India: Validity Of Writ Under Article 226 Of The Constitution Of India, When Alternate Efficacious Remedy Is Available Under The Prevention Of Money Laundering Act (PMLA) 22(5) Of The Constitution Of India To Be Afforded Opportunity To Make Representation.

Last Updated: 16 June 2017
Article by Vijay Pal Dalmia, Partner

Vijay Pal Dalmia, Advocate & Partner Vaish Associates Advocates
Email: vpdalmia@vaishlaw.com   Mobile: 09810081079

In the case of Barik Biswas vs Union of India & Ors., the Accused was found with gold over 44.65 K.G. in his car by the officers of Directorate of Revenue Intelligence (for short "DRI"), which was seized by DRI officials. A case was registered under PMLA, and the accused were served with a show cause notice under PMLA.

On 21.05.2015 the petitioner received a provisional attachment order, attaching various movable and immovable properties, by the Enforcement Department under Section 5 of the PMLA, and a notice to show cause was issued under Section 8 of the PMLA to the petitioner herein amongst others.

The Petitioner contended that the impugned show cause notice issued under Section 8 of the PMLA and the impugned Provisional Attachment Order dated 21.05.2015 issued under Section 5(1) of the PMLA are illegal, arbitrary and malafide and have been issued without following the procedure established under the PMLA, and as such, they are violative of petitioner's rights as guaranteed under Article 21 of the Constitution of India. It was further contended that the notice to show cause dated 19.06.2015 has been issued without there being any "reason to believe" that

  1. the person concerned has committed an offence under Section 3 i.e., offence of money-laundering, or
  2. the person concerned is in possession of proceeds of crime.

Respondent in the above mentioned case contended that in terms of Section 5 of PMLA, where the Director or any other officer not below the rank of Deputy Director authorised by the Director, has reason to believe, on the basis of material in his possession that any person is in possession of proceeds of crime and such proceeds of crime are likely to be concealed, transferred or dealt with in any manner, he may provisionally attach such proceeds of crime based on the said material reasons to believe that are to be given in writing. The provisional attachment under Section 5(1) of PMLA is only a cautious and tentative step and only becomes effective after an order is passed by the adjudicating authority under Section 8 of PMLA.

It was further contended by the Respondent that any person aggrieved by an order made by the Adjudicating Authority under Section 8 of PMLA can avail the remedy of appeal under Section 26 of PMLA to the Appellate Tribunal, whereby again the accused person is given an ample amount of opportunity of being heard, before any orders are passed. It is only when a person is aggrieved by the decision or order of the Appellate Tribunal that he may file an appeal to the High Court within sixty days from the date of communication of the decision or order of the Appellate Tribunal to him. The remedy of appeal under Section 42 of PMLA is in the nature of second appeal.

Jurisdiction of the High Court under Art. 226 of the Constitution of India and maintainability of Writ High Court, held that while the jurisdiction of this Court to entertain the petitions cannot be, and is not, barred, it depends upon the discretion of this Court, while exercising jurisdiction under Article 226 of the Constitution of India, to grant or refuse the relief sought for.

It is a settled law that a writ court may not exercise its discretionary jurisdiction in entertaining a writ petition questioning a notice to show cause unless the same inter alia appears to have been without jurisdiction as has been held by the Supreme Court in "State of Uttar Pradesh v. Brahm Datt Sharma and Anr.", (1987) 2 SCR 444.

High Court, in the above premise held that the action of coming to this Court is premature and therefore, this Court is of the view that since the petitioners have effective and efficacious remedy under PMLA, necessitating institution of the petition by invoking extraordinary jurisdiction of this Court is not appropriate at this stage. If this Court were to enter into the merits of this case at this stage, it would amount to scuttling the statutorily engrafted mechanism i.e. PMLA. Accordingly the writ petition was dismissed.

Relevant Sections:

  • Constitution of India - Article 21, Article 226
  • Prevention of Money Laundering Act, 2002 -Section 3, Section 2(u), Section 4, Section 5 Section 8, Section 42
  • Customs Act, 1962- Section 124
  • Code of Criminal Procedure, 1973 (2 of 1974) - section 8, section 13, section 17, section 18, section 26, section 58B, section 60, section 173

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