The Karnataka High Court has ruled that the Enforcement Directorate (ED) must rigorously follow the procedures outlined in the Prevention of Money Laundering Act (PMLA). The court emphasized that simply replicating legal text to demonstrate compliance is inadequate. This ruling came during the judgment of a case involving the provisional attachment of property by the ED in the MUDA case [Jayamma v Directorate of Enforcement].
Judgment by Justice S Sunil Dutt Yadav
Justice S Sunil Dutt Yadav presided over the case, where he overturned the ED’s decision to provisionally attach land plots allotted to a woman by the Mysore Urban Development Authority (MUDA). The court noted that the evidence presented did not justify the urgent need for property attachment, and the ED’s justification—being a mere reiteration of statutory provisions—was insufficient.
The court underscored that a failure to adhere strictly to the procedural requirements invalidates a provisional attachment order. “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,” the Bench stated.
Case Background
The ED’s case was linked to alleged illegalities in MUDA’s land allotments, a controversy that had previously implicated former Chief Minister Siddaramaiah. Although the petitioner, Jayamma, was not accused, her allocated land was scrutinized by the Lokayukta police and the ED. Jayamma argued in court that after her family land was acquired for the Jayanagar Layout development, she sought MUDA’s allotment of sites as compensation.
Legal Proceedings and Outcome
Despite MUDA executing sale deeds, the revenue authorities failed to provide ownership records for these plots. As the Lokayukta Police initiated investigations, the ED registered a money laundering case, claiming the plots constituted proceeds of crime and ordered their attachment under the PMLA. However, the High Court found the ED’s actions unjustified.
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The court concluded there was no valid reason to believe that failing to attach the property would undermine PMLA proceedings. Additionally, since revenue records were pending, the petitioner was not in a position to deal with or transfer the sites. “If that were to be so, the question of transferring the proceeds of crime and layering such proceeds would not arise,” the Bench remarked, annulling the provisional attachment order.
Advocate Jaysham Jayasimha Rao represented Jayamma, while Additional Solicitor General Aravind Kamat and advocate Madhukar M Deshpande appeared for the ED. For further details, refer to the court’s order in the case of SMT. JAYAMMA vs THE DIRECTORATE OF ENFORCEMENT, Karnataka HC, LawLens.
