Chhattisgarh HC Upholds ED Attachments in PMLA Case: Dismisses Appeals Challenging Appellate Tribunal and Adjudicating Authority Orders [Read Order]

The Chhattisgarh High Court at Bilaspur has set aside multiple attachment orders passed by the Adjudicating Authority (AA) and confirmed by the Appellate Tribunal under SAFEMA, New Delhi. The case arose from an investigation by the Enforcement Directorate (ED) into an alleged coal levy extortion racket led by bureaucrat Saumya Chaurasia, who served as Officer on Special Duty to the Chief Minister of Chhattisgarh.

The ED alleged that proceeds of crime (PoC) from extortion were layered through real estate and business transactions involving individuals and entities allegedly close to her, including her husband, Sourabh Modi. Counsel for the appellants raised several constitutional and procedural challenges. It was held that the defense pointed out that the original charge sheet dropped crucial scheduled offences like Section 384 IPC.

The appellants further argued that the ED failed to provide a reasoned basis to believe that the properties in question were proceeds of crime, a statutory precondition under Section 5 of PMLA. It was also contended that the AA lacked a judicial member, as mandated under Section 6 of PMLA, making the entire proceedings coram non judice and a nullity.

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The presumption under Section 24 (reversal of burden of proof) was mechanically invoked without establishing foundational facts like commission of a scheduled offence or nexus with PoC. The Court held that the Adjudicating Authority’s confirmation orders did not record independent reasons as to how the properties were proceeds of crime, and instead relied solely on ED’s assumption based on Section 24.

The Division Bench comprising Chief Justice Ramesh Sinha and Justice Bibhu Datta Guru found that the Appellate Tribunal had passed an omnibus order, applying the same reasoning to all appellants without distinguishing their individual roles or examining their specific financial transactions and documentation such as income tax returns or registered sale deeds.

On the issue of AA’s composition, the High Court found that absence of a judicial member rendered the proceedings legally infirm. The bench asserted that adjudication involving civil liberties and property rights cannot be left to an executive-controlled authority under the same Ministry (Department of Revenue) that oversees the ED which is a clear violation of Article 50 of the Constitution, which mandates separation of powers.

As a result, the Chhattisgarh High Court dismissed the appeals, and upheld the orders passed by both the Adjudicating Authority and the Appellate Tribunal. The Court found no grounds to interfere with the confirmation of the provisional attachment made by the Enforcement Directorate, thereby sustaining the ED’s action under the PMLA.

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