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Issues: (i) Whether property representing proceeds of crime, though mortgaged to a bank and the bank not being charged for any scheduled offence, could be provisionally attached under the Prevention of Money Laundering Act, 2002. (ii) Whether the bank's prior steps under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 barred attachment under the Prevention of Money Laundering Act, 2002.
Issue (i): Whether property representing proceeds of crime, though mortgaged to a bank and the bank not being charged for any scheduled offence, could be provisionally attached under the Prevention of Money Laundering Act, 2002.
Analysis: The property was found to belong to the person charged in the scheduled offence and to have been acquired out of proceeds of crime. The Tribunal followed its earlier construction of sections 2(p), 2(u), 3 and 5 of the Act and held that the power of provisional attachment extends to property which is proceeds of crime and is in possession of any person, even if that person is not separately charged with the scheduled offence. The proviso inserted later was treated as clarificatory and consistent with the existing scheme of the Act.
Conclusion: The property was validly attachable under the Act, and the objection based on absence of a charge against the bank failed.
Issue (ii): Whether the bank's prior steps under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 barred attachment under the Prevention of Money Laundering Act, 2002.
Analysis: The Tribunal held that the two statutes operate in distinct fields. It found that the Prevention of Money Laundering Act, 2002 came into force later and that its object is to deprive offenders of proceeds of crime, whereas the SARFAESI Act, 2002 is a debt-recovery mechanism. The mortgage in favour of the bank was treated as an encumbrance, and the Tribunal held that such encumbrance could not defeat attachment where the property itself was involved in money laundering. The bank's remedy, if any, would arise at the stage of confiscation proceedings.
Conclusion: The bank's prior possession or enforcement steps did not prevent provisional attachment under the Prevention of Money Laundering Act, 2002.
Final Conclusion: The provisional attachment was upheld and the appeal failed because the property was treated as proceeds of crime liable to attachment under the money-laundering , notwithstanding the bank's mortgage and recovery .
Ratio Decidendi: Property constituting proceeds of crime may be provisionally attached under the Prevention of Money Laundering Act, 2002 even when held or mortgaged by a person not charged with the scheduled offence, and prior recovery action under SARFAESI does not displace the attachment power where the statutes operate in different fields.
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