2026 Supreme(Gau) 969

THE GAUHATI HIGH COURT (HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)
Michael Zothankhuma, Kaushik Goswami, JJ.
Kumar Sanjit Krishna, Son Of Late Uma Charan Bania – Petitioner 
Versus
The Directorate Of Enforcement Govt. Of India – Respondent 
Crl.A(PMLA) 1 of 2025
Decided On : 27-03-2026

Property can only be attached as proceeds of crime if there is a demonstrated nexus to a scheduled offence. Assets acquired prior to the commission of the offence generally fall outside this definition, provided the acquisition timeline is substantiated by evidence.

Headnote:(A) Prevention of Money Laundering Act, 2002 - Sections 2(1)(u), 2(1)(v), 3, and 5(1) - Attachment of property - Proceeds of crime - Requirement of nexus to scheduled offence - It is settled law that only properties derived or obtained, directly or indirectly, as a result of criminal activity relating to a scheduled offence can be regarded as 'proceeds of crime' - Attachment of property having no connection with the crime or acquired prior to the commission of the offence is impermissible - The definition of 'proceeds of crime' necessitates that the property must be linked to a scheduled offence, and the authorities cannot resort to action based on assumptions regarding the source of property. (Paras 6, 13, 14, 17, 36, 37)

(B) Appeals - Disputed questions of fact - Determination of acquisition date - Where there is a major factual dispute concerning whether a property was purchased prior to or during the currency of a scheduled offence, such matters require the adduction of evidence - Appellate courts should not interfere with orders if a fundamental factual dispute remains unresolved and requires trial for verification of the timeline of acquisition. (Paras 38, 39)

Facts of the case:
The appellant challenged a final order confirming the provisional attachment of their residential property. It was the appellant’s contention that the property was acquired between 2008 and 2011, well before the scheduled offence occurred (2018-2020), despite the registration occurring in 2019. The authorities contended that the property value was subject to attachment as 'equivalent value' for the proceeds of crime, asserting that the acquisition date occurred during the currency of the criminal activity.

Findings of Court:
The court held that attachment under the applicable legal framework strictly requires a nexus to the proceeds of crime. Property acquired before the commission of a scheduled offence lacks the necessary legal connection to be classified as 'proceeds of crime'. However, as the parties presented conflicting arguments regarding the precise timing and nature of the property's purchase versus its registration, the court declined to interfere with the attachment at the appellate stage, directing that such factual disputes must be resolved through evidence.

Issues: The main issues were whether a property acquired before the commencement of a scheduled offence qualifies as 'proceeds of crime' for attachment purposes, and whether the 'equivalent value' provision enables attachment of assets without a established nexus to criminal activity.

Ratio Decidendi: The court clarified that 'proceeds of crime' must be derived from criminal activity related to a scheduled offence. While 'equivalent value' can be attached, it must still be tied to the proceeds of the crime and the accused. As the court faced a disputed question of fact regarding the actual date of property acquisition, it could not determine the legality of the attachment without further evidence.

Result: Appeal dismissed.