Prevention of Money Laundering Act, 2002
Section 5—Proceeds of crime—Types of—There are three types of proceeds of crime and they are (i) property derived or obtained from a criminal activity; (ii) value of any such property and; (iii) if the property is taken or held outside India, then a property equivalent in value held within India.
[Para 12]
Section 5—Order of freezing of bank accounts and provisional order of attachment—Challenged—Contention of respondent that term proceeds of crime will also include the value of the property which had been acquired even earlier is too far-fetched and will not be justifiable in the light of the constitutional provisions of fairness and reasonableness—Purpose of the PMLA is to remove tainted money and also to initiate proceedings against the proceeds of crime which have been transformed or converted into other property or intermingled with legitimate sources and then the value of the intermingled gain will assume the colour of proceed of crime—Such a provision cannot be used to enable the authorities to proceed against the properties that are unconnected with any of the criminal activity in question—As the provisionally attached immovable property was purchased more than a decade and a half before the predicate offence was allegedly committed, the order attaching the immovable property is ex-facie, ultra vires the powers of the statute and totally illegal and arbitrator and arbitrary to the extent of the said attachment—Since ex facie illegal acts can be interfered with Article 226 of the Constitution of India, notwithstanding the existence of an alternative remedy, the provisional attachment of the immovable property is liable to be set aside—However, the provisional attachment relating to the amount in the bank accounts—The petitioner has an effective alternative remedy provided by the statute—Petition allowed in part.
[Paras 17 to19]