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2023 (1) TMI 642 - HC - Money LaunderingSearch and seizure conducted on 17.10.2022 and consequential panchanamas contrary to the Section 17 of the Prevention of Money Laundering Act - Challenge on the ground that the reasons are to be recorded in writing before issuing search warrant and the reasons are to be communicated immediately after the search and seizure - reasons to believe - HELD THAT - This Court is of considered view that the Additional Director of the Enforcement Directorate without recording the 'reasons to believe' issued search warrant/authorisation to his subordinates and the Deputy Director of the Enforcement recorded the reasons to believe without any date and time, which clearly shows that without following the requirements under Section 17 (1) of PML Act conducted search and seizure and seized jewellery, cash and other articles belonging to the petitioners. In the instant case the record reveals that the Additional Director of Enforcement Directorate without recording the reasons to believe as contemplated under Section 17 (1) of PML Act, issued Search Warrant/Authorisation to the Deputy Director to conduct search and seizure of the premises of the petitioners and thereafter the Deputy Director recorded reasons to believe without any date and time. The Hon ble Apex Court in OPTO CIRCUIT INDIA LTD. VERSUS AXIS BANK OTHERS 2021 (2) TMI 117 - SUPREME COURT , held that the authorised Officer is vested with sufficient power and such power is circumscribed by a procedure laid down under the statute, as such the power is to be exercised in that manner alone, failing which it would fall foul of the requirement of complying due process under law. Thus, the action of the respondents in conducting search and seizure at the premises of the petitioner No.1-company and the residences of petitioners 2 to 4 and seizing of all the cash, jewellery and other articles in pursuance to the search warrant/authorization dated 17.10.2022 is contrary to the Section 17 of Prevention of Money Laundering Act, 2002 and accordingly the same is hereby set aside. The respondents are directed to release all the jewellery, cash and other articles seized in pursuance to the search warrant/authorization dated 17.10.2022 - petition allowed.
Issues Involved:
1. Legality of the search and seizure conducted on 17.10.2022. 2. Compliance with Section 17 of the Prevention of Money Laundering Act (PMLA). 3. Maintainability of the writ petition under Article 226. Issue-wise Detailed Analysis: 1. Legality of the search and seizure conducted on 17.10.2022: The petitioners challenged the search and seizure conducted on 17.10.2022, arguing that it was contrary to Section 17 of the PMLA. They contended that neither the petitioner company nor its directors were related to the alleged offenses registered against Mr. Sukesh Gupta and others. The search warrant was shown, and signatures were forcefully taken without allowing the petitioners to read its contents. The respondents failed to provide details of the date and time for recording the 'reasons to believe' and did not meet the mandatory provisions of Section 17 of the PMLA. 2. Compliance with Section 17 of the Prevention of Money Laundering Act (PMLA): The court examined whether the search and seizure were conducted in compliance with Section 17 of the PMLA. Section 17 mandates that the 'reasons to believe' must be recorded in writing before issuing a search warrant. The court found that the Additional Director of the Enforcement Directorate issued the search warrant without recording the 'reasons to believe.' Instead, the Deputy Director recorded the 'reasons to believe' without any date and time, which was a clear violation of Section 17(1) of the PMLA. The court cited various judgments, including Opto Circuit India Limited Vs. Axis Bank and others, which emphasized that if a statute provides for a thing to be done in a particular manner, it must be done in that manner alone. 3. Maintainability of the writ petition under Article 226: The respondents argued that the writ petition was not maintainable as an alternative remedy was available under Section 8(1) of the PMLA before the Adjudicating Authority. However, the court held that the writ petition was maintainable under Article 226, considering the procedural lapses in recording the 'reasons to believe' and issuing the search warrant. Conclusion: The court concluded that the search and seizure conducted on 17.10.2022 were contrary to Section 17 of the PMLA. The Additional Director issued the search warrant without recording the 'reasons to believe,' and the Deputy Director recorded the 'reasons to believe' without any date and time. Consequently, the court set aside the search and seizure and directed the respondents to release all the seized jewelry, cash, and other articles. The court allowed the writ petition and left it open for the respondents to take any action subject to compliance with the required procedure afresh, as contemplated under law.
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