Mr Shanker Mahadevan Iyer vs Deputy Director

Headnote AI-drafted · Reviewed and approved

The Petitioner, proprietor of M/s. S.S. Maritime engaged in stevedoring activities, challenged an order of provisional attachment dated 29.10.2024 passed by the Directorate of Enforcement under the Prevention of Money Laundering Act, 2002 (PMLA), and the consequent show cause notice dated 30.11.2024 issued under Section 8 of the PMLA. The attachment arose from ECIR No. ECIR/MGSZO/04/2022 recorded in connection with Crime No. 90/2017 registered against the Petitioner and others for offences under Sections 120B, 406, 417, 420, 465, 466, 467, 468, 471, 474 and 34 of the IPC, being scheduled offences under Part-A of the Schedule to the PMLA.

The Petitioner contended that there were no proceeds of crime attributable to him, that his role was limited to that of a stevedore, and that the properties attached had been purchased between 2004 and 2008, which was prior to the predicate offence alleged to have occurred in 2011-12. It was argued that properties acquired before the commission of the predicate offence cannot be treated as proceeds of crime and hence are not amenable to attachment under the PMLA. The Petitioner further contended that the Respondent had acted mechanically and without application of mind in passing the attachment order.

The Court examined the submissions of the Petitioner, including the scope of 'proceeds of crime' under Section 2(1)(u) of the PMLA, 2002, in the context of the attachment of properties acquired prior to the alleged predicate offence, raising important questions as to the applicability of the PMLA attachment provisions where the nexus between the properties and the proceeds of crime is disputed.

Catchwords: Prevention of Money Laundering Act · proceeds of crime · provisional attachment · predicate offence · Directorate of Enforcement · show cause notice · stevedoring · property acquired prior to offence · non-application of mind · writ of certiorari · Articles 226 and 227 of the Constitution of India