Case Law Details
Vijayam Vs Directorate of Enforcement (Kerala High Court)
The writ petition under Article 226 of the Constitution of India was filed by the mother-in-law, wife, and brother-in-law of Mr. M.K. Chandran, challenging the provisional attachment of their properties under the Prevention of Money Laundering Act, 2002 (PMLA). The attachment was made through a provisional attachment order issued in connection with ECIR No. ECIR/KCZO/07/2022.
Mr. M.K. Chandran had earlier been booked by the Vigilance and Anti-Corruption Bureau for offences under Section 13(2) read with Sections 13(1)(c) and 13(1)(d) of the Prevention of Corruption Act, 1988, concerning the alleged misappropriation of ₹6,07,05,069.06 during the period from 01.07.2007 to 30.06.2017 while serving as Accountant of the Kerala Advocates’ Welfare Fund Trust Committee. The investigation was later taken over by the CBI.
The petitioners contended that two of the attached properties had been purchased long before the commencement of the alleged predicate offence. According to them, one property had been purchased under Sale Deed No.1171/2005 in the name of the second petitioner, while another had been purchased under Sale Deed No.3256/1/2003 dated 20.11.2003. They argued that these properties were acquired before 01.07.2007 and therefore were not liable to attachment. The second petitioner also asserted that Mr. M.K. Chandran had opened a bank account in her name without her knowledge and that the amounts deposited therein represented income from five stage carriage buses operated by her family. Relying on Pavana Dibbur v. Directorate of Enforcement, they submitted that immovable properties acquired before the commission of the predicate offence could not be attached under Section 5 of the PMLA unless the proceeds of crime had been taken outside the country. They sought quashing of the provisional attachment order.
The respondents contended that the investigation had revealed diversion of portions of the allegedly misappropriated funds into the second petitioner’s bank account and that the proceeds of crime were either in the petitioners’ possession or had been consumed by them. They clarified that, out of the 60.07 cents of land mentioned in one schedule item, only a specific 10-cent portion standing exclusively in the second petitioner’s name had been attached. They further submitted that attachment of equivalent value properties was justified where the proceeds of crime had been exhausted. The respondents also raised a preliminary objection regarding maintainability, stating that the petitioners had not availed the statutory remedies before the Adjudicating Authority and the Appellate Tribunal under the PMLA. They relied on the three-Judge Bench decision in Vijay Madanlal Choudhary and Others v. Union of India and Others, which upheld the constitutional validity of Section 5 of the PMLA and recognised the power to attach equivalent value properties.
The High Court considered the decision in Vijay Madanlal Choudhary, particularly the observations that the offence of money laundering is an independent offence connected with the proceeds of crime and that the definition of “proceeds of crime” includes the value of such property. The Court noted the Supreme Court’s observations regarding attachment of equivalent value property and the legislative objective of recovering proceeds of crime.
The Court held that, in view of the larger Bench decision in Vijay Madanlal Choudhary, the petitioners could not contend that the attachment proceedings were invalid under Section 5 of the PMLA. The Court further noted that similar contentions had already been rejected by two Division Benches of the Kerala High Court in Samsuddin A.K. v. Union of India and Abdul Rashid @ Dr. A.R. Babu v. Deputy Director, Directorate of Enforcement, following Vijay Madanlal Choudhary.
On the facts of the case, the Court observed that the respondents had proceeded against the petitioners’ properties after obtaining specific inputs and leads regarding their involvement in the appropriation of the proceeds of crime. The Court also noted that the second petitioner had admitted that Mr. M.K. Chandran had opened a bank account in her name and that the materials collected by the respondents pointed to the channelling of funds from the alleged misappropriation into that account. In these circumstances, the Court found no reason to exercise its jurisdiction under Article 226 to interfere with the attachment proceedings. It also accepted the respondents’ contention that the petitioners had failed to avail the alternative statutory remedies before the Adjudicating Authority and the Appellate Tribunal under the PMLA. Concluding that the writ petition lacked merit, the Court dismissed it.
Cases Discussed
- Abdul Rashid @ Dr.A.R.Babu v. Deputy Director, Directorate of Enforcement (Kerala High Court), 2026 KHC 1528
- Pavana Dibbur v. Directorate of Enforcement (SC), 2023 SCC OnLine SC 1586
- Vijay Madanlal Choudhary and Others v. Union of India and Others (SC), 2022 SCC OnLine SC 929
- Samsuddin A.K v. Union of India (Kerala High Court), 2025 (3) KHC 107
- Raman Tech. & Process Engg. Co. v. Solanki Traders (SC), (2008) 2 SCC 302 : (2008) 1 SCC (Civ) 539
- Attorney General for India v. Amratlal Prajivandas (SC), (1994) 5 SCC 54 : 1994 SCC (Cri) 1325
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
The mother-in-law, wife and brother-in-law of one Mr.M.K.Chandran, against whom the Directorate of Enforcement, Cochin Zone registered ECIR No.ECIR/KCZO/07/2022, have filed this writ petition under Article 226 of the Constitution of India challenging the provisional attachment of their properties vide Ext.P2 order.
