PMLA attachment over pre-existing secured assets cannot stand where no nexus to proceeds of crime is shown.

Corporate debtor assets under insolvency resolution were examined in relation to a provisional attachment under the PMLA. The Tribunal treated the dispute as falling within its insolvency jurisdiction because the attachment directly affected the resolution process, secured creditors' claims, and the pending resolution plan. On the merits, it found the properties had been acquired and mortgaged to banks before the alleged laundering activity, so they lacked a demonstrated nexus to proceeds of crime. The attachment could not be sustained on an equivalent value theory without such nexus, and it was lifted to avoid obstructing the insolvency process and the prior security interests of creditors.

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Issues: (i) Whether the Tribunal had jurisdiction under the Insolvency and Bankruptcy Code, 2016 to entertain and decide the challenge to the provisional attachment order passed under the Prevention of Money Laundering Act, 2002. (ii) Whether the provisional attachment could be sustained when the attached properties were acquired and mortgaged to secured creditors long before the alleged laundering transactions and scheduled offences.

Issue (i): Whether the Tribunal had jurisdiction under the Insolvency and Bankruptcy Code, 2016 to entertain and decide the challenge to the provisional attachment order passed under the Prevention of Money Laundering Act, 2002.

Analysis: The dispute arose out of assets of a corporate debtor undergoing insolvency resolution, and the application was brought under the Tribunal's residuary jurisdiction relating to questions arising from or in relation to the insolvency process. The Tribunal accepted that the controversy over attachment of corporate debtor assets directly affected the resolution process, the claims of secured creditors, and the pending resolution plan. On that basis, the matter was held to fall within the Tribunal's jurisdiction.

Conclusion: The Tribunal had jurisdiction to entertain the applications and examine the provisional attachment.

Issue (ii): Whether the provisional attachment could be sustained when the attached properties were acquired and mortgaged to secured creditors long before the alleged laundering transactions and scheduled offences.

Analysis: The Tribunal found that the attached properties were purchased in 2005 and were mortgaged to banks in 2008 and 2009, whereas the alleged routing of funds through intermediary entities occurred during 2011 to 2013. On that chronology, the assets could not be treated as having been acquired from proceeds of crime. The Tribunal also noted that the properties were already subject to security interests in favour of banks and that the attachment would impair the insolvency resolution process. It accepted that the attachment could not be continued merely on a theory of equivalent value in the absence of a sufficient nexus between the specific properties and criminal proceeds.

Conclusion: The provisional attachment was unsustainable and was directed to be raised.

Final Conclusion: The applications succeeded, and the attachment over the corporate debtor's secured assets was lifted in deference to the insolvency process and the prior rights of secured creditors.

Ratio Decidendi: Where corporate debtor assets were acquired and encumbered before the alleged offence and do not bear a demonstrated nexus to proceeds of crime, a provisional attachment under PMLA cannot be continued so as to obstruct an ongoing insolvency resolution process within the Tribunal's jurisdiction.

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