Equivalent value attachment under PMLA upheld where tainted assets were unavailable and lawful source claims lacked corroboration.

Properties were upheld as attachable where the appellants' claimed lawful sources-agricultural income, unsecured loans, business income and family funds-were not corroborated, and the record showed cash routing through third-party accounts, circular banking entries and unexplained fund flows. The Tribunal held that, under section 2(1)(u) of the PMLA, proceeds of crime include property derived from criminal activity and, where the tainted assets are unavailable, property of equivalent value may be attached even if acquired before the alleged offence period. It also held that money-laundering proceedings are not defeated merely because the charge-sheet changes, absent final discharge, acquittal or quashing of the scheduled offence.

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Issues: (i) whether the properties attached were shown to have been acquired from disclosed lawful sources or were liable to attachment as proceeds of crime or equivalent value thereof; (ii) whether properties acquired before the alleged crime period could still be attached under the Prevention of Money Laundering Act, 2002 when the tainted assets were not traceable; and (iii) whether the proceedings were vitiated for alleged absence of a surviving predicate offence.

Issue (i): Whether the properties attached were shown to have been acquired from disclosed lawful sources or were liable to attachment as proceeds of crime or equivalent value thereof.

Analysis: The Tribunal compared the appellants' explanations of agricultural income, unsecured loans, business income, and family funds with the statements recorded under section 50 of the Act and the seller and intermediary statements showing cash payments, circular banking entries, and unexplained fund flows. It found that the claimed sources were not corroborated, that cash was routed through third-party accounts, and that the property acquisitions were disproportionate to disclosed income. The material on record supported the conclusion that the properties were either directly linked to criminal proceeds or represented value derived from laundering activity.

Conclusion: The challenge to attachment on the ground of lawful source of funds failed, and the finding went against the appellants.

Issue (ii): Whether properties acquired before the alleged crime period could still be attached under the Prevention of Money Laundering Act, 2002 when the tainted assets were not traceable.

Analysis: The Tribunal applied the definition of proceeds of crime in section 2(1)(u) and held that it comprises not only property directly or indirectly derived from criminal activity but also the value of such property. Relying on the statutory text and prior reasoning on deemed tainted property, it held that where proceeds of crime have been siphoned off, vanished, or are otherwise unavailable, attachment of property of equivalent value is permissible even if such property was acquired before the commission of the scheduled offence. The Tribunal found that the available tainted assets were insufficient and that equivalent-value attachment was therefore legally justified.

Conclusion: Pre-offence properties could validly be attached as equivalent value, and this ground also failed against the appellants.

Issue (iii): Whether the proceedings were vitiated for alleged absence of a surviving predicate offence.

Analysis: The Tribunal held that the ECIR and the enforcement action were founded on a scheduled offence that existed in the FIR when the ECIR was recorded, and that subsequent developments in the charge-sheet did not nullify the scheduled offence for PMLA purposes. It relied on the principle that money-laundering action is not defeated unless the accused is finally discharged, acquitted, or the criminal case is quashed by a competent court. On the record, no such final exoneration existed.

Conclusion: The proceedings were not vitiated for want of a predicate offence, and the appellants failed on this ground as well.

Final Conclusion: The provisional attachment and the impugned order were sustained on all the issues considered, and the batch of appeals did not warrant interference.

Ratio Decidendi: Under section 2(1)(u) of the Prevention of Money Laundering Act, 2002, proceeds of crime include both directly or indirectly derived property and, where such property is unavailable, the equivalent value of other property that may be proceeded against; money-laundering action survives unless the scheduled-offence accused is finally discharged, acquitted, or the criminal case is quashed.

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