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by Admin
17 December 2025 5:02 AM
“Preventive attachment under PMLA cannot be allowed to degenerate into punitive deprivation before guilt is proven”— in a crucial ruling on the intersection of economic utility and statutory safeguards under the Prevention of Money Laundering Act, 2002 (PMLA), the Orissa High Court allowed M/s. Deepak Steel and Power Ltd. to resume operations of its attached industrial units in Topadihi and Uliburu, Keonjhar, despite the properties remaining under confirmed attachment orders.
Justice Aditya Kumar Mohapatra, while refraining from interfering with the attachments or staying ongoing criminal proceedings, observed that Section 5(4) of PMLA explicitly permits enjoyment of attached immovable property, and any contrary interpretation would "amount to pre-trial punishment."
"Preventive Attachment Must Not Morph Into Pre-Trial Confiscation"
Referring to the Supreme Court’s authoritative judgment in Vijay Madanlal Choudhary v. Union of India, the Court reiterated that attachment under PMLA is preventive, not punitive:
“The legislative intent behind attachment is not to deprive a person interested of the enjoyment of the immovable property, especially before proceedings are finalized. Section 5(4) clearly states so.” [Para 24]
The Court held that even after confirmation of provisional attachment under Section 8(3), possession under Section 8(4) should not be invoked indiscriminately:
“The power to take over possession must not be resorted to at the drop of the hat. It is to be used judiciously.” [Para 25, quoting Vijay Madanlal]
Thus, the mere confirmation of attachment does not extinguish possessory rights, unless and until the trial results in confiscation.
Petitioner Abandons Prayer for Stay, Seeks Operational Use Only
Initially, the petitioner sought to stay ongoing PMLA and Vigilance proceedings, challenge the confirmation order dated 03.09.2024, and lift attachments. However, during the course of arguments, Senior Advocate Mr. A.S. Nadkarni, appearing for Deepak Steel, narrowed the reliefs to merely seek permission to operate the attached industrial units:
“We are not pressing for stay or challenging the attachment orders. We only seek permission to operate the plants conditionally.” [Para 32]
Taking note of the limited scope of relief, the Court proceeded to determine whether such permission could be granted without vacating or altering the attachments.
Long Pendency, Economic Loss & Livelihood Impact Influenced Equitable Relief
The Court recorded that charges were yet to be framed in the 2013 Vigilance case, and only 57 out of 178 witnesses had been examined over 12 years, with over 80,000 documents still pending examination:
“The plants have been under attachment since 2013. Trial is far from conclusion. In such facts, equities have to be balanced.” [Para 29]
Importantly, the Court noted the economic ramifications of forced closure, stating:
“Denying the Petitioner the right to operate the plants, particularly in the absence of a final finding of guilt, amounts to pre-trial punishment.” [Para 29]
“Closure of the plants will lead to depreciation, loss of public revenue, and hardship to workers. Revival later may not even be viable.” [Para 30]
Statutory Interpretation Favouring Enjoyment of Property Upheld
The Court extensively interpreted Sections 2(1)(d), 5(1), 5(4), 8(3), and 8(4) of PMLA and held:
“‘Attachment’ as defined under Section 2(1)(d) is merely a prohibition on transfer or movement—it does not restrict use or enjoyment.” [Para 24]
Further, quoting from Vijay Madanlal, the Court reinforced:
“Section 5(4) of PMLA needs to be read as continuing even after confirmation under Section 8(3), until confiscation under Section 8(5).” [Para 25]
In this light, the ED’s reliance on judgments dealing with lifting of attachment was found misplaced:
“Since the Petitioner does not seek lifting of attachment, but merely operational use, those precedents are inapplicable.” [Para 27]
Court’s Final Directions: Attachments Continue; Conditional Operation Permitted
Balancing statutory objectives with economic realities, the Court partly allowed the interim applications and issued the following directions:
“The Petitioner is permitted to operate and carry on the commercial activities in respect of the plants/units located in Topadihi and Uliburu, Keonjhar District, subject to strict compliance with the following:”—[Para 33]
Attachments continue undisturbed; operation permitted only for two units.
No alienation or transfer of the units permitted.
All necessary government/statutory licenses must be obtained.
Prosecution may inspect the plants/records at reasonable times.
Prosecution liberty reserved to move Court in case of any violation.
The Court clarified that this order is limited to enjoyment and operation, not lifting of the attachments, and shall not affect the ongoing criminal proceedings or rights under PMLA appellate provisions.
Alternate Remedies Under Sections 26 and 42 PMLA Not Bar to Relief
Though ED argued that the confirmation order could only be challenged before the Appellate Tribunal (Section 26) and subsequently in High Court (Section 42), the Court held:
“In the peculiar facts of the case, where only operational use is sought without challenging the attachment, this Court finds it necessary to adjudicate the grievance.” [Para 22]
Thus, alternate remedy under PMLA was held not to be a bar, particularly when no challenge to the attachment was pressed.
Equitable Relief Anchored in Statutory Interpretation and Public Interest
By permitting operational use of attached units while preserving the sanctity of attachments, the Orissa High Court’s judgment strikes a delicate balance between the preventive aims of PMLA and the practical demands of economic utility, livelihood protection, and property preservation. The ruling affirms that PMLA’s attachment mechanism is not meant to paralyse businesses before trial, and courts must ensure proportionality in interim measures.
Date of Decision: 22 September 2025
