Can't Bypass Remedies Under PMLA Unless Entirely Ill-Suited: Kerala High Court Dismisses Santiago Martin's Plea Against ED Attachments

The Kerala High Court on Tuesday dismissed 'lottery king' Santiago Martin's petition challenging ED's attachment orders freezing his and his company's movable assets under the Prevention of Money Laundering Act, 2002 (PMLA).

Justice Bechu Kurian Thomas held that PMLA provides a comprehensive three-tier remedy for such grievances and that the petitioners ought to have exhausted their alternative remedies rather than bypassing them, unless they are unsuitable for the situation.

"a three-tier remedy is provided under the PMLA itself, as fora to alleviate the grievances of those aggrieved. When such a scheme is provided for under the PMLA, petitioners do have an efficacious alternative remedy. These remedies, available under the statute, cannot be circumvented unless they are entirely ill-suited to meet the demands of the situation. Considering the timelines provided and the nature of authorities created under the PMLA, the alternative remedies cannot be regarded as ill-suited to meet the exigency. Any prejudice caused on account of the provisional attachment order can be remedied through the scheme of the Statute itself."

Distributor of Sikkim Lotteries and its Managing Director Santiago Martin had approached the Court challenging the proceeding initiated under PMLA. The petitioners contested ED's provisional attachment orders on their properties under the PMLA.

Martin and the company had been accused of being involved in money laundering by being connected to proceeds of crime estimated at Rs. 910.29 crores. Initially, they were facing accusations in a criminal case investigated by the CBI. Subsequently, the ED registered a case under the PMLA.

Senior Advocates Mukul Rohatgi and Ramesh Babu instructed by Advocates A. Kumar and G. Mini appearing for the petitioners alleged that the attachment orders exceeded the petitioners' share in the estimated proceeds of crime. It was argued that despite the ED estimating Martin's involvement at 51% (approximately Rs. 464.25 crores), the provisional attachments went beyond, amounting to nearly Rs. 894 crores. They asserted that only 51% could be attributed to Martin, while the remaining portion pertains to another accused. On this among other grounds, the petitioners challenged the attachments as lacking proper authority.

ASGI ARL Sundareshan and Standing Counsel Jaishankar V Nair appearing for the respondents asserted that the petitioners have a suitable avenue within the PMLA to address their concerns about excessive attachment and authority. They pointed out Martin's alleged investment of crime proceeds in multiple companies and stressed that the attachment order was based on reasons to ensure the integrity of PMLA proceedings.

The main issue was therefore the legality of the provisional attachment order dated 09.06.2023 and an earlier order dated 12.05.2022, freezing the movable properties of the petitioners. 

The Court pointed out that the PMLA was enacted as a means to address money laundering's threats and consequences. Apart from making money laundering a punishable offence, it provides for provisional attachment of property believed to be proceeds of crime. The statute offers safeguards through reasons for attachment, a period of validity for the order, and the creation of an Adjudicating Authority for considering the validity of the attachment, the Court observed. 

Justice Thomas further highlighted that the PMLA provides a three-tier remedy within the statute itself—adjudication by an independent authority, appeal to an Appellate Tribunal, and further appeal to the High Court. It was highlighted that resorting to Article 226 of the Constitution writ petitions, should be exceptional and that when statutory remedies are available, they should not be bypassed unless entirely ill-suited to the situation.

"When such statutory remedies are provided, including an appellate power on facts as well to the High Court, exercising the power under Article 226 of the Constitution of India would be akin to usurping the power of the Appellate Court. Such a procedure is not legally proper or justifiable, unless there are exceptional reasons to do so."

The Court concluded that since the PMLA offers a comprehensive remedy structure, the writ petition is not maintainable.

The petition was thus dismissed and the alternative statutory remedies available to the petitioners under the PMLA were upheld. 

Case Title: Santiago Martin & Anr v. Union of India & Ors. 

Citation: 2023 LiveLaw (Ker) 384

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