Provisional attachment under money-laundering law sustained where traced funds, layering, and unproven source explanations failed to rebut liability

A traced money trail from alleged bank-fund diversion through group and paper entities justified provisional attachment of the appellants' properties, because the investigation material, forensic audit findings and statements under the Act showed layered transactions and acquisition of assets from proceeds of crime or their equivalent value. The appellants did not produce reliable material to rebut the tracing of funds. The plea that corporate debt restructuring, a deed of assignment, and alleged independent or surplus sources displaced liability also failed, because those documents did not negate the laundering trail and the statutory burden under the PMLA remained unmet. The challenge to the attachment therefore failed.

---

---

Issues: (i) Whether the provisional attachment of the properties of the appellant companies was justified on the basis that the funds and assets were traceable to proceeds of crime generated from the ABG Shipyard group transactions; (ii) Whether the plea based on corporate debt restructuring, the deed of assignment, and the assertion that the monies came from independent or surplus sources rebutted the statutory burden under the Prevention of Money Laundering Act, 2002.

Issue (i): Whether the provisional attachment of the properties of the appellant companies was justified on the basis that the funds and assets were traceable to proceeds of crime generated from the ABG Shipyard group transactions.

Analysis: The material on record showed a traced money trail from the alleged diversion of bank funds to group entities, paper companies, and finally to the assets and accounts of the appellants. The Tribunal relied on the investigation material, forensic audit findings, and statements recorded under the Act to hold that the properties were acquired through layered transactions and that several recipient entities had no genuine business activity. In respect of the family-linked assets, the Tribunal accepted that the attached properties represented proceeds or value equivalent of diverted funds used for purchase of flats and other immovable properties. The appellants failed to produce reliable material to dislodge the traced flow of funds.

Conclusion: The provisional attachments were upheld as being linked to proceeds of crime or their equivalent value.

Issue (ii): Whether the plea based on corporate debt restructuring, the deed of assignment, and the assertion that the monies came from independent or surplus sources rebutted the statutory burden under the Prevention of Money Laundering Act, 2002.

Analysis: The Tribunal held that restructuring documentation and the deed of assignment did not erase the underlying laundering trail, because the investigation disclosed circular fund movements, layering, and misuse of group entities. The statutory burden under Section 24 remained on the appellants, and the explanation that the transfers originated from surplus or independent sources was found unsubstantiated. The Tribunal further noted that the attachment could not be defeated merely by relying on subsequent internal adjustments or by characterising routed transactions as genuine when the surrounding material indicated laundering activity.

Conclusion: The defences based on restructuring and alleged independent source of funds were rejected.

Final Conclusion: The appellate challenge failed in entirety, and the confirmation of provisional attachment was sustained.

Ratio Decidendi: Where the investigation establishes a traced money trail, layering through group or paper entities, and the appellants do not discharge the burden of proving a legitimate source, provisional attachment under the money-laundering law is sustainable, and subsequent restructuring or internal assignment arrangements do not by themselves negate proceeds of crime.

---