Proceeds of crime and provisional attachment: pre-existing commercial deals were excluded, but a delayed dairy payment was upheld.

Pre-existing commercial transactions supported by banking channels and contractual terms cannot be treated as layering of proceeds of crime unless the FIR or ECIR provides a lawful jurisdictional nexus to the alleged offence; on that basis, attachment over the earlier fund diversion and consultancy-fee payments was set aside. A delayed payment in a separate dairy transaction, made after an earlier MOU and initial payment but not completed as intended, was treated differently because the timing and circumstances supported an inference of connection with tainted funds; attachment was upheld to that extent. The provisional attachment order was therefore interfered with substantially but retained for the specified amount.

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Issues: (i) Whether the alleged diversion of funds of Rs. 431.33 crores through Nibodh Realty LLP could be treated as proceeds of crime so as to justify provisional attachment. (ii) Whether the consultancy-fee payments aggregating Rs. 71.82 crores could be treated as layered proceeds of crime. (iii) Whether the delayed payment of Rs. 25 crores in the dairy transaction could be provisionally attached as proceeds of crime.

Issue (i): Whether the alleged diversion of funds of Rs. 431.33 crores through Nibodh Realty LLP could be treated as proceeds of crime so as to justify provisional attachment.

Analysis: The agreement between the parties was entered in 2014-15, long before the alleged commission of the predicate offence in 2018. The transaction was supported by banking channels and contractual terms providing for interest and warrants. The Court found no foundational material in the FIR or ECIR to connect that earlier commercial arrangement with the later alleged crime, and held that the investigating authority could not question a genuine pre-existing commercial transaction as a case of anticipated layering without jurisdiction.

Conclusion: The attachment based on the first transaction was unsustainable and was set aside.

Issue (ii): Whether the consultancy-fee payments aggregating Rs. 71.82 crores could be treated as layered proceeds of crime.

Analysis: The consultancy and related service arrangements were entered into before the alleged offence, and substantial payments had already been made before the alleged crime occurred. The material relied upon by the authority did not establish that the agreements were designed in anticipation of the later offence or that the authority had a basis to treat pre-offence commercial payments as layering of proceeds yet to arise. The Court found that the authority stretched the investigation beyond the predicate allegations and without adequate foundational facts.

Conclusion: The attachment based on the consultancy-fee transaction was unsustainable and was set aside.

Issue (iii): Whether the delayed payment of Rs. 25 crores in the dairy transaction could be provisionally attached as proceeds of crime.

Analysis: The dairy sale arrangement was supported by an earlier MOU and an initial payment in 2016, but the subsequent payment was made only after a delay of about three years without completing the intended transfer. The Court found that this later payment could not be justified as an ordinary adjustment against other dealings and accepted the authority's inference that the delayed payment was connected with the tainted funds.

Conclusion: The attachment to the extent of Rs. 25 crores was upheld.

Final Conclusion: The impugned attachment order was interfered with to a substantial extent, but the provisional attachment was retained only to the extent of Rs. 25 crores against the specified properties.

Ratio Decidendi: Pre-existing independent commercial transactions, unsupported by allegations in the predicate offence or ECIR, cannot be treated as layering of proceeds of crime merely because later payments coincide with alleged crime proceeds; provisional attachment must rest on a lawful jurisdictional nexus to the alleged offence.

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