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2025 Supreme(Online)(Del) 6724
IN THE HIGH COURT OF DELHI AT NEW DELHI
Subramonium Prasad, Harish Vaidyanathan Shankar, JJ
DIRECTORATE OF ENFORCEMENT THROUGH ASSISTANT DIRECTOR DELHI – Appellant
Versus
RAJESH KUMAR AGARWAL – Respondent
MISC. APPEAL (PMLA) 03/2023 | CRL.M.A. 34701/2019 | CRL.M.A. 38804/2019
For the Appellants/Petitioners: Mr. Samrat Goswami
For the Respondents: Mr. Amit Khemka, Mr. Sandeep Dash, Ms. Himani Singh, Ms. Jeevika Dhyani
The enforcement of procedural mandates under the Prevention of Money Laundering Act is essential, as non-compliance renders actions regarding retention of seized properties legally unsustainable.
Headnote:(A) Prevention of Money Laundering Act, 2002 - Section 42, Section 17(4), Section 20 - Appeal against retention order - Tribunal set aside retention order citing lack of substantive reasoning from the Adjudicating Authority - Appellant contended a requirement for adherence to statutory requirements for retention as prescribed in Section 20 - Court noted procedural safeguards were mandatory and non-compliance invalidates retention - Various statutory provisions outlined the procedure for search and seizure, retention, and adjudication under Sections 17 and 20 - Retention order was deemed legally unsustainable due to failing to follow due process and substantive inquiry requirements. (Paras 1-102)
(B) Act - Judiciary - Authority to enforce provisions under PMLA - Emphasized the need for a stringent procedural framework ensuring both enforcement and individual rights protection. (Paras 83-102)
Facts of the case:
The Directorate of Enforcement sought to retain properties seized during a money laundering investigation against the Respondent. Following a challenged order from the Adjudicating Authority permitting this retention, the Appellate Tribunal found no substantive reasoning in support of the retention, leading to this appeal.
Findings of Court:
The Court found the procedures of the PMLA to be stringent and aimed at protecting individual rights, highlighting the need for compliance with statutory provisions.
Issues: Whether the retention order complied with procedural safeguards outlined in PMLA and whether the prior order by the Adjudicating Authority was legally sound.
Ratio Decidendi: The Court affirmed that statutory compliance with procedural mandates in the PMLA is essential; lack of adherence results in an invalid order.
Result: The appeal dismissed.
| Table of Content |
|---|
| 1. background details of investigation and appeal. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7 , 8 , 9 , 10 , 11 , 12) |
| 2. arguments presented by both parties. (Para 13 , 14 , 15 , 16 , 17 , 18 , 19 , 20 , 21 , 22 , 23 , 24 , 25 , 26 , 27 , 28 , 29 , 30 , 31 , 32 , 33) |
| 3. court analysis of statutory provisions. (Para 34 , 35 , 36 , 37 , 38 , 39 , 40 , 41 , 42 , 43 , 44 , 45 , 46 , 47 , 48 , 49 , 50 , 51 , 52 , 53 , 54 , 55 , 56 , 57 , 58 , 59 , 60 , 61 , 62 , 63 , 64 , 65 , 66 , 67 , 68 , 69 , 70 , 71 , 72 , 73 , 74 , 75 , 76 , 77 , 78 , 79 , 80) |
| 4. legal principles concerning procedural compliance. (Para 81 , 82 , 83 , 84 , 85 , 86 , 87 , 88 , 89 , 90 , 91 , 92 , 93 , 94 , 95 , 96 , 97 , 98 , 99 , 100 , 101 , 102) |
BRIEF FACTS:
1. The Appellant/ Directorate of Enforcement, ED has preferred the present appeal under Section 42 of the Prevention of Money Laundering Act, 2002, PMLA/ Act challenging the Order dated 06.02.2019, Impugned Order passed in FPA-PMLA-1973/DLI/2017 by the learned Appellate Tribunal (PMLA), New Delhi, AT/Tribunal. By the said order, the learned AT set aside the Order dated 21.08.2017 passed by the learned Adjudicating Authority (PMLA), AA which had allowed Original Application No. 106/2017 dated 15.06.2017 filed under Section 17(4) of the PMLA, seeking retention of seized properties of the Respondent.
2. The Appellant registered ECIR No. 01/DZ-II/2017 dated 11.02.2017 pursuant to Criminal Complaint No. 57463 of 2016 dated 29.11.2016 filed by the Serious Fraud Investigation Office, SFIO under Section 420 read with Section 120B of the Indian Penal Code, 1860, IPC before the learned Additional Chief Metropolitan Magistrate (Central) Special Acts, Tis Hazari Courts, Delhi.
3. The investigation related to allegations that Mr. Surendra Kumar Jain and Mr. Virendra Jain, Jain Brothers through the accounts of corporate entities controlled by them, had indulged in the offence of money laundering. It was also alleged that the said operation was carried out with the assistance of certain professionals who acted as mediators/ co-conspirators in carrying out the money laundering operations. The Modus Operandi of carrying out the said laundering was alleged to be by infusion of cash from M/s Jagat Projects into the bank accounts of the corporate entities controlled by the Jain Brothers, in the guise of the same being share subscription money at a huge premium to the tune of Rs. 64.70, during the Financial Year 2008-2009. The Respondent herein, a Chartered Accountant, was alleged to be one of the professionals who acted as a mediator/ co-conspirator.
4. Post the investigation, on a strong reasonable belief, that proceeds of crime, documents/ records related to offence of money laundering could be recovered, a search under Section 17 (1) of the PMLA was conducted on 18.05.2017 at the office premises of the Respondent, being, 202, 18/12, Jain Bhawan, WEA, Karol Bagh, New Delhi- 110060.
5. As recorded in the Seizure Report (Panchanama) dated 18.05.2017, the search led to the seizure of 59 files, one laptop, three computer hard drives, and Rs. 6,00,000/- in Indian currency.
6. In compliance with Section 17 (2) of the PMLA, the ED submitted the recorded reasons for the search in a sealed envelope to the learned Chairman of the AA on 22.05.2017. On the same day, the Respondent was arrested and later granted bail by the Special Court (PMLA), New Delhi, Special Court on 04.09.2017.
7. On 15.06.2017, the Appellant filed Original Application No. 106/2017 under Section 17 (4) of the PMLA before the learned AA, seeking retention of the seized property.
8. On 20.07.2017, the Appellant also filed a prosecution complaint before the learned Special Court, against the Respondent for the offence under Section 3 , punishable under Section 4 of the PMLA. The learned Special Court took cognizance of the offence on 04.09.2017.
9. Vide Order dated 21.08.2017, the learned AA allowed the Original Application No. 106/2017.
10. Aggrieved by the said order, the
