1. Statutory Basis under the PMLA, 2002

Under Section 5(1) of the Prevention of Money Laundering Act, 2002 (“PMLA”), the Enforcement Directorate (“ED”) is empowered to issue a provisional attachment order in writing over movable or immovable property if—based on “reason to believe”—the property constitutes proceeds of crime and is likely to be hidden, transferred, or dealt with so as to frustrate confiscation proceedings.

Such attachment is provisional in nature and valid for a maximum period of 180 days, during which the ED must forward the order to the Adjudicating Authority (AA) for confirmation.

Once the AA confirms the provisional attachment under Section 8, it continues until confiscation or release, subject to appeals. If the ED does not apply for confirmation within the initial 180 days, the property is automatically released.

2. Nature and Effect of Attachment

  • Provisional Attachment: a legal restraint prohibiting transfer or disposition, but does not immediately deprive the property owner of enjoyment unless possession is taken under exceptional circumstances (which courts advise against).
  • Confirmed Attachment: Once confirmed by the AA under Section 8(3), the ED may take physical possession only in special cases, but confiscation occurs only after adjudication and judicial order under Section 9 (confiscation vests in the Central Government upon conviction).

3. Nexus of Property to Proceeds of Crime / Equivalent Value

  • The property must be directly or indirectly linked to proceeds of crime, as defined in Section 2(1)(u), or in absence of those, ED may attach property of equivalent value.
  • However, the ED’s power to attach equivalent value property is limited to the quantifiable proceeds, and cannot exceed the value of crime‑derived assets linked to the predicate offence.
  • ED may even attach assets held by third‑parties, if connected to proceeds of crime, but due process and statutory limits must be satisfied.

4. Burden of Proof and Presumptions

  • Under Section 24, once property is alleged as proceeds of crime, the burden shifts to the accused/person interested to prove lawful source.
  • Section 23 provides for presumption in inter‑connected transactions, meaning if one part is proven tainted, remaining linked transactions are presumed tainted.

5. Right to Challenge and Substitute

  • The person affected may challenge the provisional or confirmed attachment before the PMLA Appellate Tribunal within 45 days, and thereafter before the High Court and the Supreme Court.
  • In a recent Supreme Court ruling, the SC permitted substitution of provisionally attached assets with unencumbered commercial properties of equivalent value—subject to safeguards (valuation, indemnity bond, no-encumbrance certificate, undertaking, disclosure, etc.).
  • Note, this substitution order is limited to its facts and not binding precedent. High Courts have diverged: Delhi and Telangana have allowed substitution in certain cases, Punjab & Haryana HC denied it prior to AA confirmation.

6. Examples and Judicial Practice

  • In May 2025, ED provisionally attached property worth Rs 53.64 lakhs belonging to a forest officer in a money‑laundering investigation linked to a high‑profile coal/forest scam; the Chhattisgarh HC recently upheld that attachment and confirmed the validity of statutory presumptions and nexus requirement.
  • In another case, properties worth ₹1.29 crore belonging to an ex‑AIG were attached based on extortion allegations; these assets were classified as proceeds of crime under PMLA.
  • Large‑scale examples include the NSEL fraud case, where ED attached assets worth hundreds of crores across multiple states, and courts have generally upheld such actions when statutory requirements were met.

Procedural Flowchart

Procedural Flowchart

Can ED Attach Your Property?

Yes, subject to the following strict legal framework:

  1. ED must have reason to believe your property is derived from—or equivalent to—proceeds of crime tied to a scheduled offence.
  2. A written provisional attachment is issued by an authorised officer (Deputy Director or above) under Section 5, valid for 180 days.
  3. If confirmed by the Adjudicating Authority under Section 8 within that period, the property remains attached until resolution or confiscation.
  4. Presumption shifts the burden to you to prove lawful origin under Section 24.
  5. You may challenge before the PMLA Tribunal (within 45 days), then High Court/Supreme Court.
  6. Under limited circumstances, substitution of attached property with equivalent assets may be allowed by courts, but subject to strict conditions and not automatically granted.

Conclusion

The ED can lawfully attach property under PMLA—but only if strict statutory pre-conditions are met: belief of tainted origin, notice, timely confirmation, adherence to burden‑shifting rules, and opportunity for legal challenge. Attachments must not exceed the quantified proceeds of crime, and courts are increasingly cautious about allowing substitution.