SFIO Probe No Bar To Parallel PMLA Proceedings ; Delhi High Court Upholds Provisional Attachments By ED in ₹6000 Cr Forex Scam
Sanchayita Lahkar
The High Court of Delhi Division Bench of Justice Anil Kshetrapal and Justice Harish Vaidyanathan Shankar has held that an investigation by the Serious Fraud Investigation Office into a company’s affairs does not prevent parallel proceedings under the Prevention of Money Laundering Act, and on this basis declined to interfere with the Enforcement Directorate’s action. The petitioners, arrayed as accused in money-laundering proceedings arising from alleged routing of large foreign exchange remittances through shell companies, had challenged the provisional attachment of their movable and immovable properties ordered while an SFIO probe under Section 447 of the Companies Act, 2013 was pending. The Court found no merit in the challenge, upheld the subsisting attachments, and directed the petitioners to pursue their statutory remedy before the Appellate Tribunal under the PMLA.
The case arises from a complaint by a senior officer of a public sector bank alleging serious irregularities in foreign exchange transactions involving multiple shell companies and overseas remittances of about ₹6,000 crore. On this basis, the Central Bureau of Investigation registered an FIR for offences under Sections 420 and 120B of the Indian Penal Code and Sections 13(1)(d) and 13(2) of the Prevention of Corruption Act. Relying on this FIR, the Enforcement Directorate registered an Enforcement Case Information Report under Section 3 of the Prevention of Money Laundering Act and, after investigation into alleged shell company structures and cross-border fund flows, issued a provisional attachment order over movable and immovable properties, followed by an original complaint and show cause notice under Sections 5 and 8 of the PMLA.
The petitioners, who are accused in the money-laundering proceedings, contend that once the Central Government assigned investigation into their companies to the Serious Fraud Investigation Office under Section 212(2) of the Companies Act, 2013, other agencies, including the Enforcement Directorate and CBI, were barred from proceeding in respect of the same matters. They argue that inclusion of Section 447 of the Companies Act as a scheduled offence under the PMLA does not remove this bar, that a provisional attachment under Section 5(1) of the PMLA can only follow a police report under Section 173 of the Code of Criminal Procedure, and that the attachment order lacks a properly recorded “reason to believe” and was passed without prior cognizance.
The Enforcement Directorate responds that the writ petitions challenge PMLA proceedings arising from scheduled offences under the IPC and Prevention of Corruption Act, which are outside the investigative domain of SFIO under the Companies Act. It submits that Section 212(2) of the Companies Act bars parallel investigation only for offences under that Act, not for offences under other laws, and that the Companies Act, PMLA, IPC and Prevention of Corruption Act each establish distinct investigative regimes. The Directorate further maintains that Section 5 of the PMLA permits provisional attachment based on material showing possession of proceeds of crime even before filing of a final police report, and that statements recorded under Section 50 of the PMLA, seized documents and banking records provide the evidentiary basis for the attachment.
The Court recorded that “the contention of the Petitioner, that the transfer of investigation to the SFIO would bar parallel proceedings under the PMLA, is legally untenable.” It stated that “the express language, ‘in respect of any offence under this Act’, used in Section 212(2)… reveals that the said provision applies only to offences covered under that Act.” The Bench further observed that the statutory framework “does not extend to offences under other laws, including the PMLA.”
The Court stated that the PMLA “operates as a standalone statute with its own independent investigative and prosecutorial machinery.” It referred to Section 212(17)(b) of the Companies Act, noting that the phrase “under any other law” indicates that “parallel proceedings/investigation under different statutory regimes is permissible.” It further observed that the provision functions as an information-sharing mechanism presupposing that multiple agencies may investigate distinct aspects of the same factual matrix.
In relation to the petitioner’s argument regarding the requirement of a Section 173 CrPC report, the Court recorded that its earlier decision clarified that although the first proviso to Section 5(1) constitutes a statutory prerequisite, it is “not to be construed that the compliance of the said proviso is a sole pre-requisite for issuance of a PAO.” The Bench held that non-compliance with the proviso does not render an attachment invalid.
While addressing “reason to believe,” the Court, relying on Supreme Court precedent, stated that “‘reason to believe’ is an objective, evidence-based satisfaction founded on tangible material… and cannot rest on, or be equated with, mere suspicion.” After reviewing the materials relied upon by the Directorate, including FIR, ECIR, seized documents, digital records, and statements, the Court found that the authority had “ample and cogent material to justify and form a ‘reason to believe’.” It further observed that the belief was “not perfunctory or based on mere suspicion, but was founded on a rational nexus between the material collected and the inference drawn.”
On the contention regarding the lack of a pre-attachment hearing, the Court stated that under Section 5 of the Act, “the D/AO is not required to provide a separate pre-attachment hearing or notice of belief before passing a PAO.” The Court noted that statutory safeguards exist, such as mandatory recording of reasons and subsequent issuance of a show-cause notice.
Regarding the challenge to the attachment order itself, the Court observed that the order had been “affirmed by the AA” and the petitioner had already availed the statutory appeal. It recorded that “it would not be appropriate… to re-examine the merits of the PAO in full.” The Court stated that the PMLA establishes “its own adjudicatory and appellate structure,” and that constitutional courts should ordinarily refrain from interference when adequate statutory remedies exist.
The Court held that “this Court finds no merit in the present Petitions. The present Petitions, along with the pending applications, are dismissed with a direction that the Petitioner may seek redressal before the Appellate Tribunal under the PMLA. The foregoing discussion was only for the purpose of adjudication of lis raised in the present Petitions and the same shall not be treated as a final expression on the submissions of respective parties and shall also not affect the future adjudication emanating before any other forum in accordance with law.”
Advocates Representing The Parties
For the Petitioners: Mr. Naveen Malhotra, Mr. Ritvik Malhotra, Mr. Nilansh Malhotra, Advocates; Mr. R. K. Handoo, Mr. Yoginder Handoo, Mr. Aditya Chaudhary, Mr. Ashwin Kataria, Mr. Garvit Solanki, Mr. Fateh Singh, Mr. Gaurav Vishwakarma, Mr. Aditya Aggarwal, Advocates.
For the Respondents: Mr. Anupam S. Sharrma, Special Counsel with Mr. Vivek Gurnani, Ms. Harpreet Kalsi, Mr. Abhishek Batra, Mr. Ripudaman Sharma, Mr. Vashisht Rao, Ms. Riya Sachdeva, Mr. Vishesh Jain, Mr. Anant Mishra, Advocates for ED; Mr. Ripudaman Bhardwaj, CGSC with Mr. Kushagra Kumar, Mr. Amit Kumar Rana, Advocates for Union of India; Mr. Vivek Gurnani (Panel Counsel for ED) with Mr. Kanishk Maurya, Mr. S.K. Raqueeb, Advocates.
Case Title: Sanjay Aggarwal v. Union of India & Others
Neutral Citation: 2025: DHC:10498-DB
Case Number: W.P.(C) 2819/2016 & connected matters
Bench: Justice Anil Kshetrapal and Justice Harish Vaidyanathan Shankar
