Tribunal deems search and seizure illegal under PMLA, orders return of documents.

The tribunal found the search and seizure conducted on the appellant's premises to be illegal due to non-compliance with statutory requirements under Section 17(1) of the PMLA. The Adjudicating Authority's order allowing retention of seized documents was set aside, directing the return of the documents to the appellant. The appeal was allowed under section 26 of the PMLA, emphasizing the importance of strict compliance with statutory procedures in such actions. No costs were awarded, and the tribunal did not delve into the merits of other parties involved.

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Issues Involved:
1. Legality of the search and seizure conducted on the appellant's premises.
2. Compliance with statutory requirements under Section 17(1) of the PMLA.
3. Recording and communication of "reasons to believe."
4. Validity of the Adjudicating Authority's order allowing retention of seized documents.

Detailed Analysis:

1. Legality of the Search and Seizure Conducted on the Appellant's Premises:
The search conducted on 9th July 2015 at the appellant's office was challenged as being in violation of statutory requirements and constitutional norms. The appellant contended that the search and seizure did not comply with Section 17(1) of the PMLA and related rules, as no specific reasons were recorded against the appellant. The tribunal found that the authorization for search and seizure was wholly illegal as it did not authorize a specific officer and specific premises to be searched as mandated under Section 17(1) of the PMLA read with Rule 3(1).

2. Compliance with Statutory Requirements Under Section 17(1) of the PMLA:
The tribunal examined whether the search and seizure complied with the Prevention of Money Laundering (Forms, Search and Seizure or Freezing and the Manner of Forwarding the Reasons and Material to the Adjudicating Authority, Impounding and Custody of Records and the Period of Retention) Rules, 2005. It was found that the search did not follow these rules, making the action null and void. The tribunal emphasized that not following statutory requirements makes the action null and void, referencing the judgment in State of Rajasthan V. Mohinuddin Jamal Alvi.

3. Recording and Communication of "Reasons to Believe":
The tribunal scrutinized whether "reasons to believe" were recorded and communicated as required under Section 17(1) of the PMLA. It was found that no reasons to believe were recorded or disclosed for authorizing the officers for search and seizure at the appellant's premises. The tribunal highlighted that the "Reason to Believe" document dated 6.7.2015 did not specify any reasons with respect to the appellant. The tribunal referenced several judgments, including P.P. Abdullah Vs. Competent Authority and CIT & Ors. v. Oriental Rubber Works, to support the view that reasons to believe must be communicated to the affected person.

4. Validity of the Adjudicating Authority's Order Allowing Retention of Seized Documents:
The Adjudicating Authority's order dated 01.12.2015, which allowed the ED to retain the records seized during the search, was challenged. The tribunal found that the order was based on an incorrect premise that there was no requirement to supply reasons at the time of conducting the search. The tribunal concluded that the reasons to believe must be recorded and communicated, and failure to do so invalidates the search and seizure. Consequently, the tribunal set aside the order against the appellant and directed that the documents seized from the appellant's premises be returned forthwith.

Conclusion:
The appeal was allowed, and the impugned order against the appellant was set aside/modified under section 26 of the PMLA. The tribunal emphasized the necessity of strict compliance with statutory requirements for search and seizure actions. No costs were awarded, and the tribunal did not express any opinion on the merits of other parties involved.

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