Isabella Mariam

The High Court of Delhi Division Bench of Justice Anil Kshetrapal and Justice Harish Vaidyanathan Shankar dismissed the appeal challenging the Enforcement Directorate’s provisional attachment of properties linked to alleged money-laundering in the AgustaWestland VVIP helicopter procurement case. The Bench upheld the Single Judge’s decision, holding that a chargesheet in the scheduled offence is not a precondition for issuing a provisional attachment under the Prevention of Money Laundering Act and that the authorised officer had sufficient material to record a reason to believe that immediate attachment was necessary. The Court declined to interfere, noting that statutory remedies were available to the appellants and that no case of arbitrary or unlawful exercise of power had been made out.

The matter concerns an appeal challenging the dismissal of a writ petition that sought quashing of a Provisional Attachment Order issued by the Directorate of Enforcement on 15.11.2014. The attachment related to alleged proceeds of crime arising from the procurement of VVIP helicopters from AgustaWestland. The dispute originates from a Request for Proposal issued in 2000 for replacing MI-8 helicopters, in which the service ceiling requirement was altered from 6,000 to 4,500 meters, enabling AgustaWestland to qualify.

Also Read: Supreme Court Upholds Removal Of Branch Post Master Who Embezzled Deposits; “Relationship Of A Customer With A Banker Is Of Mutual Trust”

The respondents alleged that this alteration was secured through illegal gratification paid to two Italian nationals, and that funds were routed through IDS India and its subsidiary IDS Tunisia. Another company, AISL, was incorporated during the same period, and it is alleged that kickbacks were channelled through these entities. Based on these allegations, the CBI registered an FIR in 2013 under IPC and PC Act provisions, followed by registration of an ECIR by the Enforcement Directorate under the PMLA.

Search and seizure operations were conducted on 22.09.2014, followed by an order dated 17.10.2014 for retention of seized jewellery. The subsequent Provisional Attachment Order was challenged before the Single Judge.

The appellants contended before the High Court that the attachment could not have been issued in the absence of a chargesheet under Section 173 CrPC, as required under the unamended Section 5(1) of the PMLA. They argued that the 2015 amendment was neither clarificatory nor retrospective and that the authorised officer lacked adequate material to form a “reason to believe.”

The Enforcement Directorate submitted that the second proviso to Section 5(1) permitted attachment even without a chargesheet and that the amendments enabled attachment against “any person.” It relied on statutory interpretation principles and prior judicial precedent to justify the attachment.

The Single Judge dismissed the writ petition, leading to the present appeal, in which both sides reiterated their respective legal and factual positions.

The Division Bench recorded that “the scope of exercise of jurisdiction under Article 226… must be undertaken with due care and caution” and that indiscriminate invocation of writ powers in attachment matters may “risk circumventing the legislative scheme envisaged under PMLA.” It noted that writ jurisdiction is warranted only where there is “a clear demonstration of mala fide exercise of power, patent arbitrariness, or a manifest lack of jurisdiction.”

While addressing the appellants’ contention that the provisional attachment required a chargesheet under Section 173 CrPC, the Court referred to its earlier decision and reproduced passages observing that “the report under Section 173 of the CrPC acts as a gateway triggering the requirement to initiate action… but does not confine the extent of the inquiry” and that the provisos to Section 5(1) “form a jurisdictional precondition… however, it does not restrict the scope of the Directorate’s attachment.” It further stated that the filing of a chargesheet is “one of the triggering conditions… but not the only one.”

The Bench recorded that the Single Judge had correctly interpreted Section 5(1) after the 2013 amendment, as “following the omission of the erstwhile clause ‘b’… it is no longer mandatory that a person… must have necessarily been charged with a scheduled offence.” It noted that the conclusions reached by the Single Judge were “in complete harmony with the scheme and legislative intent of the Act.”

Regarding the appellants’ challenge to the adequacy of material before the authorised officer, the Court recorded that the Single Judge “meticulously examined the relevant portions of the PAO,” including details about the quantification and investment of alleged proceeds of crime. It observed that only assets acquired between 2009 and 2014 were attached, coinciding with the period linked to the incorporation of AISL, and stated that this showed the officer had “cogent material on the basis of which it formed a reason to believe.”

It also recorded that the appellants had pressed the Single Judge to examine the material despite being advised to pursue statutory remedies, rendering their later objection to such examination “inconsequential.”

Also Read: Courts Must Consider Burden On State Exchequer And Balance It Against Interest Of Party In ITC Fraud Matters: Delhi High Court Dismisses Writ, Directs Statutory Appeal

The Court declared that it “does not deem it appropriate to interfere with the Impugned Judgment passed by the learned Single Judge. The present Appeal, along with the pending applications, is dismissed.”

“The foregoing discussion was only for the purpose of adjudication of lis raised in the present Appeal and the same shall not be treated as a final expression on the submissions of the respective parties.” It added that the findings shall “not affect the future adjudication emanating before any other forum in accordance with law.”

Advocates Representing The Parties

For the Appellants: Mr. Ramesh Singh, Senior Advocate; Ms. Roopa Dayal, Advocate; Mr. Shubham Jindal, Advocate

For the Respondents: Mr. Himanshu Pathak, SPC; Mr. Amit Singh, Advocate for R-1/UOI; Mr. Zoheb Hossain, Special Counsel for ED; Mr. Vivek Gurnani, Panel Counsel for ED; Mr. Kartik Sabhwal, Advocate; Mr. Pranjal Tripathi, Advocate; Mr. Kanishk Maurya, Advocate; Mr. S.K. Raqueeb, Advocate

Case Title: Gautam Khaitan & Anr. v. Union of India & Anr.
Neutral Citation: 2025: DHC:10040-DB
Case Number: LPA 72/2015
Bench: Justice Anil Kshetrapal and Justice Harish Vaidyanathan Shankar