Provisional attachment under PMLA requires recorded reasons and urgent necessity; pre-2002 acquisition alone does not exclude proceeds of crime.

Writ jurisdiction may be invoked against a provisional attachment order under the Prevention of Money Laundering Act, 2002 where the challenge raises pure questions of law and jurisdiction, despite the availability of statutory remedies. Provisional attachment under Section 5(1) is valid only if the authorised officer records pre-existing reasons to believe, on the basis of material in possession, that the property is proceeds of crime and that immediate attachment is necessary to prevent frustration of confiscation; a bare reproduction of statutory language is insufficient. Property acquired before 2002 is not automatically excluded from the definition of proceeds of crime if it is traceable to criminal activity relating to a scheduled offence.

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Issues: (i) Whether the writ petition challenging the provisional attachment order was maintainable and entertainable despite alternative remedies under the Prevention of Money Laundering Act, 2002; (ii) whether the provisional attachment order satisfied the requirements of Section 5(1) of the Prevention of Money Laundering Act, 2002 and its second proviso; (iii) whether property acquired before the coming into force of the Prevention of Money Laundering Act, 2002, and before the relevant offence was scheduled, could nevertheless be treated as proceeds of crime.

Issue (i): Whether the writ petition challenging the provisional attachment order was maintainable and entertainable despite alternative remedies under the Prevention of Money Laundering Act, 2002

Analysis: The availability of statutory remedies did not bar the writ court from examining a challenge that raised pure questions of law and jurisdiction. The challenge concerned the scope of the expression "proceeds of crime" and the legality of invoking urgent attachment powers, both of which went to the root of the action. Where the controversy is legal rather than factual, and the impugned action is alleged to be without jurisdiction, writ jurisdiction may be exercised notwithstanding alternative remedies.

Conclusion: The writ petition was maintainable and was fit to be entertained.

Issue (ii): Whether the provisional attachment order satisfied the requirements of Section 5(1) of the Prevention of Money Laundering Act, 2002 and its second proviso

Analysis: The power of provisional attachment under Section 5(1) requires recorded reasons to believe, based on materials in possession, that a person is in possession of proceeds of crime and that such property is likely to be concealed, transferred, or dealt with so as to frustrate confiscation. Under the second proviso, urgency must also be shown by recorded reasons. The recorded reasons placed before the Court did not disclose the necessary foundation, did not demonstrate the existence of the required statutory conditions with specificity, and appeared to have been recorded after the attachment order. Mere reproduction of statutory language was insufficient to satisfy the preconditions for exercise of the power.

Conclusion: The provisional attachment order did not comply with Section 5(1) and the second proviso, and was invalid.

Issue (iii): Whether property acquired before the coming into force of the Prevention of Money Laundering Act, 2002, and before the relevant offence was scheduled, could nevertheless be treated as proceeds of crime

Analysis: The expression "proceeds of crime" turns on the source and character of the property, not merely on the date of acquisition. If property is derived or obtained, directly or indirectly, as a result of criminal activity relating to a scheduled offence, it can fall within the definition even if acquired earlier. The relevant consideration is whether the property is traceable to criminal activity connected with a scheduled offence and whether the person is dealing with such property in a manner that attracts the offence of money-laundering. The pre-enactment date of purchase by itself did not exclude the property from the statutory definition.

Conclusion: The pre-2002 acquisition date did not, by itself, prevent the property from being treated as proceeds of crime.

Final Conclusion: The writ court upheld its jurisdiction to intervene, found the provisional attachment unsustainable for want of the statutory preconditions, and set aside the attachment and the consequential adjudicatory proceedings.

Ratio Decidendi: Provisional attachment under Section 5 of the Prevention of Money Laundering Act, 2002 can be sustained only when the authorised officer records pre-existing reasons to believe, on the basis of material in possession, that the property is proceeds of crime and that immediate attachment is necessary to prevent frustration of confiscation proceedings; the date of acquisition alone does not exclude property from the definition of proceeds of crime if it is traceable to criminal activity relating to a scheduled offence.

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