The Delhi High Court held that ED should forward a copy of the Documents to the Adjudicating Authority Immediately after a freezing order under PML Rule.
The batch of writ petitions filed challenging freezing orders passed by the Directorate of Enforcement wherein the bank accounts of the Petitioners were ordered to be frozen.
The Single judge bench of Justice Prathiba M. Singh said that when a letter of request is received under Section 60 from a contracting state, the requisite safeguards contained in Chapters III and V of the Act, as well as the procedure mentioned in the Rules and Regulations framed under the Act have to be followed. The said requests cannot be treated at a higher threshold. The ED and the Adjudicating Authority would have to adhere to all provisions relating to recording the ‘reason(s) to believe’ and supplying the ‘Relied Upon Documents’, as is required to be done in the case of domestic proceedings under the PMLA.
“Immediately upon a search and seizure/ freezing order being passed, the Director ED or the person authorized has to forward a copy of the ‘reasons to believe recorded by the ED along with ‘material in its possession’ to the Adjudicating Authority, in a sealed cover, as per the provisions of the Prevention of Money Laundering (Forms, Search and Seizure or Freezing and the manner of forwarding the reasons and material to the Adjudicating Authority, Impounding and Custody of Records and the Period of Retention) Rules, 2005. The detailed procedure provided under the said Rules has to strictly be complied with to ensure that there is no tampering in the material sent by the ED to the Adjudicating Authority,” the court said.
The court said that along with the application under Section 17(4), The Director ED or the person authorized has to transmit all the material in the possession of the ED in respect of the said case, to the Adjudicating Authority, in accordance with the procedure stipulated in Rule 8 of the 2005 Rules. It would not be permissible for the ED to retain some part of the material, and send partial documents to the Adjudicating Authority, at this stage, in as much as the statute contemplates sending of `the material in possession of the authority’ and NOT ‘material forming the basis of the ‘reasons to believe’’. No documents already in possession of the ED can be shared by the ED with the Adjudicating Authority without following the due procedure provided within the 2005 Rules, or post the issuance of the show-cause notice.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan AdFree. Follow us on Telegram for quick updates.
