Dilbag Singh @ Dilbag Singh Sandhu vs. Union Of INDIA Through Secretary And Others

Held

The Court held that the writ petitions lacked merit and were dismissed. Regarding the first issue, the Court implicitly found that the properties attached could be considered proceeds of crime or linked to them, as it did not grant relief on this ground. On the second issue concerning the failure to record 'reasons to believe' under Section 5(1), the Court did not find this to be a fatal flaw vitiating the PAO, likely by interpreting the provision as directory or finding sufficient material on record. The Court also addressed the third issue, finding no gross violation of the First Proviso to Section 5(1) regarding the status of FIRs, as the PMLA proceedings are not solely dependent on the registration of FIRs or their final outcome, citing *Pavana Dibbur*. The delay in forwarding the PAO to the Adjudicating Authority (Section 5(2) read with Rules 3 & 5 of 2005 Rules) was not considered significant enough to vitiate the order, with the Court noting that the word 'immediately' can be treated as synonymous with 'forthwith' and procedural requirements without express consequences are often directory. The Court also noted that disputed questions of fact, such as allegations regarding NGT orders and reliance on FIR No. 21, are best dealt with by the adjudicating authority. The Court acknowledged the ED's argument regarding efficacious alternative remedy but chose to entertain the writ petition based on the interpretation in *Seema Garg's* case. However, ultimately, the petitions were dismissed. The adjudicating authority was directed to proceed uninfluenced by the Court's observations.

Facts

Seven writ petitions were filed challenging a Provisional Attachment Order (PAO) dated August 9, 2024, passed by the Deputy Director of the Enforcement Directorate (ED). The petitioner, Dilbagh Singh @ Dilbag Sandhu, and others are alleged to be involved in illegal mining activities, with the ED estimating proceeds of crime at Rs. 337,12,74,800/-. The petitioner's arrest on January 8, 2024, was declared illegal by the High Court, a decision upheld when the ED's Special Leave Petition was withdrawn. The PAO attached properties of the petitioner and others. The petitioners argued that properties acquired prior to alleged scheduled offenses and unrelated to proceeds of crime could not be attached. They also contended that the PAO was passed without complying with mandatory provisions of Section 5(1) of the Prevention of Money Laundering Act, 2002 (PMLA), specifically the requirement to record 'reasons to believe'. The ED contended that the petitioners had an efficacious alternative remedy before the adjudicating authority.

Key Issues

1. Whether properties acquired prior to alleged scheduled offenses and not connected to proceeds of crime can be attached under the PMLA, in light of judgments like *Pavana Dibbur vs. Directorate of Enforcement* and *Seema Garg vs. Deputy Director, Directorate of Enforcement*? (Question of law) 2. Whether the impugned Provisional Attachment Order (PAO) is without jurisdiction due to non-compliance with the mandatory provision of Section 5(1) of the PMLA, specifically the failure to record 'reasons to believe', as held in *Vijay Madanlal Choudhary & others v. Union of India & others* and *Radha Krishan Industries Vs. State of Himachal*? (Question of law) 3. Whether the impugned PAO is liable to be set aside for non-compliance with various provisions of the PMLA, including: i. Violation of the First Proviso to Section 5(1) due to the status of final reports in FIRs (3 pending, 2 with submitted final reports, 3 with cancellation reports, and 3 without charge sheets)? (Question of mixed law and fact) ii. Violation of Section 5(2) read with Rules 3 & 5 of 2005 Rules, concerning the 'immediate' forwarding of the PAO and material to the Adjudicating Authority, given a delay between August 9, 2024, and August 12, 2024? (Question of mixed law and fact) iii. False plea regarding violation of NGT orders concerning illegal mining? (Question of fact) iv. Illegal reliance by the ED on FIR No. 21 dated January 19, 2019, which was not part of scheduled offenses and was under pending investigation? (Question of fact) Petitioner's Contentions: Properties attached were untainted and acquired before scheduled offenses. The PAO is illegal due to non-compliance with Section 5(1) (failure to record 'reasons to believe') and other provisions like Section 5(2) and Rules 3 & 5 of 2005 Rules regarding immediate forwarding. Reliance on FIR No. 21 was illegal. The ED took a false plea regarding NGT orders. They relied on *Pavana Dibbur*, *Seema Garg*, *Abdullah Ali Balsharaf*, *Kumar Pappu Singh*, *HDFC Bank Limited*, *M/s Himachal Emta Power Limited*, and *Hemanshu Rajnikant Shah*. Respondents' Contentions: The petitioners have an efficacious alternative remedy before the adjudicating authority under Section 8 of the PMLA, and an appeal against the adjudicating authority's order. Therefore, the writ petition should not be entertained.