Money-laundering attachment and third-party security interests must be balanced through fact-specific scrutiny of bona fide claims.

The Prevention of Money-Laundering Act, 2002 operates in a distinct field directed at proceeds of crime and its attachment and confiscation scheme is not displaced by the Recovery of Debts and Bankruptcy Act, 1993, the Securitisation Act, or the Insolvency and Bankruptcy Code. A bona fide third-party secured creditor may resist attachment where the interest is lawfully created, acquired in good faith, and supported by due diligence, but the claim depends on the chronology, value, and absence of complicity. Equivalent-value assets may be attached under the money-laundering statute, yet competing security interests require fact-specific scrutiny.

---

---

Issues: (i) Whether the Prevention of Money-Laundering Act, 2002 overrides the Recovery of Debts and Bankruptcy Act, 1993, the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, and the Insolvency and Bankruptcy Code, 2016 in matters concerning attachment and confiscation of property; (ii) Whether a bona fide third-party secured creditor can resist attachment under the Prevention of Money-Laundering Act, 2002 and in what circumstances the attached property may be released or the attachment restricted.

Issue (i): Whether the Prevention of Money-Laundering Act, 2002 overrides the Recovery of Debts and Bankruptcy Act, 1993, the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, and the Insolvency and Bankruptcy Code, 2016 in matters concerning attachment and confiscation of property.

Analysis: The statutory scheme of the Prevention of Money-Laundering Act, 2002 is directed against proceeds of crime and provides for provisional attachment, adjudication, and eventual confiscation. The Recovery of Debts and Bankruptcy Act, 1993, the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, and the Insolvency and Bankruptcy Code, 2016 operate in distinct fields concerned with recovery of debts, enforcement of security interest, and insolvency resolution. The non-obstante clauses in those enactments do not displace the distinct objective of the Prevention of Money-Laundering Act, 2002. The legislative fields differ and the enactments must be read harmoniously.

Conclusion: The later financial recovery statutes do not prevail over the Prevention of Money-Laundering Act, 2002.

Issue (ii): Whether a bona fide third-party secured creditor can resist attachment under the Prevention of Money-Laundering Act, 2002 and in what circumstances the attached property may be released or the attachment restricted.

Analysis: The law recognises that third parties may have legitimate interests in attached property, including by mortgage or hypothecation. A secured creditor is not to be defeated merely because an attachment under the Prevention of Money-Laundering Act, 2002 has been issued, nor is such attachment invalid merely because a prior charge exists. Where the property is genuinely acquired before the criminal activity, the third-party interest may survive to the extent of that charge. Where the property is targeted as an alternative attachable asset of equivalent value, bona fide claimants may seek release, but their claim must satisfy the statutory safeguards, including good faith, lawful consideration, due diligence, and absence of complicity. On the facts of these appeals, the appellate tribunal had not undertaken the necessary fact-specific scrutiny of the value, chronology, and bona fides of the respective claims.

Conclusion: A bona fide third-party secured creditor may resist attachment to the extent permitted by law, but the claims require further factual examination in accordance with the statutory safeguards.

Final Conclusion: The common orders of the appellate tribunal were unsustainable and required fresh consideration of the attached properties and the competing secured claims on the statutory touchstone of proceeds of crime, bona fide acquisition, chronology, and equivalent value.

Ratio Decidendi: Attachment under the Prevention of Money-Laundering Act, 2002 may extend to equivalent-value assets where tainted property is untraceable, but competing third-party security interests are protected only if they are bona fide, lawfully created, and not designed to defeat the statute, and such claims must be examined on the facts of each case.

---