PMLA- Person Can't Be Prevented From Enjoying Property On Mere Confirmation Of Provisional Attachment : Supreme Court

"The principle set out in Section 5(4) of the 2002 Act needs to be extended even after confirmation of provisional attachment order until a formal confiscation order is passed."

Section 5(4) reads as under -

"Section 5 - Attachment of property involved in money-laundering - (4) Nothing in this section shall prevent the person interested in the enjoyment of the immovable property attached under sub-section (1) from such enjoyment.

Explanation.--For the purposes of this sub-section, "person interested", in relation to any immovable property, includes all persons claiming or entitled to claim any interest in the property."

In the judgment passed in a batch of petitions concerned with challenges to interpretation of the various provisions of the PMLA, a Bench comprising Justices A.M. Khanwilkar, Dinesh Maheshwari and C.T. Ravikumar clarified that when a provisional attachment order passed under Section 5(1) is confirmed, it does not mean that the property stands confiscated, until a formal order of confiscation is passed.

It also opined that the direction under Section 8(4) PMLA to take possession of the property, without a formal order, merely on the basis of confirmation of provisional attachment order, should be an exception and not the rule. The requirements of such hastened possession would be decided on a case-to-case basis.

Thus, construing Section 8(4) harmoniously, the Bench held that the provision is not unconstitutional. It also referred to the recommendations of the Financial Action Task Force (FATF) which permits non-conviction based confiscation model.

However, it noticed that in cases where the Special Court eventually decides that the concerned property was not the proceeds of crime it would be a 'case of serious miscarriage of justice, if not abuse of process to take physical possession of the property held by such person'. Moreover, it observed that no purpose would be served by hastening the process of taking possession of the property and then returning it back to the same person later pursuant to the order passed by the Special Court. In view of the same it held -

"It is unfathomable as to how the action of confiscation can be resorted to in respect of property in the event of his acquittal or discharge in connection with the scheduled offence. Resultantly, we would sum up by observing that the provision in the form of Section 8(4) can be resorted to only by way of an exception and not as a rule."

These observations were in response to the contentions raised by the petitioners that Section 8(4) permits the ED officers to take possession of the attached property at the stage of confirmation of provisional attachment made by the Adjudicating Authority. In view of the deprivation of a person's right to property, especially at an early stage, without procedural safeguards, Section 8(4) had been assailed as unconstitutional.