Chhattisgarh HC Refuses to Quash PMLA Attachment of Hotel Westin Goa, Sends Petitioners to Adjudicating Authority
The Division Bench held that income-tax orders accepting the Rs 60 crore cash source do not immunise the property from PMLA attachment, and that disputed facts must be resolved before the Adjudicating Authority.
The High Court of Chhattisgarh at Bilaspur dismissed a writ petition challenging the Enforcement Directorate's provisional attachment of Hotel Westin, Goa, valued at Rs 110 crore under Section 5(1) of the Prevention of Money Laundering Act, 2002. Chief Justice Ramesh Sinha, leading the Division Bench along with Justice Ravindra Kumar Agrawal, held that the petitioners' challenge was essentially directed at the correctness of the material relied upon by the authorised officer, not at his jurisdiction. The bench found that a complete statutory adjudicatory mechanism under Section 8 of the PMLA was already in motion, and the disputed questions of fact — including whether Rs 60 crore in cash paid for the hotel represented proceeds of crime from the Chhattisgarh liquor scam — could not be resolved summarily under Article 226 of the Constitution.
The Dispute Before the High Court
The first petitioner, Dr. Rahul Agrawal, and the second petitioner, M/s Pacifica Hotels India Private Limited (“Pacifica”), sought to quash the Provisional Attachment Order dated 28 May 2026 passed by the ED in ECIR/RPZO/04/2024. The order attached Hotel Westin, Goa — held through Pacifica — treating it as property involved in money laundering to the extent of Rs 110 crore: Rs 60 crore as direct proceeds of crime and Rs 50 crore as the value of remaining untraced proceeds.
The predicate offence traces to FIR No. 04/2024 registered on 17 January 2024 at EOW/ACB, Raipur, under Sections 420, 467, 471 and 120B of the IPC and Sections 7 and 12 of the Prevention of Corruption Act, 1988, arising from alleged corruption in the State liquor distribution mechanism through the Chhattisgarh State Marketing Corporation Limited (CSMCL). Neither petitioner was named in the FIR, the charge-sheets, or any of the prosecution complaints filed before the Special Court (PMLA), Raipur.
The hotel itself was acquired by Pacifica from M/s Sir Biotech India Ltd. by a sale deed registered in October 2019 for a documented consideration of Rs 50 crore, with an admitted cash component of Rs 60 crore paid at Dr. Rahul Agrawal's residence in New Delhi in multiple tranches.
The ED's Evidentiary Chain
The ED's case, as presented to the Division Bench, rested on a chain of statements and circumstances. One Laxmi Narayan Bansal @ Pappu Bansal, described by the ED as the principal cash handler in the liquor scam, stated in statements recorded under Section 50 of the PMLA on 2 July 2025 that he had personally paid Rs 40 crore in cash to Vijay Kumar Agrawal — the paternal uncle of Dr. Rahul Agrawal and a former Director of Pacifica — and that a further Rs 70 crore was delivered to the same person through one Probir Kumar Sharma at the direction of Chaitanya Baghel, with the funds earmarked for purchase of a hotel in Goa by Vijay Agrawal's family.
Probir Kumar Sharma corroborated this in his own statement under Section 50, stating that he personally carried Rs 70 crore in cash in multiple trips, transporting bags of cash to Vijay Kumar Agrawal, and that he also carried interest payments back from Vijay Kumar Agrawal on two to three occasions. The ED treated this as evidence of a continuing financial arrangement, not an isolated transfer.
The Rs 60 crore cash component of the hotel's purchase price was not denied by Dr. Rahul Agrawal. In his statement recorded under Section 50 on 29 July 2025, he admitted personally delivering Rs 60 crore in cash in multiple tranches at his New Delhi residence to persons sent by the vendor. Sameer Biyani (statement dated 23 July 2025) and Vishal Saxena (statement dated 15 July 2025) independently corroborated the payer, payees, location, quantum and mode. The ED also pointed to Vishal Saxena's subsequent induction as a Director of Pacifica on 21 November 2023 — four years after he physically received the cash on behalf of the vendor — as indicating the integration stage of money laundering.
