Proceeds of Crime under PMLA require a proven nexus; post-allotment investments were not enough to sustain attachment.

Post-allotment investments by an outside investor and share subscription at face value could not be treated as proceeds of crime under PMLA in the absence of a predicate-offence finding linking those funds to money laundering. The Tribunal noted that the coal block allocation was, at most, a valuable right and did not by itself constitute proceeds of crime. Although the appellant company had been convicted for the predicate offence on the basis of misrepresentation in obtaining the coal block, that finding did not extend to later funds introduced by Shri R.S. Rungta and his family. The provisional attachment was therefore not sustainable because the required nexus with a scheduled offence was not established.

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Issues: Whether the amounts invested by an outside investor and the share subscription in the appellant company, after allotment of the coal block, constituted proceeds of crime so as to sustain provisional attachment under the Prevention of Money Laundering Act, 2002.

Analysis: The Tribunal noted that the appellant company stood convicted for the predicate offence on the footing that the coal block allocation had been obtained by misrepresentation and false claims, but the trial findings did not extend to any charge or finding that post-allotment investments from outsiders were themselves the fruit of a scheduled offence. It held that the coal block allocation, by itself, was only a valuable right and did not per se amount to proceeds of crime. On the material before it, the additional funds invested by Shri R.S. Rungta and his family, and the subscription of shares at face value, could not be treated as criminal proceeds in the absence of a predicate offence or scheduled-offence finding linking those funds to money laundering.

Conclusion: The attachment could not be sustained, because the investment and share subscription did not constitute proceeds of crime and the required nexus with a scheduled offence was not established.

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