Delhi High Court Quashes ED's Retention of Seized Property in Money Laundering Case

Court Upholds Strict Compliance with PMLA Procedural Safeguards, Protecting Constitutional Rights

In a significant ruling, the Delhi High Court has set aside the order of the Appellate Tribunal under the Prevention of Money Laundering Act (PMLA), 2002, which had upheld the Enforcement Directorate's (ED) retention of seized property belonging to Anirudh Pratap Agarwal. The Court emphasized the necessity of strict adherence to procedural safeguards under the PMLA, underscoring the protection of constitutional rights, particularly the right to property under Article 300A.

The case originated from a 2016 FIR filed by the Delhi Police, which alleged fraudulent conversion of demonetized currency into gold and diamonds, involving various individuals. The ED, following this, initiated an investigation and seized five gold bars and five diamonds from Agarwal's residence, purportedly linked to the crime proceeds.

The High Court, in its detailed judgment, pointed out that the ED failed to comply with mandatory procedural requirements under Sections 17 and 20 of the PMLA. The Court highlighted that retention of seized property beyond 180 days requires an independent and reasoned order under Section 20(1), which must be communicated to the Adjudicating Authority as per Section 20(2). The absence of such compliance rendered the retention invalid.

Justice Harish Vaidyanathan Shankar, delivering the judgment, underscored that while the PMLA provides extensive powers to the ED for combating money laundering, it equally mandates procedural safeguards to prevent arbitrary deprivation of property. The Court noted that the procedural non-compliance by the ED violated Agarwal's constitutional right to property, rendering the retention void ab initio.

The judgment also clarified that the role of the Adjudicating Authority under Section 8(3) is limited to confirming retention and cannot replace the need for a prior retention order under Section 20. The Court reiterated that any deviation from these procedural mandates undermines the legislative intent and the constitutional safeguard of property rights.

The ruling is a critical reminder of the necessity for enforcement agencies to balance their investigative powers with adherence to statutory procedures, ensuring protection of individual rights against arbitrary state action.

Bottom Line:

Prevention of Money Laundering Act, 2002 (PMLA) - Retention of seized property beyond 180 days requires strict compliance with Section 20 of the PMLA - Non-adherence to procedural safeguards renders the retention void and violative of constitutional rights under Article 300A. 

Statutory provision(s): Prevention of Money Laundering Act, 2002 - Sections 17, 20, 8(3); Indian Constitution - Article 300A

Anirudh Pratap Agarwal v. Enforcement Directorate, (Delhi)(DB) : Law Finder Doc Id # 2785127