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TMI Blog2023 (6) TMI 1436X X X X Extracts X X X X X X X X Extracts X X X X ..... ired by him for conducting investigation. Therefore, it again follows that the seized records are not included in the word material as referred to under the provisions of the Act and Rules thereunder. Whether refusal to provide copies of the seized records before filing of reply to the Show Cause Notice issued by the Office of the Ld. Adjudicating Authority u/s 8(1) of PMLA causes prejudice to the appellants herein? - HELD THAT:- The provisions of section 8(1) require that the Adjudicating Authority on receipt of an application under sub-section 17(4) has to issue a notice, if he has reason to believe that any person has committed an offence u/s 3 of PMLA or is in possession of proceeds of crime, to such person as to indicate the sources of his income, earning or assets, out of which or by means of which such person has acquired the property attached under section 5(1) or seized under section 17 along with the evidence on which such person relies and other relevant information. The Adjudicating Authority has issued Show Cause Notice to the appellants on 2-3-2023 under section 8(1) - It is observed that section 8(1) only mentions the issuing of a notice where the property has been a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ely. The appeals have been filed against the impugned order dated 26-5-2023 of the Ld. Adjudicating Authority, PMLA, New Delhi in O.A. No. 811 of 2023. The appellants have pleaded to set aside the interim order dated 26-5-2023 of the Ld. Adjudicating Authority, whereby he has dismissed the application of the appellants to supply the copies of the documents/records seized by the Enforcement Directorate in the search u/s 17(1) of The Prevention of Money Laundering Act, 2002, (PMLA) conducted on 31-1-2023 and 1-2-2023. 2. The appellants have pleaded that they are entitled to obtain copies of the seized records u/s 21(2) of PMLA. They have further pleaded that copies of the seized records were not even provided along with the Show Cause Notice issued on 2-3-2023 by the Registrar of Adjudicating Authority, PMLA. They pleaded that in spite of their application dated 6-4-2023 to the Adjudicating Authority to direct the respondent to supply copies of the seized records, hearing thereupon on 9-5-2023 before the Adjudicating Authority and written submissions filed by them before the Adjudicating Authority on 12-5-2023, the impugned order dated 26-5-2023 passed by the Ld. Adjudicating Authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question of retention of document is presently under consideration. They also pleaded that in case the seized documents are ordered to be released immediately then the written submission furnished by them during the course of the hearing with regard to giving directions to the appellants to cooperate in the investigation and to bear the fee for obtaining copies of the seized records may be kept in view. 5. We have duly considered the pleadings in the appeal, the reply of the respondent, the order of the Ld. Adjudicating Authority and the arguments made during the hearing. The moot questions which need to be answered are following:- A. Whether the provisions of Section 21(2) of PMLA gives any scope for flexibility as to the timeline for giving copies of the seized records to the person from whom such records are seized? B. Whether refusal to provide copies of the seized records before filing of reply to the Show Cause Notice issued by the Office of the Ld. Adjudicating Authority u/s 8(1) of PMLA causes prejudice to the appellants herein ? 6. The provision of section 21(2) of PMLA as it stands today is: 21(2) - The person, from whom records seized or frozen, shall be entitled to obt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mended provisions of sub-section 21(2) entitled the person from whom the records were seized, to copies of the seized records which had been retained under unamended provisions of sub-section 21(1). Since the provisions of sub-sections 21(3) and 21(4) as these stood then, as well as now, require that for any further retention of the seized records permission of the Adjudicating Authority is necessary, any failure to get such permission would cause the seized records to be returned. It can therefore, be inferred from the unamended provision of sub-section 21(2) that copies of the seized records which had been retained under then sub-section 21(1) had to be given to the person from whom such records had been seized before moving for permission of the Adjudicating Authority for retention for period beyond that prescribed under then unamended sub-section 21(1). 8. The amendments in sub-sections 21(1) and 21(2) of PMLA imply that even though the period for which the Investigating Officer can retain the seized records on the basis of his own reasons to believe has been increased to 180 days from the date of seizure, the provision for being entitled to obtain copies of such seized records ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dant circumstances. While there is no dispute as to the entitlement of obtaining copies of the seized records, in the absence of any time line having been explicitly mentioned in the provisions of sub-section 21(2) as it stands today, what is for sure is that copies of the seized records are to be provided before any prejudice is caused to the person from whom the record has been seized. 10. In this regard, the second question Whether refusal to provide copies of the seized records before filing of reply to the Show Cause Notice issued by the Office of the Ld. Adjudicating Authority u/s 8(1) of PMLA causes prejudice to the appellants herein ? Becomes necessary to be examined and answered. 