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Can the Enforcement Directorate (“ED”) invoke emergency provisional attachment powers under the Prevention of Money Laundering Act, 2002 (“PMLA”) merely through mechanical reproduction of statutory language, or must it demonstrate distinct objective material establishing an immediate necessity to prevent frustration of proceedings?
That question arose before the Karnataka High Court in Smt. Jayamma v. Directorate of Enforcement1, where the Court examined the legality of provisional attachment proceedings initiated under the Second Proviso to Section 5(1) of the PMLA. The ruling is significant not merely for its interpretation of the statutory requirement of “reasons to believe,” but for its broader clarification of the jurisdictional limits of the adjudicatory framework under Sections 5 and 8 of the PMLA.
The judgment addresses an important structural issue within anti-money laundering jurisprudence: whether the Adjudicating Authority under Section 8 possesses jurisdiction to independently examine the legality of the ED’s invocation of emergency attachment powers, or whether such foundational procedural defects remain subject to constitutional scrutiny under Article 226 of the Constitution.
The proceedings arose against the backdrop of investigations concerning allotment of compensatory sites by the Mysore Urban Development Authority (“MUDA”) in relation to formation of the Jayanagar Layout. A private complaint instituted by Sri Snehamayi Krishna alleged misuse of political and official influence in securing allotment of 14 compensatory sites in favour of certain accused persons. Pursuant to these allegations, the Lokayukta Police registered an FIR concerning the predicate offences, following which the ED initiated proceedings under the PMLA.
However, a critical aspect of the matter concerned the distinct legal posture of the petitioner, Smt. Jayamma. Unlike the principal accused persons against whom allegations of political influence were directed, the petitioner was a 70-year-old woman asserting independent inheritance rights over hereditary land allegedly utilised by MUDA without formal acquisition proceedings. Her claim to compensatory sites arose from that asserted inheritance interest and not from the alleged political arrangements forming the foundation of the complaint against Accused Nos. 1 to 4.
The ED nevertheless issued a provisional attachment order dated June 9, 2025 against certain immovable properties alleged to constitute proceeds of crime, invoking the Second Proviso to Section 5(1) of the PMLA on the basis that non-attachment was likely to frustrate proceedings under the Act.
Importantly, at the time of the provisional attachment order, no ‘B’ Report had yet been accepted by the Special Court. The High Court noted that the ‘B’ Report concerning Accused Nos. 1 to 4 came to be accepted only subsequently on January 28, 2026. On the date of attachment, the investigation remained pending or inconclusive against other accused persons, which formed part of the ED’s justification for invoking the emergency proviso.
A further material circumstance concerned the legal status of the attached properties themselves. The petitioner had separately instituted W.P. No. 36147/2024 seeking directions against MUDA for effectuation of mutation (katha) entries concerning the properties. Since the katha transfer itself remained pending and frozen during the subsistence of those proceedings, the petitioner argued that the properties were incapable of lawful transfer or alienation. Consequently, according to the petitioner, the ED lacked any objective material demonstrating a genuine apprehension that the properties would be dissipated, layered or transferred so as to frustrate proceedings under the PMLA.
Before the Karnataka High Court, the petitioner challenged the provisional attachment proceedings on the ground that the ED had mechanically invoked the Second Proviso to Section 5(1) without satisfying the mandatory jurisdictional requirement of recording valid “reasons to believe.”
The petitioner argued that the attachment order merely reproduced omnibus and cyclostyled statutory language without disclosing any distinct objective material establishing imminent concealment, alienation or frustration of proceedings. A central aspect of the challenge lay in the distinction between material capable of supporting allegations of money laundering generally and material specifically justifying emergency provisional attachment.
The High Court accepted this distinction as doctrinally significant. The Court held that material suggesting prima facie commission of money laundering under Section 3 cannot automatically constitute material sufficient to invoke the emergency mechanism under the Second Proviso to Section 5(1). The ED was required to possess independent objective material demonstrating an immediate necessity for attachment based upon a genuine apprehension that proceedings under the PMLA were likely to be frustrated in the absence of urgent intervention.
