Delhi High Court seeks ED, Centre reply in plea to read down PMLA provision on property attachment

The Delhi High Court on Thursday issued notice to the Central government and the Directorate of Enforcement (ED) on a plea seeking the reading down of the Prevention of Money Laundering Act (PMLA) provisions dealing with the attachment of properties involved in money laundering. 

A Bench of Chief Justice Devendra Kumar Upadhyaya and Justice Tejas Karia directed the ED and the government to reply in four weeks to the plea filed by Sachin Dev Duggal, a UK-based entrepreneur involved in the ED’s money laundering probe against Videocon group.

Duggal has sought a reading down of key provisions of Section 5 of the PMLA. He has also challenged the attachment of his residential property.

Advocate Zoheb Hossain appeared for the ED and raised a preliminary objection regarding the maintainability of the plea, given the fact that the Supreme Court has upheld the constitutional validity of Section 5 in its judgment in Vijay Madanlal Choudhary. 

Senior Advocate Vivek Chaudhari appeared for the petitioner and said that the reading down of the provision is possible even if the Supreme Court has upheld the constitutional validity. 

The Court proceeded to issue notice in the matter, noting that the petition sought directions to read down Section 5, not to declare the provisions unconstitutional.

The case will be heard next on July 22. 

The key reliefs sought by Duggal are: 

• The “material” which forms 'reasons to believe' should be based on admissible evidence to be led before the Court and not inadmissible evidence. 

• Hold that the expression ‘reason to believe’ is not equivalent with the expression 'grave suspicion to believe' and, therefore, the same ought to be of a higher degree of satisfaction. The petition asks the Court to declare that recording of ‘reason to believe in writing’ is a sine qua non and a legal necessity for the designated officer to ‘provisionally attach’ any property. 

• Hold that the term ‘reason to believe’ is subject to judicial review.

• The expression ‘reason to believe’ is not synonymous with the subjective satisfaction of the officer and must be held in good faith and cannot merely be a pretense.

• Direct that the officer acting under Section 5 (1) cannot pick and choose material to provisionally attach properties. 

• Hold that an officer’s power to attach provisionally attach a property “cannot take into its ambit, scope and sweep any property ‘equivalent in value". 

•  Hold that a single member, “that too from outside the ‘field of law’" can never be construed to constitute the Adjudicating Authority and “such single member under no circumstances can act as its Chairperson’”. 

Apart from Senior Advocate Chaudhary, Advocates Vivek Jain and Swapnil Shrivastava also appeared for the petitioner.