11. The provisions of search and seizure in section 17(1) is as below:- 17(1) - Where [the Director or any other officer not below the rank of Deputy Director authorised by him for the purposes of this section,] on the basis of information in his possession, has reason to believe (the reason for such belief to be recorded in writing) that any person- (i) has committed any act which constitutes money-laundering, or (ii) is in possession of any proceeds of crime involved in money-laundering, or (iii ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the appellants along with the reasons to believe recorded u/s 17(1). The said order also records that the seized items were inventoried and a copy thereof along with the Panchnama of the search proceedings was handed over at the location of seizure. The Adjudicating Authority has made specific finding that the requirements of sub-sections 17(2) and 17(4) have been complied with by the respondent and reasons to believe, copy of the Panchnama, copy of the Original Application and its Annexures have been supplied to the appellants. On perusal of the Annexures of the Original Application it is noticed that Annexure-A comprises of details of main persons/entities spread over 3 pages against whom search warrants were issued, Annexure-B comprises of reasons to believe as required under section 17(1) spread over 29 pages and Annexure-C which brings out for every search warrant the details of persons against whom search warrants were issued, brief description of recovery during search and relevance reasons for retaining such recovery, spread over 8 pages. The Adjudicating Authority has also observed that for the Show Cause Notice dated 2-3-2023 issued u/s 8(1) by his Office a copy of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds, if the compliance to the provisions of sub-section 17(2) are to be met insofar as sending immediately after search and seizure the material in sealed envelope is concerned. Moreover, Rule 10 of the aforementioned Rules states that the Adjudicating Authority shall retain copy of the reasons and the material relating to search and seizure either for a period of ten years or for shorter period if the proceedings under section 8 of the Act have been commenced then till the disposal of such proceedings or till the disposal of the appeals before the higher judicial fora. On the other hand, the seized records can only be retained for the maximum of 365 days for the cases which are under investigation or for longer period i.e. till the pendency of the proceedings relating to money laundering offence before the Court. Furthermore, if such seized records are sent within 30 days of the seizure to the Adjudicating Authority under sub-section 17(4) along with the Original Application, the provisions of retention for 180 days by the Investigating Officer on his own reasons to believe under sub-section 21(1) becomes redundant and also takes away the time required by him for conducting investi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ations, 2013 issued under the Act, whereby under Regulation 13 every summon or notice issued has to be served along with complete relied upon documents. They have said that since copies of the seized records have not been served there is contravention of the principles of natural justice which govern the procedures to be followed by the Adjudicating Authority. 17. It is observed that section 8(1) only mentions the issuing of a notice where the property has been attached or seized. The provisions of section 8(1) do not refer to seized records. The definition of property under section 2(v) of the Act includes deeds and instruments evidencing title/interest in such property or assets. Records have not been included in the definition of property. Since in the present case no property is attached or seized as yet there cannot be any question as to the inclusion of any deed or instrument in the seized records. The Adjudicating Authority has mentioned in his order dated 26-5-2023 that with the Show Cause Notice dated 2-3-2023 a copy of the reasons recorded under section 8(1) has been supplied to the appellants. 18. Provisions of section 8(2) relate to decision by the Adjudicating Authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not appear to be any contravention of the principles of natural justice as the Ld. Adjudicating Authority has ensured supply of all documents on which he intends to rely upon for the adjudication proceedings. 21. The appellants have cited Tarun Tyagi v. CBI [2013] 4 SCC 490 to contend that the principles of natural justice have been violated. However, the cited judgment too, requires providing for documents relied upon by the Prosecution to the Defence at the time of supply of the charge-sheet. In the present case the Show Cause Notice dated 02-3-2023 has been issued for deciding the question of retention of seized records beyond 180 days and not for decision on confirmation of attachment or seizure or freezing of property as explained earlier. In the instant case the Ld. Adjudicating Authority has categorically brought out that copies of the seized records are not upon which he is going to rely for decision making. In view of this the judgment as cited by the appellant in Indian Commodities Exchange Ltd. v. Neptune Overseas Ltd. [2020] 121 taxmann.com 365/[2021] 167 SCL 177 (SC)/(2020) 20 SCC 106 is also not applicable to the facts and the legal provisions of the present case. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellants that their reply to the Show Cause Notice for retention of seized records, cannot be effective in defending them in the proceedings before the Adjudicating Authority in the absence of the copies of the seized records, is not sustainable in view of the discussions in the preceding paragraphs. Their apprehension that their right in obtaining copies of the seized records is postponed/deferred for an indefinite period is unfounded. Since the adjudication of the OA No. 811 of 2023 by the Ld. Adjudicating Authority is yet to be completed, the decision cannot be prejudged. All sorts of possibilities are open including as to whether retention of seized records will be confirmed or not and if confirmed then under what conditions. The OA is still sub-judice before the Ld. Adjudicating Authority and hence we refrain from deciding as to when copies of the seized records can be given to the appellants. Therefore, giving copies of the seized records at this stage of the adjudication proceedings is not found necessary. 24. The Hon'ble Supreme Court in its judgment dated 27-7-2022 in Vijay Madanlal Chaudhary v. Union of India [2022] 140 taxmann.com 610/2022 SCC OnLine SC 929 ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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