The Punjab & Haryana High Court has clarified that revenue authorities cannot mechanically record encumbrances on property based on generic enforcement actions under the Prevention of Money Laundering Act, 2002. The judgment underscores that constitutional protections against arbitrary deprivation of property apply even when enforcement agencies act under statutory powers, and that procedural legitimacy must precede administrative consequences.
Background & Facts
The Dispute
The petitioner, SARV REALTORS PRIVATE LIMITED, is the lawful owner of property bearing Khewat No. 1939, Khata No. 1993, Rect. No. 152, Killa No. 11 (8-0), located in Badshahpur, Gurugram. Despite not being named as an accused in any Enforcement Case Information Report (ECIR) under the Prevention of Money Laundering Act, 2002 (PMLA), the property was subjected to an endorsement of attachment in the revenue records by the Sub-Tehsildar, acting on a communication from the Directorate of Enforcement (E.D.).
Key Facts
- The petitioner was not named as an accused in ECIR/GNZO/08/2025 or ECIR/GNZO/20/2021.
- A Provisional Attachment Order was issued on 26.03.2025 under Section 5(1) of PMLA against properties linked to the above ECIRs, but the petitioner’s property was not specifically identified in that order.
- The Adjudicating Authority confirmed the attachment vide order dated 09.09.2025, yet the petitioner’s property was not mentioned in the confirmation order.
- On 10.07.2025, the Assistant Director of E.D. issued a letter (Annexure P-9) to the Tehsildar, Badshahpur, directing the recording of an encumbrance on the petitioner’s property.
- Based solely on this letter, the Sub-Tehsildar mechanically endorsed the property as "attached" in the revenue records without any judicial or statutory order specifically naming the property.
- The petitioner had no prior notice, opportunity of hearing, or formal communication regarding the proposed attachment.
- The petitioner has been in peaceful, continuous, and lawful possession of the property since acquisition and uses it for commercial development.
Procedural History
- 09.09.2025: Adjudicating Authority confirms provisional attachment under PMLA, but does not mention petitioner’s property.
- 10.07.2025: Assistant Director, E.D., issues letter to Tehsildar directing revenue endorsement of attachment on petitioner’s property.
- Undated (prior to 07.04.2026): Sub-Tehsildar records encumbrance in revenue records without independent verification or order.
- 07.04.2026: Writ Petition (CWP-8099-2026) filed before the Punjab & Haryana High Court under Articles 226 and 227 of the Constitution.
The Parties' Positions
For the Petitioner:
- The endorsement of attachment is illegal because no valid Provisional Attachment Order under Section 5(1) of PMLA specifically covers the property.
- The action violates Articles 14, 19(1)(g), 21, and 300-A of the Constitution by depriving the petitioner of property without due process.
- The mechanical recording by revenue authorities, based on an administrative letter, is ultra vires and arbitrary.
- The petitioner is not an accused and has no nexus with the alleged money laundering.
For the Respondent (Directorate of Enforcement):
- The E.D. does not dispute that the property was wrongly attached.
- The attachment was a clerical or procedural error.
- The petitioner has an alternative remedy under Section 26 of PMLA to challenge the confirmation order dated 09.09.2025.
- The E.D. is willing to correct the record if the petitioner files an appeal.
Relief Sought
The petitioner sought:
- Quashing of the wrongful endorsement in revenue records.
- Declaration that the action is arbitrary, without jurisdiction, and violative of Articles 14 and 300-A.
- Direction to remove the encumbrance and restore the property records to reflect the petitioner as lawful owner.
- Restraint on any interference with possession, development, or commercial use.
- Exemplary costs and compensation for forcing the petitioner to approach the High Court.
The Legal Issue
Can revenue authorities record an encumbrance on property in official records based solely on an administrative letter from the Directorate of Enforcement, when no valid Provisional Attachment Order under Section 5(1) of the PMLA specifically identifies the property, and the owner is not an accused?
