Karnataka High Court Sets Aside ED Attachment Order, Says Copy-Paste Of Statutory Language Not Enough

The Karnataka High Court has recently set aside an Enforcement Directorate (ED) provisional attachment order, holding that a copy-paste of statutory language, without demonstrating from the material on record why immediate attachment was necessary, does not satisfy the requirements of law.

Justice S. Sunil Dutt Yadav observed:

“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."

The petitioner, Jayamma, a 70-year-old resident of Mysuru, claimed inheritance rights over land in Malalavadi Village. According to her, the land was utilised for the formation of Jayanagar layout without acquisition.

She contended that the Mysore Urban Development Authority (MUDA) allotted sites to her in lieu of compensation and executed sale deeds in her favour. However, mutation (katha) entries were not effected.

Meanwhile, a private complaint filed by Snehamayi Krishna led to the registration of an FIR by the Karnataka Lokayukta Police alleging offences under the IPC, the Prevention of Corruption Act, the Prohibition of Benami Property Transactions Act and the Karnataka Land Grabbing Prohibition Act.

The ED subsequently initiated money laundering proceedings and, on June 9, 2025, provisionally attached the sites allotted to Jayamma on the ground that they constituted proceeds of crime. The Adjudicating Authority later confirmed the attachment.

Challenging the attachment order, Jayamma contended that the ED had mechanically invoked its power to order immediate attachment. She argued that the order merely reproduced the language of the statute without identifying any material showing that non-attachment of the properties would frustrate proceedings under the Prevention of Money Laundering Act (PMLA). She further contended that the reasoning was "omnibus and cyclostyled."

The ED opposed the petition, arguing that the PMLA provided an alternative statutory remedy. It pointed out that the Adjudicating Authority had already confirmed the attachment and that the petitioner could pursue an appeal.

The agency also contended that non-attachment could result in the transfer and dissipation of proceeds of crime and that the Court could not sit in judgment over the authority's formation of "reasons to believe".

The High Court held that while writ jurisdiction is discretionary, courts can interfere in exceptional cases involving jurisdictional errors.

The High Court rejected the ED's objection that Jayamma should pursue remedies available under the PMLA. It held that the challenge raised a jurisdictional issue because it concerned compliance with the conditions required before an immediate attachment order could be passed.

The Court also observed that proceedings before the Adjudicating Authority are limited to examining whether the attached property is involved in money laundering. They do not provide an opportunity to test whether the ED had complied with the legal requirements for invoking its power of immediate attachment.

It therefore rejected the ED's contention that the petitioner should be relegated to the statutory remedy.

Examining the attachment order, the Court noted that it contained a statement that the properties needed to be attached immediately because non-attachment was likely to frustrate proceedings under the Act.

The court, however, observed that this was not sufficient.

“Except para-9, there is no recording of any finding that the competent Officer has reason to believe on the basis of material in his possession that if property involved in money laundering is not attached immediately, such non-attachment would be likely to frustrate the proceedings under the PMLA.”, it noted.

Justice Yadav observed that while the attachment order discussed material relating to the alleged commission of the offense of money laundering, it did not identify any material showing why immediate attachment was necessary or how failure to attach the properties would frustrate proceedings under the Act.

The court also took note of the petitioner's submission that katha entries had not been effected in respect of the sites. Referring to that circumstance, it held:

“Any immovable property in the absence of mutation entries (katha) cannot be dealt with by way of transfer.”

The court observed that if the properties could not be transferred, the apprehension that proceedings under the PMLA would be frustrated in the absence of immediate attachment was not based on objective material.

Accordingly, the High Court set aside the provisional attachment order and all consequential proceedings affecting the petitioner's rights. However, it reserved liberty for the ED to initiate fresh proceedings if circumstances warranting such action are made out in accordance with law.