PMLA attachment sustained where money trail, layered funds and corroborative material linked assets to proceeds of crime.

Provisional attachment under PMLA was upheld where the record showed a money trail through layered transactions, shell entities and related persons linking the properties to proceeds of crime. Reliance on an Income-tax Act statement and a diary did not vitiate the action because they were corroborative and not the sole basis for attachment. The Tribunal also rejected the objection under Regulation 3 of the Adjudicating Authority (Procedure) Regulations, 2013, finding that translated statements had been supplied and that the alleged breach was unsupported. It further held that attachment may continue against persons shown as recipients or beneficiaries of proceeds of crime, and the corporate-shareholder distinction did not bar attachment on the facts.

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Issues: (i) Whether the provisional attachment and confirmation order were vitiated because the respondent relied upon a statement recorded under the Income-tax Act, 1961 and a diary alleged to be inadmissible; (ii) Whether the proceedings were invalid for non-compliance with Regulation 3 of the Adjudicating Authority (Procedure) Regulations, 2013; (iii) Whether Section 8(3)(a) of the Prevention of Money Laundering Act, 2002 permitted continuation of attachment against the appellants on the facts of the case; (iv) Whether the corporate and shareholder distinction barred attachment of the properties involved.

Issue (i): Whether the provisional attachment and confirmation order were vitiated because the respondent relied upon a statement recorded under the Income-tax Act, 1961 and a diary alleged to be inadmissible.

Analysis: The material showed that the statement of the witness under the Income-tax Act was not the sole basis for the attachment. The record contained summons issued to the witness, statements of several persons recorded under Section 50 of the Prevention of Money Laundering Act, 2002, and other search material showing the flow of funds through multiple entities. The diary and the external statement were treated as corroborative, not as the only foundation for the action.

Conclusion: The challenge on this ground failed and the attachment was not vitiated.

Issue (ii): Whether the proceedings were invalid for non-compliance with Regulation 3 of the Adjudicating Authority (Procedure) Regulations, 2013.

Analysis: The Tribunal accepted the record showing that translated English copies of the statements had been supplied and that the persons concerned had given statements in a language they understood. The alleged breach was therefore found to be factually unsupported and only a technical objection.

Conclusion: The alleged violation of Regulation 3 was rejected.

Issue (iii): Whether Section 8(3)(a) of the Prevention of Money Laundering Act, 2002 permitted continuation of attachment against the appellants on the facts of the case.

Analysis: The Tribunal held that provisional attachment under the Act is not confined only to the named accused in the scheduled offence. It can extend to any person involved in the process or activity connected with proceeds of crime or who is shown to be a recipient of such proceeds. On the facts, the statements and bank trail indicated acquisition of properties through layered funds routed from shell entities and the appellants failed to explain the independent source of the money.

Conclusion: The statutory basis for continuing the attachment was upheld.

Issue (iv): Whether the corporate and shareholder distinction barred attachment of the properties involved.

Analysis: The Tribunal found a direct connection between the alleged criminal activity, the layering of proceeds, and the acquisition of assets through entities and relatives. The facts did not justify treating the corporate form as insulating the properties from attachment, and the reliance on the doctrine distinguishing shareholder and company was held inapposite on the facts.

Conclusion: The corporate-law objection was rejected.

Final Conclusion: The impugned attachment was sustained because the evidence disclosed a sufficient money trail linking the properties to proceeds of crime and the appellants failed to displace that linkage.

Ratio Decidendi: Provisional attachment under the Prevention of Money Laundering Act, 2002 may be sustained against persons who are shown by material and money trail evidence to be recipients or beneficiaries of proceeds of crime, even if they are not the sole named accused in the scheduled offence.

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