2. The aforesaid person by name M.K.Chandran was earlier booked by the Vigilance and Anti-Corruption Bureau for the commission of offence under Section 13(2) r/w Sections 13(1)(c) and 13(1)(d) of Prevention of Corruption Act, 1988, in connection with the misappropriation of funds amounting to Rs.6,07,05,069.06 during the period from 01.07.2007 to 30.06.2017 while he was working as the Accountant of Kerala Advocates’ Welfare Fund Trust Committee. Later on, the investigation in the aforesaid case was taken over by the CBI. The second respondent issued Ext.P2 provisional attachment order in respect of the properties, including the properties shown as Sl.No.2 and Sl.No 3 in the Schedule of Properties, which according to the petitioners, are not liable to be proceeded against for the predicate offence mentioned above. According to the petitioners, the property shown in Sl.No.2 of the Schedule of Properties in Ext.P2 was purchased by the first petitioner as per sale deed No.1171/2005 of Kuruppumpady Sub Registry in the name of the second petitioner. So also, it is contended that the property shown as Sl.No.3 of the Schedule of Properties in Ext.P2 was purchased by the petitioners by virtue of sale deed No.3256/1/2003 dated 20.11.2003 of the Thripunithura Sub Registry. Thus, it is contended that the aforesaid properties, which were purchased by the petitioners years before the commencement of the crime in 01.07.2007, are not liable to be proceeded against. It is further contended that the aforesaid person by name M.K.Chandran had opened an account in the name of the second petitioner without her knowledge. According to the second petitioner, the amounts deposited in her account came out of the payments received from five stage carriage buses operated by her family. Thus, it is contended that the petitioners had in no way dealt with the proceeds of the crime, which the person by name M.K.Chandran is alleged to have committed. By relying on the decision of the Apex Court in Pavana Dibbur v. Directorate of Enforcement [2023 SCC OnLine SC 1586], the petitioners would contend that the immovable property acquired by them before the commission of the predicate offence, cannot be attached under Section 5 of the Prevention of Money Laundering Act (for short, ‘PML Act’) unless the proceeds of crime were taken out of the country. For the above reasons, the petitioners seek the intervention of this Court to quash Ext.P2 provisional attachment order issued by the second respondent.
3. The respondents 1 to 3 would contend that the investigations revealed that the portions of funds misappropriated by the above said person by name M.K. Chandran were found to have been diverted to the account of the second petitioner, and that the proceeds of the crime are either in the possession of the petitioners or it has been consumed by the petitioners. Thus, according to the respondents 1 to 3, the provisional attachment of their properties vide Ext.P2 order is fully justified. However, it is made clear by the respondents that out of the 60.07 cents of land coming under Sl.No.3, only a specific portion measuring 10 cents registered exclusively in the name of the second petitioner has been attached. It is also stated that the properties of the petitioners are liable to be attached since it is found that they have exhausted the proceeds of the crime. According to the above respondents, if the equivalent value of the above proceeds of crime are not attached, it would frustrate the provisions of the PML Act. Another contention raised by the respondents 1 to 3 is that the present writ petition is not maintainable since the petitioners did not approach the Adjudicating Authority and the Appellate Tribunal as per the provisions of the PML Act, against the attachment of their properties. As regards the contention of the petitioners on the basis of the decision of the Apex Court in Pavana Dibbur (supra), it is contended that a three Judge Bench of the Hon’ble Supreme Court in Vijay Madanlal Choudhary and Others v. Union of India and Others [2022 SCC OnLine SC 929] had held the constitutional validity of Section 5 of the PML Act which provided for the provisional attachment of the immovable property acquired before the commission of the predicate offence even if it is not shown that the proceeds of the crime were taken out of the country.
4. Heard the learned counsel for the petitioners, the learned Standing Counsel for respondents 1 to 3 and the learned Central Government Counsel representing the 4th respondent.
5. The learned Standing Counsel for respondents 1 to 3 brought to my notice the decision of a three Judge Bench of the Hon’ble Supreme Court in Vijay Madanlal Choudhary and Others v. Union of India and Others [2022 SCC OnLine SC 929], which upheld the powers of the authorities concerned to proceed with the attachment of the immovable properties acquired by the persons concerned, even before the commission of the predicate offence, notwithstanding the absence of any indication to show that the proceeds of the crime were taken out of the country. The relevant paragraphs of the judgment of the Hon’ble Supreme Court in the aforesaid case are extracted hereunder:
“134. From the bare language of S.3 of the 2002 Act, it is amply clear that the offence of money laundering is an independent offence regarding the process or activity connected with the proceeds of crime which had been derived or obtained as a result of criminal activity relating to or in relation to a scheduled offence. The process or activity can be in any form – be it one of concealment, possession, acquisition, use of proceeds of crime as much as projecting it as untainted property or claiming it to be so. Thus, involvement in any one of such process or activity connected with the proceeds of crime would constitute offence of money laundering. This offence otherwise has nothing to do with the criminal activity relating to a scheduled offence – except the proceeds of crime derived or obtained as a result of that crime.
