Proceeds of Crime: unexplained assets can sustain provisional attachment, but mandatory notice defects vitiate specific confirmations.

Where investigative material including seized ledgers, diary entries, statements and patterns of unexplained cash and remittances fail to establish a lawful source, the assets may be treated as proceeds of crime or as property of equivalent value under the statute, justifying confirmation of provisional attachment; conversely, failure to serve the mandatory notice on a person on whose behalf property is held or on all joint holders under the proviso to the attachment provision vitiates confirmation as to that property; and acquittal in the predicate offence does not automatically nullify PMLA attachment where statutory tests and supporting material continue to justify proceedings.

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Issues: (i) Whether certain movable and immovable properties (including fixed deposit receipts) are proceeds of crime or property of equivalent value and therefore liable to confirmation of provisional attachment under the Prevention of Money Laundering Act, 2002; (ii) Whether failure to serve the notice required by the second proviso to Section 8(1) of the Prevention of Money Laundering Act, 2002 vitiates confirmation of the provisional attachment; (iii) Whether acquittal of a person in the predicate/scheduled offence necessarily requires setting aside of attachment or precludes continuation of PMLA proceedings against related properties.

Issue (i): Whether the properties and FDRs impugned in the appeals are proceeds of crime or property equivalent in value and thus liable to attachment under PMLA.

Analysis: The Tribunal examined documentary evidence, ledger/diary entries seized by investigative agencies, statements under Section 50 of PMLA, patterns of cash payments and use of family/company structures to park assets. The Court applied the three-limbed definition of "proceeds of crime" in Section 2(1)(u) and precedent recognising: (a) tainted property directly/indirectly derived from scheduled offences; (b) property of equivalent value where proceeds are not traceable; and (c) the need to consider layering, use of third parties, and adequacy of explanations or lawful source documentation. The Tribunal weighed the presence of cash transactions, unexplained remittances/loans, diary corroboration and failures to explain the lawful source of funds. It also considered decisions clarifying safeguards for bona fide third-party interests and the need for tentative assessment of illicit gains where required.

Conclusion: In the appeals examined on these facts, the Tribunal held that the preponderance of evidence and lack of satisfactory lawful-source explanations justified confirmation of provisional attachments; those appeals are dismissed insofar as attachment confirmation is sustained.

Issue (ii): Whether the impugned confirmation of provisional attachment is vitiated for failure to serve the notice required by the provisos to Section 8(1) of PMLA on a person holding property on behalf of another or on all joint holders.

Analysis: The Tribunal reviewed the statutory requirement that where a notice specifies property as held by a person on behalf of another, a copy must be served on that other person, and where property is held jointly, notice must be served on all holders. The certified title documents and the show-cause record were examined to verify service. Where the Adjudicating Authority failed to serve the requisite notice on a joint owner/recorded owner, the statutory defect was found to be material.

Conclusion: The Tribunal allowed the appeal concerned and set aside the confirmation of provisional attachment for the property where the mandatory notice under the second proviso to Section 8(1) was not served.

Issue (iii): Whether acquittal in the predicate/scheduled offence automatically nullifies PMLA attachment or bars continuation of PMLA proceedings in relation to attached properties.

Analysis: The Tribunal analysed the effect of acquittal in the scheduled offence on PMLA proceedings, applying Section 2(1)(u) and binding authority that the definition contains three limbs including property of equivalent value. The Tribunal noted that PMLA proceedings may continue where the scheduled offence persists in law or where the accused remains implicated in laundering activities; acquittal of some accused in the scheduled offence does not ipso facto defeat attachment if PMLA proceedings remain justified on available material. The Tribunal also considered precedents delineating protections for bona fide third-party interests and the circumstance where attachment may be maintained pending PMLA adjudication despite acquittal in the predicate offence.

Conclusion: Acquittal in the scheduled offence does not automatically invalidate provisional attachment in PMLA proceedings; attachment may be sustained where the statutory tests and supporting material justify continuation of PMLA action.

Final Conclusion: On the applications of Section 2(1)(u), Section 3, Section 5(1) and Section 8(1) of the Prevention of Money Laundering Act, 2002 and the assessed evidentiary record, the Tribunal dismissed a majority of the appeals confirming provisional attachments while allowing the appeal in respect of a property where statutory notice requirements were not complied with; overall the batch of appeals is partly allowed and partly dismissed.

Ratio Decidendi: Where investigative material (including corroborative diary entries, statements and unexplained cash or remittance flows) fails to establish a lawful source for challenged assets, such assets may be treated as proceeds of crime or as property equivalent in value under Section 2(1)(u) of the Prevention of Money Laundering Act, 2002; conversely, procedural non-compliance with mandatory notice provisions of Section 8(1) vitiates confirmation of provisional attachment in respect of the affected property.

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