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 documents and digital evidence in a money laundering case involving bank fraud conspiracy. The appellant argued non-recording of reasons under sections 17(1), 20(4), and 8(1), but later chose not to press these contentions. The Tribunal found that the Adjudicating Authority failed to consider relevant developments and pertinent facts in reaching its conclusion, noting that investigations were not at a preliminary stage as claimed. The seized documents constituted records under the Act, while mobile phone data qualified as both property and records. The appeal was disposed of along with pending applications.

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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.

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