135. Needless to mention that such process or activity can be indulged in only after the property is derived or obtained as a result of criminal activity (a scheduled offence). It would be an offence of money laundering to indulge in or to assist or being party to the process or activity connected with the proceeds of crime; and such process or activity in a given fact situation may be a continuing offence, irrespective of the date and time of commission of the scheduled offence. In other words, the criminal activity may have been committed before the same had been notified as scheduled offence for the purpose of the 2002 Act, but if a person has indulged in or continues to indulge directly or indirectly in dealing with proceeds of crime, derived or obtained from such criminal activity even after it has been notified as scheduled offence, may be liable to be prosecuted for offence of money laundering under the 2002 Act – for continuing to possess or conceal the proceeds of crime (fully or in part) or retaining possession thereof or uses it in trenches until fully exhausted. The Offence of money laundering is not dependent on or linked to the date on which the scheduled offence, or if we may say so, the predicate offence has been committed. The relevant date is the date on which the person indulges in the process or activity connected with such proceeds of crime. These ingredients are intrinsic in the original provision (S.3, as amended until 2013 and were in force till 31/07/2019); and the same has been merely explained and clarified by way of Explanation vide Finance (No.2) Act, 2019. Thus understood, inclusion of clause (ii) in the Explanation inserted in 2019 is of no consequence as it does not alter or enlarge the scope of S.3 at all.
(Emphasis supplied)
172. It was also urged before us that the attachment of property must be equivalent in value of the proceeds of crime only if the proceeds of crime are situated outside India. This argument, in our opinion, is tenuous. For, the definition of “proceeds of crime” is wide enough to not only refer to the property derived or obtained as a result of criminal activity relating to a scheduled offence, but also of the value of any such property. If the property is taken or held outside the country, even in such a case, the property equivalent in value held within the country or abroad can be proceeded with. The definition of “property” as in Section 2(1)(v) is equally wide enough to encompass the value of the property of proceeds of crime. Such interpretation would further the legislative intent in recovery of the proceeds of crime and vesting it in the Central Government for effective prevention of money laundering.
173. We find force in the stand taken by the Union of India that the objectives of enacting the 2002 Act was the attachment and confiscation of proceeds of crime which is the quintessence so as to combat the evil of money laundering. The second proviso, therefore, addresses the broad objectives of the 2002 Act to reach the proceeds of crime in whosoever’s name they are kept or by whosoever they are held. To buttress this argument, reliance has been placed on the dictum in Attorney General for India [Attorney General for India v. Amratlal Prajivandas, (1994) 5 SCC 54 : 1994 SCC (Cri) 1325] and Raman Tech. & Process Engg. Co. v. Solanki Traders [Raman Tech. & Process Engg. Co. v. Solanki Traders, (2008) 2 SCC 302 : (2008) 1 SCC (Civ) 539]”.
6. In the light of the aforesaid decision of a larger Bench of the Hon’ble Supreme Court, the petitioners cannot be heard to say that the proceedings of attachment initiated against their properties, are invalid as ultra vires the provisions contained in Section 5 of PML Act. Identical contentions raised by similar persons have been rejected by two Division Benches of this Court in Samsuddin A.K v. Union of India [2025 (3) KHC 107] and Abdul Rashid @ Dr.A.R.Babu v. Deputy Director, Directorate of Enforcement [2026 KHC 1528] by following Vijay Madanlal (supra).
7. As far as the present case is concerned, the respondents 1 to 3 have proceeded against the properties of the petitioners upon getting specific inputs and leads about their involvement in the appropriation of the proceeds of the crime committed by the person by name M.K.Chandran, against whom the CBI registered the case under the provisions of Prevention of Corruption Act. It is pertinent to note that, even the second petitioner has admitted the fact that the aforesaid person by name M.K Chandran had opened a bank account in her name. The materials collected by the respondents 1 to 3 also point to the channelling of funds out of the misappropriation involved in the predicate offence, into the account of the second petitioner. In that view of the matter, it is not possible for this Court to invoke its powers under Article 226 of the Constitution of India to overturn the proceedings initiated by respondents 1 to 3 towards attachment of the properties of the petitioners. As rightly pointed out by the learned Standing Counsel representing respondents 1 to 3, the petitioners did not avail the alternative remedy available to them by approaching the Adjudicating Authority and the Appellate Tribunal as per the relevant provisions of the PML Act. As a conclusion to the discussions aforesaid, I find that the present writ petition is devoid of merits.
In the result, the writ petition is hereby dismissed.
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