Seized documents must be returned after 365-day PMLA Section 8(3)(a) period expires without Special Court proceedings

The Delhi HC ruled that seized documents and property must be returned to the petitioner after the statutory 365-day period under Section 8(3)(a) of PMLA expired without proceedings being filed before a Special Court. The court held that allowing indefinite retention without formal proceedings would violate Article 14 of the Constitution. Since no complaint was filed within 365 days from the Adjudicating Authority's order dated 10.02.2021 regarding the search and seizure conducted on 19th-20th August 2020, the seizure lapsed and respondents were directed to return all seized materials forthwith.

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Issues Involved:

1. Whether the order dated 10.02.2021 passed by the Adjudicating Authority under Section 17(4) of PMLA, 2002 has ceased to have effect due to non-filing of prosecution complaint within 365 days as contemplated under Section 8(3)(a) of PMLA.
2. Whether the petitioner is entitled to the return of documents, records, digital devices, and jewellery seized by the respondent.

Summary:

Issue 1: Ceasing of the Adjudicating Authority's Order

The petitioner argued that the order dated 10.02.2021 allowing retention of seized items should cease to have effect as no prosecution complaint was filed within 365 days as required under Section 8(3)(a) of the PMLA. The petitioner emphasized that the seized items continue to be retained without any prosecution, violating their constitutional and legal rights. The respondents contended that the seizure should continue during the pendency of proceedings relating to any offence under the Act before a court, citing the pending complaint CC No. 01/2020 and other proceedings.

The court analyzed the provisions of the PMLA, including Sections 5, 17, 20, 21, and 8. It concluded that the words "the proceedings relating to any offence under this Act before a Court" in Section 8(3)(a) should be interpreted narrowly to mean only proceedings that involve the property or person from whom it was seized. The court held that the retention order dated 10.02.2021 ceased to have effect after 365 days as no relevant proceedings were pending.

Issue 2: Return of Seized Items

The petitioner sought the return of seized items, arguing that the retention period had expired without any prosecution complaint. The respondents argued that various pending proceedings justified the continued retention of the items. The court rejected this argument, stating that the pending writ petitions and other proceedings did not fall within the scope of "pendency of the proceedings relating to any offence under this Act before a Court" as required by Section 8(3)(a).

The court emphasized that the continuation of seizure beyond 365 days without relevant proceedings would be confiscatory and violative of Article 14 and Article 300A of the Constitution. Consequently, the court directed the respondents to return the seized documents, digital devices, and property to the petitioner forthwith, subject to any contrary order by a competent court.

Conclusion:

The court allowed the petition, directing the return of the seized items to the petitioner and disposing of the pending application. There was no order as to costs.

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