2024 (8) TMI 661 - AT - Money Laundering

Challenge to seizure order passed u/s 8(3) of PMLA 2002 - investigation required to be completed within 365 days as per Section 8(3)(a) of the Act has not yet been completed - HELD THAT - The respondents fairly admitted that the investigation pursuant to the FIR No. RC 221/2020 dated 11.03.2020 and the ECIR registered thereupon has not been completed. If the pendency of the proceedings relating to offence is construed or taken even prior to completion of investigation resulting in prosecution complaint then there was no necessity to even provide the period of investigation for the purpose of continuance of the order of attachment. In fact, proceedings before the Court starts from the stage of submission of prosecution complaint or charge-sheet and thereupon cognizance of the offence is taken and therefore only two limbs of the provision has significance and are not overlapping to each other and accordingly if the investigation is not completed within 365 days then the attachment or seizure would lapse. The impugned seizure so as the order of the Adjudicating Authority cannot continue, rather the seizure stands lapsed after the period given under Section 8(3) of the Act of 2002 and is set aside - the impugned order set aside - appeal allowed.

Summary

Issues: Challenge to order of seizure under Prevention of Money Laundering Act, 2002

Issue 1: Challenge to the order of seizure under Section 8(3) of the Act of 2002
The appeal challenges the order dated 25.05.2022 passed by the Adjudicating Authority under Section 8(3) of the Prevention of Money Laundering Act, 2002. The appellant argues that as per Section 8(3)(a), the seizure cannot continue beyond 365 days or the pendency of proceedings relating to any offence under the Act. It is contended that since the investigation has not been completed and no prosecution complaint has been filed even after the expiry of the stipulated time, the seizure should be declared as lapsed.

Issue 2: Interpretation of Sections 17 to 21 of the Act of 2002
The appellant refers to Sections 17 to 21 of the Act of 2002, highlighting the requirement to send seized property to the authority within 30 days of seizure for adjudication. It is argued that as more than 365 days have passed since the order of the Adjudicating Authority, and the investigation remains incomplete, the seizure should be deemed as lapsed based on the provisions of the Act.

Issue 3: Continuation of order of attachment or seizure during investigation
The interpretation of Section 8(3)(a) of the Act of 2002 is crucial in determining the validity of the seizure. The provision allows for the continuation of attachment or seizure during investigation for a period not exceeding 365 days or the pendency of proceedings relating to any offence before a court. The judgment clarifies that if the investigation is not completed within 365 days, the attachment or seizure would lapse, emphasizing the distinction between the two limbs of the provision.

Analysis:
The judgment delves into the appellant's arguments regarding the lapse of seizure under Section 8(3) of the Act of 2002 due to the non-completion of investigation and absence of a prosecution complaint within the stipulated time frame. The court examines the provisions of Sections 17 to 21, emphasizing the requirement for adjudication within 30 days of seizure. The interpretation of Section 8(3)(a) is crucial, with the court clarifying that the continuation of attachment or seizure is contingent on the completion of investigation within 365 days. The judgment ultimately sets aside the order of seizure, declaring it as lapsed due to the failure to complete the investigation within the specified period.