2019 (4) TMI 1085 - AT - Money Laundering

Prevention of Money Laundering - retention of the records seized from the residential premises of the Appellant - Application of the Respondent under Section 17 4 of the Act seeking retention of documents, Hard Disk Drive HDD and Indian Currency seized from the residential premises of the Appellant - HELD THAT - In the present case, no report against the appellant has been forwarded to the Magistrate. No complaint against the appellant was filed before a Magistrate. A mere reading of Sections 17 to 21 that the 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. 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 prescribed period for filing the prosecution complaint is ninety days. In the present case, more than one year and ten months have been passed, but no prosecution complaint has been filed. 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 Appellant. Order - a) As far as Indian Currency amounting to ₹ 4,25,000/- is concerned, in the absence any prima facie material placed by the respondent and being the appellant discharging his burden, we are satisfied that the said money cannot be retained further. The said currency of ₹ 4,25,000/- seized was part of the withdrawal of ₹ 5,00,000/- made by the father of the appellant from the current account of his proprietorship firm M/s. R.C. Kapoor Co. bearing no. 1160199139 maintained with Central Bank of India, M-2, South Extension, Part-I vide Cheque No. 156406 dated 06.02.2017. Therefore, even on merit, the appellant is entitled to receive the said money forthwith. b) With regard to one Hard Disc Drive is concerned, without prejudice, the respondent is entitled to take a copy of the Hard Disc Drive, the same be returned to the appellant forthwith. c) As far as Receipt of ₹ 1,32,00,000/- and the possession letter dated 17.03.2015 pertaining to the office premises of the appellant are concerned, the original letter may be kept by the respondent, if so required, and a photo copy of the same be handed over to the appellant. Present appeal is allowed.

Summary

Issues Involved:
1. Retention of documents, Hard Disk Drive (HDD), and Indian currency seized from the appellant's residential premises.
2. Compliance with procedural requirements under Sections 17, 18, 20, and 21 of the Prevention of Money Laundering Act (PMLA), 2002.
3. Validity of the seizure and retention of property beyond the prescribed period.

Issue-wise Detailed Analysis:

1. Retention of Documents, HDD, and Indian Currency:
The Adjudicating Authority allowed the respondent's application under Section 17(4) of the PMLA, seeking retention of documents, HDD, and Indian currency seized from the appellant's residential premises on 18.02.2017. The seized items included Indian currency amounting to ?4,25,000, an HDD, and documents related to the office premises of the appellant. The appellant argued that the seized currency and HDD did not belong to him but to his father and daughter, respectively. Additionally, the documents pertained to a period before the appellant's alleged involvement with Sanjay Bhandari.

2. Compliance with Procedural Requirements:
The search and seizure actions were initiated based on a notice from the Income Tax Department and a letter regarding Sanjay Bhandari's undisclosed foreign assets. The respondent conducted searches at the appellant's premises and locker but found no incriminating material in the locker. The appellant contended that the seized items were unrelated to the proceedings against Sanjay Bhandari and provided supporting documents, including a letter from his father and a bank statement. The respondent's rejoinder did not deny the appellant's claims about the seized currency and the timeline of his meeting with Sanjay Bhandari.

3. Validity of Seizure and Retention Beyond Prescribed Period:
The Tribunal noted that the impugned order was passed on 26.05.2017, and no FIR or charge-sheet had been filed against the appellant. Section 17 of the PMLA requires the authorized officer to record the reasons for belief in writing before conducting a search and seizure. The Tribunal observed that the search and seizure must comply with specific conditions, such as forwarding a report to a Magistrate or filing a complaint. In this case, no such report or complaint was filed against the appellant. The Tribunal emphasized that the outer limit for deciding the application for retention of property is 180 days from the date of seizure, which was not extendable unless a prosecution complaint was filed within 90 days from the retention order. Since no prosecution complaint was filed even after more than a year, the retention of the property was deemed invalid.

Conclusion:
The Tribunal allowed the appeal, setting aside the impugned order dated 26.05.2017. The Tribunal directed the respondent to return the seized currency to the appellant, as it belonged to his father. The respondent was allowed to take a copy of the HDD before returning it to the appellant. The original receipt and possession letter could be retained by the respondent, with a photocopy provided to the appellant. The application under Section 17(4) for retention of documents was disposed of accordingly. The Tribunal ordered the respondent to return the documents/records to the appellant forthwith. No costs were imposed.