Provisional attachment under PMLA needs recorded reasons for likely concealment or transfer, not mere possession of proceeds of crime.

Section 5(1) of the Prevention of Money Laundering Act permits provisional attachment only when the authorised officer records written reasons, on material in possession, that the person holds proceeds of crime and that those proceeds are likely to be concealed, transferred or otherwise dealt with to frustrate confiscation. The two requirements are cumulative, so possession of proceeds of crime does not by itself establish the further likelihood under clause (b). Where the attachment order lacked separate reasons on that point, the attachment could not be sustained. Conditional directions preserving attachment through indemnity bonds and restraint on release were also inconsistent with the statutory scheme and with the Tribunal's own reasoning.

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Issues: Whether the provisional attachment under Section 5(1) of the Prevention of Money Laundering Act, 2002 was sustainable in the absence of recorded reasons showing that the attached property was likely to be concealed, transferred or dealt with so as to frustrate confiscation proceedings, and whether the Tribunal could uphold the attachment only conditionally by imposing indemnity and related safeguards.

Analysis: Section 5(1) empowers provisional attachment only when the authorised officer, on the basis of material in his possession, has reason to believe and records that reason in writing that a person is in possession of proceeds of crime and that such proceeds are likely to be concealed, transferred or otherwise dealt with to frustrate confiscation proceedings. The predicates in clauses (a) and (b) are cumulative and not disjunctive. A mere finding that a person is in possession of proceeds of crime does not, by itself, permit an automatic inference of the further likelihood required by clause (b). The recorded order in support of attachment contained no separate or substantive reasons on the clause (b) requirement. In the absence of such compliance, the attachment could not be sustained. Once the Tribunal itself concluded that the attachment was liable to be released, it had no basis to preserve the attachment of the fixed deposits or to condition the release of immovable properties by directions not contemplated by the statutory scheme. The directions imposing indemnity bonds and continued restraint were inconsistent with the Tribunal's own reasoning and with the structure of the Act.

Conclusion: The provisional attachment was invalid for want of compliance with Section 5(1), and the conditional directions imposed by the Tribunal were unsustainable and had to be set aside.

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