Equivalent-Value Attachment under PMLA: Power, Limits and Valuation

Section 2(1)(u) defines proceeds of crime to include not only property directly or indirectly derived from scheduled criminal activity, but also “the value of any such property.” This permits action where the original proceeds have been spent, concealed, transferred or taken beyond practical reach. It does not permit attachment of unlimited lawful property.

Direct proceeds and equivalent value

An order should state which theory it applies. Direct proceeds require tracing to criminal activity. Equivalent-value attachment targets another asset because the original tainted property cannot effectively be secured. Confusing the two can obscure ownership, limitation and third-party rights.

The quantified ceiling

Equivalent-value attachment must ordinarily remain within the properly assessed value of unavailable proceeds. The calculation should avoid counting the same corpus every time it passes through an account, adding gross contract value where only a portion is alleged to be criminal benefit, or attaching multiple assets each for the full amount.

The Delhi High Court’s Axis Bank decision recognises the concept while protecting genuine third-party interests. The later Division Bench judgment in Directorate of Enforcement v. Prakash Industries Ltd., 2025:DHC:9626-DB, affirms that equivalent-value power can operate when statutory prerequisites are established. The power remains dependent on identified proceeds, rational valuation and recorded reasons.

Whose property may be reached?

The statutory text, ownership structure and authority invoked require close analysis. The prosecution must not use equivalent value as a shortcut to attach property of any relative, lender or group company. Beneficial ownership, control, transfer history and the alleged offender’s interest must be proved.

Valuation disputes

Relevant dates and valuation methods should be disclosed. Market value, book value, acquisition cost and alleged criminal gain are different measures. Expert valuation may be necessary for shares, businesses, intellectual property or partially completed real estate.

The defence should offer its own schedule comparing alleged proceeds, recovered direct property, existing restraints and each equivalent asset. Any excess or duplication should be quantified.

Equivalent value preserves confiscation where criminals dissipate proceeds; proportionality prevents that rationale from becoming general asset forfeiture.

Sources

Delhi High Court, Deputy Director, Directorate of Enforcement v. Axis Bank, 2019 SCC OnLine Del 7854.

Delhi High Court, Directorate of Enforcement v. Prakash Industries Ltd., 2025:DHC:9626-DB, decided 3 November 2025.

Prevention of Money-Laundering Act, 2002, Sections 2(1)(u), 5 and 8: https://www.indiacode.nic.in/handle/123456789/15402

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