The Karnataka High Court.
Credit: DH File Photo
Bengaluru: The High Court of Karnataka has quashed the provisional attachment order issued by the Enforcement Directorate (ED) against those associated with Vikram Investments.
Justice M Nagaprasanna passed the order after observing non-compliance with the provisions of the Prevention of Money Laundering (PML) Act.
In 2018, the police registered a cheating case following complaints by investors regarding non-refund of money. Subsequently, the ED registered a money laundering case, and a provisional attachment order was issued on November 2, 2021. The ED attached the properties of the petitioners — Prahlad and others — by invoking powers under Section 5(1) of the PML Act.
However, the petitioners argued that, except for the issuance of a show-cause notice in 2022, no other orders were passed by the competent authority confirming the provisional attachment, despite the outer limit of 180 days.
On the other hand, the ED submitted that due to the Covid-19 pandemic, the Supreme Court had protected limitation periods under every statute from March 24, 2020, to October 21, 2021. Although it further argued that the 180-day period for validation should be extended, the agency admitted that, even as of date, no order has been passed confirming the provisional attachment.
Justice Nagaprasanna pointed out that Section 5(1)(b) of the Act itself mandates that a provisional attachment would be effective only for a period of 180 days from the date of the order.
"This is not limitation for filing of a case, or otherwise to a litigant, it is the period of validation. If the order is not passed within 180 days, the statute itself would mandate that the order would be a nullity, and the order which is in nullity cannot be given a breather by extending the limitation period, as it is done by the Supreme Court during the Covid pandemic,” Justice Nagaprasanna said.
The court further said: "The show-cause notices so issued as a consequence thereof, stand obliterated. The petitioners shall become entitled to all consequential benefits that would flow from the quashment of the orders of provisional attachment."