Provisional attachment under money laundering law can reach property in third-party hands if linked to proceeds of crime and unproven funds.

Property derived from criminal activity under the Prevention of Money Laundering Act, 2002 may be provisionally attached even when held by persons not charged with the scheduled offence, because "proceeds of crime" and money laundering are construed broadly to cover direct and indirect involvement. The Tribunal also found that suspicious remittances into an NRE account, coupled with interconnected transactions and inadequate proof of lawful source, failed to rebut the statutory burden under section 24. On the evidence before the Adjudicating Authority, the remittances and properties acquired from them were treated as proceeds of crime, and the provisional attachment was confirmed.

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Issues: (i) Whether property involved in money laundering could be provisionally attached under section 5 of the Prevention of Money Laundering Act, 2002 even though the appellants were not themselves charged with the scheduled offence. (ii) Whether the remittances into the NRE account and the properties acquired out of those funds were proved to be proceeds of crime or legitimate funds.

Issue (i): Whether property involved in money laundering could be provisionally attached under section 5 of the Prevention of Money Laundering Act, 2002 even though the appellants were not themselves charged with the scheduled offence.

Analysis: The statutory scheme was read as a whole, especially sections 2(p), 2(u), 3, 5 and 8 of the Act. The expression "proceeds of crime" was treated as wide enough to include property derived directly or indirectly from criminal activity relating to a scheduled offence, and section 3 was held to cover not only the person who commits the scheduled offence but also any person who assists, indulges in, or is involved in the process of laundering those proceeds. On that construction, attachment is not confined to property held only by a person formally charged with the scheduled offence, because such a narrow reading would defeat the object of the Act and allow tainted property to be concealed or transferred.

Conclusion: Property in the possession of persons not charged with the scheduled offence could still be attached if it was proceeds of crime involved in money laundering.

Issue (ii): Whether the remittances into the NRE account and the properties acquired out of those funds were proved to be proceeds of crime or legitimate funds.

Analysis: The Tribunal relied on the surrounding facts of the narcotics investigation, the interconnected entities and transactions, the suspicious foreign remittances without commercial justification, the use of signed blank cheques, the deposit slips recovered in search, and the statements indicating that the cheques and pay orders were not deposited by the stated recipients. The burden under section 24 was placed on the appellants to show that the properties were untainted, and they were found not to have produced satisfactory documentary proof of legitimate source of funds. The Tribunal also treated the earlier criminal proceedings and the prima facie findings of the Special Court and High Court as supporting material, though the present conclusion rested on the evidence before the Adjudicating Authority and the failure to rebut the statutory presumption.

Conclusion: The remittances were held to be proceeds of crime and the attached properties were held to be tainted property.

Final Conclusion: The provisional attachment orders were validly confirmed and the appellants were not entitled to relief.

Ratio Decidendi: Under the Prevention of Money Laundering Act, 2002, property derived from criminal activity relating to a scheduled offence may be provisionally attached even in the hands of a person not charged with that offence, and the person claiming legitimate ownership must rebut the statutory burden by proving a lawful source of the property.

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