The ED restricted its attachment to Rs 110 crore — the purchase consideration — declining to attach on the higher figures of Rs 214 crore (Income Tax Department project value) or Rs 118.25 crore (total cash component as per the IT appraisal report). Of the Rs 110 crore allegedly received by Vijay Kumar Agrawal, the ED traced Rs 60 crore directly into the hotel as the undisclosed cash component and attached Rs 50 crore under the “value of any such property” limb of Section 2(1)(u) of the PMLA because the remaining Rs 50 crore of the alleged proceeds could not be separately located.
The Petitioners' Legal Challenge
Senior Advocates Mr. Abhimanyu Bhandari and Mr. Rajeev Shrivastava advanced several grounds before the bench.
On the merits, they argued that the CIT(Appeals) had, by order dated 22 December 2022, deleted the addition of Rs 60 crore to the income of RK Group entities, accepting that adequate cash in hand was available in the books of the respective firms. The Income Tax Appellate Tribunal upheld that order on 4 July 2024. Since two departments of the Union of India — the Income Tax Department and the ED — cannot take contradictory positions on the provenance of the same cash, the ED was bound by the IT authorities' acceptance. Reliance was placed on Central Warehousing Corporation v. Adani Ports and Special Economic Zone Ltd. and the Supreme Court's observations in Vijay Madanlal Choudhary v. Union of India on the requirement of recording genuine reasons to believe.
On procedure, the petitioners submitted that the Adjudicating Authority as currently constituted suffered from coram non judice. Section 6(2) of the PMLA requires the AA to consist of a Chairperson and two Members, each with experience in law, administration, finance or accountancy. The petitioners argued that a single member from outside the field of law, sitting also as Acting Chairperson, could not constitute a valid AA. They pointed to Supreme Court interim stays in Tushar Bansal & Others v. Adjudicating Authority (SLP(C) 5066/2026) and Samridh Surekha & Others v. Union of India (SLP(C) No. 5308/2026), where the apex court had stayed High Court orders refusing to interfere with single-member proceedings. They also challenged the lack of any dedicated AA bench with a legal member, citing Adjudicating Authority (Procedure) Regulations, 2013, particularly Regulation 26, which requires orders to bear the signatures of the Chairperson and Members constituting the Bench.
On maintainability, the petitioners contended that the predicate ECIR arose from offences committed in Chhattisgarh and the matter was being prosecuted in Raipur, making the Chhattisgarh High Court the appropriate forum, even though the attached property is in Goa.
The ED's Response
Special Counsel Mr. Zoheb Hossain, appearing through video conferencing, argued that the writ petition was premature and sought to bypass a complete statutory machinery. He contended that Section 5 creates only a provisional measure and that Sections 8, 26 and 42 provide graded adjudication — AA, Appellate Tribunal, and then the High Court — before any final consequence ensues. Original Complaint No. 472 of 2026 had already been filed before the AA under Section 5(5), activating that machinery.
The ED disputed the relevance of the income-tax orders. The CIT(A)'s decision on 22 December 2022 pre-dated both the FIR (registered January 2024) and the material statements (recorded in 2025), so the IT authorities never examined whether the cash was derived from the liquor scam. The PMLA and the Income Tax Act operate on different tests: whether a sum is adequately explained for fiscal purposes is distinct from whether it represents proceeds of crime from a scheduled offence. Section 71 of the PMLA gives the Act overriding effect, and there is no res judicata or issue estoppel because the ED was neither a party to the IT proceedings nor heard therein.
On the coram non judice point, Mr. Hossain submitted that the PAO is an independent executive act under Section 5(1) by the authorised officer of the Directorate, wholly anterior to and independent of the AA's composition. Even if the AA's constitution were later found defective, it could not retrospectively void the provisional attachment. He further relied on this Court's own prior decisions in Mr. Sourabh v. Directorate of Enforcement (MA No. 34 of 2025, decided 23 July 2025) and Tushar Sahu v. Deputy Director, Directorate of Enforcement (MA No. 21 of 2026, decided 22 April 2026), where the Chhattisgarh High Court had itself held that a single-member bench could adjudicate PMLA disputes, relying on the Madras High Court in G. Gopalakrishnan v. Deputy Director.
