2025 (11) TMI 440 - AT - Money Laundering

Prosecution complaint filed after 365 days held maintainable as exclusion of 15.03.2020-28.02.2022 must be fully applied under PMLA

The AT upheld that a prosecution complaint filed after 365 days remains maintainable because the SC's order excluding the period 15.03.2020-28.02.2022 ... Money Laundering - continued attachment of property - Prosecution Complaint which was filed after 365 days of the Impugned Order can hold good, or not, in view of the order of the Hon’ble Supreme Court in Suo Motu Writ Petition (C) No. 3 of 2020 [2022 (1) TMI 385 - SC ORDER], whereby, it was directed that the period from 15.03.2020 till 28.02.2022 shall stand excluded for the purposes of limitation as may be prescribed under any general or special laws in respect of all judicial or quasi- judicial proceedings - HELD THAT:- The Judgment in the matter of S. Kasi [2020 (6) TMI 727 - SUPREME COURT] was passed in the context of grant of default bail, which has direct bearing on personal liberty. The present matter relates to continuation of attachment of movable and immovable properties of the Appellant, unlike the issue of personal liberty. This Tribunal in the matter of Rakesh Tiwari has held that given the extraordinary emergent situation arising out of Covid-19 the Order dated 10.01.2022 (supra) of the Apex Court cannot be given narrow interpretation. The enormity of the situation for the Investigating Officer to have completed the investigation during the period of lockdown, when he was not even authorized to visit the witnesses or record their statements needs to be appreciated. In any case such witnesses could have declined to respond to the summons and tender their statements. The nature of Covid-19 did not rule out threat to life arising from mere human interaction. The extraordinary circumstances arisen due to Covid-19 would have had an impact on the pace of the investigations being conducted. It must also be kept in view that the Hon’ble Supreme Court in the matter of Prakash Corporates [2022 (2) TMI 1268 - SUPREME COURT], has observed that the legal effect and coverage of the orders passed by the Apex Court in SMWP No. 3 of 2020 cannot be unnecessarily narrowed and rather, having regard to their purpose and object, full effect is required to be given to such orders and directions. The protection given through the interim Order dated 03.09.2019 to the residential property of Appellant against the eviction from the said property and against the notice issued under Section 8(4) of the PMLA, cannot be continued with on the disposal of the Appeal. However, it is observed that in view of the Judgment of the Hon’ble Supreme Court in the matter of Vijay Madanlal Choudhary & Ors. vs. Union of India & Ors. [2022 (7) TMI 1316 - SUPREME COURT (LB)] possession can henceforth be taken only if exceptional reasons exist. Application disposed off. 1. ISSUES PRESENTED AND CONSIDERED 1.1 Whether a prosecution complaint under the Prevention of Money Laundering Act (PMLA) filed after 365 days from confirmation of provisional attachment can be valid where the delay falls within the period excluded by the Supreme Court's suo motu order relating to limitation during the Covid-19 pandemic. 1.2 Whether the Supreme Court's order excluding the period 15.03.2020 to 28.02.2022 for purposes of limitation (SMWP No. 3 of 2020 and subsequent directions) applies to executive action by investigating agencies (filing of prosecution complaints) and not only to litigants/lawyers seeking to file judicial or quasi-judicial remedies. 1.3 The legal consequence under Section 8(3)(a) PMLA of failure to file a prosecution complaint within the prescribed period (i.e., lapse/release of attached property) and whether pandemic-related exclusion prevents lapse where filing occurred after the prescribed statutory period but within the excluded period. 1.4 Whether interim protection restraining eviction/possession under earlier interim orders should continue post-disposal and the applicable test for taking possession after dismissal of appeal. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Applicability of pandemic period exclusion to PMLA time-limit for filing prosecution complaint Legal framework: Section 8(3)(a) PMLA provides that upon confirmation of attachment by the Adjudicating Authority the attachment 'shall continue during investigation for a period not exceeding three hundred and sixty-five days or the pendency of the proceedings relating to any offence under this Act before a court...'. The Supreme Court's suo motu order directed that the period 15.03.2020 to 28.02.2022 shall stand excluded for the purposes of limitation as may be prescribed under any general or special laws in respect of all judicial or quasi-judicial proceedings, with consequential directions about residual periods. Precedent treatment: Tribunal decisions cited hold that failure to file prosecution complaint within the statutory period under Section 8(3)(a) results in lapsing of attachment (release of properties) where no proceedings are pending. Other Tribunal orders have applied the Supreme Court pandemic exclusion to extend time in various contexts. The Supreme Court's decision on default bail (S. Kasi) clarified that the extension order was not intended to eclipse time limits of executive action like filing charge-sheets under Section 167(2) CrPC which directly engage personal liberty, but emphasized that the extension order's object was to assist litigants unable to file remedies. Interpretation and reasoning: The Court recognized that Section 8(3)(a) prescribes a substantive outer limit (365 days) for continuation of attachment unless proceedings are pending. The central question is whether the pandemic exclusion extends that statutory outer limit by suspending computation of limitation so that filing made after 365 days but within the excluded pandemic period is valid. The Tribunal found the pandemic circumstances extraordinary, acknowledging operational impediments to investigation (lockdowns, court suspensions, difficulty in obtaining witness statements). The Tribunal accepted the view in other orders that the Supreme Court's exclusion should not be narrowly confined and that, given its object to obviate hardship, full effect must be given to its orders. The Tribunal also distinguished S. Kasi on its facts: S. Kasi dealt with personal liberty/default bail under CrPC and held that the extension order could not be read to enlarge the statutory right to default bail because the investigating officer could have filed a charge-sheet before the magistrate even during lockdown; whereas the present issue concerns property rights under Section 8(3)(a) PMLA and the practical impossibility of completing investigation in lockdown was held to be relevant. Ratio