2020 (7) TMI 119 - AT - Money Laundering

Jurisdiction - power of Tribunal to grant stay/pass order of status quo - Retention of documents, digital devices and other things seized/recovered - section 17(4) of the PMLA - whether the Appellate Tribunal has jurisdiction to grant stay or passed any order of status quo which has the consequence of stalling the investigation? HELD THAT - Section 26 (1) clearly provides that the appeal to this Tribunal is to be preferred against an order passed by the Adjudicating Authority. The Adjudicating Authority has passed the impugned order under Section 8(3) of the said Act allowing the application filed by the Respondent in the interest of investigation and interest of justice and permitted that the records seized in the case to be retained in terms of Section 17(4) of the PMLA, 2002. Since the order under challenged is an order passed by the Adjudicating Authority so this Tribunal has inherent jurisdiction to grant stay of the impugned order but the stay as sought in the present appeals, by the appellant cannot be granted as the appellant is seeking stay of the impugned order consequence of which is to stall the investigation. In the present case, during the course of hearing it is submitted by the learned Sr. counsel for the appellant that they have received summons to unlock the cell phones, which according to the appellant, violates privacy of the appellants. What it appears is that, actually, the appellant wants a direction from this Tribunal to issue an order of status quo re qua the cell phones which is nothing but in the guise to stall the investigation and the same is not within the jurisdiction of this Tribunal as the matter pertains to issue of summons was not before the Adjudicating Authority. The submissions made with regard to issue of summons/unlock of cell phones and the violation of the fundamental rights as enshrined under Articles 20(3) 20(1) are not within the jurisdiction of this Tribunal. We have to read Section 17(1)(i) to (iv) in conjunction with Section 8(3)(a) wherein it is clearly provided that the retention of record shall continue during investigation for a period not exceeding 365 days, as the case may be. From the above, it appears that both the provisions are inter-related so the records are meant for the investigations - the appellants do not have a prima facie case for grant of any stay or status quo order with respect to records including digital devices seized during the search made by the Respondent. Application dismissed.

Summary

Issues Involved:
1. Legality of the retention of cell phones and other digital devices by the Enforcement Directorate.
2. Jurisdiction of the Appellate Tribunal to grant a stay or status quo order.
3. Alleged violation of privacy and fundamental rights under Articles 20(3) and 21 of the Constitution of India.

Detailed Analysis:

1. Legality of the Retention of Cell Phones and Other Digital Devices:
The appellants challenged the common order of the Adjudicating Authority, which allowed the Respondent to retain documents, digital devices, and other items seized on 19.09.2019 from seven different premises under Section 17(4) of the PMLA. The appellants limited their prayer to the cell phones seized, arguing that viewing the contents of the cell phones and other electronic devices by the Enforcement Directorate would be illegal, unconstitutional, and an invasion of privacy, causing grave prejudice to the appellants.

The appellants relied on several judgments, including:
- Justice K.S. Puttaswamy (Retd) and Another v/s. Union of India and Others (2017) 10 SCC.
- Selvi & Ors v/s. State of Karnataka (2010) 7 SCC 263.
- Riley v/s. California (2014 SCC OnLine US SC 71:573 US).
- A Residence in Oakland, California (Case No. 4-19-70053).

They argued that unlocking the cell phones without express consent would violate Articles 20(3) and 21 of the Constitution of India.

2. Jurisdiction of the Appellate Tribunal to Grant a Stay or Status Quo Order:
The Respondent argued that the appellants did not raise the issue of the infringement of fundamental rights before the Adjudicating Authority and that the Tribunal has limited statutory jurisdiction under Section 26 of the PMLA. The Respondent emphasized that the appellants were not cooperating with the investigation despite several summons and that granting a stay would prejudice the investigation.

The Tribunal noted that Section 26(1) of the PMLA allows appeals against orders passed by the Adjudicating Authority. The Tribunal has jurisdiction to grant a stay of the impugned order, but not in a manner that would stall the investigation. The Tribunal concluded that the appellants were seeking a status quo order regarding the cell phones, which would effectively interfere with the ongoing investigation.

3. Alleged Violation of Privacy and Fundamental Rights:
The appellants contended that the Enforcement Directorate's actions would violate their right to privacy and Articles 20(3) and 21 of the Constitution. The Tribunal, however, stated that it does not have jurisdiction to decide constitutional issues or the violation of private rights vis-à-vis the summons issued by the Respondent. The Tribunal must exercise its jurisdiction as per the statute.

The Tribunal referred to Sections 17(1)(i) to (iv), 2(w), 8(3), and 26 of the PMLA. Section 17(1) deals with search and seizure, Section 2(w) defines "records," Section 8(3) deals with adjudication, and Section 26 pertains to appeals. The Tribunal emphasized that the retention of records, including digital devices, is meant for investigations and can continue for a period not exceeding 365 days.

Conclusion:
The Tribunal rejected the appellants' applications for a stay or status quo order regarding the operation of the cell phones. The Tribunal found that the appellants did not have a prima facie case for such relief and that granting the stay would interfere with the ongoing investigation. The Tribunal reiterated that it does not have jurisdiction to decide constitutional issues or the violation of private rights related to the summons issued by the Respondent.