2019 (5) TMI 472 - AT - Money Laundering

Offence under PMLA - applications filed by the respondent under Section 17(4) for retention of document - application for retention of property is 180 days from the date of seizure of any property or records - HELD THAT - No report against the appellants has been forwarded to the Magistrate. No complaint against the appellants was filed before a Magistrate. No cognizance of schedule offence was taken by any authority or Additional Secretary to the Government of India. Under Section17(1) (A), it is the duty of the officer authorised if where it is found that it is not practicable to seize such property, can make such order that the person concerned shall not transfer or deal with the said property prior to the permission of the officer authorised. A copy of the said order shall be served upon the person concerned. Section 17, Sub-section (2) stipulates that after search and seizure, the authorised officer shall immediately forward a copy of the reason so recorded along with the material in his possession to the Adjudicating Authority in a sealed cover. It is clear from the reading of Sections 17 to 21 that outer limit upto the date for deciding the application for retention of property is 180 days from the date of seizure of any property or records. The said period is not extendable as per the scheme of the Act, unless the prayer for retention is allowed and subject to filling of prosecution complaint within 90 days from the date of passing the retention order. No doubt, once the prayer is allowed, the person concerned/aggrieved party of such order, is entitled to file the appeal under Section 26 of the Act. The same shall be heard and after giving an opportunity of being heard, the Appellant Tribunal shall pass the order either to confirm the order of retention or to modify or setting aside the same. The provisions of section 8 (3) (a) provides that the attachment or retention of property or record seized shall continue during the investigation for a period not exceeding ninety days. The said prescribed period has already been expired as more than a year has already elapsed but the properties and records have not been returned so far which is in clear violation of the provisions of PMLA. No prosecution complaint has been filed against the Appellants. In the light of above, the present appeals are allowed. The impugned orders dated 08.02.2018 and 22.02.2018 are set-aside pertaining to the appellants. The applications filed by the respondent under Section 17(4) for retention of documents are dismissed accordingly. All documents/materials and records shall be returned to the respective appellants by the respondent accordingly.

Summary

Issues Involved:
1. Legality of retention of seized documents and digital evidence.
2. Compliance with procedural requirements under the Prevention of Money Laundering Act (PMLA), 2002.
3. Justification for the ongoing investigation and retention of documents.

Issue-wise Detailed Analysis:

1. Legality of Retention of Seized Documents and Digital Evidence:
The appellants challenged the impugned orders allowing the retention of seized documents, mobile phones, laptops, and hard discs by the Directorate of Enforcement. The Adjudicating Authority had permitted the retention on grounds that the ongoing investigation justified it, and the documents were potentially relevant to the proceeds of crime. The Tribunal noted that no FIR, charge sheet, or prosecution complaint had been filed against the appellants, which weakened the justification for retaining the seized materials.

2. Compliance with Procedural Requirements under PMLA, 2002:
The Tribunal scrutinized whether the procedural requirements under Sections 17, 18, 20, and 21 of the PMLA were followed. Section 17 mandates that the authorized officer must record the reason to believe in writing before conducting a search and seizure. The Tribunal found that the authorized officer did not forward any report to the Magistrate or file a complaint before a Magistrate, as required by the proviso to Section 17(1). Additionally, the retention of property beyond the prescribed period of 180 days without proper authorization was highlighted as a violation of the Act.

3. Justification for Ongoing Investigation and Retention of Documents:
The Tribunal examined the justification provided for the ongoing investigation and the retention of documents. It was noted that the investigation was based on suspicion and the seizure of materials was to facilitate the investigation. However, the Tribunal found that the prescribed period for retention had expired, and no prosecution complaint had been filed, which rendered the continued retention unjustifiable. The Tribunal emphasized that the retention of property or records seized should not exceed 90 days during the investigation, as per Section 8(3)(a) of the PMLA.

Conclusion:
The Tribunal allowed the appeals, set aside the impugned orders dated 08.02.2018 and 22.02.2018, and dismissed the applications filed under Section 17(4) for retention of documents. The Tribunal ordered the respondent to return all seized documents, materials, and records to the respective appellants, emphasizing the importance of adhering to procedural requirements and the prescribed timelines under the PMLA.