DATE: 16/02/2026
COURT: High Court of Punjab and Haryana
BENCH: High Court of Delhi
FACTS:
The appellant filed a Miscellaneous Appeal
under Section 42 of the Prevention of Money Laundering Act, 2002 (PMLA),
challenging an order dated 27 November 2025 passed by the Appellate Tribunal
under the PMLA. By the impugned order, the Tribunal upheld the confirmation of
a Provisional Attachment Order dated 28 July 2017 issued by the Directorate of
Enforcement in respect of a residential property situated at 255, Sainik Vihar,
Pitampura, Delhi. At the threshold, the Court also dealt with and allowed an application
seeking condonation of a delay of nine days in re-filing the appeal.
The appellant contended that the attached
property was never purchased by him and had been acquired in 1991 by his father
out of his own lawful income, in the joint names of the father and the
appellant. It was asserted that the property had remained with the family
continuously since its purchase and that the appellant had not contributed any
funds towards its acquisition. On this basis, the appellant argued that the
property could not be treated as “proceeds of crime” or as “value thereof”
under Section 2(1)(u) of the PMLA, particularly since it was acquired much
prior to the alleged scheduled offence and through lawful means.
ISSUES:
The principal issue before the Court was
whether an inherited or ancestral property, not purchased from the appellant’s
funds and acquired long prior to the commission of the scheduled offence, could
be provisionally attached under the PMLA as “property equivalent in value” to
the proceeds of crime when the actual tainted property was allegedly
unavailable or untraceable.
JUDGEMENT WITH REASONING:
The Court dismissed the appeal and upheld
the orders of the Adjudicating Authority and the Appellate Tribunal, holding
that there was no illegality or perversity in attaching the subject property as
property equivalent in value to the proceeds of crime under Section 2(1)(u) of
the PMLA. Consequently, the interim relief sought by the appellant was denied,
and all pending applications were disposed of.
The Court examined the statutory framework
of the PMLA, particularly Section 2(1)(u), which defines “proceeds of crime” to
include not only property directly or indirectly derived from criminal activity
relating to a scheduled offence but also the “value of any such property.”
Relying on authoritative precedent of the Supreme
Court of India, the Court reiterated that where the actual proceeds of
crime are taken or held outside the country or are otherwise unavailable, the
authorities are empowered to attach property of equivalent value held within
the country or abroad. The Court emphasized that the relevant consideration is
not the date of acquisition of the attached property, but whether it represents
the value of proceeds of crime that cannot be traced.
The Court further held that the plea of the
property being ancestral or inherited does not, by itself, grant immunity from
attachment under the PMLA. The statute does not carve out any exception for
ancestral or inherited properties, and permitting such an exception would
defeat the object of the Act. The Adjudicating Authority had recorded a
categorical finding, upon appreciation of evidence, that the subject property
represented equivalent value of the proceeds of crime generated from the
scheduled offences. Since the actual tainted property could not be recovered,
attachment of an untainted property of equivalent value was legally
permissible. The Court therefore concluded that the findings of the authorities
below were in accordance with law and consistent with the scheme and object of
the PMLA.
ANALYSIS:
This decision reinforces the expansive
scope of attachment powers under the Prevention of Money Laundering Act, 2002,
particularly in relation to the concept of “proceeds of crime” and “value
thereof” under Section 2(1)(u). The Court adopted a purposive interpretation of
the statute, aligning with the settled position that the PMLA is a special
legislation aimed at preventing laundering of illicit gains rather than merely
confiscating directly tainted assets. By upholding the attachment of an
untainted, inherited property as property equivalent in value, the Court
reaffirmed that the focus under the Act is on neutralising the economic
advantage derived from criminal activity. The reliance on authoritative
precedent of the Supreme Court of India
underscores judicial consistency in recognising that the unavailability or
dissipation of actual proceeds of crime cannot frustrate enforcement action
under the PMLA.
At the same time, the judgment clarifies an
important doctrinal point by rejecting the argument that ancestral or inherited
properties enjoy implicit immunity from attachment. The Court rightly noted
that the statute does not recognise such a distinction, and introducing one
judicially would undermine the legislative intent of the Act. The analysis
demonstrates that the timing or source of acquisition of the attached property
is not determinative; rather, the decisive factor is whether the property
represents the equivalent value of proceeds of crime that cannot be traced. By
endorsing the factual findings of the Adjudicating Authority and the Appellate
Tribunal, the Court also highlighted the limited scope of appellate
interference under Section 42 of the PMLA, confining it to questions of law and
clear perversity. Overall, the ruling strengthens the enforcement framework
under the PMLA while signalling that property rights, though protected, must
yield where statutory conditions for attachment are duly satisfied.
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