How the Bench Reasoned
The Division Bench framed the central question as whether the writ petition ought to be entertained when a complete statutory adjudicatory mechanism had already been set in motion. It held that the exceptions in Whirlpool Corporation v. Registrar of Trade Marks — enforcement of fundamental rights, violation of natural justice, proceedings wholly without jurisdiction, and challenge to vires — were not attracted on the facts.
On the jurisdictional fact argument, the bench drew the established distinction between the existence of relevant material before the authorised officer and the sufficiency of that material. Judicial review under Article 226 examines whether there was relevant material with a rational nexus to the belief recorded; it does not involve a mini-trial on whether the material ultimately proves money laundering. On the facts, the bench found the existence of material was plain: the statements of Laxmi Narayan Bansal, Probir Kumar Sharma, Sameer Biyani and Vishal Saxena; the IT appraisal report; the admitted cash payment of Rs 60 crore; the registered consideration of Rs 50 crore; and the circumstances around the hotel's acquisition.
On the income-tax orders, the bench rejected the proposition “in the absolute terms in which it has been advanced.” The question before the IT authorities was whether the cash investment was unexplained for income-tax purposes. The question before the PMLA authorities is whether the property was derived, directly or indirectly, from criminal activity relating to a scheduled offence. The statutory tests, causes of action and consequences are materially different. Crucially, the material statements relied upon by the ED were recorded in 2025, well after the CIT(A) decided in December 2022. The IT orders therefore could not operate as an adjudication of allegations that did not then exist before those authorities.
On the alleged absence of a money trail from Vijay Kumar Agrawal to Dr. Rahul Agrawal, the bench noted that the alleged transaction was stated to have been carried out in cash, physically transported in bags. The absence of a banking trail is inherent in such a transaction. Whether the chain of oral and circumstantial evidence is ultimately sufficient is for the AA to determine.
The bench also held that the petitioners' non-inclusion in the FIR and prosecution complaints does not render the attachment jurisdictionally flawed. The PMLA's attachment regime is property-oriented, not accused-oriented. The statutory definition of “proceeds of crime” encompasses indirect derivation, and the question whether the alleged indirect nexus is established cannot be decided by looking at the registered ownership of the hotel alone.
On the second proviso to Section 5(1) — the requirement to record reasons why immediate attachment was necessary to prevent frustration of proceedings — the bench declined to substitute its own assessment for that of the authorised officer at the provisional stage, particularly when the property remains subject to further adjudication and the hotel continued to operate undisturbed.
On coram non judice, the bench held the issue severable and incapable of invalidating the PAO. The impugned order was passed by the authorised officer under Section 5(1), anterior to any AA proceeding. Even if the AA's composition were found defective in appropriate proceedings, the consequence would concern the Section 8 adjudication, not the prior provisional attachment. The bench relied on its own earlier decisions in Mr. Sourabh and Tushar Sahu, and declined to treat the Supreme Court's interim stays in Samridh Surekha and Tushar Bansal as declarations of law, noting that a stay of a judgment does not efface it or convert a dismissal into an allowance.
On the allegation that the authorised officer erroneously described Vijay Kumar Agrawal as a serving Director of Pacifica (when he had resigned in March 2019), the bench observed that even assuming there was such an error, it was not fundamental so as to destroy the entire basis of the satisfaction recorded, given the substantial other material referred to in the order.
The bench expressly confined its observations to the writ jurisdiction question and stated that it expressed no final opinion on the provenance of the Rs 60 crore, the alleged receipt of Rs 110 crore by Vijay Kumar Agrawal, the connection between that amount and the hotel acquisition, or the ultimate applicability of Sections 2(1)(u), 3, 5, 8, 23 and 24 of the PMLA. All such questions were left open for the competent statutory authorities.
Outcome
The Division Bench dismissed WPCR No. 473 of 2026 by its order dated 25 August 2026. The Provisional Attachment Order dated 28 May 2026, attaching Hotel Westin, Goa, to the extent of Rs 110 crore, was left undisturbed. The petitioners were directed to the statutory adjudicatory process before the Adjudicating Authority, where they may place the income-tax orders, the memorandum of family settlement, books of account, audited records and all other material in support of their case. Pending applications, if any, were also disposed of. No order as to costs was made.