Provisional attachment under PMLA sustained where banking trail linked property to tainted funds and burden to prove innocence was not met.
Property can be provisionally attached under the PMLA where investigation material shows a rational nexus between the asset and proceeds of crime, including indirect derivation or infusion of tainted funds. The plea that the transfers were loans failed because the record showed banking trail evidence and no credible documentary support for a clean source of funds, and attachment was not barred merely because the appellant was not named as an accused. The competent authority's reason to believe was upheld because it rested on statements and financial material indicating layering and concealment risk. Once that material was produced, the appellant had to prove the property was untainted, which was not done.
Issues: (i) Whether the attached property, though claimed to have been purchased earlier and financed as a loan arrangement, could still be treated as proceeds of crime and subjected to provisional attachment under the Prevention of Money Laundering Act, 2002. (ii) Whether the competent authority had material to form the requisite reason to believe under the Prevention of Money Laundering Act, 2002 and whether the appellant discharged the burden of showing that the property was not involved in money laundering.
Issue (i): Whether the attached property, though claimed to have been purchased earlier and financed as a loan arrangement, could still be treated as proceeds of crime and subjected to provisional attachment under the Prevention of Money Laundering Act, 2002.
Analysis: The property was held liable to attachment because the record showed substantial transfers from the account of the person behind the scheduled offence to the appellant's accounts, and those transfers were found to be linked to cash proceeds generated from the unlawful fundraising activity. The plea that the amounts were mere loans was not supported by credible documentary evidence. Even if the property had originally been acquired earlier, infusion of tainted funds into the property or its upkeep was sufficient to attract the definition of proceeds of crime, which covers property derived directly or indirectly from criminal activity relating to a scheduled offence. The fact that the appellant was not named as an accused did not prevent attachment.
Conclusion: The property was rightly treated as proceeds of crime and the attachment was valid.
Issue (ii): Whether the competent authority had material to form the requisite reason to believe under the Prevention of Money Laundering Act, 2002 and whether the appellant discharged the burden of showing that the property was not involved in money laundering.
Analysis: The authority recorded reasons based on investigation material, including statements and banking trail, showing the generation, layering and routing of tainted funds and the likelihood of concealment or transfer if the property was not attached. That material had a rational nexus with the belief formed, and the sufficiency of the material was not open to challenge at this stage. Once such material was produced, the burden shifted to the possessor of the property to establish that it was untainted. The appellant did not discharge that burden because the alleged loan explanation and source-of-funds explanation were not proved convincingly.
Conclusion: The requisite reason to believe existed, and the appellant failed to rebut the statutory burden.
Final Conclusion: The provisional attachment and its confirmation were sustained, and the appeal failed in full.
Ratio Decidendi: Property may be provisionally attached under the money-laundering law if material shows a rational nexus between the property and proceeds of crime, including indirect derivation or infusion of tainted funds, and the attachment is not confined to persons named as accused in the scheduled offence; once such material is produced, the possessor must prove that the property is untainted.