Attachment of equivalent value under PMLA upheld where proceeds of crime were not traceable and proof was insufficient.

Section 2(1)(u) of the Prevention of Money Laundering Act, 2002 permits attachment of property of equivalent value where direct proceeds of crime are not traceable, subject to assessment of wrongful gain and safeguards for bona fide third parties. Applying that principle, the tribunal noted alleged forged bitumen invoices, partial genuine invoices, unexplained shortage in required bitumen drums, and inadequate bank evidence to show full transfer of receipts to a subcontractor. As the appellant failed to rebut the traceable nexus concern with reliable documentary proof, the provisional attachment and its confirmation were upheld and the appeals were dismissed.

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Issues: Whether the provisional attachment order dated 17.01.2023 and its confirmation dated 04.07.2023 by the Adjudicating Authority, made under Section 26 of the Prevention of Money Laundering Act, 2002, for value equivalent to alleged proceeds of crime arising from forged bitumen invoices, is liable to be set aside.

Analysis: The statutory definition of "proceeds of crime" in Section 2(1)(u) of the Prevention of Money Laundering Act, 2002 contains three limbs, including property derived or obtained directly or indirectly from scheduled offences and the value of any such property; where direct proceeds are not traceable, property of equivalent value may be attached. Binding precedents permit attachment of deemed tainted property subject to safeguards and assessment (even tentative) of wrongful gain. The factual matrix shows production of allegedly forged invoices alleged to have caused wrongful gain of Rs. 1,08,95,583/-, partial genuine invoices, a failure to account fully for required bitumen drums, and absence of reliable documentary proof (bank statements) to establish that the entire receipts were transferred bona fide to a subcontractor. The requirement to establish a traceable nexus to the proceeds was engaged and, given that direct proceeds were not shown to be available, statutory power to attach property of equivalent value was invoked; procedural and evidentiary safeguards for third parties were considered and applied in the assessment of the attachment. The contention that the appellant discharged responsibility to a subcontractor was not substantiated by bank evidence adequate to rebut the attachment of equivalent value.

Conclusion: The provisional attachment and its confirmation are valid and the appeals are dismissed; result is in favour of the respondent.

Ratio Decidendi: Where direct proceeds of a scheduled offence are not traceable, Section 2(1)(u) of the Prevention of Money Laundering Act, 2002 authorises attachment of property of equivalent value subject to assessment of wrongful gain and protection of bona fide third-party interests; absence of adequate documentary proof to trace proceeds permits attachment of equivalent value.

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