Prior secured creditor rights prevail over PMLA attachment, with attachment limited to any surplus beyond the secured debt.

A bona fide secured creditor whose mortgage and enforcement rights arose before the commission of the scheduled offence retains priority over provisional attachment under the Prevention of Money Laundering Act, 2002. The relevant cut-off is the date of the offence generating the alleged proceeds of crime, so a prior lawful interest cannot be treated as tainted property or overridden by attachment. Attachment may continue only to the extent of any surplus value remaining after satisfaction of the secured creditor's claim. The prior mortgagee's interest is therefore protected against attachment to that extent, while any balance beyond the secured debt may remain attachable.

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Issues: Whether a secured creditor who created a mortgage and initiated enforcement proceedings before the alleged commission of the scheduled offence could have its interest defeated by provisional attachment under the Prevention of Money Laundering Act, 2002.

Analysis: The secured property had been mortgaged in favour of the appellant before the alleged criminal activity and the appellant had already invoked its statutory recovery remedies. The reasoning adopted the principle that, for attachment under the Prevention of Money Laundering Act, 2002, the relevant cut-off is the date of commission of the offence generating proceeds of crime. A bona fide third party whose interest in the property arose earlier cannot be treated as part of the tainted proceeds, and the attachment cannot extinguish or override that prior lawful interest. The attachment may continue only to the extent of any surplus value beyond the secured creditor's claim.

Conclusion: The appellant's prior mortgage and enforcement rights were protected, and the attachment could not be sustained against the mortgaged property to that extent.

Final Conclusion: The attachment was set aside only in relation to the property secured in favour of the appellant, while the remaining attachment was left undisturbed.

Ratio Decidendi: A bona fide secured creditor who acquired and enforced its interest in property before the commission of the scheduled offence has priority over attachment under the Prevention of Money Laundering Act, 2002, and such prior interest cannot be defeated except to the extent of any surplus remaining after satisfying the secured debt.

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