2019 (4) TMI 2178 - AT - Money Laundering

Money Laundering - validity of retention of seized properties under the Prevention of Money Laundering Act 2002 (PMLA) when no prosecution complaint has been filed within the mandatory period - HELD THAT - 90 days period has already been expired from the date of passing the impugned order. No prosecution complaint under Section 8(3)(a) of the Act has been filed. The period is mandatory in nature. The retention order in the above said matter was passed on 04th April 2018. More than one year has been passed. Counsel for the respondent has confirmed that no prosecution complaint has been filed by the respondent. Under these circumstances retention lapses the appeal is accordingly allowed. The impugned order is set aside - Petition allowed.

Summary

ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment include:

• Whether the retention of seized properties under the Prevention of Money Laundering Act, 2002 (PMLA) is valid when no prosecution complaint has been filed within the mandatory period.
• Whether the lapse of the retention order due to non-compliance with statutory timelines necessitates the return of seized items to the appellant.

ISSUE-WISE DETAILED ANALYSIS

Issue 1: Validity of Retention of Seized Properties

Relevant Legal Framework and Precedents:

The legal framework governing this issue is primarily derived from Section 26 of the PMLA, which allows for an appeal against orders of the Adjudicating Authority. The retention of seized properties is governed by the provisions of the PMLA, which require that a prosecution complaint must be filed within a specified period to validate continued retention.

Court's Interpretation and Reasoning:

The Tribunal examined the statutory requirement for filing a prosecution complaint under Section 8(3)(a) of the PMLA. The Tribunal emphasized that the 90-day period for filing such a complaint is mandatory, and non-compliance results in the lapse of the retention order.

Key Evidence and Findings:

The Tribunal noted that the retention order was passed on 04th April 2018, and more than one year had elapsed without the filing of a prosecution complaint. Counsel for the respondent confirmed the absence of any such filing.

Application of Law to Facts:

Applying the statutory requirement to the facts, the Tribunal concluded that the retention of the seized items was no longer valid due to the lapse of the mandatory period without the filing of a prosecution complaint.

Treatment of Competing Arguments:

The Tribunal did not address any competing arguments on the merits of the case, focusing solely on the procedural lapse concerning the retention order.

Conclusions:

The Tribunal concluded that the retention order had lapsed, and the seized items must be returned to the appellant.

Issue 2: Return of Seized Items

Relevant Legal Framework and Precedents:

The return of seized items is contingent upon the invalidity of the retention order, as governed by the PMLA.

Court's Interpretation and Reasoning:

The Tribunal interpreted the lapse of the retention order as necessitating the return of the seized items to the appellant, given the failure to file a prosecution complaint within the statutory period.

Key Evidence and Findings:

The Tribunal relied on the confirmation by the respondent's counsel that no prosecution complaint had been filed, which was a key factor in its decision.

Application of Law to Facts:

The Tribunal applied the law by directing the respondent to return the seized items within three weeks, acknowledging the procedural lapse.

Treatment of Competing Arguments:

The Tribunal did not engage with any substantive arguments regarding the merits of the underlying case, focusing solely on the procedural aspect of the retention order.

Conclusions:

The Tribunal ordered the return of the seized items to the appellant, as the retention order was no longer valid.

SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning:

The Tribunal stated, "Under these circumstances, retention lapses, the appeal is accordingly allowed. The impugned order is set aside. The respondent is directed to handover the seized properties retain by them within a period of three weeks."

Core Principles Established:

The judgment reinforces the principle that statutory timelines for filing prosecution complaints under the PMLA are mandatory and that failure to comply results in the invalidity of retention orders.

Final Determinations on Each Issue:

The Tribunal determined that the retention order had lapsed due to non-compliance with statutory timelines, necessitating the return of seized items to the appellant. The Tribunal clarified that its decision did not address the merits of the underlying case.