PMLA provisional attachment requires recorded reasons to believe, plus likely concealment or transfer, to sustain attachment.
Provisional attachment under the PMLA is treated as dependent on recorded reasons to believe that a person holds proceeds of crime and that those proceeds are likely to be concealed, transferred or otherwise dealt with to frustrate confiscation. The text explains that money-laundering is a continuing offence, so attachment is not barred merely because the underlying acquisition preceded the later scheduled offence notification, and Article 20(1) does not prevent such proceedings. It also notes that where a property is already under a prior judicial attachment, the statutory likelihood of concealment or transfer may not be met for that property, while unexplained income, bank deposits and source of acquisition can support attachment for other properties.
Issues: (i) Whether the provisional attachment of properties acquired before the scheduled offence was hit by retrospectivity or Article 20(1) of the Constitution of India; (ii) Whether the requirements of Section 5(1) of the Prevention of Money Laundering Act, 2002, including recorded reasons to believe and likelihood of concealment or transfer, were satisfied; (iii) Whether the attachment could be sustained against the properties in the names of the appellants on the basis of the material relating to income, bank deposits and source of acquisition.
Issue (i): Whether the provisional attachment of properties acquired before the scheduled offence was hit by retrospectivity or Article 20(1) of the Constitution of India.
Analysis: The governing distinction is between the date of the predicate offence and the date on which property is projected or dealt with as untainted. Money-laundering is treated as a continuing offence, and attachment or confiscation proceedings are not barred merely because the underlying criminal activity or acquisition preceded the later notification of the scheduled offence. Article 20(1) does not prohibit attachment and confiscation proceedings under the money-laundering law in such a situation.
Conclusion: The challenge based on retrospectivity and Article 20(1) failed.
Issue (ii): Whether the requirements of Section 5(1) of the Prevention of Money Laundering Act, 2002, including recorded reasons to believe and likelihood of concealment or transfer, were satisfied.
Analysis: Section 5(1) requires reason to believe, recorded in writing, both that a person is in possession of proceeds of crime and that such proceeds are likely to be concealed, transferred or dealt with so as to frustrate confiscation. On the facts, the prior attachment order passed by the Principal District and Sessions Judge in respect of four properties negatived the likelihood of concealment or transfer for those properties. As to the remaining properties, the material on record, including bank transactions, statements and the financial profile, was held sufficient to sustain the attachment.
Conclusion: The attachment was unsustainable for the four properties already covered by the earlier judicial order, but was sustained for the remaining properties.
Issue (iii): Whether the attachment could be sustained against the properties in the names of the appellants on the basis of the material relating to income, bank deposits and source of acquisition.
Analysis: The explanations offered for acquisition from agricultural income, dairy income and other sources were found unsupported by adequate evidence. The declared income did not satisfactorily match the value of the properties and movable asset, and the cash deposits and acquisitions remained unexplained. In respect of the properties not covered by the prior attachment order, the material was sufficient to support the finding that they represented proceeds of crime or were traceable thereto.
Conclusion: The attachment was upheld for the properties whose source remained unexplained, and was set aside for the properties affected by the earlier attachment order.
Final Conclusion: The decision resulted in partial relief: one appeal was dismissed and the other two appeals were allowed, with liberty reserved to the authority to proceed afresh in accordance with law if the earlier attachment is withdrawn and the statutory preconditions are otherwise met.
Ratio Decidendi: For attachment under Section 5(1) of the Prevention of Money Laundering Act, 2002, the authority must have recorded reasons to believe not only that the property is involved in money-laundering, but also that it is likely to be concealed, transferred or otherwise dealt with so as to frustrate confiscation; where that likelihood is absent because the property is already under prior attachment, the provisional attachment cannot be sustained for that property.
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AI Drafter ✕
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