2024 (2) TMI 141 - HC - Money Laundering

Money Laundering - proceeds of crime - attachments of the property - meaning to be prescribed to the words the proceedings relating to any offence under this Act before a Court in Section 8(3)(a) of PMLA - HELD THAT - The retention of the documents and properties has been allowed for the purposes of investigation/adjudication. The same would, therefore, extend for a period of 365 days in terms of Section 8(3)(a) of the Act unless a proceeding relating to the offence under the Act has been filed prior thereto. As noted hereinabove, the proceeding relating to any offence under this Act has to mean proceeding filed before the Special Court in relation to the property or the record so attached, seized or frozen. The interpretation to Section 8(3)(a) of the Act as propounded by the learned counsel for the respondent would, in fact, make the said provision confiscatory and violative of Article 14 of the Constitution of India inasmuch as it would allow the seizure to continue endlessly even though the same does not culminate into any proceedings relating to any offence under the Act before a court within the period of 365 days as prescribed by that very provision. Explanation (ii) to Section 44 of the Act states that the complaint shall be deemed to include any subsequent complaint in respect of further investigation that may be conducted to bring any further evidence, oral or documentary, against any accused person involved in respect of the offence for which complaint has already been filed, whether named in the original complaint or not. From the said provision also, it is apparent that the investigation may lead to filing of a subsequent complaint to bring on record further evidence in form of seized documents and records, either against the accused named in the original complaint or subsequent thereto - it is held that the period of 365 from the passing of the order dated 10.02.2021 by the Adjudicating Authority having been passed, the documents/digital device/property seized from the petitioner in the search and seizure conducted on 19th and 20th August, 2020 from the premises of the petitioner are liable to be returned. Therefore, the natural consequence of the investigation for a period beyond three hundred and sixty five days not resulting in any proceedings relating to any offence under the Act, in terms of Section 8(3) of the Act, is that such seizure lapses and the property so seized must be returned to the person from whom it was so seized. The respondents are directed to return the documents, digital devices, property, and other material seized from the petitioner pursuant to the search and seizure operation conducted on 19th and 20th August, 2020, forthwith to the petitioner, subject to any order to the contrary passed by any competent Court - The petition is allowed.

Summary

Issues Involved:

1. Whether the order dated 10.02.2021 passed by the Adjudicating Authority under Section 17(4) of PMLA, 2002 has ceased to have effect due to non-filing of prosecution complaint within 365 days as contemplated under Section 8(3)(a) of PMLA.
2. Whether the petitioner is entitled to the return of documents, records, digital devices, and jewellery seized by the respondent.

Summary:

Issue 1: Ceasing of the Adjudicating Authority's Order

The petitioner argued that the order dated 10.02.2021 allowing retention of seized items should cease to have effect as no prosecution complaint was filed within 365 days as required under Section 8(3)(a) of the PMLA. The petitioner emphasized that the seized items continue to be retained without any prosecution, violating their constitutional and legal rights. The respondents contended that the seizure should continue during the pendency of proceedings relating to any offence under the Act before a court, citing the pending complaint CC No. 01/2020 and other proceedings.

The court analyzed the provisions of the PMLA, including Sections 5, 17, 20, 21, and 8. It concluded that the words "the proceedings relating to any offence under this Act before a Court" in Section 8(3)(a) should be interpreted narrowly to mean only proceedings that involve the property or person from whom it was seized. The court held that the retention order dated 10.02.2021 ceased to have effect after 365 days as no relevant proceedings were pending.

Issue 2: Return of Seized Items

The petitioner sought the return of seized items, arguing that the retention period had expired without any prosecution complaint. The respondents argued that various pending proceedings justified the continued retention of the items. The court rejected this argument, stating that the pending writ petitions and other proceedings did not fall within the scope of "pendency of the proceedings relating to any offence under this Act before a Court" as required by Section 8(3)(a).

The court emphasized that the continuation of seizure beyond 365 days without relevant proceedings would be confiscatory and violative of Article 14 and Article 300A of the Constitution. Consequently, the court directed the respondents to return the seized documents, digital devices, and property to the petitioner forthwith, subject to any contrary order by a competent court.

Conclusion:

The court allowed the petition, directing the return of the seized items to the petitioner and disposing of the pending application. There was no order as to costs.