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Judgment
FPA-PMLA-963-969/CHD/2015
The above-mentioned appeals have been filed under Section 26 of the Prevention of Money Laundering Act, 2002 against the Order of Original
Application no. 24/2015 dated 25.05.2015.
2.The operative part of the order is mentioned in paras 14 to 17, which read as under:-
Further, during the proceedings it is seen that following discrependes are there
i. Certain defendants have been repeated.
li It has been conveyed by the defendants that certain persons who have been made defendants have expired.
Hi. It was pointed out during proceedings that there are certain joint accounts also.
iv. Defendants pointed out during arguments that certain accounts have been closed, certain accounts did not exist, and certain accounts
are in-operative. Initially when O.A. was sent only two defendants were made and O.A. showed a large no. Of bank accounts of various
persons other than these two persons. Later on a total of 43 defendants were made by Applicant. Such things should be avoided in future.
a15. It is expected of applicant that when he conducts further enquiries and investigation that he will ensure proper investigation and
follow due approach. Such lapses should not occur again. Further if Applicant wants to proceed against deceased person, his legal heirs
are required to be made party. And in case of joint accounts all the joint accounts holders should be made party and the notices should be
properly served on all such persons before conducting further enquiries and conducting further investigations. The Applicant should not
only to be fair but also appear to be fair while conducting enquiries and investigations. Applicant should avoid such glaring lapses also.
Both sides will co-operate with each other in investigations for fair play & for action in accordance with law.
Keeping in view the facts conveyed in 0.A, submission of both the side, prima facie case for allowing O.A. is made out.
While allowing the retention appliction, following directions are issued in para 21, which is also reproduced hereunder:-
The Order shall:
(a) continue during the pendency of proceedings relating to any offence under this Act before a court or under corresponding law of any
other country before competent court of criminal jurisdiction outside India as the case may be;
(b) become final after an order of confiscation is passed under sub-section (5} /(6) and sub-section (7) of section 8 or section 58B of sub-
section (2A) of section 60 by the Adjudicating Authority.
The impugned order was passed on 25.05.2015. More than 3 year and 11 months have been passed. No prosecution complaint has been filed
against the appellants. The said fact has been admitted by the learned counsel for the respondent, who has made the statement after verifying the
same from the records.
Section 17 of PMLA, 2002 reads as under:
17 Search and seizure. â€"(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 â€
(i) has committed any act which constitutes money-laundering, or
(ii) is in possession of any proceeds of crime involved in money-laundering, or
(Hi) is in possession of any records relating to money-laundering, (or)
(iv) is in possession of any property related to crime]
then, subject to the rules made in this behalf, he may authorize any officer subordinate to him to -
(a) enter and search any building, place, vessel, vehicle or aircraft where he has reason to suspect that such records or proceeds of crime
are kept;
(b) break open the lock of any door, box, locker, safe, almirah or other receptacle for exercising the powers conferred by clause (a) where
the keys thereof are not available;
(c) seize any record or property found as a result of such search;
(d) place marks of identification on such record or [property, if required or] make or cause to be made extracts or copies therefrom;
(e) make a note or an inventory of such record or property;
(f) examine on oath any person, who is found to be in possession or control of any record or property, in respect of all matters relevant for
the purposes of any investigation under this Act:
[Provided that no search shall be conducted unless, in relation to the scheduled offence, a report has been forwarded to a Magistrate
under section 157 of the Code of Criminal Procedure, 1973 (2 of 1974), or a complaint has been filed by a person, authorised to
investigate the offence mentioned in the Schedule, before a Magistrate or court for taking cognizance of the scheduled offence, as the case
may be, or in cases where such report is not required to be forwarded, a similar report of information received or otherwise has been
submitted by an officer authorised to investigate a scheduled offence to an officer not below the rank of Additional Secretary to the
Government of India or equivalent being head of the office or Ministry or Department or Unit, as the case may be, or any other officer who
may be authorised by the Central Government, by notification, for this purpose.]
1(1A) Where it is not practicable to seize such record or property, the officer authorised under sub-section (1), may make an order to freeze
such property whereupon the property shall not be transferred or otherwise dealt with, except with the prior permission of the officer
making such order, and a copy of such order shall be served on the person concerned:
Provided that if, at any time before its confiscation under sub-section (5) or sub-section (7) of Section 8 or Section 58B or sub-Section (2A)
of Section 60, it becomes practical to seize a frozen property, the officer authorised under sub-Section (1) may seize such property.]
