2023 (11) TMI 1296 - AT - Money Laundering

Appellate Tribunal allows appeal against document retention order in money laundering case under sections 17(1), 20(4), 8(1)

The Appellate Tribunal SAFEMA, New Delhi allowed the appeal challenging the Adjudicating Authority's order under PMLA 2002 permitting retention of seized ... Money Laundering - challenge to order of the learned Adjudicating Authority under the PMLA 2002 allowing retention of the seized documents and digital evidence - participation in the criminal conspiracy to defraud the Andhra Bank and other public sector banks - non-recording of reasons/satisfaction under sections 17(1), 20(4), and 8(1) - Aalleged non-recording of reasons/satisfaction under sections 17(1), 20(4), and 8(1) without which the authorities concerned could not have assumed jurisdiction under the respective provisions - HELD THAT:- The respondent has suggested that the case records available with the learned Adjudicating Authority may be called for. The Bench was inclined to accept the suggestion made by the learned counsel for the respondent Directorate. However, the learned counsel for the appellant submitted that instead of calling for the record from the learned Adjudicating Authority the appeal may be decided on the basis of the other contentions put forward by them. Having considered this submission for the appellant's side, the arguments relating to the non-recording of reasons/satisfaction under the respective provisions of section 17(1), 20(4), and 8(1) are treated as not pressed and are not being adjudicated upon in this order. The documents seized would clearly constitute 'records' for the purposes of the Act. As regards the mobile phone itself, it would fall under the category of 'property'. However, the data contained in it would again answer to the description of 'records'. As mandated by the law, an 'application' (OA) was filed before the learned Adjudicating Authority on 1-12-2017, which was within the prescribed thirty-day period prescribed for this purpose under section 17(4). In the said application, the Assistant Director, Directorate of Enforcement had prayed for permission to retain the seized documents and digital evidence under section 8(3). In the impugned order, the Ld. Adjudicating Authority has not made any mention of the above developments which would have been within its knowledge and which were pertinent for it to come to a reasoned conclusion. It also reveals that investigations in the case were not at such a preliminary stage as has been made out in the impugned order. It was also known at that stage which of the properties had been provisionally attached as the confirmation of provisional attachment was pending before the very same authority in the form of an OC. The present appeal stands disposed of, along with any pending applications filed thereunder. Issues Involved:1. Non-recording of reasons/satisfaction under sections 17(1), 20(4), and 8(1) of the PMLA, 2002.2. Whether the seized documents and digital evidence pertain to properties involved in money laundering.3. Retention of seized documents and electronic evidence by the respondent directorate.Issue-wise Detailed Analysis:1. Non-recording of Reasons/Satisfaction:The appellant contended that reasons or satisfaction were not recorded at the stages required by sections 17(1), 20(4), and 8(1) of the PMLA, 2002, which are preconditions for invoking these provisions. The appellant relied on previous judgments, including Universal Music India (P.) Ltd. v. Deputy Director, Directorate of Enforcement and Musaddilal Gems and Jewels (P.) Ltd. v. Union of India, which emphasized the necessity of recording reasons to believe before conducting search and seizure operations. However, during the proceedings, the appellant chose not to press this issue further, and thus, it was not adjudicated upon in the final order.2. Seized Documents and Digital Evidence:The appellant argued that three of the properties related to the seized documents do not represent proceeds of crime, as per the respondent's own supplementary charge sheet. The respondent directorate opposed this, stating that the investigation was ongoing and that the seized documents and digital evidence were crucial for confronting individuals and could serve as evidence in court proceedings. The Adjudicating Authority had allowed the retention of these documents, stating that the investigation was not yet complete and that the materials might be needed for further examination by the Directorate.The Tribunal noted that the Adjudicating Authority's conclusion that the seized documents/digital evidence were involved in money laundering was not based on a reasoned consideration of the material before it. The Tribunal found that the Authority had not adequately considered the appellant's explanations regarding the acquisition of properties, which were deemed irrelevant at that stage.3. Retention of Seized Documents and Electronic Evidence:The respondent directorate argued for the retention of the seized documents, citing ongoing investigations and the potential need for the documents in future proceedings. The Tribunal observed that the investigation dated back to 2017, and after six years, it was unreasonable to continue retaining all the documents indefinitely. The Tribunal concluded that only two of the documents related to properties involved in money laundering, as per the prosecution complaint.Final Order:The Tribunal ordered that the retention of seized records listed as Annexures 'B' and 'F' of the Schedule to the Panchanama be confirmed. However, the seized records listed as 'A', 'C', 'D', and 'E', along with the electronic device (mobile phone), were ordered to be released to the appellant within sixty days, with the provision that the respondent may keep copies of the documents and data. The Tribunal clarified that this order would not affect ongoing criminal proceedings or other appeals related to the case. The appeal was thus disposed of, with no order as to costs.