Bona fide secured creditor protection limits money-laundering attachment where mortgage predates the alleged offence and no valid reason is recorded.

A provisional attachment under money-laundering law cannot be sustained against a bona fide secured creditor where the mortgage predates the alleged offence and the record does not show the creditor's involvement or that the property is proceeds of crime as against that creditor. The record must also disclose an independent, valid reason to believe before attachment is invoked. Here, the notice and confirmation order ignored the secured creditor's reply and claim, and were treated as mechanical. On those facts, continuation of the attachment at the confirmation stage was not justified, and the confirmation order was liable to be set aside for the mortgaged property.

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Issues: Whether the provisional attachment and its confirmation could be sustained against a bona fide secured creditor whose mortgage was created before the alleged criminal activity and where no valid reason to believe was recorded against the appellant.

Analysis: The secured property was mortgaged to the appellant before the alleged offence and before the provisional attachment. The material on record did not show that the appellant itself was involved in money-laundering or that the property, as against the appellant, was shown to be proceeds of crime. The record also did not disclose a valid, independent reason to believe against the appellant for invoking attachment under the Act. The notice and the confirmation order were found to be mechanical and to have ignored the appellant's reply and claim as a secured creditor. In these circumstances, the statutory scheme did not justify continuing the attachment against the appellant at the stage of confirmation.

Conclusion: The attachment could not be sustained against the appellant and the confirmation order was liable to be set aside in respect of the mortgaged property.

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