Attachment Of Property In Money Laundering Cases
📌 1. Introduction to Money Laundering and Attachment
Money laundering is the process of disguising the origins of illegally obtained money, making it appear legal. To combat this, India enacted the Prevention of Money Laundering Act (PMLA), 2002.
A critical tool under the PMLA is the attachment of property suspected to be involved in money laundering. This prevents the accused from disposing of or transferring assets during investigation or trial.
📜 Legal Provisions
Section 5 of PMLA: Power to provisionally attach property involved in money laundering.
Section 8 of PMLA: Confirms attachment after adjudication.
Section 17 of PMLA: Procedure for attachment and confiscation.
Section 24 of PMLA: Burden of proof on the accused to show property is not involved in money laundering.
Section 45 of PMLA: Trial of offences under PMLA.
The Attachment is a preventive measure pending investigation or adjudication to safeguard the property.
📌 2. Important Features of Attachment under PMLA
Attachment can be provisional and must be confirmed by Adjudicating Authority within 180 days.
No prior notice is required for provisional attachment to prevent dissipation.
Once attached, the property cannot be sold, transferred or encumbered.
Attachment can cover movable, immovable, tangible, intangible property.
The burden shifts to the accused to prove the property is not proceeds of crime.
⚖️ Landmark Case Laws on Attachment of Property in Money Laundering
⚖️ 1. M/s. Asset Reconstruction Company (India) Ltd. v. S. Nayak (2010) 8 SCC 532
🔹 Facts:
The Supreme Court dealt with attachment and confiscation of properties under the SARFAESI Act but laid down important principles applicable to attachment under PMLA.
🧾 Judgment:
The Court emphasized that attachment is a preventive measure, and the right to property is subject to restrictions under law. The attachment must be justified, proportionate, and follow due process.
✅ Importance:
Stressed fairness and due process in attachment.
Set principles that apply to attachment under PMLA.
⚖️ 2. Directorate of Enforcement v. Deepak Mahajan (2019) 4 SCC 226
🔹 Facts:
Property was attached under PMLA as proceeds of crime. The accused challenged the attachment on grounds of no evidence of money laundering.
🧾 Judgment:
The Supreme Court held that once attachment is made under Section 5, the Adjudicating Authority must confirm or revoke it within 180 days. Attachment is a non-obstante provision and overrides other laws.
✅ Importance:
Clarified procedure and timeline for attachment confirmation.
Affirmed priority of PMLA over other laws for attachment.
⚖️ 3. Indian Oil Corporation Ltd. v. NEPC India Ltd. (2006) 6 SCC 736
🔹 Facts:
Although not a money laundering case, the Supreme Court’s observations on attachment in the context of recovery of dues are often cited.
🧾 Judgment:
Court held attachment must be based on prima facie satisfaction of wrongdoing and must be just and reasonable.
✅ Importance:
Established the principle that attachment must not be arbitrary.
Balances state interest and individual property rights.
⚖️ 4. Rajendra Jagdish Prasad Sharma v. Union of India (2017) 8 SCC 745
🔹 Facts:
This case dealt with attachment of property under PMLA and challenge to the Adjudicating Authority’s confirmation of attachment.
🧾 Judgment:
The Court ruled that the Adjudicating Authority’s satisfaction is judicially reviewable but on limited grounds like perversity or non-application of mind. Mere difference of opinion is not enough.
✅ Importance:
Limits judicial interference in attachment confirmation.
Emphasizes specialized tribunal’s expertise in attachment matters.
⚖️ 5. Jitender Kumar v. Directorate of Enforcement (2020) SCC OnLine Del 6379
🔹 Facts:
Delhi High Court examined whether the Enforcement Directorate (ED) followed proper procedure during attachment.
🧾 Judgment:
Court held that while provisional attachment can be made without notice, the ED must serve notice and give reasonable opportunity before confirmation.
✅ Importance:
Reinforces natural justice after provisional attachment.
Affirms due process in confirming attachment.
⚖️ 6. Union of India v. Parminder Singh Saini (2017) 9 SCC 706
🔹 Facts:
Property attached as proceeds of crime; challenge raised on grounds of procedural lapses.
🧾 Judgment:
Supreme Court held that PMLA provisions are special and overriding, and once there is prima facie case of money laundering, attachment is justified. Procedural safeguards must be observed but will not invalidate attachment unless substantial injustice occurs.
✅ Importance:
Affirms primacy of PMLA in attachment.
Recognizes need for procedural safeguards without diluting attachment powers.
🧠 Key Legal Takeaways
| Principle | Explanation |
|---|---|
| Preventive nature | Attachment is to prevent dissipation, not punishment per se. |
| Provisional attachment without notice | Allowed to protect state interest but must be confirmed with notice. |
| Burden of proof shifts | Accused must prove property is not proceeds of crime. |
| Judicial review limited | Courts will interfere only if there is manifest perversity or non-application of mind. |
| Time-bound confirmation | Attachment must be confirmed or revoked within 180 days. |
📌 Conclusion
The power of attachment of property under PMLA is a potent weapon in fighting money laundering and related crimes. It strikes a balance between protecting the rights of accused persons and safeguarding the interest of the state in recovering illicit wealth.
Indian courts have consistently upheld the importance of due process while recognizing the urgency and necessity of attachment to prevent misuse or hiding of proceeds of crime.
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