Ancestral Property Not Immune From PMLA Attachment As ‘Equivalent Value’: Delhi HC

The Delhi High Court has held that ancestral or inherited property is not immune from attachment under the Prevention of Money Laundering Act, 2002, clarifying that the statute permits attachment of untainted assets as “equivalent value” where the actual proceeds of crime are unavailable or untraceable.

The Court ruled that the character of a property as ancestral does not create any statutory exception under the Act and that attachment can extend to such property if it represents the value of the alleged proceeds of crime.

A Division Bench of Justice Navin Chawla and Justice Ravinder Dudeja dismissed an appeal filed under Section 42 of the PMLA by Arun Suri challenging the order of the Appellate Tribunal dated 27.11.2025, which had upheld the confirmation of the provisional attachment order issued by the Enforcement Directorate on 28.07.2017.

Holding that there was no perversity or illegality in the findings of the Adjudicating Authority or the Tribunal, the Court affirmed the attachment and declined to grant any relief to the appellant.

The appellant had contended that the property at Sainik Vihar, Pitampura, Delhi, was purchased in 1991 by his father out of his own income in their joint names and that he had not contributed any funds towards its acquisition.

It was argued that his right in the property flowed by inheritance and that the same could not be treated as “proceeds of crime” or attached as “value thereof” under Section 2(1)(u) of the Act.

Reliance was placed on judicial precedents to contend that properties acquired prior to the commission of the scheduled offence cannot be subjected to attachment and that only tainted assets derived from criminal activity fall within the scope of the provision.

The Enforcement Directorate, opposing the appeal, submitted that the alleged proceeds of crime had been generated in the form of foreign exchange and remitted abroad and were therefore not traceable within the country. In such circumstances, the statutory scheme expressly permits attachment of property equivalent in value to the proceeds of crime.

It was contended that the impugned attachment was within the framework of Section 5 read with Section 2(1)(u) of the Act and had been confirmed after due consideration of the material on record.

The Court noted that the definition of “proceeds of crime” under Section 2(1)(u) is of wide amplitude and includes not only property directly derived or obtained from criminal activity but also the value of such property.

Referring to the Supreme Court’s decision in Vijay Madanlal Choudhary v. Union of India, the Bench observed that where the tainted property is taken or held outside the country or cannot be located, the authorities are empowered to proceed against property of equivalent value held within the country or abroad.

The Court also relied on earlier decisions of the Delhi High Court, including Deputy Director, Directorate of Enforcement v. Axis Bank and Prakash Industries Ltd. v. Directorate of Enforcement, to reiterate that attachment of untainted property is permissible when it is sought as equivalent value to the proceeds of crime.

Rejecting the appellant’s plea that the property having been acquired prior to the alleged criminal activity could not be attached, the Court held that the offence of money laundering is linked to the process or activity connected with the proceeds of crime and not to the date of acquisition of the property.

It further held that the argument that ancestral or inherited property stands on a different footing is misconceived, as the statute does not provide any exemption for such assets.

The Court observed that the Adjudicating Authority had, on appreciation of the evidence, returned a finding that the property represented value equivalent to the proceeds of crime generated from the scheduled offences.

Finding that the Appellate Tribunal had exercised jurisdiction in accordance with law and that its order reflected due application of mind and adherence to statutory requirements, the Bench declined to interfere.

The appeal was accordingly dismissed along with the pending applications.

Case Title: Arun Suri v. Directorate of Enforcement

Bench: Justice Navin Chawla and Justice Ravinder Dudeja

Date of Decision: February 16, 2026