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Issues: (i) Whether the provisional attachment of properties alleged to represent Rs. 2.84 crores could be sustained when the amount was received through banking channels against transfer of shares in a company; (ii) Whether the attachment relating to the alleged Rs. 11 crores required interference, and if not, what protective directions were appropriate.
Issue (i): Whether the provisional attachment of properties alleged to represent Rs. 2.84 crores could be sustained when the amount was received through banking channels against transfer of shares in a company.
Analysis: The amount was received by the appellants and their entities through banking channels in consideration of transfer of shares of the company in favour of another shareholder. The material on record showed a disclosed commercial settlement and consideration for transfer of interests. On that footing, the attachment was made on a mistaken premise that the received consideration itself could be treated as proceeds of crime, without first examining the transactional source and the correct property capable of attachment. The proper subject of attachment, if at all, would have been the shares received by the other side and not the consideration lawfully received for transfer of shares.
Conclusion: The attachment to the extent of Rs. 2.84 crores was unsustainable and was set aside in favour of the appellants.
Issue (ii): Whether the attachment relating to the alleged Rs. 11 crores required interference, and if not, what protective directions were appropriate.
Analysis: The challenge to the alleged Rs. 11 crores was not accepted for release of the attached properties. At the same time, the parties agreed to maintain the existing possession and the appellant undertook not to alienate or transfer the property till conclusion of the trial. The arrangement was treated as innocuous and without prejudice to the trial court, while preserving the respondents' liberty to seek possession in an exceptional case.
Conclusion: The attachment concerning the alleged Rs. 11 crores was not interfered with, and the status quo arrangement regarding possession was directed to continue.
Final Conclusion: The appeals succeeded only to the limited extent of setting aside the attachment based on Rs. 2.84 crores, while the remaining attachment issue was maintained with protective directions preserving possession and the trial court's consideration.
Ratio Decidendi: Where money is received through banking channels as consideration for a genuine share transfer, attachment cannot be sustained merely by assuming the receipt itself to be proceeds of crime without identifying the correct property traceable to such proceeds.
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