Kerala High Court Dismisses Federal Bank's Plea Against ED Attachment Of Mortgaged Property, Points To PMLA Court

The Kerala High Court has dismissed a writ petition filed by Federal Bank challenging the Enforcement Directorate's attachment of a mortgaged property.

The court held that since the attachment had already been confirmed by the Adjudicating Authority under the Prevention of Money Laundering Act (PMLA), the bank's remedy was to approach the Special Court dealing with PMLA cases.

Justice P.V. Balakrishnan observed, “Admittedly, the attachment effected by the respondent, has been confirmed by the Adjudicating Authority under Section 8(3) of the PML Act and now the trial of the case under this Act is pending before the Special Court for PMLA cases, Ernakulam. Therefore, I am of the view that the remedy of the petitioner is to approach the Special Court for PMLA cases under Section 8(7) of the PML Act and seek lifting of attachment.”

Federal Bank had sanctioned a housing loan of ₹22 lakh to Saji Basheer for the purchase of an immovable property. The property was mortgaged to the bank as collateral security.

After the borrower defaulted, the bank initiated proceedings under the SARFAESI Act. It took possession of the property on December 22, 2023.

While taking steps to sell the property, the bank obtained an encumbrance certificate. It then discovered that the Enforcement Directorate had provisionally attached the property. The bank also learned that a final attachment order had subsequently been passed.

According to the bank, the attachment stood in the way of the sale of the secured asset under the SARFAESI Act. It therefore approached the High Court seeking to set aside the attachment.

During the hearing, Federal Bank reiterated the contentions raised in its petition and sought removal of the attachment.

The Enforcement Directorate opposed the plea. It contended that the provisional attachment had already been confirmed by the Adjudicating Authority.

The agency argued that the appropriate remedy available to the bank was to approach the Special Court for PMLA cases at Ernakulam and seek relief there.

After considering the submissions, the court found merit in the Enforcement Directorate's stand.

The court observed, “Therefore, I am of the view that the remedy of the petitioner is to approach the Special Court for PMLA cases under Section 8(7) of the PML Act and seek lifting of attachment.”

Holding that the attachment had already been confirmed and that the PMLA proceedings were pending before the Special Court, the court declined to exercise its writ jurisdiction.

The writ petition was consequently dismissed. 

For Petitioner: Advocates M Jithesh Menon, P.G. Maheshkumar, and Arshita Ann Joy

For Respondent: Advocates Jaishankar V Nair, CGC, M Kannan, Sr. GP and Cristy Theresa Suresh