New Delhi: The Delhi High Court has said that if an investigation under the Prevention of Money Laundering Act (PMLA) goes “beyond 365 days” without any proceeding related to the offence, then the Enforcement Directorate has to return the “seized” property to the owner.
A single judge bench of Justice Navin Chawla, in a January 31 order, made the observation while directing the Enforcement Directorate (ED) to return forthwith documents, digital devices, and properties among other material seized from Mahender Kumar Khandelwal, who was appointed the interim resolution professional (IRP) of Bhushan Power and Steel Ltd (BPSL). The ED made the seizure during a search operation on August 19 and 20, 2020.
“The contention of the learned counsel for the respondents that as Section 8(3)(a) of the Act does not provide for a consequence of lapsing of 365 days, there can be no direction for the return of the property so seized cannot be accepted. The continuation of such seizure beyond 365 days, in 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 underscored while allowing the plea.
The court also said that the PMLA provisions have to be “reasonably read” in a “harmonious manner”, with other provisions. It said that the power of attachment, seizure, and freezing of the properties and records is a “draconian provision” which has to be strictly construed, referring to a 2021 judgment of the Supreme Court.
In 2019, the Central Bureau of Investigation (CBI) had registered a case against BPSL, its directors, and other key managerial persons on the allegations of offences committed under various Indian Penal Code (IPC) sections including 120B (criminal conspiracy), read 420 (cheating), among others as well as relevant provisions of the Prevention of Corruption Act. However, Khandelwal was not named as an accused in the FIR or investigated by the CBI or summoned or asked to join the CBI investigation.
Based on the CBI FIR, the ED registered an Enforcement Case Information Report (ECIR) against the on April 25, 2019, under the PMLA.
Khandelwal had claimed that the ED carried out the search and seizure operation on his premises on the basis of the ECIR as well as seized several documents, records, digital devices, and gold and diamond jewellery worth Rs.85,98,677 from his possession. He had moved the HC, claiming that the ED did not return his properties or gave any reply to his request to return the properties as no complaints were filed against him for over 365 days.
Agencies

KR Desk