Property Retention not allowable only based on Confirmation of Attachment under PMLA: Delhi HC [Read Order]

The Delhi High Court has observed that retention of money laundering-related property is not permitted by the confirmation of attachment of such property under Section 8(3) of the Prevention of Money Laundering Act, 2002 (PMLA), since Section 20 requires a valid order to be issued.

Anirudh Pratap Agarwal, the petitioner filed appeal under Section 42 of the Prevention of Money Laundering Act, 2002 , impugning the Order dated 26.06.2024 passed by the Appellate Tribunal (PMLA), New Delhi. The order dismissed the appeal filed under Section 26 of the PMLA against the Order dated 14.06.2017 passed by the Adjudicating Authority (PMLA) , which had allowed Original Application No. 78/2017 dated 17.03.2017 filed under Section 17(4) of the PMLA seeking retention of seized properties of the Appellant herein.

The bench observed that Section 20 is substantive and mandatory in nature. It ensures that seizure under Section 17 does not result in indefinite deprivation of property without independent scrutiny. Section 20(1) requires a fresh and independent “reason to believe”, duly recorded in writing, by an authorised officer, who may not necessarily be the same officer who conducted the search under Section 17.

Under Section 8(3), while exercising its confirmatory adjudicatory power, has nothing before it to confirm. Therefore, Section 20 acts as a vital safeguard against arbitrary executive action and ensures that property rights are protected until a full adjudication takes place under Section 8 of the PMLA.

The court viewed that resorting to Section 8 of PMLA, without recording independent reasons, forwarding retention order to the Adjudicating Authority, adhering to the 180 day limit and the Authority's satisfaction as to “prima facie involvement is invalid and void ab initio.

Since Section 17 permits search and seizure, Section 20 permits retention for a maximum of 180 days upon a reasoned and independent order, and Section 8 establishes the adjudicatory framework for confirmation and continuance, the PMLA's statutory architecture incorporates several levels of monitoring. It is not permitted to directly utilize Section 8(3) without first adhering to Section 20.

The Appellant's property remained under retention until the adjudication processes under Section 8 of the PMLA were concluded, despite this non-compliance. Such behaviour is obviously against the protections guaranteed by the PMLA in addition to being procedurally incorrect.

A division bench comprising Justice Subramonium Prasad and Justice Harish Vaidyanathan Shankar observed that the compliance with Sections 17, 20, and 8 of the PMLA is mandated by law and is not just a formality. The retention order is nullified if this framework is broken. The PMLA can only maintain the integrity of its enforcement system and the constitutional guarantee of property rights under Article 300A of the Indian Constitution by strictly adhering to these safeguards.

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