SC puts stay on Allahabad HC decision directing PMLA Special Court to consider claim in alleged disregard of Rule 3A PMLA Rules, 2016

Supreme Court: While considering a challenge to the interim order of Allahabad High Court in Prakash Chandra Tiwari v. Union of India¹ for alleged disregard of Rule 3A of the Prevention of Money Laundering (Restoration of Property) Rules, 2016; the Division Bench of M.M. Sundresh and Rajesh Bindal, JJ., put a stay on the impugned decision of the High Court.

The petitioner is the director of Shine City Infra Project Pvt. Ltd, which is prominently involved in the real estate sector. The Company was managed by the Petitioner herein along with the co-director. In May 2019, the co-director attended a business workshop in Nepal, wherein he was detained along with the other individuals by the authorities, on account of certain pending cases against one of the individuals.

Following the registration of multiple FIRs, Directorate of Enforcement Lucknow Zonal Office (ED), initiated proceedings under the Prevention of Money Laundering Act, 2002 against the petitioner, alleging the involvement of proceeds of crime under sections 409, 420, 467, 468, 471 and 120-B of the Penal Code, 1860.

The counsels for the petitioner alleged that the ED initiated the proceedings without application of mind. The petitioner further alleged that the High Court in Prakash Chandra Tiwari (supra), erroneously passed an order directing the Special Court to consider the claim of the complainant as per the Section 8(8) of the Prevention of Money Laundering Act, 2002 (“PMLA”) in complete disregard of Rule 3A of the Prevention of Money Laundering (Restoration of Property) Rules, 2016, within a period of five months from the date of the production of the certified copy of the order along with the claim. The Petitioner further contended that the second proviso to the Section 8(8) of PMLA, 2002, is in contravention with the settled law provided under the PMLA, 2002.

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