Arun Suri Vs Directorate of Enforcement (Delhi High Court)
The appeal was filed under Section 42 of the Prevention of Money Laundering Act, 2002 (PMLA) challenging the order dated 27.11.2025 passed by the Appellate Tribunal under the PMLA, which upheld the confirmation of the Provisional Attachment Order dated 28.07.2017 issued by the Directorate of Enforcement. The attachment concerned property situated at 255, Sainik Vihar, Pitam Pura, Delhi. The appellant also sought interim relief. The Court first allowed an application for condonation of a delay of nine days in re-filing the appeal before considering the appeal on merits.
The appellant contended that the subject property had never been purchased by him. According to the appellant, the property had been purchased in 1991 by his father from his own income in the joint names of the father and the appellant. It was submitted that the property had remained with the family since 1991 and that the appellant had not contributed any amount towards its acquisition.
The appellant argued that the property could not be attached as “value thereof” under Section 2(1)(u) of the PMLA because it had not been purchased by him and his interest in the property had devolved through his deceased father. It was contended that Section 2(1)(u) permits attachment only of tainted properties obtained directly or indirectly as a result of criminal activity relating to a scheduled offence. Reliance was placed upon the Karnataka High Court decision in M. Malthesh Vs. Directorate of Enforcement and the Supreme Court decision in Pavana Dibbur Vs. Directorate of Enforcement to contend that property purchased prior to the commission of the scheduled offence could not be attached.
The Directorate of Enforcement submitted that the proceeds of crime had been acquired by the appellant in the form of foreign exchange, remitted abroad, and were therefore unavailable. Consequently, the subject property belonging to the appellant had been attached as property of “equivalent value” under Section 5 read with Section 2(1)(u) of the PMLA. It was argued that such attachment was within the statutory framework.
The High Court considered the rival submissions and noted that the principal contention of the appellant was that the property was ancestral in nature and had neither been acquired nor purchased from proceeds of crime. The Court observed that the competent authority under Section 5 of the PMLA is empowered to provisionally attach property believed to be proceeds of crime.
The Court referred to the Supreme Court decision in Vijay Madanlal Choudhary and Ors. Vs. Union of India and Ors., which held that the offence of money laundering is not dependent upon the date of commission of the scheduled offence but upon the process or activity connected with the proceeds of crime. Reproducing Section 2(1)(u) of the PMLA, the Court noted that the definition of “proceeds of crime” includes not only property derived or obtained from criminal activity but also the value of such property, including property equivalent in value held within or outside India where the original property is held outside the country.
The Court further referred to its earlier decisions in Prakash Industries Ltd. Vs. Directorate of Enforcement and Deputy Director, Directorate of Enforcement of Delhi Vs. Axis Bank & Ors. It observed that those decisions recognised that property acquired before enforcement of the Act is not completely immune from proceedings under the PMLA. They also recognised that where tainted property cannot be discovered, attachment of untainted property equivalent in value is permissible under the statutory scheme.
The Court noted that the Adjudicating Authority had, after appreciating the evidence, recorded a finding that the property represented value equivalent to the proceeds of crime generated from scheduled offences. It held that the plea that the property was ancestral did not, by itself, grant immunity from attachment. According to the Court, the PMLA does not create any exception for ancestral or inherited property, and such property is not immune from attachment. The Court rejected the contention that ancestral property could not be attached unless it had been purchased from illicit funds, holding that such an argument was contrary to the scheme of the PMLA.
Finding no perversity or illegality in the findings of the Adjudicating Authority, the Court held that the Appellate Tribunal had exercised its statutory jurisdiction properly and that the impugned order reflected due application of mind, compliance with statutory requirements, and consideration of the material on record.
Accordingly, the High Court dismissed the appeal along with the pending application(s), if any.
Cases Discussed
- Pavana Dibbur Vs. Directorate of Enforcement (Supreme Court), (2023) 15 SCC 91
- Vijay Madanlal Choudhary and Ors. Vs. Union of India and Ors. (Supreme Court), 2022 SCC Online SC 929
- Prakash Industries Ltd. Vs. Directorate of Enforcement (Delhi High Court), (2022) SCC Online Del. 2087
- Deputy Director, Directorate of Enforcement of Delhi Vs. Axis Bank & Ors. (Delhi High Court), (2019) SCC Online Del 7854
- M. Malthesh Vs. Directorate of Enforcement (Karnataka High Court), Criminal Petition No. 584 of 2018, dated 18th December 2020
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
CM APPL. 10454/2026-Exemption
1. Allowed, subject to all just exceptions.
CM APPL. 10456/2026
2. This is an application seeking condonation of delay of 9 days in re-filing the appeal.
3. For the reasons stated in the application, the same is allowed.
4. The application stands disposed of.
MISC. APPEAL (PMLA) 13/2026 & CM APPL. 10455/2026 INTERIM RELIEF
5. The present appeal is filed under Section 42 of the Prevention of Money Laundering Act, 2002 [“PMLA”] assailing the impugned order dated 27th November, 2025 passed by the Appellate Tribunal under the PMLA in FPA-PMLA-2158/DLI/2018 whereby the Tribunal upheld the confirmation of the Provisional Attachment Order dated 28th July, 2017 issued by the respondent Directorate of Enforcement.
