M/s Gurudev Jewelers vs The Deputy Director Directorate of Enforcement Chennai

Headnote:(A) Prevention of Money Laundering Act, 2002 - Sections 17, 8(1), 8(3)(a), 21(2) - Adjudicating Authority (Procedure) Regulations, 2013 - Regulation 13 - Retention of seized property - Supply of Relied Upon Documents (RUDs) - It is mandatory for the Adjudicating Authority to serve all documents it relies upon to the party concerned, including FIRs and other materials, as per Section 8(1) read with Regulation 13. Failure to supply such documents violates principles of natural justice and renders the retention order illegal. Reliance placed on J.K. Tyre and Industries vs. Directorate of Enforcement (Delhi HC). (Paras 14, 15, 16, 17, 18)

(B) Similarly, where a prosecution complaint is filed before the Special Court and the seized property is proposed for confiscation, the release of the property becomes subject to the order of the Special Court. (Para 19)

Facts of the case:
The appellant, a jewellery firm, had cash of Rs.5,75,930 seized during searches under Section 17 of PMLA in connection with an investigation against another entity for alleged investment fraud. The Adjudicating Authority allowed retention of the cash. The appellant challenged the order, primarily on the ground that copies of relied-upon documents, including the FIR, were not supplied to them despite requests.

Findings of Court:
The Tribunal found that the Adjudicating Authority's 'reasons to believe' relied on the FIR and other documents, yet copies were not provided to the appellant. The respondent's claim of service was insufficient; documents like FIR were not supplied. Following the Delhi High Court's ruling in J.K. Tyre, this non-supply vitiates the order. Consequently, the retention order is set aside. However, since the prosecution complaint has since been filed, the release of the cash is now subject to the Special Court's orders.

Issues: The main issue was whether the failure to supply all relied-upon documents to the appellant before passing the retention order violated the statutory requirements and principles of natural justice.

Ratio Decidendi: The Adjudicating Authority is duty-bound under Section 8(1) PMLA read with Regulation 13 of the 2013 Regulations to serve all documents it 'relies upon' to the party. Non-supply of such documents, especially the FIR forming the basis of the investigation, renders the retention order illegal and unsustainable.

Result: Appeal allowed. Impugned order set aside. Pending applications disposed of. No order as to costs.

Legal Category Hierarchy

1. Appeal against PMLA Adjudicating Authority order allowing retention of seized cash — Dispute over supply of relied-upon documents. (Para 2 , 3 , 4 , 5 , 6 )

2. Appellant: non-supply of RUDs and lapse of 365 days. Respondent: documents served; no statutory right to all RUDs. (Para 7 , 8 , 9 , 10 , 11 , 12 , 13 )

3. Impugned order set aside; retention not mandated; release subject to order of Special Court due to filed prosecution complaint. (Para 18 , 19 , 20 )

4. What is the duty of the Adjudicating Authority under PMLA to supply relied-upon documents to the affected party?

The Adjudicating Authority must serve all documents it relies upon, including FIRs and ITRs, to the party; failure violates natural justice. (Para 14 , 15 , 16 , 17 , 18 )

5. Does Section 21(2) of PMLA limit the right to copies of seized records to only the person from whom they are seized?

No, the Adjudicating Authority's duty under Section 8(1) and Regulations to serve all RUDs applies to all parties, not limited by Section 21(2). (Para 9 , 10 , 14 , 15 , 16 )

6. What is the effect of filing a prosecution complaint on a pending retention order under PMLA?

Once prosecution complaint is filed and seized property is proposed for confiscation, release is subject to the Special Court's order. (Para 19 )

FINAL ORDER

28.10.2025

The present appeal arises from the order dated 15.04.2024 (“the impugned order”) of the learned Adjudicating Authority (“AA”) established under the Prevention of Money Laundering Act, 2002 (“PMLA”) allowing the Original Application (“OA”) filed by the Directorate of Enforcement (“ED”) seeking retention of an amount of Rs. 5,75,930/- seized from the premises of the appellant during search and seizure proceedings under section 17 of the said Act.

Facts in Brief

2. The relevant facts briefly are that an FIR bearing No. 08/2023 dated 18.10.2023 was registered by Economic Offences Wing, Trichy under sections 406, 420 and 120B of the IPC and section 5 of the Tamil Nadu Protection of Depositors (In Financial Establishment) Act 1997 against one M/s Pranav Jewellers, Trichy on the basis of a complaint filed by one Mr. Purushothaman, S/o Anbazhagan of Trichy. Since the FIR disclosed alleged offences which constituted ‘scheduled offences’ under the PMLA, the respondent directorate (ED) registered an Enforcement Case Information Report (ECIR/CEZO-II/30/2023 dated 03.11.2023) under the PMLA and undertook an investigation under the said Act against Pranav Jewellers, Trichy, its founder Mr. Selvaraj Mathan, his wife Karthika and Mr. Narayanan, Branch Manager.

