Provisional attachment under PMLA falls when no proceeds-of-crime nexus survives after discharge and the money trail is unproved.

Provisional attachment under the PMLA cannot survive where the person said to be linked to the attached assets has been discharged and the record does not establish a money trail, placement, layering, or integration of proceeds of crime. The Delhi HC noted that the attachment rested on the allegation that the petitioner was the majority shareholder and ultimate beneficiary of the company, but the Special Court found no material showing receipt or dealing in proceeds of crime. On that basis, the court held that the attachment could not be sustained and the attached properties were liable to be released.

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Issues: Whether the provisional attachment order and the consequent attachment of the company's properties could survive after the petitioner had been discharged in the PMLA proceedings and the attachment was founded on the petitioner's alleged nexus with the attached assets.

Analysis: The attachment was based on the allegation that the petitioner was the majority shareholder and ultimate beneficiary of the company and that the attached properties represented proceeds of crime. The Special Court's discharge order held that the petitioner and the connected companies were not shown to have received or dealt with any proceeds of crime and that no material established the required money trail, placement, layering, or integration. The governing principle applied was that money-laundering proceedings cannot continue in the absence of a surviving scheduled offence or where the person concerned has been finally discharged or acquitted, and the same consequence extends to persons or properties claimed through such person.

Conclusion: The provisional attachment order could not be sustained and the attached properties were liable to be released. The petitioners succeeded.

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