6. The learned counsel for the appellant submits that the subject property, that is, 255, Sainik Vihar, Pitam Pura, Delhi was never purchased by the appellant. The said property was purchased by the father of the appellant out of his own income in the year 1991 in the joint name of appellant and his own. The said property has been with the family of the appellant continuously since the year 1991. The appellant never contributed any sum in the acquisition of the said property.
7. It has been argued that subject property could not have been attached as “value thereof’ in terms of Section 2(1) (u) of PMLA, 2002, since the said property was never actually purchased by the appellant himself. The right of the appellant in the subject property has flown through his deceased father and thus, it was wholly impermissible to rely upon Section 2(1) (u) of PMLA to attach the said property. Placing reliance on judgment of Karnataka High Court in M. Malthesh Vs. Directorate of Enforcement, dated 18th December 2020 in Criminal Petition No. 584 of 2018, it is argued that as per Section 2(1)(u) of PMLA, only these tainted properties, which are obtained directly or indirectly as a result of criminal activity relating to scheduled offence, can be termed as “proceeds of crime”, which is not the situation in the present case, as the subject property was not purchased by the appellant’s money but was rather purchased by his father from his own money. He also places reliance on the judgment of Supreme Court in Pavana Dibbur Vs. Directorate of Enforcement (2023) 15 SCC 91 to argue that any property bought prior to the commission of Scheduled Offence shall not be attached.
8. Per contra, learned Special Counsel for the respondent submits that the proceeds of crime acquired by the appellant in the form of foreign exchange, had been remitted abroad and were not available and therefore the subject property belonging to the appellant was attached as “equivalent value” by order passed under Section 5 of PMLA read with Section 2(1) (u) of PMLA and such action is therefore within statutory framework.
9. We have considered the rival submissions. The principal contention urged on behalf of the appellant is that the subject property was neither acquired nor purchased by the appellant from proceeds of crime and was ancestral in nature, and therefore, could not have been attached. At the very outset, it is apposite to note that the competent authority under Section 5 of the PMLA is empowered to provisionally attach property believed to be proceeds of crime. The Hon’ble Supreme Court in the case of Vijay Madanlal Choudhary and Ors. Vs. Union of India and Ors. (2022 SCC Online SC 929), held that the offence of money laundering is not dependent on or linked to the date on which the scheduled offence/predicate offence is committed. The relevant date is the date on which the person indulges in the process or activity connected with such proceeds of crime. Section 2(1)(u) of PMLA is being reproduced below for ready reference:-
“(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 or abroad.”
10. While interpreting the word “value thereof’, the Hon’ble Supreme Court in the case of Vijay Madanlal Choudhary (supra), clarified that the definition of “proceeds of crime” is wide enough to not only refer to the property derived or obtained as a result of criminal activity relating to a scheduled offence, but also of the value of any such property. If the property is taken or held outside the country, even in such a case, the property equivalent in value held within the country or abroad can be proceeded with. This Court, in the case of Prakash Industries Ltd. Vs. Directorate of Enforcement (2022) SCC Online Del. 2087, held that the properties which were acquired prior to enforcement of the Act, may not be completely immune from action under the Act. In Prakash Industries (supra), this Court reiterated the observations made in Deputy Director, Directorate of Enforcement of Delhi Vs. Axis Bank & Ors. (2019) SCC Online Del 7854 that the expression “proceeds of crime” envisages both tainted property as well as untainted property with it being permissible to proceed against latter provided it is being attached as equivalent to the “value of any such property” or “property equivalent in value held within the country or abroad”, provided the actual tainted property cannot be traced or found. Thus, where the respondent is unable to discover the tainted property, it may proceed to attach even an untainted property equivalent in value.
11. The Adjudicating Authority, upon appreciation of evidence, recorded a finding that the property represents value equivalent to proceeds of crime generated from scheduled offences. The plea of the property being ancestral does not ipso facto grants immunity from attachment under the PMLA. The statute does not carve out an exception for ancestral or inherited properties, and thus, they are not immune from attachment. The argument that ancestral property cannot be attached unless purchased from illicit funds, is misconceived and contrary to the scheme of PMLA.
12. Hence, we find no perversity or illegality in the findings of the Adjudicating Authority. The Appellate Tribunal, while upholding the attachment, has exercised jurisdiction vested in it under the statute and the impugned order reflects due application of mind, adherence to statutory requirements and consideration of the material on record.
13. In view of the foregoing, the present appeal is dismissed along with the pending application(s), if any.
