ED PMLA Attachment Disclosure: Gauhati HC Refers Confidentiality Question to Larger Bench
Justice Manish Choudhury of the Gauhati High Court has referred to a larger bench the critical question of whether the Enforcement Directorate’s recorded ‘reasons to believe’ under Section 5(1) of the PMLA are confidential and must be furnished to an affected person whose property is provisionally attached.
The referral arises in Mrig Mrinal Dhawan v. Union of India & Anr. (Writ Petition (C) No. 2531/2026), after Justice Choudhury found his own view in direct conflict with an earlier coordinate bench ruling, according to LiveLaw.
Background & Case History
The dispute originates from a provisional attachment order (PAO) passed by the Deputy Director, Directorate of Enforcement, Itanagar, attaching three plots of land belonging to the petitioner, Mrig Mrinal Dhawan, proprietor of Fama Marketing.
The attachment arose from a money laundering investigation linked to an alleged fake GST input tax credit fraud involving approximately ₹99.31 crore, as reported by Bar & Bench. The PAO was valid for 180 days from the date of the order.
Dhawan challenged the PAO by filing Writ Petition (C) No. 2531/2026 before the Gauhati High Court. The petition was cited with the citation 2026 LLBiz HC (GAU) 19, per LiveLaw Biz.
- 2024: A coordinate bench of the Gauhati High Court decided Aftabuddin Ahmed and another v. Enforcement Directorate and Others, holding that ‘reasons to believe’ constitute an internal satisfaction note not mandatorily required to be part of the PAO communicated to the noticee.
- 2026: The Deputy Director, Directorate of Enforcement, Itanagar, passes a PAO provisionally attaching three plots of land belonging to Mrig Mrinal Dhawan in connection with the alleged GST fraud.
- 2026: Dhawan files Writ Petition (C) No. 2531/2026 before the Gauhati High Court challenging the PAO.
- 2026: Justice Manish Choudhury dismisses the petition on merits but, finding a conflict with the 2024 coordinate bench ruling, directs the matter be placed before the Chief Justice for constitution of a larger bench.
Arguments & Submissions
In an unusual posture, the argument for confidentiality of the ‘reasons to believe’ was advanced by the petitioner — the very person whose property was attached — and not by the ED, as reported by Bar & Bench and India Legal Live.
The petitioner contended that the authorised officer’s ‘reasons to believe’ ought to have remained in a separate confidential file and should not have been incorporated into the PAO itself. According to LiveLaw Biz, Dhawan argued that incorporating the reasons into the PAO constituted a jurisdictional error under the PMLA framework.
The petitioner’s case relied on the Prevention of Money Laundering (Maintenance of Records) Rules, 2005, which he claimed mandated that such reasons be kept separately and not disclosed through the PAO. Senior Advocate A. Saraf with Advocate S.P. Sharma represented the petitioner, while Senior Counsel and Deputy Solicitor General of India R.K. Deb Choudhury represented the Union of India, per Bar & Bench.
The Ruling: Key Findings
Justice Choudhury dismissed the writ petition on merits, disagreeing fundamentally with the petitioner’s confidentiality argument. The court held that neither Section 5(1) of the PMLA nor the Prevention of Money Laundering (Maintenance of Records) Rules, 2005 impose any statutory bar on disclosure of the recorded satisfaction or reasons to believe, according to India Legal Live.
The judge stated: “Rather, this Court is of the view that such reason to believe is required to be furnished to the affected person, sooner or later, if a request is made to that effect by the affected person.”
Justice Choudhury further observed that transparency in this regard would serve constitutional values: “If the reason to believe is made part of the PAO, the same would be in alignment with the constitutional principles of natural justice and fair play; and the same would lessen the possibility of subjective fishing expeditions.”
Addressing the absence of any explicit legislative restriction, the court held: “The Court cannot read into a restriction which the legislature itself has not incorporated.” The court also held that ‘reason to believe’ is a jurisdictional precondition for the exercise of coercive powers of provisional attachment and therefore forms part of the foundational material subject to procedural fairness requirements, per India Legal Live.
Legal Analysis & Implications
The statutory framework at the centre of the dispute is Section 5(1) of the Prevention of Money Laundering Act, 2002, which empowers an authorised officer to provisionally attach property if he has ‘reasons to believe’ that a person has committed money laundering and that attachment is necessary.
Justice Choudhury’s view is that furnishing these reasons to the affected person aligns with the doctrine of audi alteram partem, the principles of natural justice, fair play, and the constitutional guarantee of equality under Article 14 of the Constitution of India, as reported by Bar & Bench and India Legal Live.
The referral creates a formally recorded judicial conflict. The 2024 coordinate bench in Aftabuddin Ahmed v. Enforcement Directorate had treated the ‘reasons to believe’ as an internal satisfaction note with no mandatory disclosure obligation. Justice Choudhury’s contrary finding now requires a larger bench to settle which view prevails — a determination that will have direct consequences for every future provisional attachment proceeding before the Gauhati High Court, and potentially influence other high courts grappling with the same question.
The fact that it was the property-owner, not the ED, who argued for confidentiality adds a pointed irony. The petitioner’s strategy appeared aimed at having the PAO set aside as jurisdictionally flawed, but the court declined to treat the inclusion of reasons as an error, let alone a fatal one.
Reactions & Stakeholder Response
No formal public reactions from the Bar Council, civil society organisations, or the Enforcement Directorate have been reported in the sources cited. The ED itself did not press for confidentiality of the ‘reasons to believe’ during the proceedings, according to India Legal Live and Bar & Bench — a notable institutional stance that the court appeared to take into account.
The matter’s referral to a larger bench is itself a signal that the Gauhati High Court treats the question as one of significant and unsettled legal importance across PMLA enforcement proceedings in the region.
What’s Next
Following the dismissal of the writ petition on merits, Justice Choudhury directed the matter to be placed before the Hon’ble Chief Justice of the Gauhati High Court on the administrative side for the constitution of a larger bench, as confirmed by LiveLaw and Bar & Bench.
The larger bench will be required to authoritatively settle two questions: first, whether the ED’s ‘reasons to believe’ under Section 5(1) of the PMLA are confidential in nature and must be furnished to the affected person; and second, whether incorporating those reasons into the PAO itself constitutes any jurisdictional error. No date has been reported for the constitution of the larger bench or the next hearing.
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Disclaimer
Disclaimer: This article is for general information only and does not constitute legal advice. Laws may change or vary by case — consult a qualified lawyer before acting. The Courtroom is not liable for any reliance on this content.
