Property must be returned, if PMLA probe goes beyond a year without Charge sheet: Delhi HC

New Delhi [India], February 2 : The Delhi High Court has recently directed that the property seized during the investigation must be returned if the money laundering probe under PMLA goes beyond a year without filing a prosecution complaint (charge sheet).
Justice Navin Chawla held, "If the investigation for a period beyond three hundred and sixty-five days does not result in any proceedings relating to any offence under PMLA, the property so seized must be returned to the person from whom it was so seized."
The High Court directed the Enforcement Directorate (ED) to return the documents, digital devices, property, and other material seized from the petitioner pursuant to the search and seizure operation conducted on August 19 and 20, 2020, to the petitioner, subject to any order to the contrary passed by any competent court.
The High Court rejected the contention of the counsel for the ED that, as Section 8(3)(a) of the Act does not provide for a consequence of a lapsing of 365 days, there can be no direction for the return of the property so seized.
"The continuation of such seizure beyond 365 days, in the absence of the pendency of any proceedings relating to any offence under this Act before a court or under the corresponding law of any other country before the competent court of criminal jurisdiction outside India, shall be confiscatory in nature, without authority of law and, therefore, violative of Article 300A of the Constitution of India," Justice Chawla held.
The High Court was dealing with a petition filed by Mahender Kumar Khandelwal through advocate DP Singh.
The petitioner claimed that on 19th and 20th August, 2020, the respondent carried search and seizure on his premises of on the basis of the ECIR and seized various documents, records, digital devices, and gold and diamond jewellery having an aggregate value of Rs.85,98,677 from him.
In 2017, the petitioner was appointed as the Interim Resolution Professional (IRP) for the Corporate Insolvency Resolution Process of M/s Bhushan Power and Steel Ltd. (BPSL).
Counsel for the petitioner submitted that though more than three years have passed since the seizure of petitioner's property, and though no prosecution with respect to the petitioner or the said property has been initiated by the ED, yet the seized items continue to be retained by the respondent.
It was further argued that the petitioner continues to be a witness for the respondent. He submits that in terms of Section 8(3)(a) of the Act, retention of the property so seized can be continued only for a period not exceeding 365 days or during the
pendency of the proceedings relating to any offence under the Act before a Court.
"As no complaint in relation to the goods seized from the petitioner is pending, and the period of 365 days from the passing of the order by the Adjudicating Authority has expired, the property and the documents seized from the petitioner are liable to be returned to the petitioner," counsel argued.
ED's counsel submitted that in the present case, based on the information obtained from open source regarding the initiation of an investigation against BPSL by the Director General of GST Intelligence, Bhubaneswar (DGGI) involving fraudulent and clandestine removal of finished goods by the previous as well as the current management of BPSL, the respondents collected incriminating evidence in the shape of statements recorded by DGGI.
It was found that BPSL had engaged in clandestine clearance of the finished goods from its Odisha Plant to its plants at Kolkata and Chandigarh. A total of 58 of such consignments had been cleared in a clandestine manner.
The total value of these consignments was Rs.705.39 Crore, out of which, three such consignments, valuing Rs.40.42 crores, were cleared after 26.07.2017. It was further gathered that the data has been deleted from the servers of BPSL, Odisha, it was submitted.