PMLA attachment prevails over secured creditor rights where property is prima facie proceeds of crime and supported by material.

A secured creditor's mortgage did not override PMLA attachment where the properties were prima facie found to be proceeds of crime and the mortgages were created later than the alleged fraudulent acquisition. The Tribunal held that SARFAESI proceedings and claims of bona fide third-party status did not justify release of the attached properties on these facts, so the attachment was upheld against the appellant. It further held that the attachment order disclosed sufficient material to form the required "reason to believe", and no legal infirmity was shown in the confirmation order. The challenge based on non-applicability of Section 3 also failed, and the confirmation of provisional attachment was sustained.

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Issues: (i) Whether the appellant, as a secured creditor and claimed bona fide third party, could resist attachment and seek release of the mortgaged properties under the PMLA in preference to the Enforcement authorities. (ii) Whether the provisional attachment and its confirmation were invalid for want of material to form "reason to believe" under the PMLA and for non-applicability of Section 3.

Issue (i): Whether the appellant, as a secured creditor and claimed bona fide third party, could resist attachment and seek release of the mortgaged properties under the PMLA in preference to the Enforcement authorities.

Analysis: The properties were found to have been acquired during 2013 and 2014 from funds alleged to be traceable to fraudulent loan transactions and diversion of consortium funds, whereas the appellant's home loans and mortgage were created only in March and April 2016. The Tribunal held that, on the material before it, the properties prima facie constituted proceeds of crime and the appellant's mortgage could not override the attachment merely because SARFAESI proceedings had been initiated. The Tribunal further held that the cited authorities on bona fide third-party rights and priority of secured creditors did not assist the appellant on these facts.

Conclusion: The claim of priority and release was rejected and the attachment was upheld against the appellant.

Issue (ii): Whether the provisional attachment and its confirmation were invalid for want of material to form "reason to believe" under the PMLA and for non-applicability of Section 3.

Analysis: The Tribunal found that the impugned order disclosed the material relied upon, the travel of alleged proceeds of crime, and the conclusions supporting the formation of "reason to believe" for provisional attachment. It also held that the appellant, not being an accused in the scheduled offence or prosecution complaint, did not require a separate finding on Section 3 for the purpose of testing the attachment order, and no legal infirmity was shown in the confirmation order.

Conclusion: The challenge to the attachment on these grounds failed.

Final Conclusion: The confirmation of provisional attachment was sustained in full and the appeal was dismissed with no order as to costs.

Ratio Decidendi: A mortgagee or secured creditor cannot obtain release of property under the PMLA where the property prima facie represents proceeds of crime and the attachment is supported by material forming reason to believe; SARFAESI rights do not defeat such attachment on these facts.

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