Attachment Under PMLA Ceases After 180 Days: Bombay High Court Holds Supreme Court COVID Limitation Orders Do Not Extend PAO Validity

Case: Naresh T. Jain v. Union of India & Directorate of Enforcement 2025:BHC-OS:22051-DB

Introductory Facts

The Hon’ble Bombay High Court was called upon to decide whether a Provisional Attachment Order (PAO) issued under Section 5 of the Prevention of Money Laundering Act, 2002 ("PMLA") survives beyond 180 days because of the Supreme Court's COVID-19 limitation extension orders. The Petitioners challenged a PAO dated 27 November 2020 and contended that it automatically lapsed on 26 May 2021 upon expiry of the statutory period prescribed under Sections 5(1) and 5(3) of the PMLA.

Submissions by the Parties

The Petitioners argued that Section 5(3) of the PMLA contains a mandatory safeguard whereby every provisional attachment order ceases to have effect after 180 days unless confirmed by the Adjudicating Authority. It was submitted that the Supreme Court's suo motu orders extending limitation during the COVID-19 pandemic were intended to protect litigants who were unable to institute proceedings and could not be invoked to enlarge the life of a provisional attachment order. Reliance was placed upon S. Kasi v. State and the decision of the Calcutta High Court which had taken a similar view.

The Enforcement Directorate, on the other hand, contended that while computing the 180-day period, the period excluded by the Supreme Court's COVID limitation orders ought to be taken into account. It was argued that the pandemic had affected the functioning of authorities and, therefore, the benefit of the Supreme Court's orders should equally extend to proceedings under the PMLA. Reliance was placed upon a contrary judgment of the Delhi High Court.

Observations of the Hon'ble Court

The Hon’ble High Court undertook a detailed examination of Section 5 of the PMLA and emphasized that the statutory scheme consciously limits the operation of a provisional attachment order to a maximum period of 180 days. The Court noted that Section 5(3) expressly provides that every attachment order "shall cease to have effect" after the expiry of the prescribed period unless confirmed under Section 8.

The Hon’ble Court observed that this 180-day restriction is not a mere procedural requirement but one of the significant safeguards recognised by the Supreme Court in Vijay Madanlal Choudhary v. Union of India while upholding the constitutional validity of the PMLA. The fixed duration of attachment protects property rights against indefinite executive restraint.

While analysing the Hon’ble Supreme Court's COVID limitation orders, the High Court held that those directions were intended to protect litigants facing difficulties in filing petitions, applications, suits and appeals within prescribed periods of limitation. The orders dealt with limitation for initiating proceedings and could not be extended to enlarge the lifespan of a provisional attachment order issued under Section 5 of the PMLA.

The Court found considerable support in the Hon’ble Supreme Court's decision in S. Kasi v. State, where it was held that the COVID limitation orders did not extend the statutory period for filing a charge-sheet under Section 167(2) of the Cr.P.C. The Bombay High Court held that the reasoning in S. Kasi equally applied to the PMLA context.

The Hon’ble Court also rejected the ED's argument that the pandemic made compliance impossible. Significantly, it noted that during the very period for which exclusion was sought, the ED had successfully issued the PAO, filed the complaint before the Adjudicating Authority, and participated in proceedings. This demonstrated that there was no practical impossibility preventing the authorities from acting.

A further factor that weighed with the Hon’ble Court was that the ED had itself approached the Supreme Court seeking clarification regarding PMLA timelines in the COVID limitation proceedings, but no such relief had been granted. The Court held that the ED could not indirectly secure through litigation what it had failed to obtain directly from the Supreme Court.

Preferring the reasoning of the Hon’ble Calcutta High Court over that of the Hon’ble Delhi High Court, the Hon’ble Bombay High Court ultimately held that the impugned PAO dated 27 November 2020 ceased to have effect on 26 May 2021 upon completion of 180 days. Consequently, the attachment stood lifted and the ED was restrained from taking any action pursuant to the expired attachment order.

However, the Hon’ble Court clarified that the lapse of the provisional attachment order would not terminate the adjudication proceedings pending before the Adjudicating Authority. Relying upon Kaushalya Infrastructure Development Corporation Ltd. v. Union of India, it held that adjudication proceedings under Section 8 of the PMLA continue independently and must proceed on their own merits.

Takeaway

This judgment is an important reaffirmation that the 180-day validity period prescribed for provisional attachment orders under Section 5 of the PMLA is mandatory. The Hon’ble Bombay High Court has held that the Supreme Court's COVID-19 limitation extension orders do not extend the life of a provisional attachment order. Once the statutory period expires, the attachment automatically lapses. At the same time, the Hon’ble Court clarified that the lapse of the attachment does not invalidate or terminate adjudication proceedings pending under Section 8 of the PMLA.