Court deems search and seizure illegal under PMLA, sets aside warrant, orders release of seized items

The court found the search and seizure conducted on 17.10.2022 to be illegal as it did not comply with Section 17 of the Prevention of Money Laundering Act (PMLA). The search warrant was issued without proper recording of 'reasons to believe,' violating statutory provisions. Consequently, the court set aside the search and seizure, ordering the release of all seized items. The writ petition was deemed maintainable under Article 226 due to procedural irregularities. The respondents were given the opportunity to take necessary actions in accordance with the law.

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Issues Involved:
1. Legality of the search and seizure conducted on 17.10.2022.
2. Compliance with Section 17 of the Prevention of Money Laundering Act (PMLA).
3. Maintainability of the writ petition under Article 226.

Issue-wise Detailed Analysis:

1. Legality of the search and seizure conducted on 17.10.2022:
The petitioners challenged the search and seizure conducted on 17.10.2022, arguing that it was contrary to Section 17 of the PMLA. They contended that neither the petitioner company nor its directors were related to the alleged offenses registered against Mr. Sukesh Gupta and others. The search warrant was shown, and signatures were forcefully taken without allowing the petitioners to read its contents. The respondents failed to provide details of the date and time for recording the 'reasons to believe' and did not meet the mandatory provisions of Section 17 of the PMLA.

2. Compliance with Section 17 of the Prevention of Money Laundering Act (PMLA):
The court examined whether the search and seizure were conducted in compliance with Section 17 of the PMLA. Section 17 mandates that the 'reasons to believe' must be recorded in writing before issuing a search warrant. The court found that the Additional Director of the Enforcement Directorate issued the search warrant without recording the 'reasons to believe.' Instead, the Deputy Director recorded the 'reasons to believe' without any date and time, which was a clear violation of Section 17(1) of the PMLA. The court cited various judgments, including Opto Circuit India Limited Vs. Axis Bank and others, which emphasized that if a statute provides for a thing to be done in a particular manner, it must be done in that manner alone.

3. Maintainability of the writ petition under Article 226:
The respondents argued that the writ petition was not maintainable as an alternative remedy was available under Section 8(1) of the PMLA before the Adjudicating Authority. However, the court held that the writ petition was maintainable under Article 226, considering the procedural lapses in recording the 'reasons to believe' and issuing the search warrant.

Conclusion:
The court concluded that the search and seizure conducted on 17.10.2022 were contrary to Section 17 of the PMLA. The Additional Director issued the search warrant without recording the 'reasons to believe,' and the Deputy Director recorded the 'reasons to believe' without any date and time. Consequently, the court set aside the search and seizure and directed the respondents to release all the seized jewelry, cash, and other articles. The court allowed the writ petition and left it open for the respondents to take any action subject to compliance with the required procedure afresh, as contemplated under law.

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