2025 (4) TMI 695 - SCH - Money Laundering

Money Laundering - duration for which the order of attachment retention or freezing of property passed by the Adjudicating Authority under sub-Section (3) of Section 8 of the Prevention of Money Laundering Act 2002 (PMLA) - period for which the order of attachment or retention or freezing passed by the Adjudicating Authority under sub-Section (3) of Section 8 will continue to operate - HELD THAT - There is no dispute that the complaint is based on ECIR dated 17th March 2017 in which the respondent was shown as one of the accused. Moreover clause (a) will apply during the continuation of the proceedings relating to an offence under the PMLA in a Court. There is no dispute that when an order under Section 8(3) was passed the proceedings of a complaint under Section 44 of the PMLA was pending before the Special Court and cognizance of the offence under Section 3 of the PMLA was taken on the basis of the complaint. For attracting clause (a) it is enough if a complaint alleging commission of offence under Section 3 of the PMLA is pending. It is not necessary for the applicability of clause (a) that the person affected by the order under Section 8(3) must be shown as an accused in the complaint. The complaint under Section 44 will always relate to the offence under Section 3 punishable under Section 4 of the PMLA. The order of cognizance is of the offence and not of the accused or the offender. Obviously the amended clause (a) was not applicable when the order dated 4th April 2018 was passed under Section 8(3). Even assuming that the amended clause (a) was applicable even after completion of investigation for 90 days the order under Section 8(3) would continue to operate as the complaint remained pending. Therefore the Appellate Tribunal as well as the High Court have committed an error and both orders deserve to be set aside. Conclusion - The original provision of Section 8(3)(a) of the PMLA as it existed before the amendment on 19th April 2018 applied to the order in question. The impugned judgment and order dated 16th February 2022 of the High Court and the impugned order dated 25th April 2019 passed by the Appellate Tribunal set aside - appeal allowed.

Summary

ISSUES PRESENTED and CONSIDERED

The core legal question considered by the Court was the duration for which the order of attachment, retention, or freezing of property, passed by the Adjudicating Authority under sub-Section (3) of Section 8 of the Prevention of Money Laundering Act, 2002 (PMLA), would continue to operate. Specifically, the issue revolved around the interpretation of the relevant provisions of Section 8 as they existed at different times, and whether the amended provisions applied retroactively to affect the order in question.

ISSUE-WISE DETAILED ANALYSIS

Relevant Legal Framework and Precedents

The legal framework primarily involved Section 8 of the PMLA, which governs the attachment and retention of property involved in money laundering. The relevant sub-sections of Section 8 were amended over time, impacting the duration for which such orders could remain in force. The original provision applicable from 14th May, 2015 to 18th April, 2018, allowed the order to continue during the pendency of proceedings related to the offence under the PMLA. The amendment effective from 19th April, 2018 introduced a 90-day limit for retention during investigation, after which the order could continue during the pendency of proceedings.

Court's Interpretation and Reasoning

The Court interpreted the provisions of Section 8 as they existed at the time the order was passed by the Adjudicating Authority on 4th April, 2018. It concluded that the original provision, which allowed the order to continue during the pendency of proceedings, was applicable. The Court reasoned that the amended provision, which introduced a 90-day limit, did not apply retroactively to alter the effect of the order passed before the amendment came into force.

Key Evidence and Findings

The key evidence considered was the sequence of events and the text of the relevant statutory provisions. The Court noted that the complaint under Section 44 of the PMLA was based on an ECIR dated 17th March, 2017, and that proceedings were pending before the Special Court when the order under Section 8(3) was passed. The Court found that the Appellate Authority and the High Court had erroneously applied the amended provision, which was not in force at the time of the original order.

Application of Law to Facts

The Court applied the original clause (a) of sub-Section (3) of Section 8, which allowed the order to continue during the pendency of proceedings. It emphasized that the pendency of a complaint under Section 44, alleging an offence under Section 3 of the PMLA, was sufficient to satisfy the requirement of clause (a). The Court rejected the argument that the respondent needed to be named as an accused for the order to continue.

Treatment of Competing Arguments

The appellant argued that the original provision was applicable and allowed the order to continue during the pendency of proceedings. The respondent contended that the amended provision should apply, limiting the duration of the order. The Court sided with the appellant, finding that the amended provision did not apply retroactively and that the original provision governed the order in question.

Conclusions

The Court concluded that the order of the Adjudicating Authority dated 4th April, 2018, was valid and should continue to operate until the disposal of the complaint. It found that the Appellate Authority and the High Court had erred in applying the amended provision, and their orders were set aside.

SIGNIFICANT HOLDINGS

The Court held that the original provision of Section 8(3)(a) of the PMLA, as it existed before the amendment on 19th April, 2018, applied to the order in question. It emphasized that an order of attachment, retention, or freezing of property could continue during the pendency of proceedings related to an offence under the PMLA. The Court clarified that the applicability of the provision did not require the affected person to be named as an accused in the complaint.

The Court quashed the impugned judgment of the High Court and the order of the Appellate Tribunal, restoring the order of the Adjudicating Authority. It directed compliance with Section 21(2) of the PMLA, allowing the respondent to apply for copies of the retained records.