Proceeds of crime justified attachment of company assets; director's personal Supreme Court undertaking did not undo it.

Properties acquired from tainted funds could be provisionally attached and confirmed under the Prevention of Money Laundering Act, 2002 where the record showed mobilisation of public money through Ponzi-type schemes and diversion of those funds into asset purchases. The appellants failed to prove a lawful source for the attached properties, so the attachment was sustained. A Supreme Court order obtained by the director in his personal capacity did not affect the statutory attachment against the appellant companies, because the deposit made pursuant to his bail undertaking was not an order in their favour and did not displace confiscation proceedings under the Act.

---

---

Issues: (i) Whether the Supreme Court order obtained by the director in his personal capacity could nullify or affect the provisional attachment confirmed against the appellant companies. (ii) Whether the attached properties were acquired out of proceeds of crime and were therefore liable to provisional attachment and confirmation under the Prevention of Money Laundering Act, 2002.

Issue (i): Whether the Supreme Court order obtained by the director in his personal capacity could nullify or affect the provisional attachment confirmed against the appellant companies.

Analysis: The attachment proceedings were against the appellant companies on the basis of material showing that the properties were acquired from funds generated through the alleged money-laundering activity. The deposit made pursuant to the director's undertaking before the Supreme Court was in the context of his personal bail and was not an order in favour of the appellant companies. Such deposit did not arise from attachment or seizure proceedings under the Act and therefore did not displace the statutory basis for attachment or the possibility of confiscation under the Act.

Conclusion: The Supreme Court order did not relieve the appellant companies of the attachment, and this objection failed.

Issue (ii): Whether the attached properties were acquired out of proceeds of crime and were therefore liable to provisional attachment and confirmation under the Prevention of Money Laundering Act, 2002.

Analysis: The record, including statements recorded under section 50, showed that the companies mobilised large sums from the public through Ponzi-type schemes without regulatory permission, and that the funds were diverted for acquisition of properties. Under section 5, property may be provisionally attached where it is believed to be proceeds of crime and likely to be dealt with so as to frustrate confiscation. Under section 8, the Adjudicating Authority may confirm the attachment upon a finding that the property is involved in money-laundering. The appellants failed to establish a lawful source for acquisition of the attached properties, while the materials on record supported the conclusion that the properties were purchased from tainted funds.

Conclusion: The attached properties were held to be proceeds of crime and were validly attached and confirmed.

Final Conclusion: The appeals were rejected in full, and the provisional attachment confirmed by the Adjudicating Authority was sustained.

Ratio Decidendi: Property shown by material on record to have been acquired from proceeds of crime may be provisionally attached and confirmed under the Act, and a third party's or director's personal undertaking or deposit does not extinguish or substitute the statutory attachment against the company's tainted assets.

---