PMLA | 'Copy-Paste' Of Statutory Language In Provisional Attachment Order Not Sufficient; ED Must Show Imminent Urgency To Invoke Sec 5(1) Second Proviso: Karnataka High Court

"In the guise of adherence to law mere copy-paste of statutory language to indicate compliance would not be sufficient. There must be application of mind to the particular facts to demonstrate that material in possession would indicate the failure of passing an order for provisional attachment would likely frustrate the proceedings under the PMLA," Karnataka High Court, in a significant ruling, held that the Directorate of Enforcement (ED) cannot invoke the emergency powers of provisional attachment under the Second Proviso to Section 5(1) of the PMLA by merely reproducing statutory language.

A Single Judge Bench of Justice S Sunil Dutt Yadav observed that the "reasons to believe" must be recorded in writing and must demonstrate a specific, imminent urgency based on objective material to justify bypassing the standard procedural safeguards.

The petitioner, a 70-year-old lady, was allotted 14 sites by the Mysore Urban Development Authority (MUDA) in lieu of compensation for her lands utilized for a layout without formal acquisition. Following a private complaint alleging undue influence in the allotment, the Lokayukta Police registered an FIR and the ED subsequently registered an ECIR, attaching the sites as "proceeds of crime" via a Provisional Attachment Order (PAO) dated June 9, 2025. Although a closure report ('B' report) was filed and accepted regarding some accused in the predicate offence, the ED continued its proceedings, which were later confirmed by the Adjudicating Authority during the pendency of this writ petition.

The primary question before the court was whether a writ petition is maintainable against a provisional attachment order when an alternative statutory remedy exists under the PMLA. The court was also called upon to determine whether the ED had strictly complied with the jurisdictional requirements of the Second Proviso to Section 5(1) regarding the "imminent urgency" needed for immediate attachment.

Maintainability Of Writ Petition Despite Statutory Remedy

The court first addressed the respondent's contention that the petition was not maintainable as the petitioner could appeal the Adjudicating Authority’s confirmation order under Section 26 of the PMLA. Relying on the landmark Whirlpool Corporation v. Registrar of Trade Marks and Godrej Sara Lee Ltd. precedents, the Bench clarified that the power to issue prerogative writs under Article 226 is plenary.

It was noted that while "maintainability" and "entertainability" are distinct concepts, a writ court is justified in intervening where the challenge touches upon the jurisdiction of the authority or a violation of natural justice. The court held that the non-following of the mandatory procedure prescribed under the Second Proviso to Section 5(1) of the PMLA constitutes a jurisdictional issue, warranting judicial review despite the existence of an alternative forum.

Scope Of The Second Proviso To Section 5(1) PMLA

The Bench analyzed the statutory scheme of Section 5(1), noting that while the First Proviso generally requires a report to be forwarded to a Magistrate (charge sheet) before attachment, the Second Proviso allows for immediate attachment "notwithstanding" the first. However, this emergency power is subject to the officer recording "reasons to believe" that non-attachment would likely frustrate proceedings under the Act.

The court emphasized that because the Second Proviso is an exception that bypasses standard safeguards, it must be construed strictly. It held that the Adjudicating Authority, while confirming an attachment under Section 8, does not typically test the validity of the "urgency" recorded under the Second Proviso of Section 5(1), making the High Court the appropriate forum to examine this jurisdictional threshold.

"ED Cannot Resort To 'Cyclostyled' Reasons To Believe"

Upon perusing the impugned PAO, the court found that the ED had merely reproduced the language of the statute to justify the immediate necessity of attachment. The Bench remarked that there was an absence of material forming the basis for such urgency.

The court held that for a valid attachment under the Second Proviso, the authority must demonstrate a nexus between the material in possession and the likelihood of the proceedings being frustrated. A mere "copy-paste" of the statutory provision does not satisfy the requirement of application of mind to the specific facts of a case.

"In the guise of adherence to law mere copy-paste of statutory language to indicate compliance would not be sufficient."

Absence Of Urgency Where Property Cannot Be Transferred

The court looked into the specific facts where the petitioner had actually filed a separate writ petition seeking a direction for the mutation of 'Katha' (title records) for the sites, which was still pending. Since the revenue entries had not been effected in the petitioner's name, the court observed that the property could not have been legally dealt with or transferred to create third-party rights.

Consequently, the court found that there was no possibility of the petitioner dealing with the property in a manner that would frustrate PMLA proceedings. The apprehension of the ED that provisional attachment was "immediately" required was found to be without any objective basis or nexus with the reality of the property's legal status.

Subsequent Confirmation Order Does Not Eclipse The Challenge

The respondent argued that because the Adjudicating Authority had confirmed the PAO on November 26, 2025, the challenge to the provisional order had become infructuous. The High Court rejected this, noting its previous interim observation that any proceedings taken would be subject to the outcome of the writ petition.

The Bench applied the settled legal principle that if an order passed at an earlier stage of the proceedings forms the basis for subsequent orders and is found to be legally defective, the corollary is that the subsequent proceedings based on that defective order must also fail.

The High Court concluded that the ED failed to meet the jurisdictional requirement of demonstrating "imminent urgency" as mandated by the Second Proviso to Section 5(1) of the PMLA. Accordingly, the court set aside the Provisional Attachment Order dated June 9, 2025, and all consequential proceedings. The court reserved liberty for the ED to initiate fresh proceedings if circumstances warranting the exercise of power under the Second Proviso are legitimately made out in accordance with the law.

Date of Decision: 02 June 2026