Seized Property Under Money Laundering Case Must Be Returned If…: Court

The court said that Property seized under Money-laundering act must be returned if probe does not result.

New Delhi:

Property seized by the Enforcement Directorate (ED) under the Prevention of Money-laundering Act (PMLA) must be returned if the investigation does not result in any proceedings within 365 days, the Delhi High Court has held.

In an order passed earlier this week, Justice Navin Chawla said the continuation of a seizure beyond 365 days, in the absence of the pendency of any proceedings relating to any offence before a court, shall be confiscatory in nature and without the authority of law and, thus, violative of Article 300A of the Constitution.

The court’s decision came on a petition filed by the resolution professional of Bhushan Power and Steel Limited (BPSL) against the continued seizure of various documents, records, digital devices and gold and diamond jewellery that have an aggregate value of more than Rs 85 lakh from his premises pursuant to a money-laundering case.

In the absence of any proceedings in relation to the seized property, the court directed the authorities to return the same to the petitioner.

“The natural consequence of the investigation for a period beyond 365 days not resulting in any proceedings relating to any offence under the Act, in terms of section 8(3) of the (Prevention of Money Laundering) Act, is that such seizure lapses and the property so seized must be returned to the person from whom it was so seized,” the court ruled.

“The respondents (ED) are directed to return the documents, digital devices, property and other material seized from the petitioner pursuant to the search-and-seizure operation conducted on August 19 and 20, 2020 forthwith to the petitioner, subject to any order to the contrary passed by any competent court,” it ordered.

The agency argued that the seizure has to continue during the pendency of the proceedings before the trial court after a prosecution complaint has been filed before the court concerned, irrespective of whether it has arrayed the petitioner as an accused or not.

The court observed that retention of the documents and properties has been allowed for the purposes of investigation or adjudication and can be sustained beyond 365 days if any proceeding is initiated before the special court in relation to the property or the record so attached, seized or frozen.

In the present case, however, the investigation did not culminate into any complaint nor did it culminate into a supplementary complaint to the original one filed against BPSL and others, the court added.

“It is held that the period of 365 days from the passing of the order dated 10.02.2021 by the adjudicating authority having been passed, the documents, digital device, property seized from the petitioner in the search and seizure conducted on August 19 and 20, 2020 from the premises of the petitioner are liable to be returned,” the court concluded.

“The continuation of such seizure beyond 365 days, in the absence of the pendency of any proceedings relating to any offence under this Act before a court or under the corresponding law of any other country before the competent court of criminal jurisdiction outside India, shall be confiscatory in nature, without authority of law and, therefore, violative of Article 300A of the Constitution of India,” it said.

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