2025 (3) TMI 1035 - HC - Money Laundering

Money Laundering - proceeds of crime - Challenge to provisional attachment order - prayer for appropriate writ/direction for redrafting of the definition of value as provided under Section 2(1)(zb) of the Prevention of Money-Laundering Act 2002 - HELD THAT - As per Section 2(u) of the PMLA Act defines the Proceeds of Crime if any property is derived or obtained directly or indirectly by any person as a result of criminal activity relating to a scheduled offence or the value of any such property comes under the proceeds of crime. Therefore the definition of value as defined under Section 2(1)(zb) cannot be read in isolation. It has to be read along with the definition of property and proceeds of crime in order to achieve the aims and objectives of the PMLA Act. If all three definitions are read conjointly there would be no need to redraft the definition of value as prayed by the petitioner by way of this petition. A definition is not to be read in isolation. Conclusion - The definition of value as defined under Section 2(1)(zb) cannot be read in isolation. It has to be read along with the definition of property and proceeds of crime in order to achieve the aims and objectives of the PMLA Act. The petition challenging the provisional attachment order and the constitutional validity of the definition of value under Section 2(1)(zb) was dismissed.

1. ISSUES PRESENTED and CONSIDERED

The core legal issues considered in this judgment include:

Whether the provisional attachment order issued under the Prevention of Money-Laundering Act, 2002 (PMLA Act) is valid.
Whether the definition of "value" under Section 2(1)(zb) of the PMLA Act is constitutionally valid or if it requires redrafting to distinguish between properties acquired through proceeds of crime and those acquired from legitimate sources.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Validity of the Provisional Attachment Order

Relevant legal framework and precedents: The provisional attachment order is issued under the PMLA Act, which aims to prevent money laundering and to provide for confiscation of property derived from or involved in money laundering.
Court's interpretation and reasoning: The Court noted that the petitioner is already contesting the attachment order before the Adjudicating Authority under the PMLA Act, indicating that the petitioner is availing the statutory remedy available under the Act.
Key evidence and findings: The petitioner's property was attached at its book value on the date of acquisition, as per the definition of "value" under Section 2(1)(zb) of the PMLA Act.
Application of law to facts: The Court found no procedural irregularities or grounds for interference with the attachment order as the petitioner is pursuing the appropriate legal channels.
Treatment of competing arguments: The petitioner argued that the attachment should consider the current market value rather than the book value at acquisition. However, the Court found that the statutory framework of the PMLA Act was correctly applied.
Conclusions: The Court dismissed the challenge to the provisional attachment order, emphasizing the ongoing proceedings before the Adjudicating Authority.

Issue 2: Constitutional Validity of the Definition of "Value" under Section 2(1)(zb) of the PMLA Act

Relevant legal framework and precedents: Section 2(1)(zb) defines "value" as the fair market value of any property on the date of its acquisition or possession. This definition is integral to the adjudication process under the PMLA Act.
Court's interpretation and reasoning: The Court emphasized that the definition of "value" must be read in conjunction with the definitions of "property" and "proceeds of crime" under Sections 2(1)(v) and 2(u) of the PMLA Act, respectively.
Key evidence and findings: The petitioner contended that the definition is arbitrary and suggested amendments to differentiate between properties acquired through proceeds of crime and those from legitimate sources.
Application of law to facts: The Court found that the existing definition, when read with related provisions, adequately serves the objectives of the PMLA Act without requiring redrafting.
Treatment of competing arguments: The petitioner's argument for redrafting was countered by the Court's interpretation that the current definitions, when read together, fulfill the legislative intent and objectives of the PMLA Act.
Conclusions: The Court upheld the constitutional validity of the definition of "value" under Section 2(1)(zb), finding no merit in the petitioner's request for redrafting.

3. SIGNIFICANT HOLDINGS

Preserve verbatim quotes of crucial legal reasoning: "The definition of 'value' as defined under Section 2(1)(zb) cannot be read in isolation. It has to be read along with the definition of 'property' and 'proceeds of crime' in order to achieve the aims and objectives of the PMLA Act."
Core principles established: The Court reinforced the principle that statutory definitions must be interpreted in the context of the entire legislative framework to fulfill the Act's objectives.
Final determinations on each issue: The petition challenging the provisional attachment order and the constitutional validity of the definition of "value" under Section 2(1)(zb) was dismissed. The Court found no grounds for interference, affirming the statutory framework of the PMLA Act.