Provisional attachment under money-laundering law can stand before charge-sheet filing when reasons to believe are recorded and burden is not rebutted.

Provisional attachment under the Prevention of Money Laundering Act, 2002 may be sustained where the authorised officer records reasons to believe, on material in possession, that non-attachment may frustrate proceedings; filing of a charge-sheet is not a prerequisite when the proviso to section 5 is invoked. The attachment is protective and does not itself divest title or possession. On challenge under sections 8 and 24, the burden shifts to the person affected to explain the source and character of the property and rebut the allegation of proceeds of crime. On the material noted, the appellants failed to produce adequate proof, so confirmation of attachment was justified.

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Issues: (i) Whether the provisional attachment could be sustained on the basis of reasons recorded under the proviso to section 5 of the Prevention of Money Laundering Act, 2002, even though the charge-sheet had not been filed when the order was passed. (ii) Whether the appellants discharged the burden of showing that the attached properties were not proceeds of crime and whether the confirmation of attachment under sections 8 and 24 of the Prevention of Money Laundering Act, 2002 was justified.

Issue (i): Whether the provisional attachment could be sustained on the basis of reasons recorded under the proviso to section 5 of the Prevention of Money Laundering Act, 2002, even though the charge-sheet had not been filed when the order was passed.

Analysis: The proviso to section 5 permits immediate attachment where the authorised officer has reason to believe, on the basis of material in possession and for recorded reasons, that non-attachment would frustrate proceedings under the Act. The filing of a report under section 173 of the Code of Criminal Procedure is not a precondition where the statutory proviso is attracted. The order records material suggesting likely dissipation of property and the need to preserve assets for possible confiscation. Attachment under the Act is only a protective measure and does not by itself divest title or possession in the ordinary course.

Conclusion: The provisional attachment was validly invoked and was not vitiated merely because the charge-sheet had not yet been filed.

Issue (ii): Whether the appellants discharged the burden of showing that the attached properties were not proceeds of crime and whether the confirmation of attachment under sections 8 and 24 of the Prevention of Money Laundering Act, 2002 was justified.

Analysis: Under sections 8 and 24, the burden lies on the person facing attachment to explain the source and character of the properties and to rebut the allegation that they represent proceeds of crime. The reasoning accepted by the Tribunal showed that the appellants did not produce sufficient documentary proof to substantiate the claimed business dealings, loans, or sources of funds, while the material on record connected the assets with money traced through the bank accounts and the scheduled-offence allegations. The Tribunal also accepted that the definition of proceeds of crime is broad enough to include the value of such property. On that basis, the appellants failed to displace the prima facie case supporting attachment.

Conclusion: The appellants failed to discharge the statutory burden, and confirmation of the attachment was justified.

Final Conclusion: The attachment order was upheld because the statutory prerequisites for provisional attachment were satisfied and the appellants did not rebut the presumption supporting the properties' treatment as proceeds of crime.

Ratio Decidendi: Where the authorised officer records reasons to believe that non-attachment may frustrate proceedings under the Act, provisional attachment may be sustained even before filing of the charge-sheet, and once attachment is challenged, the person affected must rebut the allegation that the property represents proceeds of crime.

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