Recently, the Enforcement Directorate or the ED was in the news for attaching properties of various Maharashtra leaders and their affiliates after recording provisions of the Prevention of Money Laundering Act (PMLA) in different cases. On March 22, the ED provisionally attached immovable properties belonging to Maharashtra CM Uddhav Thackeray’s brother-in-law Shridhar Patankar worth Rs 6.45 crore.
Soon, properties belonging to Shiv Sena troubleshooter Sanjay Raut and his wife Varsha were attached in reference to the Patra Chawl land scam case. It was for tainted Nawab Malik of the NCP next, to find his properties including a 147.79-acre agricultural land in Osmanabad to be attached by the ED under the recent money laundering case against him.
As far as the common larger perception goes, one wonders whether the properties so attached can be accessed by the accused while the investigation is on. So what does the provisional attachment of a property entail – does it mean that the property is sealed during the course of the investigation? The intent to attach a property is to stop the accused from reaping the benefits from the asset. However, the accused can release the property through an application in courts or tribunals. Let us dissect what the law on the attachment of properties says by discussing questions that are often raised in the rough and tumble of the political discourse.
Provision of the law on the attachment of properties
The Enforcement Directorate has powers to provisionally attach a property as prescribed in Section 5(1) of the Prevention of Money Laundering Act, 2002 and the property concerned is to be confiscated by the Government in terms of Section 9 of the PMLA. To establish a crime for attaching a property, understanding the concept of ‘Proceeds of crime’ is important.
As per the latest amendment in 2019 via the Finance Act, the ‘proceeds of crime’ refers to “any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property or where such property is taken or held outside the country, then the property equivalent in value held within the country”.
It has been clarified by the ED that any attachable property may or may not be directly obtained through means of a scheduled offence. The purpose of an ED attachment is to strip off the benefits to be incurred by the accused, while he/she holds the property as an asset. Until the judicial trial is complete, the property remains out of bounds for the accused until he is freed of all the charges. The law however has provisions for the accused to access the property by applying applications in High courts or tribunals.
Live properties such as shops, malls, restaurants, hotels, etc can continue to function even if the property is sealed. Commercial establishments can run even after the properties and attached while the law provides for the resting of operational profits with the ED. Upon this inclusion, businesses can go along sharing their profit with the government agency or can get a stay on this from the courts, based upon the outcome of the case.
What happens when properties are sealed?
Contrary to the popular understanding, Provisional attachment orders issued by the ED do not lead to immediate sealing of a property. Often the accused continues to live and enjoy his property while the matter remains pending in one court hearing after another. For example in 2018, when the ED had attached 50% of Congress leader P Chidambaram’s bungalow in New Delhi’s Jor Bagh, his family continued to enjoy the property until an eviction notice was sent to his son, Karti Chidambaram, who in return has secured legal protection against the notice.
The ED order for attachment of property is valid for 180 days for confirmation by the Adjudicating Authority under the PMLA. If the action of attachment is not approved by the Adjudicating Authority or the Government, the property is automatically released. If the attachment is approved, then the accused has a window of 45 days to challenge the ED action in the Appellate Tribunal followed by the higher courts.
What happens to the assets when they are attached for a long time?
Attached properties may remain locked for years, and their condition may start deteriorating. One may witness many jerkwater attached properties lying alone in the city, often in high-end areas. The provision for maintenance of such properties has not been highlighted yet in legal parlance. When vehicles are attached, they are parked inside the Central Warehousing Corporation. While cases continue for years, vehicles keep rotting inside the warehouses, the parking fee of which is paid by the ED.
