Karnataka High Court Allows PMLA Attachment of Properties Bought Years Before Offence

The Karnataka High Court on October 28, 2026 dismissed Writ Petition No. 34513 of 2024 filed by Mangaluru businessman Shanker Mahadevan Iyer against the Deputy Director, Directorate of Enforcement.

Justice Suraj Govindaraj decided the petition through a 228-page order that took up Iyer's timing objection at length.

Iyer had challenged provisional attachment proceedings against immovable properties he bought in 2004 and 2008.

He argued assets purchased years before the alleged scheduled offence could not attract liability under the anti-money laundering law by reason of age and prior ownership.

Construing the definitional and attachment provisions together, the Court rejected that argument.

It held acquisition long before the alleged offence does not by itself give immunity from attachment under the Prevention of Money Laundering Act 2002.

Equivalent Value Assets Can Be Attached

Section 2(1)(u) read with Section 5 formed the basis for that finding, extending attachment beyond property directly derived from crime.

The order separates property directly derived from criminal activity from other property attached to meet the alleged value involved.

If direct proceeds are not available for attachment, assets of equivalent value held by the person concerned can be proceeded against.

This value limb, the bench said, is not limited to cases where original proceeds sit abroad and only a domestic equivalent is available.

With no foreign-holding requirement, timing of purchase alone cannot defeat a claim for provisional attachment claimed on equivalent-value basis.

Attachment, on this view, turns on the alleged act of money laundering and the value attributed to it, not the calendar year of acquisition.

On that reading, the attachment proceedings started by the respondent agency survive.

Pronouncement came with a 30-day extension of the interim order operating in the writ proceedings, holding off further steps for that period.