PMLA time limits and attachment powers upheld after Covid exclusion, separate criminal stay, and reverse burden analysis

Supreme Court pandemic-related exclusion orders were applied to statutory time limits for concluding PMLA retention, freezing and provisional attachment proceedings, so the 180-day period was treated as extended by the Covid exclusion. The Tribunal also held that a stay in connected criminal proceedings did not bar separate PMLA action, and that FIR, ECIR and Section 50(2) statements supplied sufficient foundational facts despite reclassification of bank accounts. It further applied the reverse burden under Section 24, finding no cogent proof of lawful origin for the attached jewellery and properties. On statutory power, it held that Section 8(3) permits confirmation of attachment and retention of seized or frozen property after the prescribed process.

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Issues: (i) Whether the period from 15.03.2020 to 28.02.2022 stood excluded while computing the 180-day period for retention, freezing and provisional attachment proceedings under the Prevention of Money Laundering Act, 2002; (ii) whether the interim stay in the connected criminal proceedings affected the present PMLA proceedings and whether the challenge based on reclassification of bank accounts and absence of foundational facts was sustainable; (iii) whether the challenge to the attachment, seizure and freezing orders on the ground of absence of reasons to believe and non-discharge of burden under Section 24 was sustainable; and (iv) whether the Tribunal should accept the contention that Section 8(3) did not authorise the impugned action and that the Delhi High Court decision in Rajesh Kumar Agarwal governed the matter.

Issue (i): Whether the period from 15.03.2020 to 28.02.2022 stood excluded while computing the 180-day period for retention, freezing and provisional attachment proceedings under the Prevention of Money Laundering Act, 2002.

Analysis: The Tribunal treated the Supreme Court's pandemic-related orders as applicable to judicial and quasi-judicial proceedings, including proceedings under the PMLA where the Adjudicating Authority must conclude matters within a prescribed time. It held that the 180-day period under the PMLA is an endpoint for termination of proceedings and therefore falls within the exclusion granted for the Covid period. On that basis, the impugned orders were found to have been passed within time after exclusion of the relevant period.

Conclusion: The challenge on limitation failed and was rejected against the appellants.

Issue (ii): Whether the interim stay in the connected criminal proceedings affected the present PMLA proceedings and whether the challenge based on reclassification of bank accounts and absence of foundational facts was sustainable.

Analysis: The Tribunal held that the stay order of the Supreme Court was confined to the criminal proceedings pending before the trial court and did not extend to the present proceedings concerning provisional attachment, seizure or freezing. It further held that reclassification of the accounts from fraud or willful defaulter status did not erase the allegations of diversion of funds, use of funds for non-business purposes, and the existence of a predicate offence. The record, including the FIR, ECIR and statements under Section 50(2), was treated as sufficient to show foundational facts supporting the money-laundering proceedings.

Conclusion: The challenge based on the stay order, reclassification of accounts and absence of foundational facts failed.

Issue (iii): Whether the challenge to the attachment, seizure and freezing orders on the ground of absence of reasons to believe and non-discharge of burden under Section 24 was sustainable.

Analysis: The Tribunal held that the Adjudicating Authority had recorded reasons to believe at the initial stage and that the subsequent adjudication order contained sufficient conclusions after considering the rival material. On the attached jewellery and immovable properties, it held that the appellants failed to produce cogent documentary proof establishing a lawful source independent of proceeds of crime. The Tribunal applied the reverse burden under Section 24 and concluded that the appellants had not discharged it.

Conclusion: The challenge to the recording of reasons and the challenge to attachment of properties and jewellery was rejected.

Issue (iv): Whether Section 8(3) did not authorise the impugned action and whether the Delhi High Court decision in Rajesh Kumar Agarwal governed the matter.

Analysis: The Tribunal examined Sections 8, 17 and 20 of the PMLA and held that the adjudicatory power under Section 8(3) includes confirmation of attachment as well as retention of seized or frozen property after the statutory procedure. It accepted the respondent's submission that the interpretation adopted in Rajesh Kumar Agarwal conflicted with the Supreme Court's exposition in Vijay Madanlal Choudhary on the role of the Adjudicating Authority under Section 17(4). The Tribunal also held that the High Court decision could not be followed to the extent it rewrote the statutory scheme or displaced the Supreme Court's binding interpretation.

Conclusion: The objection based on Section 8(3) and Rajesh Kumar Agarwal was rejected; the impugned orders were upheld.

Final Conclusion: The appeals failed on all substantial grounds, and the orders confirming provisional attachment, retention, freezing and seizure were sustained.

Ratio Decidendi: Pandemic-related exclusion orders of the Supreme Court apply to statutory time limits for concluding quasi-judicial PMLA proceedings, and the Adjudicating Authority's power under Section 8(3) extends to lawful confirmation of attachment and retention of seized or frozen property following the prescribed process.

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