Proceeds-of-crime nexus is essential: equivalent-value attachment cannot enforce a pre-existing civil debt absent receipt or diversion.

Attachment under the Prevention of Money Laundering Act requires a demonstrated nexus between the attached property and proceeds of crime, including receipt or diversion by the person whose property is attached. An amount paid before the alleged crime period for a proposed shop sale, and not shown to originate from diverted home-buyers' funds, was not proceeds of crime. Accordingly, attachment of the appellant's fixed deposit as property of equivalent value lacked a statutory basis. A failure to refund the payment may support a civil recovery claim, but does not convert the amount into proceeds of crime or permit the Enforcement Directorate to recover it for the transferor. The attachment confirmation was set aside.

---

---

Issues: (i) Whether the amount received by the appellant before the period of commission of the scheduled crime constituted proceeds of crime; (ii) whether property of equivalent value could be provisionally attached in the absence of receipt or diversion of proceeds of crime; and (iii) whether the Enforcement Directorate could sustain the attachment to recover an amount allegedly due to the transferor.

Issue (i): Whether the amount received by the appellant before the period of commission of the scheduled crime constituted proceeds of crime.

Analysis: The amount of Rs. 10 Crores was transferred to the appellant in 2004, whereas the diversion of home-buyers' funds constituting the alleged crime occurred during 2006-07 to 2014-15. The payment was made in the course of a proposed sale of shops and was maintained as a credit balance with the appellant. On the material facts, the amount was not shown to have originated from or been diverted out of the proceeds generated during the crime period.

Conclusion: The amount received by the appellant was not proceeds of crime.

Issue (ii): Whether property of equivalent value could be provisionally attached in the absence of receipt or diversion of proceeds of crime.

Analysis: Attachment of property of equivalent value presupposes the existence of proceeds of crime and their receipt or diversion by the person whose property is attached. Since the appellant had neither received nor diverted proceeds of crime, the statutory basis for attaching its fixed deposit for an equivalent value was absent.

Conclusion: The equivalent-value attachment of the appellant's fixed deposit was unsustainable.

Issue (iii): Whether the Enforcement Directorate could sustain the attachment to recover an amount allegedly due to the transferor.

Analysis: The failure to complete the shop transaction and the alleged non-refund of the amount could give rise to a civil recovery claim between the appellant and the transferor. Such a claim did not convert the amount into proceeds of crime and could not authorise the Enforcement Directorate to act as a recovery agent by attaching the amount with accrued interest.

Conclusion: The attachment could not be sustained as a recovery measure for the transferor.

Final Conclusion: The confirmation of the provisional attachment was set aside, without preventing the transferor's new management from pursuing recovery of the Rs. 10 Crores in accordance with law.

Ratio Decidendi: Attachment under the Prevention of Money Laundering Act requires a demonstrated nexus between the attached property and proceeds of crime, including their receipt or diversion; property cannot be attached merely to recover a pre-existing civil debt.

---