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The doctrine of arbitrariness under Article 14 of the Indian constitution has once again come into debate with the challenge to the proviso to the section 5(1) of the prevention of money laundering act, 2002. The proviso empowers the Enforcement directorate to temporarily attach properties which might have been brought from proceeds of a crime.
The petitioners had challenged the proviso in view of the fact that it provides for the attachment of the property even though the filing of the charge sheet is yet pending under the section 173 of Crpc if there is ‘reason to believe’ that not attaching the property would cause hindrance to the proceedings under PMLA. The petitioners argued that it grants a huge amount of the discretion to the officers of the ED without the existence of an objective and verifiable criteria to decide the attachment or otherwise.
But the Delhi HC bench of Justice S Muralidhar and Justice IS Mehta have upheld the validity of the proviso by arguing that the existence of the safeguard of judicial review of the attachment under section 8 of the same act limits a potential arbitrary decision. The Court held that ‘reason to believe’ must be in compliance with the existing law and it must be noted down and communicated by notice as under section 8(1) of the act. The Court also held that the person on whom the notice is served will have access to the material basis of the ‘reason to believe’.
By pointing out the safeguards and limits already provided by the law, the court held the second proviso to the section 5(1) of the PMLA to be valid and not manifestly arbitrary.
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