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2019 (5) TMI 1461 - AT - Money LaunderingOffence under PMLA - Retention of property - application filed by the Enforcement Directorate - Respondent and allowing the Respondent to retain the documents/digital devices till finalization of the case - HELD THAT - 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 within the meaning of sub-section 4 of Section 21 is 180 days from the date of seizure of any property or records. The said period is not extendable. 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. Where the Adjudicating Authority decides by an order confirm the retention under Sub-section (1) of Section 17 or Section 18 for the purpose of continuation during investigation for a period not exceeding ninety days under this Act before the Competent Court, or under the corresponding law of any other countries as the case may be under Sub-section (3) (a) of Section 8 may take necessary action within the time prescribed. In failure to do so under this Act, all the proceedings, seizures/frozen under Section 17 would be lapsed ipso facto. If a particular thing is to be done in a particular manner, it must be done in that manner only and none other. Reliance in this regard is also placed on a judgements in the cases of Dipak Babaria and another vs. State of Gujarat 2015 (8) TMI 775 - SUPREME COURT and J. Jayalalitha Anr vs State of Karnataka Ors 2013 (9) TMI 1182 - SUPREME COURT 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. No prosecution complaint has been filed against the appellant herein. The properties and records of the appellant were seized only for the purpose of investigation. The period of 90 days as prescribed under section 8 (3) (a) has already expired. No prosecution complaint has been filed by the respondent against the appellant. The said fact has been admitted by the learned counsel for the respondent. Appeal is liable to be allowed in view of the mandatory provision as the retention order lapses. The properties retained by the respondent shall be returned to the appellant within next two weeks from today. In the interest of justice, equity and fair play, the respondent is allowed to retain the photocopies of records seized/print of the electronic items and copy of hard disks, if so required, before returning the same to the appellant. The counsel for the respondent states that the respondent may rely upon the documents and materials before the Special Court. This Tribunal does not express any opinion in this regard, the same, if necessary, may be relied upon in accordance with law.
Issues Involved:
1. Validity of the retention of documents/digital devices by the Enforcement Directorate. 2. Compliance with the procedural requirements under the Prevention of Money Laundering Act, 2002 (PMLA). 3. Justification for the search and seizure operations. 4. Connection of the appellant with the alleged money laundering activities. 5. Adherence to statutory timelines for retention of seized property. Detailed Analysis: 1. Validity of the retention of documents/digital devices by the Enforcement Directorate: The appeal was filed against the order dated 22.05.2018 by the Adjudicating Authority under the PMLA, 2002, which allowed the Enforcement Directorate (ED) to retain the documents/digital devices till the finalization of the case. The appellant challenged this order, arguing that the retention was unjustified and lacked proper legal basis. 2. Compliance with the procedural requirements under the Prevention of Money Laundering Act, 2002 (PMLA): The appellant argued that the ED failed to comply with the procedural requirements under the PMLA. Specifically, the appellant contended that the ED did not provide any material linking the appellant to the alleged money laundering activities or the proceeds of crime. Additionally, the appellant emphasized that the ED did not record or forward the reasons to believe in writing, as mandated by Section 17 of the PMLA. 3. Justification for the search and seizure operations: The ED conducted search and seizure operations on 01.12.2017 under Section 17 of the PMLA, recovering various documents and electronic devices. The appellant argued that the search and seizure were unjustified as there was no evidence linking the appellant to the alleged money laundering activities. The appellant also highlighted that the total value of the seized property was only one lac rupees, which was disproportionate to the alleged offense. 4. Connection of the appellant with the alleged money laundering activities: The appellant contended that there was no material evidence produced by the ED to establish any connection between the appellant and the alleged money laundering activities involving Sterling Biotech Ltd. The appellant emphasized that they were not accused in any FIR or ECIR and had not been charge-sheeted for any offenses. 5. Adherence to statutory timelines for retention of seized property: The appellant argued that the statutory timeline for retention of seized property, as prescribed under Section 8(3)(a) of the PMLA, had expired. The ED had not filed a prosecution complaint against the appellant within the 90-day period, rendering the retention order invalid. The Tribunal acknowledged this lapse and ordered the return of the seized properties to the appellant within two weeks. Conclusion: The Tribunal allowed the appeal, highlighting the mandatory provisions of the PMLA and the failure of the ED to comply with the procedural requirements. The Tribunal ordered the return of the seized properties to the appellant, allowing the ED to retain photocopies of the records and digital evidence if necessary. The Tribunal did not express any opinion on the potential reliance on these documents in future proceedings before the Special Court.
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