High Court Upholds Attachment Under PMLA; No Final Guilt Determination

The appellants, Tushar Sahu, Pankaj Kumar Sahu and Poonam Sahu, challenged the order of the Adjudicating Authority confirming a Provisional Attachment Order issued by the Directorate of Enforcement under the Prevention of Money Laundering Act, 2002. The matter arises out of the alleged coal levy scam in Chhattisgarh, where illegal collections of Rs. 25 per tonne of coal were said to have generated substantial proceeds of crime. The ED alleged that such proceeds were routed into the acquisition of immovable properties in the names of the appellants, who are stated to be relatives of a senior public official. The appellants contended that the properties were acquired from legitimate agricultural income and personal savings. They also argued that they were neither named in the predicate offence nor in the original prosecution complaints, and therefore, the attachment was unjustified.

Main Issue: Whether confirmation of provisional attachment under Section 8 of the PMLA is valid and whether such attachment can extend to properties held by persons not named as accused in the predicate offence.

Decision: The High Court dismissed the appeals and upheld the attachment of properties. It clarified that provisional attachment under Section 5, and its confirmation under Section 8 of the PMLA, is not a determination of guilt but a preventive mechanism to ensure that alleged proceeds of crime are not dissipated during investigation and trial. In fact, the Court found that the ED had placed sufficient material to establish a prima facie link between the funds used for the acquisition of the properties and the alleged coal levy scam. At this stage, a detailed adjudication on ownership or legitimacy of funds is not required.

Addressing the appellants’ contention regarding their non-inclusion as accused, the Court held that under the PMLA, attachment is property-centric and not person-centric. Even properties held in the name of third parties can be attached if they are found to be linked to the proceeds of crime. The Court further observed that the appellants failed to discharge the burden of rebutting the statutory presumption by producing credible material to establish legitimate sources of funds. In the absence of such a rebuttal, the confirmation of attachment by the adjudicating authority was found to be justified.