ED must return seized items if probe goes beyond 365 days without prosecution: HC

This was stated in an order by Justice Navin Chawla of the Delhi High Court
Delhi High Court (File photo)
Delhi High Court (File photo)

NEW DELHI: If the money laundering investigation by the Enforcement Directorate (ED) goes beyond 365 days and does not result in any prosecution complaint, then the seized items must be returned to the individual from whom it was seized, ruled the Delhi High Court.

Justice Navin Chawla, in an order, said, "It is also to be remembered that the power of attachment, seizure, and freezing of the properties and records is a draconian provision that has to be strictly construed."

The continuation of such seizure beyond 365 days, in absence of the pendency of any proceedings relating to any offence under this Act before a court or under the corresponding law of any other country before the competent court of criminal jurisdiction outside India, shall be confiscatory in nature, without authority of law and, therefore, violative of Article 300A of the Constitution of India, the court said.

"Therefore, the natural consequence of the investigation for a period beyond three hundred and sixty-five days not resulting in any proceedings relating to any offence under the Act, in terms of Section 8(3) of the Act, is that such seizure lapses and the property so seized must be returned to the person from whom it was so seized," the order asserted.

Further, the high court refused to accept the ED counsel's argument that as Section 8(3)(a) of the Prevention of Money Laundering Act (PMLA) does not provide for a consequence of lapsing of 365 days, there can be no direction for the return of the property so seized.

The court said Section 8(3) of the Act cannot extend the period of retention of the seized documents and property of the petitioner.

"In case the respondents wished to conduct custodial investigation/arrest of the petitioner, it was open to the respondent to move an appropriate application in this regard in the said writ petition. The respondents, admittedly, did not do so," the order read.

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