ED Cannot Treat Entire Disproportionate Assets as Proceeds of Crime Before CBI Investigation: Bombay HC

Bombay HC Limits ED’s Presumption in PMLA Cases

The Bombay High Court has held that the Enforcement Directorate (ED) cannot automatically treat disproportionate assets as 'proceeds of crime' under the Prevention of Money Laundering Act (PMLA), 2002, before the conclusion of the underlying predicate investigation by agencies like the CBI.

The Court observed that the determination of whether assets were derived from criminal activity must be based on conclusive evidence from the predicate offence probe. Merely identifying disproportionate assets without establishing a direct link to proceeds generated from scheduled offences renders confiscation proceedings premature.

The prosecution must establish a direct nexus between the asset and the proceeds of crime; a preliminary finding of disproportionality is not sufficient.

This ruling reinforces procedural fairness in PMLA investigations. Practitioners should challenge provisional attachments where the predicate case remains inconclusive, especially in corruption-linked money laundering probes. The decision may impact ongoing ED actions in pre-trial stages.