Provisional attachment: continued possession or use of pre Act proceeds permits PMLA attachment when activity continues after commencement.

Provisional attachment under Section 5(1) of the PMLA can reach immovable property bought before the Act if possession or use of that property continued after commencement; the court reasoned that Sections 3, 5 and 8 form an integrated scheme where 'proceeds of crime' includes concealment, possession, acquisition or use and Explanation (ii) treats the activity as continuing while the person enjoys the proceeds, so the offence and attendant attachment powers apply from the date of continued activity. On the facts taken for certiorari review the HC upheld the provisional attachment.

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Issues: (i) Whether immovable property purchased from proceeds of a scheduled offence before the Prevention of Money Laundering Act, 2002 (PMLA) came into force can be provisionally attached under Section 5(1) of the PMLA if the person continues in possession of and continues to use the property after the PMLA came into force.

Analysis: Section 5(1) permits provisional attachment of "such property" which, read with Section 2(1)(u), covers any property derived or obtained directly or indirectly as a result of criminal activity relating to a scheduled offence. Section 3 defines the offence of money-laundering and, by use of the word "includes" and the Explanations, expressly encompasses concealment, possession, acquisition or use of proceeds of crime; Explanation (ii) confirms the process or activity is continuing so long as the person enjoys the proceeds by concealment, possession, acquisition, use or by projecting/claiming it as untainted. Sections 3, 5 and 8 form an integrated scheme where provisional attachment under Section 5(1) is in aid of adjudication under Section 8. The PMLA, being penal, does not apply retrospectively to completed acts prior to its commencement, but where one or more acts constituting money-laundering continue after the Act came into force (for example, continued possession or use of property that itself constitutes proceeds of crime), the offence continues and the PMLA applies from the date of continued activity. On the facts accepted for the purpose of certiorari review, the property purchased before the PMLA was in continued possession and use after the PMLA came into force and the provisional attachment decision recorded reasons to believe the property was proceeds of crime and likely to be dealt with so as to frustrate confiscation; such a subjective reasoned belief, supported by material, is amenable to provisional attachment under Section 5(1).

Conclusion: The provisional attachment under Section 5(1) is sustainable; the attachment of the subject immovable property is upheld and the writ petition challenging the provisional attachment is dismissed.

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