Arjun Mehta purchased a house using proceeds of crime. The Enforcement Directorate attached the property under the Prevention of Money Laundering Act, 2002. During the pendency of proceedings, Arjun Mehta created a lease

Section 9 of the Prevention of Money Laundering Act, 2002 provides that where an order of confiscation has been made under sub-section (5) or sub-section (7) of section 8 or section 58B or sub-section (2A) of section 60 in respect of any property of a person, all the rights and title in such property shall vest absolutely in the Central Government free from all encumbrances: Where the Special Court or the Adjudicating Authority, as the case may be, after giving an opportunity of being heard to any other person interested in the property attached under this Chapter, or seized or frozen under Chapter V, is of the opinion that any encumbrance on the property or lease-hold interest has been created with a view to defeat the provisions of this Chapter, it may, by order, declare such encumbrance or lease-hold interest to be void and thereupon the aforesaid property shall vest in the Central Government free from such encumbrances or lease-hold interest. It may be noted that nothing in this section shall operate to discharge any person from any liability in respect of such encumbrances which may be enforced against such person by a suit for damages. In the present case, the property was confiscated under Section 8(5) of the PMLA. Once confiscation is ordered, the property vests absolutely in the Central Government free from all encumbrances. If the lease and mortgage were created after attachment and with the intention to defeat the proceedings under PMLA, the Special Court can declare them void. Therefore, the lease in favour of the friend and the mortgage in favour of the lender will not survive after confiscation. The Central Government will obtain full and clear title over the property.