3. Investigation revealed that M/s Pranav Jewellers was into the business of gold jewellery with headquarters at Trichy and branches at Madurai, Chennai, Kumbakonam, Nagercoil and Coimbatore. It was learnt that the said entity has floated several investment schemes to lure its investors and cheated them by accepting investment with false promise of high returns. However, all of sudden, it closed all of its outlets, as a consequence of which, the aforesaid FIR was registered against the said M/s Pranav Jewellers, Trichy and others.

4. During investigation searches under Section 17(1) of the PMLA, 2002 were conducted on 20.11.2023 to 22.11.2023 at 13 premises found to be belonging to the Managing Partner of Pranav Jewellers and its related parties. During the searches, many documents, digital devices and valuables were seized under section 17(1) of the Act under the panchnamas dated 20.11.2023/ 21.11.2023/22.11.2023 from the premises of 13 parties. The seizures made included an amount of INR 5,75,930 found and seized from the office premises of the present appellant, i.e., M/s Gurudev Jewellers located at Nathella Jubilee Plaza, NSC Bose Road, Sowearpet, Chennai-600079.

5. Consequent to the seizures made, an Original Application (OA No. 1078/2023) was filed u/s 17(4) of PMLA for retention of records/ property seized during the searches before the Ld. AA, and the same was allowed by Ld. AA.

6. Aggrieved by the said of Ld. AA allowing retention of the seized amount, the appellant has filed the present appeal challenging the order on various factual and legal grounds.

Arguments on behalf of the appellant

7. Though many grounds have been taken in the Grounds of Appeal filed with the appeal memo filed by the appellant at the time of filing the appeal, the arguments pressed by the appellant at the stage of final hearing were briefly as follows:

(i) Copies of the relied-upon documents (RUDs), including FIR and ECIR, were not provided to the appellant. The appellant had raised this issue before the ld. AA but no response was received. Reference is made in this regard to page 118 of the appeal paper book which comprises an email dated 22.01.2024 addressed to the Ld. AA by the Advocate representing the appellant requesting for the complete set of RUDs accompanying the Show Cause Notice (SCN) issued by the AA, including FIR, chargesheet if any, filed by the Police, ECIR and any other relevant documents. Subsequently, another reminder was also sent on 20.02.2024 stating that the complete set of RUDs had not been received by them. The Ld. AA forwarded the said email to the ED for comments at the earliest. However, instead of sending their comments, or forwarding the complete set of RUDs, E

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2025 Supreme(Online)(ATFP) 13400

APPELLATE TRIBUNAL FOR FORFEITED PROPERTY
V. Anandarajan, Member
M/s Gurudev Jewelers – Appellant
Versus
The Deputy Director Directorate of Enforcement Chennai – Respondent
FPA PMLA 1284 CHN 2024

Under PMLA, the Adjudicating Authority must serve all relied-upon documents to the party before ordering retention; failure violates natural justice and invalidates the order.

Legal Category Hierarchy

Table of Contents

4. What is the duty of the Adjudicating Authority under PMLA to supply relied-upon documents to the affected party?

5. Does Section 21(2) of PMLA limit the right to copies of seized records to only the person from whom they are seized?

6. What is the effect of filing a prosecution complaint on a pending retention order under PMLA?

2025 Supreme(Online)(ATFP) 13400

APPELLATE TRIBUNAL FOR FORFEITED PROPERTYV. Anandarajan, MemberM/s Gurudev Jewelers – AppellantVersusThe Deputy Director Directorate of Enforcement Chennai – RespondentFPA PMLA 1284 CHN 2024

Under PMLA, the Adjudicating Authority must serve all relied-upon documents to the party before ordering retention; failure violates natural justice and invalidates the order.

Legal Category Hierarchy

Table of Contents

4. What is the duty of the Adjudicating Authority under PMLA to supply relied-upon documents to the affected party?

5. Does Section 21(2) of PMLA limit the right to copies of seized records to only the person from whom they are seized?

6. What is the effect of filing a prosecution complaint on a pending retention order under PMLA?

Cases Referred (2)

APPELLATE TRIBUNAL FOR FORFEITED PROPERTY
V. Anandarajan, Member
M/s Gurudev Jewelers – Appellant
Versus
The Deputy Director Directorate of Enforcement Chennai – Respondent
FPA PMLA 1284 CHN 2024