Copy-Pasting Statutory Language Without Application Of Mind Not Sufficient For Provisional Attachment Under PMLA: Karnataka High Court

The Karnataka High Court has held that merely reproducing the language of a statute in a provisional attachment order under the Prevention of Money Laundering Act, 2002 (PMLA), without demonstrating independent application of mind, is insufficient to satisfy the legal requirements of the Act. The ruling came in Jayamma v. Directorate of Enforcement, where Justice S. Sunil Dutt Yadav set aside a provisional attachment order issued by the Directorate of Enforcement (ED) against a 70-year-old widow.

The petitioner had inherited land that was later utilised by the Mysore Urban Development Authority (MUDA) for a housing layout. In lieu of compensation, MUDA executed sale deeds in her favour for certain sites in June 2024. Following allegations regarding irregular allotment of sites, the Lokayukta Police registered a predicate offence and the ED initiated proceedings under the PMLA, provisionally attaching the petitioner’s properties under the second proviso to Section 5(1) of the Act.

The Court observed that the second proviso permits attachment only when the competent authority records reasons, based on material in its possession, that failure to attach the property immediately would likely frustrate money laundering proceedings. It emphasised that material indicating a prima facie money laundering offence is distinct from material establishing urgency for attachment.

Finding that the ED had merely copied statutory language without identifying any concrete risk of transfer or dissipation of the property, the Court held that the mandatory procedural safeguards were violated. Since the sale deeds had not even resulted in mutation of records and no third-party rights could be created, the alleged urgency was absent. Consequently, the provisional attachment order and all consequential proceedings against the petitioner were quashed, while granting liberty to the ED to initiate fresh proceedings if legally justified.