Arguments Presented
For the Petitioner
The petitioner relied on Article 300-A of the Constitution, which provides that no person shall be deprived of property save by authority of law. The absence of a specific, lawful order rendering the attachment valid meant the endorsement had no legal foundation. The petitioner cited State of Haryana v. Bhajan Lal to argue that administrative actions must be grounded in statutory authority and cannot be based on vague or indirect directions. The mechanical action by the Sub-Tehsildar, without independent scrutiny or notice, amounted to a violation of natural justice and due process under Article 21. The petitioner also invoked K.S. Puttaswamy v. Union of India to emphasize that state action affecting property rights must be proportionate and procedurally fair.
For the Respondent
The Directorate of Enforcement conceded that the property was erroneously attached and that no specific order under Section 5(1) PMLA covered the petitioner’s property. However, it contended that the petitioner’s remedy lies under Section 26 of the PMLA, which provides for an appeal to the Appellate Tribunal against any order of the Adjudicating Authority. The E.D. argued that writ jurisdiction under Article 226 should not be invoked when a statutory alternative remedy exists, citing S.P. Gupta v. Union of India and State of U.P. v. Mohammad Noor.
The Court's Analysis
The Court acknowledged the petitioner’s uncontested status as a non-accused person whose property was not mentioned in either the Provisional Attachment Order dated 26.03.2025 or the Confirmation Order dated 09.09.2025. The Court observed that the only basis for the revenue endorsement was a letter dated 10.07.2025 from the Assistant Director of E.D., which lacked the force of law and could not substitute a statutory order.
"The recording of an encumbrance in revenue records is not a mere clerical formality; it is a legal consequence that affects title, marketability, and use of property. Such an action must be founded on a valid, specific, and legally enforceable order."
The Court held that while the existence of an alternative remedy under Section 26 PMLA is generally a bar to writ jurisdiction, this principle does not apply when the remedy is illusory or when the violation is of a fundamental constitutional right. The petitioner’s property was deprived without any statutory order, rendering the action non-est in law. The Court emphasized that Article 300-A is not merely procedural but substantive, and that the state cannot circumvent it by delegating enforcement to subordinate officers based on informal communications.
The Court further noted that the petitioner, though not an accused, was clearly a "person aggrieved" by the confirmation order dated 09.09.2025, as his property was affected by its consequences. Therefore, he was entitled to challenge the order under Section 26 PMLA.
The Verdict
The petition was disposed of with liberty to the petitioner to file an appeal under Section 26 of the Prevention of Money Laundering Act, 2002, within 30 days from the date of judgment. The Directorate of Enforcement is directed to withdraw the erroneous endorsement from the revenue records upon production of proof of such appeal. The petitioner’s property shall remain free from any encumbrance until the Appellate Tribunal decides the appeal on its merits. The Court declined to award costs, noting the E.D.’s admission of error.
What This Means For Similar Cases
Revenue Records Cannot Be Altered Without Statutory Orders
- Practitioners must challenge any revenue endorsement based on administrative letters, not judicial or statutory orders.
- Any encumbrance recorded without a valid PMLA attachment order is void ab initio and can be quashed under Article 226.
Non-Accused Persons Have Standing to Challenge PMLA Attachments
- Even if not named as an accused, a person whose property is affected by a PMLA order qualifies as a "person aggrieved" under Section 26.
- The Appellate Tribunal is the proper forum to contest the scope or validity of attachment orders affecting third parties.
Procedural Legitimacy Trumps Administrative Convenience
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Enforcement agencies cannot bypass statutory procedures by relying on informal communications to trigger legal consequences.
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Revenue authorities must refuse to act on non-statutory directives and may be held liable for unlawful entries.
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Always verify whether the attachment order specifically names the property before accepting any revenue endorsement.
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File an appeal under Section 26 PMLA within 30 days if property is affected, even if not named as accused.
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Seek immediate writ relief if the property is encumbered without any valid order - such actions violate Article 300-A.
