Provisional attachment of property as proceeds of crime upheld where possession, unexplained repayments and layering establish the requisite nexus.

Confirmation of the provisional attachment was upheld on evidence showing a plausible nexus between proceeds of the scheduled offence and the impugned properties; unexplained bank credits, admissions, contemporaneous investigative findings and valuation supported the conclusion that the properties represented proceeds of crime. Provisional attachment extends to any person found in possession of such property and need not be limited to those formally named as accused. Rapid loan repayment by undisclosed cash was treated as a layering mechanism and did not sever the nexus. Death of the principal accused did not invalidate attachment absent an order terminating proceedings.

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Issues: (i) Whether the confirmation of the Provisional Attachment Order under Section 26 of the Prevention of Money Laundering Act, 2002, finding the impugned properties to be proceeds of crime, is legally sustainable; (ii) Whether provisional attachment under Section 5(1) of the Prevention of Money Laundering Act, 2002 requires the property to be in the hands of a person formally accused in the scheduled offence; (iii) Whether acquisition of property by way of loan repaid shortly after borrowing severs the link with proceeds of crime or precludes attachment; (iv) Whether the death of the principal accused and alleged abatement of criminal proceedings invalidates provisional attachment of properties derived from alleged proceeds.

Issue (i): Whether the confirmation of the Provisional Attachment Order under Section 26 of the Prevention of Money Laundering Act, 2002, finding the impugned properties to be proceeds of crime, is legally sustainable.

Analysis: The materials include admissions under Section 50(2) of the Act, bank statements showing layering and unexplained credits, contemporaneous investigative findings linking funds collected through the fraudulent scheme to acquisition of immovable properties, and valuation evidence. The adjudicating authority recorded that the attached properties were derived from or represented value equivalent to proceeds of crime as defined in Section 2(1)(u). The repayment of a loan by cash deposits from undisclosed sources within a short period was treated as a layering mechanism indicating use of tainted funds for acquisition. The Tribunal examined these factual and documentary materials and found a plausible nexus between the proceeds of the scheduled offence and the properties.

Conclusion: The confirmation of the Provisional Attachment Order was upheld; the attached properties were held to be proceeds of crime.

Issue (ii): Whether provisional attachment under Section 5(1) of the Prevention of Money Laundering Act, 2002 requires the property to be in the hands of a person formally accused in the scheduled offence.

Analysis: The Tribunal applied the legal principle that Section 5(1) extends to any person found to be in possession of proceeds of crime, not solely to those already named as accused in FIR/ECIR, relying on binding authority interpreting the scope of the provision. The authority discussed makes clear that provisional attachment can be directed at any person where material indicates possession of proceeds of crime and that such persons may subsequently be made parties to prosecution under Section 3 of the Act.

Conclusion: Provisional attachment under Section 5(1) does not require the person to be previously or presently named as an accused; attachment against a person in possession of proceeds of crime is permissible.

Issue (iii): Whether acquisition of property by way of loan repaid shortly after borrowing severs the link with proceeds of crime or precludes attachment.

Analysis: The Tribunal examined evidence that a loan was availed for purchase but was repaid within four months by cash deposits into the account without disclosure of legitimate source. The short repayment period, unexplained cash inflows, and corroborative admissions supported the finding that the loan arrangement was used to disguise the origin of criminal proceeds (a layering transaction). The adjudicating authority's reliance on those facts to treat repayment as indicative of tainted funds was sustained.

Conclusion: A loan-funded acquisition followed by rapid repayment from undisclosed cash sources did not break the nexus with proceeds of crime; attachment on that basis was justified.

Issue (iv): Whether the death of the principal accused and alleged abatement of criminal proceedings invalidates provisional attachment of properties derived from alleged proceeds.

Analysis: The record did not establish any order of abatement or final termination of criminal proceedings such that the basis for investigative and provisional measures ceased to exist. Moreover, statutory scheme permits attachment of properties in possession of persons who may be legal heirs or others holding proceeds; death of the principal accused does not automatically nullify a finding of proceeds or the authority to provisionally attach pending trial or further proceedings.

Conclusion: Death of the principal accused did not invalidate provisional attachment in the absence of an order terminating proceedings or other legal basis for abatement affecting the attachment.

Final Conclusion: The adjudicatory findings linking the impugned properties to proceeds of crime were supported by the material on record; the statutory framework permits provisional attachment against persons in possession of such property; none of the grounds raised by the appellants warranted interference with the confirmation of attachment.

Ratio Decidendi: Section 5(1) of the Prevention of Money Laundering Act, 2002 authorises provisional attachment of property held by any person where material shows it to be proceeds of crime, and unexplained or proximate repayment of loans with funds from undisclosed sources can establish the requisite nexus to sustain such attachment.

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