(2) The authority, who has been authorized under subsectionfl) shall, immediately after search and seizure [or upon issuance of a freezing
order] forward a copy of the reasons so recorded along with material in his possession, referred to in that sub-section, to the Adjudicating
Authority in a sealed envelope, in the manner, as may be prescribed and such Adjudicating Authority shall keep such reason and material
for such period, as may be prescribed.
(3) Where an authority upon information obtained during survey under section 16, is satisfied that an evidence shall be or is likely to be
concealed or tampered with, he may, for reasons to be recorded in writing, enter and search the building or place where such evidence is
located and seize that evidence.
Provided that no authorization referred to in subsection (1) shall be required for search under this subsection.
(4) The authority seizing any record or property under sub-Section (1) or freezing any record or property under sub-Section (1A) shall,
within a period of thirty days from such seizure or freezing, as the case may be, file an application, requesting for retention of such record
or property seized under sub-Section (1) or for continuation of the order of freezing served under sub-Section (1A), before the Adjudicating
Authority.].
Section 18 of PMLA, 2002 reads as under:
U18. Search of persons. â€
[1} If an authority, authorised in this behalf by the Central Government by general or special order, has reason to believe (the reason for
such belief to be recorded in writing) that any person has secreted about his person or in anything under his possession, ownership or
control, any record or proceeds of crime which may be useful for or relevant to any proceedings under this Act, he may search that person
and seize such record or property which may be useful for or relevant to any proceedings under this Act:
[Provided that no search of any person shall be made unless, in relation to the scheduled offence, a report has been forwarded to a
Magistrate under section 173 of the Code of Criminal Procedure, 1973 (2 of 1974), or a complaint has been filed by a person authorised to
investigate the offence mentioned in the Schedule, before a Magistrate or court for taking cognizance of the scheduled offence, as the case
may be.]
(2} The authority, who has been authorised under sub-section (1) shall, immediately after search and seizure, forward a copy of the reasons
so recorded along with material in his possession, referred to in that sub-section, to the Adjudicating Authority in a sealed envelope, in the
manner, as may be prescribed and such Adjudicating Authority shall keep such reasons and material for such period, as may be prescribed.
(3) Where an authority is about to search any person, he shall, if such person so requires, take such person within twenty-four hours to the
nearest gazetted officer, superior in rank to him, or a Magistrate:
Provided that the period of twenty-four hours shall exclude the time necessary for the journey undertaken to take such person to the nearest
gazetted officer, superior in rank to him, or Magistrate's Court.
(4) If the requisition under sub-section (3) is made, the authority shall not detain the person for more than twenty-four hours prior to taking
him before the Gazetted Officer superior in rank to him, or the Magistrate referred to in that sub-section:
Provided that the period of twenty-four hours shall exclude the time necessary for the journey from the place of detention to the office of the
Gazetted Officer, superior in rank to him, or the Magistrate's Court.
(5} The Gazetted Officer or the Magistrate before whom any such person is brought shall, if he sees no reasonable ground for search,
forthwith discharge such person but otherwise shall direct that search be made.
(6) Before making the search under sub-section (1) or sub section (5) the authority shall call upon two or more persons to attend and witness
the search, and the search shall be made in the presence of such persons.
(7) The authority shall prepare a list of record or property seized in the course of the search and obtain the signatures of the witnesses on the
list.
(8) No female shall be searched by any one except a female.
(9) The Authority shall record the statement of the person searched under sub-section (1) or sub-section (5) in respect of the records or
proceeds of crime found or seized in the course of the search:â€* [***]
(10) The authority seizing any record or property under sub section (1) shall, within a period of thirty days from such seizure, file an
application requesting for retention of such record or property, before the Adjudicating Authority.
Sub-section (11. (2) and (3) of Section 20 read as under:-
Retention of property.â€
(1) Where any property has been seized under section 17 or section 18 or frozen under sub-Section (1A) of Section 17 and the officer
authorised by the Director in this behalf has, on the basis of material in his possession, reason to believe (the reason for such belief to be
recorded by him in writing) that such property is required to be retained for the purposes of adjudication under section 8, such property
may, if seized be retained or if frozen, may continue to remain frozen, for a period not exceeding one hundred and eighty days from the day
on which such property was seized or frozen, as the case may be.