vs. Obiter: Ratio - The Tribunal held that the Supreme Court's exclusionary order is wide enough in purpose and effect to be applied for computing the 365-day period under Section 8(3)(a) PMLA where the period of delay falls within the excluded pandemic period and where extraordinary Covid-19 constraints impeded investigation. Obiter - Observations about the comparative ability to file charge-sheets during lockdown and theoretical possibilities for investigators to file despite restrictions (drawn from S. Kasi) were noted but not treated as decisive. Conclusion: Filing of the prosecution complaint on 01.06.2020 (after 365 days from confirmation) was held to be maintainable because the delay fell within the period excluded by the Supreme Court's suo motu order; therefore the statutory 365-day limit is to be read in light of that exclusion for the purposes of computing limitation under Section 8(3)(a) PMLA in the exceptional pandemic circumstances. Issue 2 - Whether the Supreme Court exclusion applies to executive/investigating agency action Legal framework: The Supreme Court order speaks in terms of exclusion for limitation 'in respect of all judicial or quasi-judicial proceedings' and was framed to obviate hardships faced by litigants and lawyers in filing proceedings during the pandemic; it was passed under Article 142 and declared binding. Precedent treatment: S. Kasi held the extension order was not intended to extend the period for police filing of charge-sheets under Section 167(2) CrPC insofar as it sovereignly limited personal liberty rights, because the charge-sheet could be filed even during lockdown before the magistrate in charge. Other authorities and Tribunal decisions, however, have applied the exclusion in contexts beyond purely litigant filings, particularly where investigation and court functioning were hampered by lockdown, and where the object of the exclusion (avoiding termination of proceedings) warrants broader application. Interpretation and reasoning: The Tribunal accepted that the Supreme Court order's primary object was to assist litigants and preserve remedies, but rejected a rigid restriction that would exclude all executive actions from its scope. The Tribunal emphasized the extraordinary operational constraints on investigators (court suspensions, restrictions on witness contact) that made timely completion of investigatory tasks practically impossible. The Tribunal reasoned that the exclusionary order must be given full effect and not narrowed artificially where its purpose (preventing unfair forfeiture of rights during the pandemic) supports extending its operation to the computation of the PMLA time limit for continuation of attachment. Ratio vs. Obiter: Ratio - The Tribunal held that the Supreme Court's exclusion may be applied to the computation of statutory periods under Section 8(3)(a) PMLA for filing prosecution complaints by investigative agencies where the delay is attributable to pandemic restrictions and falls within the excluded period. Obiter - Broad commentary on the distinction between personal liberty contexts and property contexts (Article 21 vs Article 300A) and the differing weight to be accorded to S. Kasi. Conclusion: The exclusion order is applicable to computing the 365-day limitation under Section 8(3)(a) PMLA in the present facts; therefore the delayed filing by the investigating agency is not fatal where the period of delay lies within the excluded pandemic window and investigation was impeded by Covid-19 constraints. Issue 3 - Consequence of non-filing within statutory period and effect of precedents requiring release Legal framework: Section 8(3)(a) contemplates lapse of the attachment if the statutory period elapses without initiation/pendency of prosecution; Tribunal jurisprudence has held attachments lapse if no prosecution complaint is filed within the statutory period. Precedent treatment: Prior Tribunal decisions have ordered release of properties where no prosecution complaint was filed within the prescribed period (pre- and post-amendment jurisprudence), emphasizing the mandatory nature of the time limit. Interpretation and reasoning: The Tribunal reconciled those precedents with the pandemic exclusion: although the statutory period is mandatory, computation of that period must take into account the Supreme Court's exclusionary directions. Where the statutory period would have expired during the excluded period, the effective computation must exclude that window; hence attachments do not lapse automatically if the prosecuting agency files within the extended computation made possible by the exclusion. The Tribunal found that earlier decisions ordering release where no account was taken of pandemic exclusion are distinguishable where the facts fall within the excluded window. Ratio vs. Obiter: Ratio - Attachments under Section 8(3)(a) do not ipso facto lapse where failure to file within 365 days is attributable to the pandemic period excluded by the Supreme Court and the prosecution complaint is filed within the recalculated limitation. Obiter - General statements in earlier orders that attachments lapse upon non-filing remain good law in non-pandemic or non-excluded circumstances. Conclusion: The mandatory nature of Section 8(3)(a) persists, but in the present case the filing after 365 days was validated by applying the pandemic exclusion; therefore lapse/release was not warranted. Issue 4 - Interim protection and possession after dismissal Legal framework: Interim orders maintaining status quo (restraining eviction and steps under Section 8(4) PMLA) are discretionary and normally cease on final disposal; however, possession under attachment may be taken only where exceptional reasons exist, following higher-court guidance on properties and possession. Precedent treatment: The Tribunal had earlier granted interim status-quo orders; higher authority guidance indicates that taking possession post-adjudication requires exceptional reasons. Interpretation and reasoning: The Tribunal held that the interim protection granted earlier cannot continue after disposal of the appeal. Nonetheless, in view of higher-court directions (cited) the respondent may take possession only if exceptional reasons exist, signalling a cautious approach to eviction/possession even after dismissal. Ratio vs. Obiter: Ratio - Earlier interim orders are not perpetually binding after final disposal; post-disposal possession may be taken only upon exceptional justification. Obiter - Practical directions about protection of residential property pending further proceedings. Conclusion: The interim status-quo will not continue by default after dismissal of the appeal; however, possession by the investigative agency should be taken only upon demonstration of exceptional reasons.