Delhi HC Stays Order Which Held That Property Seized By ED Must Be Returned If Probe Continues Beyond 365 Days & Doesn't Result In Any Proceedings

The Delhi High Court on Thursday stayed last month's judgment of a single judge which held that in cases where the investigation under the Prevention of Money-Laundering Act, 2002, (PMLA) extends beyond 365 days and does not result in proceedings relating to any offence, the seizure of a property will lapse and it must be returned to the person from whom it was seized.

A division bench comprising Acting Chief Justice Manmohan and Justice Manmeet Pritam Singh Arora stayed the decision delivered by the single judge till March 11, till the matter would be decided.

The bench was dealing with an appeal moved by the Enforcement Directorate (ED) against the single judge's decision delivered on January 31.

The single judge had allowed the plea moved by Mahender Kumar Khandelwal, who was appointed as Interim Resolution Professional (IRP) of Bhushan Power and Steel Limited (BPSL).

ED had filed a money laundering case against BPSL based on CBI's FIR which did not name Khandelwal.

The single judge had directed the ED to return the documents, digital devices, property, and other material seized from Khandelwal, subject to an order to the contrary passed by any competent Court.

The court had observed that if ED wanted to conduct a custodial investigation or arrest Khandelwal, it could move an appropriate application before the court but admittedly it did not do so.

It was Khandelwal's case that in August 2020, ED conducted a search from his premises based on ED's ECIR against BPSL and seized various documents, records, digital devices, and gold and diamond jewellery. The PMLA Adjudicating Authority confirmed the seizure.

Khandelwal claimed that no complaint against him was filed for more than 365 days, and sought return of the seized documents and properties but the ED refused to do so and did not reply to his request.

“The continuation of such seizure beyond 365 days, in absence of the pendency of any proceedings relating to any offence under this Act before a court or under the corresponding law of any other country before the competent court of criminal jurisdiction outside India, shall be confiscatory in nature, without authority of law and, therefore, violative of Article 300A of the Constitution of India,” the single judge had held.

ASG SV Raju along with special counsel Zoheb Hossain appeared for ED. Advocate DP Singh appeared for Mahender Kumar Khandelwal.

Title: DIRECTORATE OF ENFORCEMENT v. MAHENDER KUMAR KHANDELWAL