Buying a property years before the alleged offence does not, on that ground alone, place it beyond PMLA provisional attachment, the Karnataka High Court has held, adding that the “value” limb of the law is not confined to cases where the original proceeds of crime are held abroad, so such properties can be attached as assets of equivalent value.
Bengaluru: The Karnataka High Court has dismissed the writ petition of a Mangaluru stevedoring businessman who challenged the Enforcement Directorate’s attachment of two properties he bought in 2004 and 2008. He had argued that the transactions alleged against him took place only in 2011-2012; the Court held that the dates of purchase do not, by themselves, put the attachment outside the PMLA [Shanker Mahadevan Iyer v. Deputy Director, Directorate of Enforcement].
The 228-page CAV order, reserved on July 29, 2026, was pronounced on October 28, 2026 by Justice Suraj Govindaraj in Writ Petition No. 34513 of 2024.
Purchase dates and the “equivalent value” limb
The petitioner leaned on the Kerala High Court’s ruling in Satish Motilal Bidri v. Union of India, which had set aside the attachment of immovable property acquired in 2004, to contend that the “equivalent value” limb of Section 2(1)(u) applies only where proceeds of crime are taken or held outside India. Relying on paragraphs 172 and 173 of Vijay Madanlal Choudhary v. Union of India, the Court held:
“This Court is bound by the interpretation adopted by the Hon’ble Supreme Court. Accordingly, the absence of property held abroad does not, by itself, exclude attachment of other property of equivalent value under the PMLA.”
Turning to the sale deeds themselves, the Court said:
“The provisional attachment of the Petitioner’s properties is not unsustainable in law merely because they were purchased under registered sale deeds dated 15.12.2004 and 28.03.2008, before the alleged scheduled offence and the transactions of 2011–2012. The properties cannot themselves be treated as having been derived or obtained from criminal activity that occurred later, and the Respondent does not claim that they were directly acquired from the alleged proceeds of crime.”
That, the Court made clear, does not hand the ED a free hand over an accused’s property. Whether the original proceeds are unavailable, whether the amounts the petitioner received are proceeds of crime, and whether the statutory conditions are met are questions for the Adjudicating Authority and, in appeal, the Appellate Tribunal, to be decided on evidence.
The case behind the attachment
Shanker Mahadevan Iyer, proprietor of M/s. S.S. Maritime, had challenged the provisional attachment order dated October 29, 2024 passed by the ED’s Mangaluru Sub-Zonal Office in ECIR/MGSZO/04/2022, together with the show cause notice of November 30, 2024 under Section 8 of the Prevention of Money Laundering Act, 2002.
The petition says he paid Rs 25 lakh to M/s. Hanuman Minerals on February 9, 2011 for high-grade iron ore. In January 2012, Hanuman Minerals is said to have offered to refund the money and proposed that his firm handle stevedoring of 40,000 metric tonnes of iron ore at the Alcon and Maina jetties in Goa. His position is that the sums he later received from Hanuman Minerals were part-repayments of his own advance.
The case traces to a contractual dispute between Hanuman Minerals and M/s. Manipal Global Services Pvt. Ltd. over an agreement of January 18, 2012. Manipal Global filed a private complaint (PCR No. 23/2017) before the Additional Civil Judge and ACJM, Udupi, which was referred to Manipal Police Station, and Crime No. 90/2017 was registered on June 2, 2017 against the petitioner and 10 others.
A hearing before attachment?
The petitioner also said he ought to have been heard before the attachment. The Court held that the Act’s safeguards come into play afterwards: the order and material go to the Adjudicating Authority, a complaint must follow within the prescribed time, and the affected person can respond in proceedings under Section 8.
“The provisional nature of the attachment, the statutory time limit and the subsequent adjudicatory process are material safeguards. This Court finds no basis to read a requirement of prior hearing into Section 5(1).”
ALSO READ: Karnataka High Court Refuses WinZO US Plea To Shift ED-Attached Funds To Another Bank
What happens next
The writ petition stands dismissed, but all remedies under the PMLA have been kept open. The authorities were told to decide the matter on its own merits without being influenced by the Court’s observations, which it said were confined to whether the writ petition should be entertained. The petitioner gets the benefit of Section 14 of the Limitation Act for the time spent in the High Court, and the interim order in force since 2024 has been extended by 30 days so he can seek interim relief before the appropriate authority. That benefit lapses automatically if he does not approach the authority within 30 days of receiving a certified copy of the order.
The allegations against the petitioner in the Udupi case and the ED proceedings remain to be tested, the High Court expressed no view on whether he received proceeds of crime, and he is presumed innocent until proven guilty.
Where this leaves owners facing attachment
A common defence to ED attachment is that a property bought long before the alleged offence cannot be “proceeds of crime”. This ruling says that argument does not, on its own, defeat an attachment framed as one of equivalent value, and it openly departs from the Kerala High Court’s narrower reading in Satish Motilal Bidri. With two High Courts now reading the value limb differently, the question is likely to reach the Supreme Court. For now, in Karnataka, such disputes will turn on the evidence before the Adjudicating Authority rather than on purchase dates alone.
Case Title: Shanker Mahadevan Iyer v. Deputy Director, Directorate of Enforcement [Writ Petition No. 34513 of 2024 (GM-RES)], 2026:KHC:59898
Bench: Justice Suraj Govindaraj, High Court of Karnataka at Bengaluru
Date of Order: October 28, 2026
Appearances: Senior Counsel D.R. Ravishankar for Advocate Abhishek Marla M.J. for the petitioner; Advocate Anuparna Bordoloi for the Directorate of Enforcement
