PMLA Attachment Cannot Survive Without Established Link to Proceeds of Crime: Bombay High Court
1. Background and Nature of the Dispute
The Bombay High Court recently pronounced its judgment in cross-appeals arising from an order dated 1 April 2026 passed by the Appellate Tribunal, New Delhi, constituted under the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976. The matter involved competing challenges — one by Avinash Bhosale and others seeking release of attached properties, and another by the Directorate of Enforcement seeking to sustain and extend attachments. The Court, after examining the record and the rival submissions, allowed the appeal filed by the private parties and dismissed the Enforcement Directorate's cross-appeal.
The Appellate Tribunal, by its order under challenge, had directed continuation of provisional attachment to the extent of ₹25 crore across two properties: a land parcel admeasuring 6,143.71 square metres in Pune, held under the name of Samit Realty and valued at ₹14.65 crore; and the balance amount required to reach ₹25 crore, being a land parcel admeasuring 20,200 square metres in Nagpur, valued at ₹15,52,87,000, registered in the name of Gauri Bhosale.
Criminal Appeal No. 478 of 2026 was filed by Avinash Bhosale and others, who were named as accused in the third supplementary chargesheet filed by the Enforcement Directorate in investigation ECIR/MBZO-I/03/2020. Criminal Appeal No. 816 of 2026 was filed by the ED itself, contending that the Tribunal's direction to release certain attached properties was without merit.
2. The ED's Case: Alleged Proceeds of Crime
The Enforcement Directorate's original complaint, filed on 21 October 2022, alleged that proceeds of crime amounting to ₹3,983 crore originated from YES Bank. These funds were said to have been sanctioned and disbursed to Dewan Housing Finance Corporation Limited (DHFL) through three financial instruments: subordinated debt or privately placed bonds amounting to ₹1,000 crore; masala bonds amounting to ₹283 crore; and public issue of non-convertible debentures amounting to ₹2,700 crore.
Out of the overall alleged proceeds, the ED specifically claimed that ₹164.64 crore received by Avinash Bhosale or his associated entities constituted proceeds of crime. These entities fell into three transaction categories: Nibodh Realty, consultancy arrangements, and ABIL Dairy.
3. Statutory Framework: Key PMLA Provisions
Before examining the individual transactions, the Court set out the governing legal framework under the Prevention of Money-Laundering Act, 2002.
(i) Definition of Proceeds of Crime
Section 2(u) of the Prevention of Money-Laundering Act, 2002 defines the expression as follows:
"Section 2(u) 'proceeds of crime' means any property 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 [or where such property is taken or held outside the country, then the property equivalent in value held within the country for abroad]."
(ii) Offence of Money Laundering
Section 3 of the Prevention of Money-Laundering Act, 2002, which defines the offence, reads: