Strict compliance with PMLA freezing and retention procedure required; Section 102 CrPC cannot bypass statutory safeguards.
Where the Prevention of Money Laundering Act, 2002 prescribes a complete and time-bound mechanism for freezing and retention of property, that procedure must be followed strictly. The Adjudicating Authority had no jurisdiction to compel a fresh application after an earlier retention request had already been decided on merits, could not rely on Section 102 CrPC to justify freezing under the special statute, and could not continue freezing beyond the statutory period without complying with the Act's extension procedure. The impugned order was therefore set aside and the appeals were allowed.
Issues: (i) Whether the Adjudicating Authority could direct filing of a fresh application and sustain continuation of freezing when the earlier application for retention under the Prevention of Money Laundering Act, 2002 had already been decided on merits; (ii) Whether directions for investigation under Section 102 of the Code of Criminal Procedure, 1973, and freezing of bank accounts under that provision, were permissible in the scheme of the Prevention of Money Laundering Act, 2002; (iii) Whether the impugned order could validly continue the freezing beyond the statutory period prescribed under the Prevention of Money Laundering Act, 2002.
Issue (i): Whether the Adjudicating Authority could direct filing of a fresh application and sustain continuation of freezing when the earlier application for retention under the Prevention of Money Laundering Act, 2002 had already been decided on merits.
Analysis: The scheme of the Act requires seizure, freezing, and retention to proceed in the manner expressly provided by the statute. Once the earlier application for continuation of freezing had been considered and rejected, the Adjudicating Authority had no authority to compel a fresh application on the same basis. The impugned order travelled beyond jurisdiction by attempting to reopen a matter already decided on merits.
Conclusion: The direction to file a fresh application was without jurisdiction and could not be sustained.
Issue (ii): Whether directions for investigation under Section 102 of the Code of Criminal Procedure, 1973, and freezing of bank accounts under that provision, were permissible in the scheme of the Prevention of Money Laundering Act, 2002.
Analysis: The Act contains its own self-contained mechanism for attachment, seizure, freezing, retention, notice, and adjudication. That mechanism requires the authorized officer to act on recorded reasons to believe and within the statutory framework of Sections 17 and 20. The scheme of Section 102 of the Code of Criminal Procedure, 1973, is materially different and inconsistent with this regime. A freezing power cannot be imported from the general criminal procedure provision to bypass the safeguards and time limits built into the special enactment.
Conclusion: Directions under Section 102 of the Code of Criminal Procedure, 1973, were impermissible and the freezing could not be justified on that basis.
Issue (iii): Whether the impugned order could validly continue the freezing beyond the statutory period prescribed under the Prevention of Money Laundering Act, 2002.
Analysis: The statutory scheme limits retention or continuation of freezing to the period prescribed in the Act, subject to the specific procedure for extension before the Adjudicating Authority. The impugned order allowed continuation for a further period, but the record showed that the statutory time frame had already run its course and nothing survived for continuation. The order therefore did not accord with the mandatory timeline fixed by the statute.
Conclusion: The continuation of freezing beyond the statutory period was not legally sustainable.
Final Conclusion: The impugned order was set aside and all the appeals were allowed, as the Adjudicating Authority acted beyond the statutory scheme governing freezing and retention of property under the Prevention of Money Laundering Act, 2002.
Ratio Decidendi: Where a special statute prescribes a complete and time-bound procedure for freezing and retention of property, that procedure must be strictly followed and cannot be supplemented by resort to an inconsistent general procedural provision or by orders issued beyond jurisdiction.
TaxTMI 
AI Drafter ✕
TaxTMI 
TaxTMI 
