Delhi High Court halts an ED order for the return of assets
New Delhi: The Delhi High Court postponed its ruling from last month, which stipulated that assets seized in connection with a money laundering case had to be restored if the inquiry lasted longer than 365 days and no prosecution complaint (or charge sheet) is filed. The decision was made on Thursday.
A division bench headed by acting Chief Justice Manmohan delayed the decision while it reviewed an appeal against the January 31 ruling that the Enforcement Directorate (ED) had filed. The panel, which also included Justice Manmeet Pritam Singh Arora, said that the stay will be in effect until the next hearing in the case, which is scheduled for March 11.
The ruling dated January 31, issued by a single-judge bench of Justice Navin Chawla, was challenged by the ED. It said that any seizure that lasted more than 365 days would be considered confiscatory in character, in violation of Article 300A of the Indian Constitution, which guarantees the right to private property.
According to section 8(3) of the (Prevention of Money Laundering) Act, “the natural consequence of the investigation for a period beyond 365 days not resulting in any proceedings relating to any offense under the Act is that such seizure lapses and the property so seized must be returned to the person from whom it was so seized.” The court had made this decision.
Despite being declared no longer a basic right by the 44th Amendment to the Constitution in 1978, the right to property remained protected by Article 300A, which stipulates that no one may be stripped of their property unless authorized by law.
In its 37-page ruling, the single-judge bench held that the phrase “pendency of the proceedings relating to any offence under this Act [PMLA] before a Court” only applied to the cases that were still ongoing before a PMLA Court concerning the owner of the confiscated property.
The former resolution professional of Bhushan Power and Steel Limited (BPSL), Mahender Kumar Khandelwal, had petitioned the court to stop the federal agency from continuing to seize various documents, records, digital devices, and gold and diamond jewelry valued at ₹85 lakh since 2020.
“Consequently, in light of the aforementioned provisions, the words ‘proceedings relating to any offence under this Act’ appearing in Section 8(3)(a) of the Act have to be read to mean only a proceeding that is pending before a special court in relation to the property or records that are so attached, seized, or frozen, or with the respect to the person from whom such property was seized or recovered,” the court had noted. “It should be kept in mind that the authority to attach, seize, and freeze assets and documents is an extremely harsh clause that requires careful interpretation.”
On Thursday, the ED filed a number of objections to the single-judge bench judgment via assistant solicitor general SV Raju. The police officer requested a stay of the decision because they thought it may be used as precedent.
