The clause empowers the ED to provisionally attach the properties bought from proceeds of crime.
Besides Virbhadra’s wife, others who had challenged the PMLA provision include their daughter Aprajita Singh, sand mining baron and former Tirumala Tirupathi Devasthanams (TTD) Board member J Sekar Reddy and his business associates S Ramachandran and K Rethinam.
While upholding the Prevention of Money Laundering Act (PMLA) provision, the court, however, said the agency will have to communicate the ‘reasons to believe’ at every stage to the person to whom an attachment notice was being issued under it.
A bench of Justices S Muralidhar and I S Mehta also said that if there was any violation of the legal requirements, the order of provisional attachment of assets would be rendered “illegal”.
The verdict came in 19 petitions in two separate money laundering cases allegedly involving Virbhadra Singh’s wife, daughter and Reddy respectively.
The accused had challenged the constitutional validity of section 5(1) second proviso, which deals with the power of an officer not below the rank of deputy director in the ED to provisionally attach a person’s property suspected to be brought from proceeds of crime, if he has “reasons to believe” that not doing so could frustrate the PMLA proceedings.
The court, in a 48-page judgement, said “the second proviso to Section 5(1) PMLA is not violative of Article 14 of the Constitution and the challenge in that regard in these petitions is hereby negatived.”
It also said the noticee is entitled access to materials on record that constitutes the basis for ‘reasons to believe’, subject to redaction, for reasons to be recorded in writing.
The court said the maintainability of the petitions will be decided by a single judge of the high court.
The various accused in two separate cases have challenged the ED’s FIR against them and provisional attachment orders regarding their assets.