Recorded reasons to believe and statutory time limits control money-laundering seizures; mere suspicion under criminal procedure cannot sustain retention.

Seizure and retention of property under the Prevention of Money Laundering Act must comply with the Act's self-contained scheme, including recorded reasons to believe and mandatory statutory timelines. The Tribunal treated Sections 17, 18, 20, 21 and 8 as governing the field and held that retention cannot continue beyond the prescribed period during investigation. It also rejected reliance on the general seizure power under the Code of Criminal Procedure, stating that mere suspicion is insufficient and that the special safeguards in the Act prevail. On that basis, continued retention of the seized cash was held unsustainable and relief followed.

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Issues: (i) Whether the seized cash could be retained under the Prevention of Money Laundering Act, 2002 despite the statutory time limits and the absence of a prosecution complaint within the prescribed period; (ii) Whether the Enforcement Directorate could justify seizure or freezing on mere suspicion by relying on the general scheme of the Code of Criminal Procedure, 1973.

Issue (i): Whether the seized cash could be retained under the Prevention of Money Laundering Act, 2002 despite the statutory time limits and the absence of a prosecution complaint within the prescribed period.

Analysis: The retention and adjudication scheme under Sections 17, 18, 20, 21 and 8 of the Act was read as a self-contained code with mandatory timelines. The Tribunal held that the outer limit for deciding retention is fixed by the statute and that, after the amendment to Section 8(3)(a), retention during investigation cannot continue beyond the prescribed period. It was also noticed that no prosecution complaint had been filed against the appellant within the stipulated time, and the respondent's position that this was immaterial was rejected in light of the amended statutory framework.

Conclusion: The seized cash could not be retained beyond the statutory limit, and the impugned retention order was unsustainable.

Issue (ii): Whether the Enforcement Directorate could justify seizure or freezing on mere suspicion by relying on the general scheme of the Code of Criminal Procedure, 1973.

Analysis: The Tribunal declined to import the seizure scheme of Section 102 of the Code of Criminal Procedure, 1973 into the Prevention of Money Laundering Act, 2002. It held that the Act requires material giving rise to a reason to believe, recorded in writing, and that powers of seizure or freezing cannot be exercised on mere suspicion. The special safeguards and time limits in the Act were treated as inconsistent with a broader, suspicion-based power under the criminal procedure law.

Conclusion: The Enforcement Directorate could not sustain the action on the basis of mere suspicion or by relying on Section 102 of the Code of Criminal Procedure, 1973.

Final Conclusion: The appeal succeeded, the retention order was set aside, and the appellant obtained relief against continued retention of the seized cash.

Ratio Decidendi: Under the Prevention of Money Laundering Act, 2002, seizure or retention of property must rest on recorded reasons to believe and must comply with the Act's mandatory time limits; a suspicion-based approach under the general criminal procedure law cannot override that statutory scheme.

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