PMLA Seizure Orders to Continue During Pendency of Proceedings, Not Limited by Later Amendments: Supreme Court - 2025-03-05

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PMLA Seizure Orders to Continue Throughout Trial, Not Limited by Subsequent Amendments: Supreme Court

New Delhi – In a significant ruling on the Prevention of Money Laundering Act, 2002 (PMLA), the Supreme Court has clarified that an order for the retention of seized property or records will continue for the entire duration of the trial proceedings, based on the law in force at the time the order was passed. The Court held that subsequent amendments introducing time limits cannot be applied retrospectively to curtail the life of such orders.

The decision was delivered by a bench comprising Justice Abhay S. Oka and Justice Nongmeikapam KotiswarSingh in the case of Union of India vs J. P. Singh . The bench set aside a High Court order that had limited the validity of a retention order issued by the Enforcement Directorate (ED) to 90 days.

Case Background

The case stemmed from an investigation initiated by the Enforcement Directorate, which registered an Enforcement Case Information Report (ECIR) against J.P. Singh and others on March 17, 2017. During a search, various electronic items and documents were seized. On April 4, 2018, the Adjudicating Authority under the PMLA confirmed the retention of these seized items.

Subsequently, the Appellate Tribunal and the High Court ruled in favour of Mr. Singh , holding that the retention order would cease to exist after 90 days. This conclusion was based on an amended version of Section 8(3)(a) of the PMLA, which came into effect on April 19, 2018. The Union of India, through the ED, challenged this interpretation before the Supreme Court.

Key Arguments

Counsel for the Union of India argued that the lower courts had erred by applying the wrong version of the law. They contended that the law applicable was the one in force on April 4, 2018, when the Adjudicating Authority passed its order. Under that provision, a retention order was to "continue during the pendency of the proceedings relating to any offence under this Act before a court," with no specified time limit.

Mr. J.P. Singh , appearing in person, argued that the continued retention was unjust. He pointed out that he had not been named as an accused in the final complaint filed by the ED and that the seized items had been held for an "inordinately long time" without being used in the proceedings.

Supreme Court's Analysis and Ruling

The Supreme Court identified the core issue as which version of Section 8(3) of the PMLA was applicable. The bench unequivocally stated that the law as it stood on the date of the Adjudicating Authority's order (April 4, 2018) would govern the duration of the retention.

The Court cited the pre-amendment version of Section 8(3)(a), which read:

“...whereupon such attachment or retention or freezing of the seized or frozen property shall— (a) continue during the pendency of the proceedings relating to any offence under this Act before a court...”

The bench observed that the requirement for the order's continuation is the pendency of proceedings related to a PMLA offence, not that the affected person must be an accused in the complaint. The Court highlighted:

“For attracting clause (a), it is enough if a complaint alleging commission of offence under Section 3 of the PMLA is pending. It is not necessary for the applicability of clause (a) that the person affected by the order under Section 8(3) must be shown as an accused in the complaint.”

The Court further noted that even if the amended provision were to be considered, it would not support the respondent's case. The amended clause allows retention to continue "during investigation for a period not exceeding ninety days or the pendency of the proceedings." Since the complaint was pending, the order would continue to operate regardless.

Final Decision and Implications

The Supreme Court quashed the orders of the High Court and the Appellate Tribunal, restoring the Adjudicating Authority's order from April 4, 2018. It clarified that the retention of seized items "shall continue to remain in force till the disposal of the complaint."

This judgment provides crucial clarity on the temporal application of PMLA provisions, reinforcing that the law in effect at the time of an order's issuance dictates its terms. It establishes that seizure and retention orders under Section 8(3) are co-terminus with the trial proceedings, unless the specific provision applicable at the time states otherwise.

While allowing the appeal, the Court directed the ED to provide Mr. Singh with copies of the retained records upon his formal application, in compliance with Section 21(2) of the PMLA.