Tribunal overturns order seizing jewelry under PMLA. Jewelry deemed stridhan, not proceeds of crime.

The Tribunal set aside the order allowing the retention of the appellant's jewelry under the Prevention of Money Laundering Act (PMLA). The court found that the jewelry, considered as the appellant's stridhan, did not constitute proceeds of crime. The failure to provide explicit "reasons to believe" and the lack of evidence linking the jewelry to money laundering activities led to the decision to de-freeze the appellant's locker and dispose of the appeal without costs.

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Issues Involved:
1. Legality of the seizure and retention of the appellant's jewelry and ornaments under the Prevention of Money Laundering Act (PMLA).
2. Whether the jewelry constitutes "proceeds of crime" under PMLA.
3. Compliance with procedural requirements for "reasons to believe" under PMLA.
4. The appellant's rights to her property under the concept of "stridhan".

Issue-wise Detailed Analysis:

1. Legality of the Seizure and Retention:
The appeal was filed under Section 26 of the PMLA against the order dated 05.06.2017, which allowed the retention of the appellant's movable property (jewelry and ornaments) found in Locker No. 004262/003/005/0096. The jewelry was seized on 02.01.2017 and retained for further investigation under Section 5(1) of PMLA. The Enforcement Directorate did not pass any orders under Section 5(1) of PMLA within the stipulated 180 days, rendering the retention of the property beyond this period illegal.

2. Jewelry as "Proceeds of Crime":
The appellant argued that the jewelry in question was her personal property ("stridhan"), acquired through gifts at the time of her marriage and over time, much before the demonetization date of 08.11.2016. The jewelry could not be termed as "proceeds of crime" as it was her stridhan. The appellant cited several judgments, including Pratibha Rani Vs. Suraj Kumar and Ashok Chaddha Vs. Income Tax Officer, to support her claim that a Hindu married woman is the absolute owner of her stridhan property.

3. Compliance with Procedural Requirements:
The judgment emphasized the necessity of having "reasons to believe" in writing before authorizing the retention of property under Section 20(4) of PMLA. The Division Bench of the Delhi High Court in J. Sekar Vs. Union of India clarified that reasons must be explicit and based on material evidence, not mere assumptions. The appellant was not served a copy of the reasons to believe, which is a procedural lapse as established in previous cases like P.P Abdullah Vs. Competent Authority and CIT & Ors. v. Oriental Rubber Works.

4. Appellant's Rights to Property:
The appellant's claim to her jewelry as stridhan was supported by legal precedents, which state that a Hindu married woman is the absolute owner of her stridhan and can deal with it as she pleases. The court noted that there was no evidence linking the appellant's jewelry to money laundering activities. The involvement of her husband in criminal activities did not implicate the appellant or her property directly.

Conclusion:
The Tribunal concluded that there were no sufficient reasons to believe that the jewelry was involved in money laundering. The statutory requirement of having a reasonable belief under Section 17 of PMLA was not met. The impugned order dated 22.07.2017 was set aside, and the appellant's locker was ordered to be de-frozen. The appeal and pending applications were disposed of without costs.

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