PMLA attachment of traced assets upheld despite non-accused status and Covid-excluded limitation period.

Property traceable to diverted government funds was treated as proceeds of crime and remained liable to provisional attachment and confirmation under PMLA, even where the appellants were not named as accused and one principal person had died. The Tribunal noted that the statutory sweep extends to property derived directly or indirectly from criminal activity, and that tracing of assets to tainted funds was not displaced by any lawful source. The challenge to confirmation after 180 days also failed because the Covid-related exclusion period was applied to the Section 5(1) timeline, making the confirmations timely. The attachment confirmations were upheld.

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Issues: (i) Whether the properties and funds traced to the appellants were liable to attachment and confirmation under the Prevention of Money-Laundering Act, 2002 as proceeds of crime, including in cases where the appellants were not arraigned as accused and one of the principal persons had died. (ii) Whether the impugned confirmations of the provisional attachment orders were vitiated for breach of the 180-day period under Section 5(1) of the Prevention of Money-Laundering Act, 2002.

Issue (i): Whether the properties and funds traced to the appellants were liable to attachment and confirmation under the Prevention of Money-Laundering Act, 2002 as proceeds of crime, including in cases where the appellants were not arraigned as accused and one of the principal persons had died.

Analysis: The material showed diversion of government funds into the accounts of SMVSSL and further routing to relatives and associates through bank transfers and cash, with acquisition of immovable properties and other benefits in their names. The statutory definition of proceeds of crime covers property derived or obtained, directly or indirectly, from criminal activity relating to a scheduled offence, and the sweep of provisional attachment is not confined to persons formally shown as accused in the scheduled offence. The death of the principal person did not extinguish the proceedings against the properties or the legal representatives, and the record did not establish any lawful source sufficient to displace the tracing of the assets to tainted funds.

Conclusion: The attachment and confirmation of the impugned properties were upheld; the challenge failed and was against the appellants.

Issue (ii): Whether the impugned confirmations of the provisional attachment orders were vitiated for breach of the 180-day period under Section 5(1) of the Prevention of Money-Laundering Act, 2002.

Analysis: Although the confirmations were passed beyond 180 days from the provisional attachment orders, the period from 15.03.2020 to 28.02.2022 stood excluded by the Supreme Court's Covid-related limitation orders. On that computation, the confirmations were not beyond the permissible period, and no statutory violation was made out.

Conclusion: The limitation challenge was rejected and was against the appellants.

Final Conclusion: The Tribunal found that the impugned attachment confirmations were legally sustainable and that the appellants had not established any lawful source or procedural illegality warranting interference.

Ratio Decidendi: Under PMLA, property traceable to criminal activity relating to a scheduled offence may be provisionally attached and confirmed against any person involved in dealing with the proceeds of crime, and the Covid-related exclusion of limitation applies to the statutory period for confirmation of attachment.

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