Provisional attachment under PMLA can reach non-accused persons where material shows possession of proceeds of crime and linked lending operations.
Provisional attachment under the PMLA may extend beyond a person named in the predicate FIR or charge sheet if the authorised officer has material showing possession of proceeds of crime and a risk of concealment or transfer. The Tribunal also noted that a digital lending structure involving fintech entities, mobile applications, upfront deductions, coercive recovery practices and outsourcing of core lending functions could indicate a model generating proceeds of crime, with the NBFC licence facilitating the business structure. On that material, the attached assets were treated as within the scope of proceeds of crime and the attachment was upheld.
Issues: (i) Whether the provisional attachment could be sustained even though the appellant was not named as an accused in the FIRs or charge sheets. (ii) Whether the material on record established that the appellant's NBFC licence and related funds were used in a lending model generating proceeds of crime and justifying attachment under the PMLA.
Issue (i): Whether the provisional attachment could be sustained even though the appellant was not named as an accused in the FIRs or charge sheets.
Analysis: The attachment power under Section 5 of the Prevention of Money Laundering Act, 2002 is not confined to property held by a person named as an accused in the scheduled offence. The decisive consideration is whether the person is in possession of proceeds of crime and whether the authorised officer has reason to believe, on the basis of material in possession, that such property is liable to be concealed, transferred or otherwise dealt with so as to frustrate confiscation. The absence of the appellant's name in the predicate FIRs did not, by itself, defeat attachment where the investigation disclosed its linkage with the lending operations and the funds under scrutiny.
Conclusion: The issue was answered against the appellant and in favour of the respondent.
Issue (ii): Whether the material on record established that the appellant's NBFC licence and related funds were used in a lending model generating proceeds of crime and justifying attachment under the PMLA.
Analysis: The record disclosed a digital lending model in which fintech entities and the appellant operated through mobile applications, collected borrower data, advanced short-term loans, deducted substantial amounts upfront as processing or platform charges, and used coercive recovery methods. The Tribunal relied on the agreements and surrounding material to hold that core lending functions had effectively been outsourced in a manner inconsistent with RBI norms, while the appellant's licence facilitated the business model. The rise in loan volume and revenue, the use of fintech deposits as performance guarantees, and the alleged exploitation of borrowers supported the conclusion that the appellant had facilitated and benefited from activities generating proceeds of crime.
Conclusion: The issue was answered against the appellant and in favour of the respondent.
Final Conclusion: The appeal was rejected, and the provisional attachment was upheld on the basis that the appellant's participation in the lending structure brought the attached assets within the ambit of proceeds of crime under the PMLA.
Ratio Decidendi: For the purpose of provisional attachment under the PMLA, property may be attached from any person in possession of proceeds of crime, and the statute is not limited to property held by a person formally arraigned as an accused in the scheduled offence.