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2023 (6) TMI 1436 - AT - Money LaunderingMoney Laundering - time limitation - refusal to provide copies of the seized records before filing of reply to the SCN. Whether the provisions of Section 21(2) of PMLA gives any scope for flexibility as to the timeline for giving copies of the seized records to the person from whom such records are seized? - HELD THAT - The seized records can only be retained for the maximum of 365 days for the cases which are under investigation or for longer period i.e. till the pendency of the proceedings relating to money laundering offence before the Court. Furthermore, if such seized records are sent within 30 days of the seizure to the Adjudicating Authority under sub-section 17(4) along with the Original Application, the provisions of retention for 180 days by the Investigating Officer on his own reasons to believe under sub-section 21(1) becomes redundant and also takes away the time required by him for conducting investigation. Therefore, it again follows that the seized records are not included in the word material as referred to under the provisions of the Act and Rules thereunder. Whether refusal to provide copies of the seized records before filing of reply to the Show Cause Notice issued by the Office of the Ld. Adjudicating Authority u/s 8(1) of PMLA causes prejudice to the appellants herein? - HELD THAT - The provisions of section 8(1) require that the Adjudicating Authority on receipt of an application under sub-section 17(4) has to issue a notice, if he has reason to believe that any person has committed an offence u/s 3 of PMLA or is in possession of proceeds of crime, to such person as to indicate the sources of his income, earning or assets, out of which or by means of which such person has acquired the property attached under section 5(1) or seized under section 17 along with the evidence on which such person relies and other relevant information. The Adjudicating Authority has issued Show Cause Notice to the appellants on 2-3-2023 under section 8(1) - It is observed that section 8(1) only mentions the issuing of a notice where the property has been attached or seized. The provisions of section 8(1) do not refer to seized records. The definition of property under section 2(v) of the Act includes deeds and instruments evidencing title/interest in such property or assets. The mere mention of the seized records in the Show Cause Notice so as to disclose the purpose of issuing the Show Cause Notice so as to make it clear that it is for the decision with regard to further retention of the seized records does not make such records as relied upon documents. From the reading of the order dated 26-5-2023 of the Adjudicating Authority it is clear that he does not intend to rely upon the seized record for the determination of further retention of seized records. In fact, he has not even received such records. It is, therefore, obvious that the Ld. Adjudicating Authority for the aforementioned adjudication proposes to rely upon the material for which copies thereof has already been supplied to the appellants - there does not appear to be any contravention of the principles of natural justice as the Ld. Adjudicating Authority has ensured supply of all documents on which he intends to rely upon for the adjudication proceedings. The documents which are in the form of material before the Ld. Adjudicating Authority are those on which he will be relying upon to adjudicate the proceedings relating to retention of the seized records beyond 180 days. Whether such records will be sufficient for the adjudication process is a question of subjective satisfaction of the Ld. Adjudicating Authority. In any case the appellants have chosen to challenge the interim order dated 26-5-2023 without allowing the Show Cause Notice dated 2-3-2023 to be finally adjudicated - The plea by the appellants that their reply to the Show Cause Notice for retention of seized records, cannot be effective in defending them in the proceedings before the Adjudicating Authority in the absence of the copies of the seized records, is not sustainable. Appeal dismissed.
Issues Involved:
1. Whether the provisions of Section 21(2) of PMLA allow flexibility regarding the timeline for providing copies of seized records. 2. Whether refusal to provide copies of seized records before filing a reply to the Show Cause Notice under Section 8(1) of PMLA causes prejudice to the appellants. Issue-wise Detailed Analysis: 1. Flexibility in Timeline for Providing Copies of Seized Records: The appellants argued that under Section 21(2) of the Prevention of Money Laundering Act (PMLA), they are entitled to obtain copies of seized records immediately and without limitation. They contended that the right to obtain such copies is unconditional and should be provided before the adjudication proceedings under Section 8 of PMLA reach their final stage. The appellants referred to the provisions of Section 21(2) before the 2013 amendment to support their claim that the right to obtain copies was absolute and immediate. The Tribunal examined the amended and unamended provisions of Section 21(2) and concluded that, post-amendment, the entitlement to obtain copies is not absolute. The removal of the link to sub-section 21(1) after the amendment implies that the right to obtain copies is not immediate and unconditional. The Tribunal noted that the legislative intent, as reflected in the placement of sub-section 21(2) between sub-sections 21(1) and 21(3), does not necessarily dictate the timing for providing copies. The Tribunal emphasized that the right to obtain copies should be exercised before any prejudice is caused to the person from whom the records are seized, rather than immediately upon request. 2. Prejudice Due to Refusal to Provide Copies Before Filing a Reply: The appellants claimed that not receiving copies of the seized records prejudices their ability to effectively respond to the Show Cause Notice issued under Section 8(1) of PMLA. They argued that the absence of such records prevents them from providing an effective reply, thereby violating principles of natural justice. The Tribunal examined the relevant provisions, including Sections 8 and 17 of PMLA, and concluded that there is no statutory requirement to provide copies of seized records at the current stage of proceedings. The Tribunal noted that the adjudication at this stage relates to the retention of seized records, not the attachment or seizure of property. The Tribunal also highlighted that the Adjudicating Authority does not intend to rely on the seized records for the determination of further retention, and the appellants have already been provided with all material relied upon for the adjudication proceedings. The Tribunal considered the respondents' concerns about the ongoing investigation, which involves complex scrutiny of voluminous records and forensic analysis of electronic records. The respondents argued that providing copies at this stage could compromise the investigation, lead to evidence tampering, and create third-party rights. The Tribunal found the respondents' concerns valid and noted that the appellants' apprehension of indefinite postponement is unfounded, as the adjudication of the Original Application is still pending. The Tribunal refrained from deciding when the copies should be given, emphasizing that it is not necessary at this stage of the proceedings. Conclusion: The Tribunal concluded that the applications for stay and the appeals lack merit and dismissed them. The Tribunal emphasized the need to interpret the provisions of PMLA in light of the legislative intent to address money laundering effectively, and it found no contravention of natural justice principles in the current proceedings. The Tribunal's decision reflects a careful consideration of the statutory provisions, legislative intent, and the practical implications of the ongoing investigation.
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