HC Halts Confirmation of Property Attachment in OctaFX–Pavel Prozorov PMLA Case

The Bombay High Court has granted interim relief to Russian national Pavel Aleksandrovich Prozorov, alleged mastermind of the OctaFX investment fraud, by restraining the adjudicating authority under the Prevention of Money Laundering Act, 2002 (PMLA) from confirming attachment of his properties until the next hearing. The matter will be heard again on January 19.

The order was passed by a Division Bench of Justice Revati Mohite Dere and Justice Sandesh Patil on December 22, in response to a writ petition moved through Prozorov’s power of attorney holder, Raviraja Kanyadi.

Background of the Case: ED Probe and Alleged Forex Investment Scam

Alleged Fraudulent Investment Scheme

According to the Enforcement Directorate:

• OctaFX allegedly lured investors with claims of
– 2× returns in five months, and
– 3× returns in eight months

• The platform presented itself as a global forex trading service
• It allegedly operated without RBI authorization
• Investor funds were allegedly routed overseas via layered structures

The ED case originated from a December 2021 FIR registered at Shivaji Nagar Police Station, Pune for cheating investors through the OctaFX platform.

ED Findings and Asset Attachment

Scale of Alleged Laundering and Asset Movements

The ED investigation claims:

• Around ₹1,875 crore was duped from investors (July 2022 – April 2023)
• Approx ₹800 crore profits generated during the same period
• Estimated total profits from India (2019–2024): over ₹5,000 crore

Asset Attachments Under PMLA

The ED has provisionally attached:

• ₹2,681 crore worth of assets (including immovable properties)
• ₹2,385 crore worth of cryptocurrency
• A luxury yacht named Cherry in Spain

These attachments were carried out under:

Section 5 — PMLA (Provisional Attachment of Property)
pending adjudication under Section 8 — Confirmation of Attachment.

ED sources have stated that Prozorov was arrested in Spain for alleged cyber-fraud activities across jurisdictions.

Modus Operandi Identified by ED

The ED charge sheets state:

• Operations were structured through a distributed global network
• Marketing was handled via entities in the British Virgin Islands (BVI)
• Servers and back-office infrastructure were allegedly based in Spain
• The platform promoted itself through
– Sponsorships, including an IPL team
– Influencer marketing agencies

The ED alleges that the structure was designed to:

• Evade regulatory oversight
• Launder funds across jurisdictions
• Mask ownership and financial flows

OctaFX Response to Allegations

OctaFX has categorically denied the allegations, stating:

• It is a registered global broker
• It operates in compliance with governing jurisdictions
• It has no connection with Pavel Prozorov’s personal business affairs

The company also rejected accusations of:

• Money laundering
• Unrealistic investment promises
• Trading manipulation practices

Legal Issue Before the Bombay High Court

Relief Granted by Court

The High Court has:

• Restrained the PMLA adjudicating authority from confirming the attachments
• Granted interim protection until January 19

This ensures that:

• No final confirmation order is passed
• The petitioner retains the opportunity to challenge attachment proceedings

This protection was granted at the pre-confirmation stage.

Statutory Framework Involved

Prevention of Money Laundering Act, 2002

Relevant provisions:

  1. Section 3 — Offence of Money Laundering

  2. Section 4 — Punishment

  3. Section 5 — Provisional Attachment of Property

  4. Section 8 — Adjudication and Confirmation of Attachment

  5. Section 17 — Search and Seizure

  6. Section 20 — Retention of Seized Property

The attachment is currently at the Section 8 adjudication stage.

Constitutional Principles Involved

The petition raises issues relating to:

• Article 14 — Right to Equality and Non-Arbitrariness
• Article 21 — Protection of Personal Liberty and Due Process
• Article 300-A — Protection of Property Rights

The key contention pertains to:

Whether attachment and deprivation of property
can proceed without adequate procedural safeguards.

Relevant Judicial Precedents

The case engages with settled principles from:

  1. Vijay Madanlal Choudhary v. Union of India (2022)
    — Upheld ED’s powers but emphasized procedural fairness

  2. Seema Silk and Sarees v. Directorate of Enforcement (2008)
    — Attachment must be based on credible material evidence

  3. K.T. Plantation v. State of Karnataka (2011)
    — Property deprivation must meet proportionality standards

  4. Radha Krishan Industries v. State of HP (2021)
    — Judicial review applies against premature coercive measures

  5. Asset Reconstruction Co. v. Bishal Jaiswal (2021)
    — Courts can intervene in attachment if mala fides alleged

The High Court’s interim restraint aligns with the principle that:

Confirmation of attachment cannot proceed
while legality of attachment itself is under challenge.

Analytical Assessment

The case reflects major themes in current financial enforcement:

• Increasing ED action against global fintech and crypto-linked platforms
• Cross-border money movement scrutiny
• Growing judicial oversight of PMLA attachment processes
• International cooperation in financial crime investigations

The Court has not adjudicated on merits yet —
but has ensured that no irreversible attachment confirmation takes place until the matter is heard fully.

Conclusion

The Bombay High Court order represents a significant procedural development in one of India’s largest alleged forex-platform laundering cases. While the ED maintains that OctaFX orchestrated a sophisticated financial deception network, the Court has emphasized the need to ensure due process and adjudicatory fairness before property deprivation becomes final.

The outcome of the January 19 hearing will likely shape:

• The scope of PMLA adjudication standards
• Judicial scrutiny over crypto-asset attachment
• Treatment of offshore fintech-linked financial structures

This remains a legally and financially high-stakes litigation with cross-border implications.

Location: Pune, Maharashtra, India

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