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2022 (12) TMI 1380 - KARNATAKA HIGH COURTProvisional attachment order - predicate offences - right of Enforcement Directorate to attach the properties of the petitioners - reasons to believe - continuation of proceedings under PMLAin the teeth of the interim order of stay of further proceedings granted in the offences relating to IPC. Whether the Enforcement Directorate had the right to attach the properties of the petitioners? - HELD THAT:- The 3rd respondent/Competent Authority passes an order on 01.08.2022, issuing a provisional attachment order in Provisional Order No.5 of 2022 under sub-Section (1) of Section 5 of the PMLA. To arrive at passing of the order, statements of all the petitioners have been recorded under Section 50 of the PMLA and several documents are scrutinized. A detailed order is passed in terms of Section 5 of the PMLA and arriving at a conclusion albeit prima facie that he has reason to believe that proceeds of crime are the result of properties standing in the names of the petitioners either movable or immovable. It is this attachment order that drives the petitioners to this Court. Therefore, the power under Section 5 being executed and the considered finding that he has reason to believe to pass the said order cannot be found fault with. It is in tune with Section 5 of the PMLA. Therefore, the first point that has arisen for consideration is answered against the petitioners, holding that the3 rd respondent has the power to attach the properties. What is required is ‘there should be reasons to believe’. The order passed does reflect application of mind and records reasons to believe that they were proceeds of crime. Whether the impugned proceedings under PMLA in ECIR No.ECIR/BGZO/04/2019/AD-AKV/1541 should be permitted to be continued in the teeth of the interim order of stay of further proceedings granted in the offences relating to IPC i.e., the predicate offences? - HELD THAT:- If the allegations in the predicate offences are considered to be the flesh, the offences under the PMLA is the blood, they are impregnable. Therefore, if the predicate offences are not permitted to move forward, the impugned proceedings cannot. It would have been altogether different circumstance, if the petitioners were all acquitted of the offences under the IPC or any other predicate offence to which the offence under the PMLA is linked. The situation in the case at hand is not with regard to acquittal, but the stay of the proceedings. Therefore, they are eclipsed and not extinguished. In the light of the judgments rendered by the Apex Court in the case of VIJAY MADANLAL CHOUDARY [2022 (7) TMI 1316 - SUPREME COURT] it is deemed appropriate to stall all further action in the impugned proceedings till conclusion of Writ Petition No.14431 of 2020 and Criminal Petition No.7949 of 2020. If the proceedings in the predicate offence are stayed, the impugned proceedings of attachment under the ECIR cannot be permitted to continue. If the proceedings move on in the predicate offence, the offence under the ECIR should also be permitted to continue, failing which, it would defeat the proceedings under the PMLA or the IPC and would fall foul of the judgment of the Apex Court. The Writ Petition is allowed in part.
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