Kerala High Court Dismisses Writ Petition Challenging PMLA Provisional Attachment — Vijayam Vs Directorate of Enforcement
Background and Context
The Kerala High Court recently delivered a significant ruling in Vijayam Vs Directorate of Enforcement, dismissing a writ petition filed under Article 226 of the Constitution of India by the family members of an accused individual. The petitioners — comprising the mother-in-law, wife, and brother-in-law of one Mr. M.K. Chandran — challenged the provisional attachment of their properties carried out by the Directorate of Enforcement (ED) under the Prevention of Money Laundering Act, 2002 (PMLA) in connection with ECIR No. ECIR/KCZO/07/2022.
This judgment touches upon critical aspects of PMLA jurisprudence, including the attachment of properties acquired prior to the commission of the predicate offence, attachment of equivalent value properties, and the importance of exhausting statutory remedies before approaching the High Court under Article 226.
The Predicate Offence and Enforcement Action
Mr. M.K. Chandran was originally proceeded against by the Vigilance and Anti-Corruption Bureau for alleged commission of offences punishable under Section 13(2) read with Sections 13(1)(c) and 13(1)(d) of the Prevention of Corruption Act, 1988. The allegations related to the misappropriation of public funds amounting to ₹6,07,05,069.06 during the period from 01.07.2007 to 30.06.2017, when Mr. M.K. Chandran served as the Accountant of the Kerala Advocates' Welfare Fund Trust Committee. Subsequently, the investigation was taken over by the Central Bureau of Investigation (CBI).
Following the registration of the Enforcement Case Information Report (ECIR), the Directorate of Enforcement, Cochin Zone issued a provisional attachment order covering certain properties belonging to the petitioners. This order became the subject matter of the present writ petition.
Arguments Advanced by the Petitioners
The petitioners raised several grounds in support of their challenge to the provisional attachment order:
1. Properties Acquired Before the Predicate Offence
The petitioners contended that two of the attached properties were acquired well before the period of the alleged misappropriation (i.e., before 01.07.2007):
- One property was purchased under Sale Deed No. 1171/2005 registered at Kuruppumpady Sub Registry, in the name of the second petitioner (wife of the accused).
- Another property was acquired under Sale Deed No. 3256/1/2003 dated 20.11.2003, registered at the Thripunithura Sub Registry.
Since both properties predated the commencement of the alleged criminal activity, the petitioners argued they could not be treated as "proceeds of crime" under the PMLA and were therefore immune from attachment.
2. Lack of Knowledge Regarding Bank Account
The second petitioner (wife) specifically averred that Mr. M.K. Chandran had opened a bank account in her name without her knowledge or consent. She further asserted that the deposits in this account were attributable to income generated from five stage carriage buses operated by her family — not from any misappropriated funds.
3. Reliance on Pavana Dibbur v. Directorate of Enforcement
The petitioners placed heavy reliance on the Supreme Court's decision in Pavana Dibbur v. Directorate of Enforcement [2023 SCC OnLine SC 1586], arguing that an immovable property acquired prior to the commission of the predicate offence cannot be attached under Section 5 of the PMLA, unless the proceeds of crime had been transferred or moved outside India. Since no such allegation was made in the present matter, the petitioners maintained that the attachment lacked legal sanctity.