The Delhi High Court has delivered a significant ruling on the scope of attachment under the Prevention of Money Laundering Act, 2002, clarifying whether properties acquired before the law came into force can be targeted as “proceeds of crime.”
A Division Bench comprising Justice C. Hari Shankar and Justice Om Prakash Shukla was hearing an appeal filed by the Directorate of Enforcement against a Single Judge’s decision that had quashed a provisional attachment order.
The case arose from allegations linked to a National Agricultural Marketing Cooperative Federation sugar import transaction involving officials and private entities.
According to the investigation, funds allegedly generated through fraudulent transactions were routed through multiple companies and eventually used to purchase a property in Vasant Vihar, New Delhi, in 2005.
The property was acquired by M/s Mahanivesh Oils & Foods Pvt Ltd, where Alka Rajvansh, wife of a key accused, was a director. The Central Bureau of Investigation had registered an FIR in 2009 alleging offences under cheating, criminal breach of trust, and conspiracy provisions of the IPC.
The core legal issue before the Court was whether property purchased using alleged “proceeds of crime” before the PMLA came into force could still be attached if the owner continued to possess it after the law became operational.
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The Enforcement Directorate argued that continued possession of such property amounts to money laundering, making it liable for attachment under Section 5(1) of the Act.
On the other hand, the respondent contended that the entire alleged laundering process—including acquisition and integration of funds—was completed before the PMLA came into force, making the law inapplicable.
The Bench emphasized that provisions of the PMLA must be read as part of an integrated scheme involving Sections 3, 5, and 8.
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Importantly, the Court disagreed with the Single Judge’s reasoning on multiple counts. It held that:
- “Proceeds of crime” is not limited to money but also includes property derived from such funds.
- The offence of money laundering includes possession and use of such property.
- The concept of money laundering cannot be restricted only to the stage when funds are first integrated into the economy.
The Court noted that mere possession of property derived from criminal activity could fall within the ambit of money laundering under Section 3.
The Division Bench found errors in the Single Judge’s interpretation, particularly in treating money laundering as a one-time completed act prior to the enactment of the PMLA.
- The definition of “proceeds of crime” includes property purchased from illicit funds.
- The offence of money laundering may extend to continued possession and use of such property.
Case Details Section
Case Title: Directorate of Enforcement v. M/s Mahanivesh Oils & Foods Pvt Ltd
Case Number: LPA 144/2016
Court: Delhi High Court
Judge: Justice C. Hari Shankar, Justice Om Prakash Shukla
Date: 16 March 2026
