5 to attach properties preventively and protectively. Delay in sharing information does not invalidate a Provisional Attachment Order if the illicit origin of funds is established.
PMLA Aligns with Global Anti-Money Laundering Standards
The court reaffirmed that PMLA is aligned with India's international obligations under the Vienna Convention, Palermo Convention, and FATF guidelines.
Its objective is to combat money laundering, confiscate assets linked to criminal activity and prevent illicit funds from entering the legitimate economy.
The Delhi High Court's ruling reinforces that the ED's powers of investigation and property attachment under PMLA are legally sound and procedurally fair. The judgment discourages the misuse of writ jurisdiction and underscores that changing the form or value of illicit money does not cleanse its criminal taint.
