Delhi HC: Seized property must be returned if money-laundering investigation lapses beyond 365 days
New Delhi, Feb 2 : The Delhi High Court has ruled that if an investigation under the Prevention of Money-Laundering Act, 2002 (PMLA), extends beyond 365 days without resulting in any proceedings related to an offence, the seizure of a property must lapse, and it should be returned to the person from whom it was seized.
Justice Navin Chawla said that the continuation of such seizure beyond the specified period would be confiscatory and violative of Article 300A of the Constitution of India.
Rejecting the Enforcement Directorate's (ED) argument that Section 8(3)(a) of the PMLA does not provide for consequences after 365 days, the court said that the natural consequence is the lapse of the seizure, and the property must be returned.
The case involved Mahender Kumar Khandelwal, appointed as the Interim Resolution Professional of Bhushan Power and Steel Limited (BPSL).
The ED, in a money laundering case against BPSL, seized documents, records, digital devices, and jewellry from Khandelwal's premises in August 2020.
Khandelwal, who was not named in the FIR, sought the return of seized items after more than 365 days without any complaint against him, but the ED refused.
Justice Chawla directed the ED to return the seized documents, digital devices, property, and other materials to Khandelwal, unless a competent court orders otherwise.
The court noted that if the ED wished to conduct a custodial investigation or arrest Khandelwal, it could move an appropriate application before the court, which it had not done.
As the 365-day period had lapsed, the court held that the seized items are liable to be returned.