Provisional attachment under money laundering law fails without reasoned belief, nexus to proceeds of crime, or retrospective liability.

Provisional attachment under the Prevention of Money Laundering Act could not be sustained without a valid, reasoned belief based on material that the properties were proceeds of crime and bore a nexus to the alleged conduct. The authority found that the alleged receipts had been exhausted in ordinary business, no proceeds had reached the individual respondent's account, and no material linked the attached assets to crime, so the attachment failed for want of the statutory precondition. Attachment was also impermissible where the alleged conduct predated the PMLA regime and liability could not be fastened on the transferee company merely because of amalgamation. The attachment was therefore set aside.

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Issues: (i) Whether the provisional attachment of the respondents' properties could be sustained in the absence of a valid reasonable belief and nexus with proceeds of crime. (ii) Whether attachment could be justified in view of the amalgamation of companies and the alleged pre-PMLA conduct.

Issue (i): Whether the provisional attachment of the respondents' properties could be sustained in the absence of a valid reasonable belief and nexus with proceeds of crime.

Analysis: The attachment under Section 5(1) required the authority to form a reasoned belief, based on material, that the properties were proceeds of crime and were liable to attachment. The impugned order found that the alleged receipts had already been exhausted in the ordinary course of business, that no proceeds had travelled into the account of the individual respondent, and that no material established a nexus between the attached properties and any proceeds of crime. The authority therefore held that the attachment was unsupported by the statutory precondition of reasonable belief.

Conclusion: The attachment could not be sustained on this ground and was held to be unjustified.

Issue (ii): Whether attachment could be justified in view of the amalgamation of companies and the alleged pre-PMLA conduct.

Analysis: The impugned order treated the amalgamation as legally significant and held that criminal liability of the transferor company could not be fastened on the transferee company merely because of merger. It also noted that the relevant transactions and alleged conduct predated the coming into force of the Prevention of Money Laundering Act, 2002, and that the predicate offences were not brought within the schedule until a later amendment. On that basis, the retrospective fastening of liability or attachment was not permissible on the facts found.

Conclusion: The attachment could not be justified on this ground either.

Final Conclusion: The appeals failed, and the order vacating the attachment was maintained, leaving the respondents' properties free from attachment under the Act.

Ratio Decidendi: Provisional attachment under the Prevention of Money Laundering Act, 2002 cannot stand unless the authority forms a valid reasoned belief, on material, that the property is proceeds of crime and is connected to the accused conduct; where no such nexus is shown and the relevant conduct predates the statutory regime or cannot be fastened after amalgamation, attachment is unsustainable.

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