Bank guarantee substitution for attached fixed deposits under PMLA led to release of the deposits

Fixed deposits attached in PMLA proceedings were treated as replaceable by an equivalent bank guarantee, where the appellate tribunal found no illegality in the mining lease and the deposits were not declared proceeds of crime. The petitioner furnished a bank guarantee in compliance with the tribunal's order, and the respondent was directed to accept it and release the fixed deposits. The respondent's objection that proceeds of crime could not be converted into a bank guarantee was rejected on the footing that the deposits themselves were not identified as such.

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Issues: Whether the petitioner was entitled to release of the fixed deposits on furnishing bank guarantee in lieu of the attached amount pending appeal.

Analysis: The fixed deposits were not treated as proceeds of crime for the purpose of the relief sought. The appellate tribunal had already permitted substitution of the attached amount by bank guarantee, and the petitioner had furnished the bank guarantee in the stipulated amount. In these circumstances, the respondent could not retain both the fixed deposits and the bank guarantee. The separate request for stay did not survive independently.

Conclusion: The petitioner was entitled to acceptance of the bank guarantee and release of the fixed deposits pending appeal.

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