PMLA provisional attachment of mortgaged bank-secured properties set aside where no material showed they were proceeds of crime.

Provisional attachment under PMLA Section 5(1) must rest on recorded reasons, based on material in possession, that the property itself is proceeds of crime and is likely to be concealed, transferred, or dealt with to frustrate confiscation. The tribunal found that the mortgaged properties were already charged to the banks, possession had been taken by them, and some assets had been auctioned, while the record did not support the new claim that the properties were direct or indirect proceeds of crime. Treating the attachment as one only of value, the tribunal held there was no substantiation that non-attachment would frustrate proceedings and set aside the attachment order as unsustainable against the banks.

---

---

Issues: Whether provisional attachment of mortgaged properties standing in the banks' favour was sustainable when the record indicated that the properties were attached as value of the alleged proceeds of crime and not as property directly or indirectly acquired from proceeds of crime.

Analysis: The attachment power under Section 5(1) of the Prevention of Money Laundering Act, 2002 requires the authorised officer to record reasons to believe, on the basis of material in possession, that the property is proceeds of crime and is likely to be concealed, transferred, or otherwise dealt with so as to frustrate confiscation. The material on record showed that the relevant properties were already mortgaged to the appellant banks, possession had been taken by the banks, and some properties had already been auctioned. The record did not support the new contention that the properties were themselves direct or indirect proceeds of crime. The tribunal treated the attachment as one made only as value thereof, and found no substantiation for the assertion that non-attachment would frustrate proceedings.

Conclusion: The provisional attachment of the mortgaged properties was not sustainable against the appellant banks, and the impugned order was set aside.

---