In the facts of the present case, the Court found that the absence of mutation entries, coupled with the pendency of separate writ proceedings concerning katha registration, substantially undermined the ED’s assertion that the properties were capable of immediate transfer or dissipation. The Court observed that the apprehension relied upon by the ED lacked any objective material having a nexus with actual frustration of proceedings.
A major issue before the Court concerned the maintainability of the writ petition despite the statutory adjudicatory framework under Sections 8, 26 and 42 of the PMLA.
The ED argued that once the Adjudicating Authority confirmed the provisional attachment order on November 26, 2025, the challenge to the original attachment order had become infructuous. Reliance was placed upon decisions including JSW Steel Ltd. v. Deputy Director, Directorate of Enforcement2 and Dyani Antony Paul v. Union of India3 to contend that the PMLA constitutes a complete statutory mechanism requiring exhaustion of alternate remedies.
The High Court, however, analysed the issue through the doctrinal distinction between maintainability and entertainability developed in Whirlpool Corporation v. Registrar of Trade Marks4 and Godrej Sara Lee Ltd. v. Excise and Taxation Officer5. The Court reiterated that although writ jurisdiction under Article 226 is discretionary, existence of alternate remedies does not bar constitutional scrutiny where foundational jurisdictional defects are alleged.
Significantly, the Court held that the procedural safeguards embedded within the Second Proviso to Section 5(1) constitute jurisdictional conditions precedent governing exercise of emergency attachment powers. According to the Court, the Adjudicating Authority under Section 8 is principally concerned with examining the existence and acquisition of allegedly tainted assets and does not possess jurisdiction to independently test the procedural legality of the ED’s recorded “reasons to believe” while invoking emergency powers under Section 5.
Consequently, the Court held that constitutional scrutiny under Article 226 remained available notwithstanding the statutory appellate framework.
The Court further rejected the ED’s argument that confirmation of attachment by the Adjudicating Authority rendered the writ petition infructuous.
A crucial procedural aspect relied upon by the Court was its own interim order dated October 31, 2025, which expressly provided that any proceedings undertaken pursuant to the provisional attachment order would remain subject to the final outcome of the writ petition. As a result, the subsequent confirmation order never acquired an independent or insulated status capable of eclipsing the challenge to the foundational attachment order itself.
The Court additionally invoked the settled administrative law principle flowing from Taylor v. Taylor6, Nazir Ahmad v. Emperor7, Deep Chand v. State of Rajasthan8 and State of U.P. v. Singhara Singh9, namely that where a statute prescribes a particular manner for exercise of power, the power must be exercised strictly in that manner or not at all.
Applying that principle, the Court held that once the original invocation of emergency attachment powers under the Second Proviso to Section 5(1) was found legally defective for want of valid “reasons to believe,” all consequential proceedings arising therefrom necessarily collapsed as a corollary.
Accordingly, the Karnataka High Court set aside the provisional attachment order dated June 9, 2025 and all consequential proceedings arising therefrom, while reserving liberty to the ED to initiate fresh proceedings in accordance with law upon proper satisfaction of statutory requirements.
The ruling in Smt. Jayamma v. Directorate of Enforcement is an important recognition that procedural safeguards under the PMLA are substantive jurisdictional limitations upon the exercise of coercive state power and cannot be diluted through boilerplate or cyclostyled reproduction of statutory language.
The judgment is particularly significant for drawing a rigorous distinction between material capable of supporting allegations of money laundering generally and the separate threshold required to justify invocation of emergency attachment powers under the Second Proviso to Section 5(1). Equally important is the Court’s clarification that the adjudicatory framework under Section 8 cannot cure foundational jurisdictional defects arising from invalid invocation of provisional attachment powers.
Viewed more broadly, the decision reflects increasing judicial scrutiny over the procedural and evidentiary foundations underlying emergency attachment proceedings under the PMLA, particularly where extraordinary coercive powers are exercised without demonstrable objective material establishing a genuine and immediate threat of frustration of proceedings.
Citations
Expositor(s): Adv. Aparna Shukla
