Equivalent-value attachment under PMLA can reach earlier-acquired property when proceeds of crime are unavailable

An unsecured loan claim was rejected where the recipient admitted receiving funds from the main accused but produced no loan agreement or credible repayment evidence, and the was treated as proceeds of crime linked to laundering. The Tribunal also applied a broad construction of "proceeds of crime" under the PMLA, holding that where tainted assets are unavailable or have been siphoned off, provisional attachment may extend to property of equivalent value. Such attachment is not barred merely because the substituted property was acquired before the predicate offence.

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Issues: (i) Whether the amount of Rs. 1 crore received by the appellant from the main accused was a genuine unsecured loan or constituted proceeds of crime linked to money laundering; (ii) Whether a property acquired prior to the commission of crime could be provisionally attached as property of equivalent value when the proceeds of crime were not available.

Issue (i): Whether the amount of Rs. 1 crore received by the appellant from the main accused was a genuine unsecured loan or constituted proceeds of crime linked to money laundering.

Analysis: The appellant failed to produce any loan agreement or credible evidence of repayment. The receipt of Rs. 1 crore was admitted, but no material established that it was a legitimate loan transaction. On the record, the amount was treated as money received out of the proceeds of crime and the appellant's conduct was found consistent with laundering of tainted funds.

Conclusion: The amount was not accepted as a bona fide unsecured loan and was held to be proceeds of crime.

Issue (ii): Whether a property acquired prior to the commission of crime could be provisionally attached as property of equivalent value when the proceeds of crime were not available.

Analysis: The Tribunal applied the wider construction of the expression "proceeds of crime" under Section 2(1)(u) of the Prevention of Money Laundering Act, 2002, relying on the principle that the expression includes not only property derived or obtained from criminal activity, but also the value of such property where the tainted asset is not traceable. It was held that equivalent-value attachment is permissible even against another property, including one acquired earlier, if the proceeds have vanished or been laundered and the statutory object would otherwise be frustrated.

Conclusion: Prior acquisition of the attached property did not bar provisional attachment for equivalent value.

Final Conclusion: The challenge to the provisional attachment and its confirmation was rejected, and the attachment was sustained.

Ratio Decidendi: Where the proceeds of crime are not available or have been siphoned off, the enforcement authorities may proceed against property of equivalent value, and such attachment is not defeated merely because the substituted property was acquired before the commission of the predicate offence.

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