Ancestral or Inherited Properties Can Be
Attached Under PMLA: Delhi High Court

Your grandfather bought a house in 1991. You inherited it. You never contributed a rupee toward its purchase. The Enforcement Directorate attaches it under the Prevention of Money Laundering Act, 2002. Can they do that?

The Delhi High Court answered that question on February 16, 2026 in Arun Suri v. Directorate of Enforcement [MISC. APPEAL (PMLA) 13/2026]. The answer: yes. And the reasoning matters for every practitioner advising clients in PMLA proceedings.

The Facts

In 1991 — over a decade before the PMLA even came into force — Arun Suri's father purchased a property at 255, Sainik Vihar, Pitam Pura, Delhi, in the joint names of himself and his son. The appellant, Arun Suri, contributed nothing toward its purchase. The property had remained in the family continuously since then.

In 2017, the Directorate of Enforcement issued a Provisional Attachment Order (PAO) under Section 5 of the PMLA against this property. The reason: the actual proceeds of the scheduled offence — foreign exchange — had been remitted outside India and could not be traced or recovered. The property was being attached not as a directly tainted asset, but as a substitute: the equivalent value of the untraceable proceeds of crime.

The Adjudicating Authority confirmed the attachment. The Appellate Tribunal, on November 27, 2025, upheld it. Arun Suri appealed to the Delhi High Court under Section 42 of the PMLA.

A Division Bench of Justice Navin Chawla and Justice Ravinder Dudeja dismissed the appeal.

The Core Legal Question

At the heart of the case was a deceptively simple question:

Can a property be attached under PMLA if it was never purchased with the proceeds of crime — and in fact, was never purchased by the accused at all?

Suri's counsel argued no. The argument was built around Section 2(1)(u) of the PMLA, which defines "proceeds of crime" as:

"any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property or where such property is taken or held outside the country, then the property equivalent in value held within the country or abroad."

The submission: the provision requires a direct or indirect connection between the property and the criminal activity. An ancestral or inherited property — purchased from a father's own income — simply cannot satisfy that test. Taint cannot travel through blood.

Two precedents were pressed:

• Karnataka HC in H.M. Malthesh v. Directorate of Enforcement (2020): Only properties obtained as a result of criminal activity qualify as proceeds of crime.
• Supreme Court in Pavana Dibbur v. Directorate of Enforcement (2023) 15 SCC 91: Property bought prior to the commission of the scheduled offence shall not be attached.

The Court's Reasoning: Three Pillars

1. The "Equivalent Value" Doctrine

The ED was not attaching the property as a directly tainted asset. It was invoking the "value thereof" limb of Section 2(1)(u) — the clause that permits attachment of a property equivalent in value when the actual proceeds cannot be traced.

The court relied on the Supreme Court's landmark ruling in Vijay Madanlal Choudhary v. Union of India (2022 SCC OnLine SC 929), which held that the definition of "proceeds of crime" is wide enough to cover not only property derived from criminal activity but also the value of any such property — and even property held outside India, or its equivalent value within India.

The actual foreign exchange had left the country. ED was entitled to reach for equivalent value sitting domestically. Section 2(1)(u) expressly contemplates exactly this scenario.

2. Pre-Enactment Acquisition Is No Shield

The court cited its earlier ruling in Prakash Industries Ltd. v. Directorate of Enforcement (2022) SCC OnLine Del. 2087, which held that properties acquired prior to the enforcement of the PMLA may not be completely immune from action under the Act.

This was the court's pointed answer to the Pavana Dibbur argument: the date of acquisition does not insulate a property from PMLA proceedings when it is being reached as equivalent value.

3. Ancestral Character Is Not a Statutory Exception

The most significant holding of the judgment:

"The plea of the property being ancestral does not ipso facto grants immunity from attachment under the PMLA. The statute does not carve out an exception for ancestral or inherited properties, and thus, they are not immune from attachment. The argument that ancestral property cannot be attached unless purchased from illicit funds, is misconceived and contrary to the scheme of PMLA."

The logic is clean: PMLA creates a broad attachment power. It lists no carve-outs for ancestral property. Courts cannot read in exceptions that Parliament chose not to create.

What This Means in Practice

This ruling has significant consequences for practitioners and clients in PMLA proceedings.

"I didn't buy it with dirty money" is no longer sufficient

The most instinctive defence — this property has nothing to do with the alleged crime — will not work if the actual proceeds are abroad or untraceable. The question is not where the property came from. The question is: does its value approximate the value of proceeds that cannot be found?

The date of acquisition is largely irrelevant in equivalent value cases

Whether the property was bought in 1991, 1971, or inherited through three generations, the PMLA can still reach it in an equivalent value scenario. Pavana Dibbur does not save you if the proceedings are correctly framed.

Joint ownership creates exposure

In this case the property was in the joint name of father and son. Even where joint ownership is entirely innocent, if one co-owner is subject to PMLA proceedings and the original proceeds cannot be traced, the jointly-held property can be reached.

The family / inheritance defence has been substantially narrowed

There has long been an argument that family members who inherited property cannot be dragged into PMLA proceedings. This judgment makes clear that the nature of how you came to hold the property — by purchase, gift, inheritance, or ancestral devolution — does not matter when PMLA's equivalent value provisions are invoked.

The Limits of This Ruling — Where the Fight Now Lies

It is important not to overclaim. The court was careful to ground its reasoning in a specific factual matrix:

• The actual proceeds of crime (foreign exchange) had been remitted abroad and were untraceable.
• The Adjudicating Authority had already recorded a finding that the property represented equivalent value.
• The challenge was to an interim attachment order in a Section 42 appeal — not a final determination after full trial.

What this means for defence strategy: ED still has to —

1. Establish that the original tainted property cannot be traced or found;
2. Demonstrate that the property proposed as equivalent actually approximates that value;
3. Satisfy the Adjudicating Authority on these questions before confirmation.

The door to challenging attachments of ancestral property is not fully closed. But the arguments must now focus on these thresholds — not on the ancestral character of the property itself.

Key Cases at a Glance

The Bottom Line

Arun Suri v. Directorate of Enforcement is a significant addition to the growing body of PMLA jurisprudence expanding the ED's attachment powers. It confirms that:

• PMLA draws no distinction between ancestral and self-acquired property.
• Where the original proceeds have vanished, equivalent value can be attached — regardless of who holds it or how they came to hold it.
• The "innocent holder" defence must be built on the evidentiary foundations of the attachment, not on the nature of how the property was acquired.

For clients holding inherited property in families where PMLA proceedings are a risk, the lesson is clear: safeguards must be put in place proactively, and defence strategy must engage with what ED can and cannot prove — not rest on the ancestral shield alone.