2019 (3) TMI 1441 - AT - Money Laundering

Appeals allowed, order set aside, seized properties to be returned due to expired retention period. Emphasis on PMLA compliance.

The tribunal allowed the appeals, setting aside the impugned order and directing the respondents to return the seized properties to the appellants as the ... Retention of property for the purpose of adjudication under section 8 of PMLA - number of days retention can be continued - Non satisfying the statutory requirement enshrined in provisions of section 20 of PMLA which mandates that the officer authorised by the Director is under an obligation to record the ‘reason to believe’ in writing as to why the seized property is to be retained for the purposes of adjudication under section 8 - HELD THAT:- In the present case, the statutory obligations laid down in section 20 (1), 20(2), 20 (4) and 21(4) of PMLA are not at all complied with and a deliberate attempt has been made to retain the seized property & records without recording any ‘reason to believe’ qua the properties and records of the Appellant. In view of thereof, the appellant submitted that the order passed by the learned Adjudicating Authority is liable to be quashed and set aside. Reading of Sections 17 to 21 that outer limit upto the date for deciding the application for retention of property within the meaning of sub-section 4 of Section 21 is 180 days from the date of seizure of any property or records. The said period is not extendable. The provisions of section 8 (3) (a) provides that the attachment or retention of property or record seized shall continue during the investigation for a period not exceeding ninety days. In the instant case, the search of the residential premises was conducted on 31.11.2017 and the Adjudicating Authority has confirmed the OA on 22.05.2018. It is admitted position that no prosecution complaint has been filed against the Appellant herein. The properties and records of the Appellant were seized only for the purpose of investigation. The period of 90 days as prescribed under section 8 (3) (a) has already elapsed. Thus, we allow the appeal. We direct the respondent to return the properties retained by the respondent as the prescribed period of 90 days under section 8(3)(a) has already been expired. The seizure lapses after the said period if no prosecution complaint is filed. Issues Involved:1. Allegations against the appellants under the Prevention of Money Laundering Act (PMLA).2. Legality of the search and seizure operations conducted by the respondent.3. Compliance with statutory requirements under sections 20 and 8 of PMLA.4. Retention and return of seized properties and records.Issue-wise Detailed Analysis:1. Allegations Against the Appellants:- Shri Arvind Gupta: The appellant was accused of erasing and taking backup of digital data related to Ghanshyam Pandya and possessing documents related to money laundering. During the search on 30.11.2017, his premises were searched, and he was interrogated. He claimed he was forced to sign statements and his request to write statements in Gujarati was denied. Seized items included 4 mobile phones, 2 pen drives, 2 mobile tablets, and 1 laptop. No evidence was found linking these items to money laundering.- Shri Ghanshyam Pandya: Similar to Arvind Gupta, his premises were searched on 30.11.2017, and he was forced to sign dictated statements. Seized items included 4 mobile phones, 2 pen drives, 2 mobile tablets, and 1 laptop. No incriminating evidence was found.- Shri Lakhmi Chand Sharma: Alleged to have received payments linked to money laundering from Shri Gagan Dhawan and M/s. PMT Machines Ltd. without providing any legitimate service. He denied the allegations, citing his clean service record in the Indian Army. He argued that no incriminating material linked him to money laundering and he was not named in the FIR dated 25.10.2017.2. Legality of the Search and Seizure Operations:- The appellants argued that the search and seizure operations were conducted without meeting the statutory requirements under PMLA. They claimed that the respondents failed to record the 'reason to believe' in writing as mandated by section 20(1) of PMLA. The respondents also did not forward the required material to the Adjudicating Authority in a sealed envelope as per section 20(2).3. Compliance with Statutory Requirements:- The appellants contended that the Adjudicating Authority's order under section 8(3) of PMLA confirming the retention of the property was passed without satisfying the statutory requirements. They emphasized that the provisions of section 20 (Retention of Property) are similar to section 5 (Attachment of Property), requiring strict compliance.- The tribunal noted that the outer limit for deciding the application for retention of property under section 21(4) is 180 days from the date of seizure. This period is not extendable, and failure to meet this deadline results in the lapse of the proceedings.4. Retention and Return of Seized Properties and Records:- The tribunal observed that more than a year and six months had passed since the seizure, and no prosecution complaint had been filed against the appellants. The statutory period of 90 days for retention during investigation under section 8(3)(a) had elapsed.- The tribunal concluded that the seizure lapses after the prescribed period if no prosecution complaint is filed. Therefore, the appeals were allowed, and the respondents were directed to return the seized properties to the appellants.Conclusion:The tribunal allowed the appeals, setting aside the impugned order and directing the respondents to return the seized properties to the appellants as the statutory period for retention had expired without any prosecution complaint being filed. The tribunal emphasized the importance of strict compliance with statutory requirements under PMLA.