Proceeds of crime traced: attachment of immovable and movable assets sustained where claimant failed to prove lawful source.

Provisional and confirmed attachments of an immovable flat and linked movable assets were upheld after tracing repayments and acquisitions to disputed reimbursements and subsequent transfers; the tribunal applied the principle that where assets can be traced to funds forming part of a money laundering chain and the claimant fails to produce credible documentary proof of lawful source, those assets may be treated as proceeds of crime and validly attached under the Prevention of Money Laundering Act. The appeals challenging confirmation of provisional attachments were dismissed, while secured creditors retain liberty to seek inter se determination of rights before the Special Court under the Act.

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Issues: (i) Whether the provisional attachment and subsequent confirmation of attachment of the immovable property (flat) as proceeds of crime was legally sustainable; (ii) Whether the provisional attachment and confirmation of attachment of fixed deposits and LIC policies (movable assets) was legally sustainable.

Issue (i): Whether attachment of the flat as proceeds of crime was justified.

Analysis: The material shows reimbursement of large sums into the appellant's bank account followed by substantial transfers to third parties and cash withdrawals; loan repayment for purchase of the flat was effected from a joint account and after receipt of the disputed reimbursement; absence of documentary proof of bona fide sources for the amounts allegedly used to pay hospital bills; the flat repayment transactions traceable to amounts received by the appellant following the disputed reimbursements.

Conclusion: Attachment of the flat for a value of Rs. 15 lacs as proceeds of crime is upheld (against the appellant).

Issue (ii): Whether attachment of FDRs and LIC policies aggregating about Rs. 13 lacs was justified.

Analysis: The movables were linked to the same chain of receipts and transfers that underpin the finding of laundering in respect of the reimbursement; no separate, persuasive evidence was produced to show these assets derived from lawful sources; reasoning applied to the immovable property equally applies to the movable assets.

Conclusion: Attachment of the FDRs and LIC policies is upheld (against the appellant).

Final Conclusion: The appeals challenging confirmation of the provisional attachment orders are dismissed and the impugned orders are maintained; appeals by secured financial institutions are disposed of without interfering with the attachments and with liberty to seek inter se determination of rights before the Special Court under the Prevention of Money-Laundering Act, 2002.

Ratio Decidendi: Where assets are shown by tracing to have been repaid or acquired from funds received through transactions that form part of a money-laundering chain and the claimant fails to demonstrate lawful source with credible documentary proof, those assets may be treated as proceeds of crime and validly attached under the Prevention of Money-Laundering Act, 2002.

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