(2) The officer authorized by the Director shall, immediately after he has passed an order for retention or continuation of freezing of the
property for purposes of adjudication under section 8, forward a copy of the order along with the material in his possession, referred to in
sub-section (1), to the Adjudicating Authority, in a sealed cover, in the manner as may be prescribed and such Adjudicating Authority shall
keep such order and material for such period as may be prescribed.
(3) On the expiry of the period specified in sub-section (1), the property shall be returned to the person from whom such property was seized
or whose property was ordered to be frozen unless the Aâ€judicating Authority permits retention or continuation of freezing of such property
beyond the said period.
Section 21 of PMLA reads as under:-
Retention of records. -
(1) Where any records have been seized, under section 17 or section 18 or frozen under sub-section (1A) of section 17 and the Investigating
Officer or any other officer authorised by the Director in this behalf has reason to believe that any of such records are required to be
retained for any inquiry under this Act, such records may if seized, be retained or if frozen, may continue to remain frozen, for a period not
exceeding one hundred and eighty days from the day on which such records were seized or frozen, as the case may be.
(2) The person, from whom records seized or frozen, shall be entitled to obtain copies of records.
(3) On the expiry of the period specified under sub-section (1), the records shall be returned to the person from whom such records were
seized or whose records were ordered to be frozen unless the Adjudicating Authority permits retention or continuation of freezing of such
records beyond the said period.
(4) The Adjudicating Authority, before authorising the retention or continuation of freezing of such records beyond the period specified in
sub-section (1), shall satisfy himself that the records are required for the purposes of adjudication under section 8.
(5) After passing of an order of confiscation [or release under sub-section (5) or sub-section (6) or sub-section (7) of section 8 or section 58B
or sub section (2A) of section 60] , the Adjudicating Authority shall direct the release of the records to the person from whom such records
were seized.
(6)Where an order releasing the records has been made by the Court [Adjudicating Authority under section (5) of section 21] the Director or
any other officer authorised by him in this behalf may withhold the release of any such record for a period of ninety days from the date of
(receipt of] such order, if he is of the opinion that such record is relevant for the appeal proceedings under this Act. ]
It is clear from the reading of Sections 17 to 21 that outer limit upto the date for deciding the application for retention of property within the meaning
of sub-section 4 of Section 21 is 180 days from the date of seizure of any property or records. The said period is not extendable.
The person concerned/aggrieved party of such order, is entitled to file the appeal under Section 26 of the Act. The same shall be heard and after
giving an opportunity of being heard, the appellant Tribunal shall pass the order either to confirm the order of retention or to modify or setting aside the
same.
Where the Adjudicating Authority decides by an order confirm the retention under Sub-section (1} of Section 17 or Section 18 for the purpose of
continuation during investigation for a period not exceeding ninety days under this Act before the Competent Court, or under the corresponding law of
other countries as the case may be under Sub-section (3) (a) of Section 8 may take necessary action within the time prescribed. In failure to do so
under this Act, all the proceedings, seizures /frozen under Section 17 would be lapsed ipso facto.
It is settled law that if a particular thing is to be done in a particular manner, it must be done in that manner only and none other. Reliance in this
regard is also placed on a judgements of Honâ€ble Supreme Court in the cases of Dipak Babaria and another vs. State of Gujarat 2014 (3) SCC 502
and J. Jayalalitha & Anr vs State ofKamataka & Ors 2014 (2) SCC 401.
The provisions of section 8 (3) (a) provides that the attachment or retention of property or record seized shall continue during the investigation for
a period not exceeding ninety days.
It is admitted, position that no prosecution complaint has been filed \ against the Appellant herein. The properties and records of the Appellant
were seized only for the purpose of investigation. The period of 90 days as prescribed under section 8 (3) (a) has already elapsed as more than 3
years and 11 months have been expired. No prosecution complaint has been filed by the respondent against the appellants. The said fact has been
admitted by the learned counsel for the respondent.
Thus, we allow the appeals. The impugned orders 25.05.2015 in above-mentioned appeals is set-aside as the seizure lapses after the expiry of
statutory period of ninety days. Admittedly, no prosecution complaint has been filed. The seized properties are defreezed accordingly.
Since, we have decided the appeal, in the light of the amendment brought in the statute as mentioned above, hence, we have not gone into other
legal issues raised herein.
No costs.