Madhya Pradesh High Court: In a writ petition filed challenging a search authorization and consequential search and seizure action undertaken by the Directorate of Enforcement (‘ED’) under Section 17 of the Prevention of Money Laundering Act, 2002 (PMLA) in S. Kumar’s Nationwide Limited (“SKNL”) bank fraud case, the Division Bench of Vijay Kumar Shukla* and Alok Awasthi, JJ., declined to interfere at the threshold and held that the petitioner has an efficacious statutory remedy before the Adjudicating Authority under Section 17(4) of the PMLA. The Court ruled that issues relating to legality and validity of the search proceedings must be raised before the competent statutory forum and not directly in writ jurisdiction.
Background
The petitioner, former Chairman and Managing Director of M/s S. Kumar’s Nationwide Limited (“SKNL”), challenged the legality of search and seizure operations conducted by the ED under the PMLA. The impugned action comprised a search authorisation dated 22-12-2025 issued under Section 17 of the PMLA, followed by search and seizure proceedings at the petitioner’s premises on 23-12-2025, pursuant to which various assets and documents were seized. The petitioner sought quashing of the search authorisation and consequential proceedings, return of seized properties, and a declaration that the entire exercise was void ab initio.
The petitioner’s company, SKNL, had availed substantial credit facilities under the Corporate Debt Restructuring Scheme from several banks, including IDBI Bank and Union Bank of India, during the petitioner’s tenure. However, owing to humongous commercial challenges, the company defaulted on its repayment obligations and was subsequently classified as a Non-Performing Asset (NPA). Insolvency proceedings were thereafter initiated under the Insolvency and Bankruptcy Code, 2016, culminating in liquidation and sale of the company’s assets.
Following the declaration of default, certain banks classified the loan accounts as fraudulent under the Reserve Bank of India’s fraud reporting framework. Based on complaints lodged by the banks, the Central Bureau of Investigation registered multiple FIRs against the company and its former directors, including the petitioner.
The petitioner contended that in earlier writ proceedings, the High Court had granted interim protection against coercive action arising out of those FIRs, and that certain travel restrictions imposed upon him had also been set aside. Subsequently, relying upon the said FIRs as predicate offences, the ED initiated proceedings under the PMLA and carried out the impugned search and seizure. The petitioner further contended that the search authorisation lacked a valid “reason to believe” which is mandated under Section 17 of the PMLA and that there was no tangible material to establish the existence of “proceeds of crime” or involvement in money laundering. He further contended that the action was mala fide and amounted to a retaliatory measure taken immediately after he had secured relief from the Court in connected proceedings.
On the other hand, the respondents raised a preliminary objection to the maintainability of the writ petition, asserting that statutory proceedings had already been initiated before the Adjudicating Authority under Sections 17(4) and 5(5) of the PMLA.
Issues
Whether a writ petition under Article 226 of Constitution challenging search and seizure under Section 17 of the PMLA is maintainable.
Analysis
At the outset, the Court noted that the ED had already complied with the statutory procedure by recording the “reasons to believe” in writing and forwarding them to the Adjudicating Authority as required under Section 17(2) of the PMLA. Further, the ED had also filed an application before the Adjudicating Authority in respect of the search and seizure proceedings. In view of this, the Court held that the petitioner would have a full opportunity to raise all objections, including the legality and validity of the search, before the competent authority.
With respect to the petitioner’s challenge relating to provisional attachment, the Court observed that no specific relief had been sought in the petition against such attachment. Even otherwise, proceedings under Section 5(5) of the PMLA were already pending before the Adjudicating Authority, where the petitioner had been impleaded. Consequently, the petitioner could raise all permissible objections therein.
Addressing the submission that the PMLA action was contrary to earlier stay orders passed in relation to the FIRs, the Court held that the orders pertained only to scheduled offences and not to the offence of money laundering. The Court relied upon the case of Vijay Madanlal Choudhary v. Union of India, (2022) SCC OnLine SC 92, wherein the Supreme Court recognized that an offence under Section 3 of the PMLA is distinct and independent from the scheduled offences. Hence, the enforcement proceedings could not be said to violate the earlier judicial orders.
On the plea of mala fides, the Court found that there were no specific allegations against any official of the respondents. In the absence of such pleadings, this contention could not be accepted. Thus, the Court held that the statutory framework provides an adequate remedy and that the High Court ought not to exercise writ jurisdiction at this stage and accordingly dismissed the petition.
[Nitin Shambhukumar Kasliwal v. Union of India, W.P. No. 1527 of 2026, decided on 28-01-2026]
*Judgment authored by Justice Vijay Kumar Shukla
Advocates who appeared in this case:
For the petitioner: Senior Advocates Piyush Mathur and Sumit Nema, assisted by Advocates Piyush Parashar and Arun Dwivedi
For the respondents: Additional Solicitor General Sunil Kumar Jain, assisted by Deputy Solicitor General Romesh Dave, Advocate Shan Ali Khan (for respondent No. 3)
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