Delhi High Court stays order asking ED to return seized property if PMLA probe goes beyond 365 days sans prosecution complaint

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The Delhi High Court on Thursday stayed a single-judge order which held that held that if an investigation under the Prevention of Money Laundering Act (PMLA) goes beyond 365 days and does not result in any prosecution complaint, the Enforcement Directorate (ED) must return the property seized during the probe [Directorate of Enforcement & Anr v. Mahender Kumar Khandelwal].

A Division Bench of Acting Chief Justice Manmohan and Justice Manmeet Pritam Singh Arora stayed the judgment after ED filed an appeal.

The Court said that the stay will remain in force till March 11, when the matter will be heard next.

In an order passed on January 31, single-judge Justice Navin Chawla had also said that the expression “pendency of the proceedings relating to any offence under this Act [PMLA] before a Court” in Section 8(3) of the PMLA relates only to a complaint that is pending before a PMLA court in relation to the person from whom the property was seized.

The single-judge had rejected the ED’s argument that since Section 8(3) of PMLA does not provide for any consequence for lapse of 365 days, there can be no direction for the return of the property so seized.

He had further said that the continuation of such seizure beyond 365 days, in the absence of pendency of any proceedings relating to any offence under the PMLA or the corresponding law of any other country, shall be without authority of law and, therefore, violative of Article 300A of the Constitution of India.

Appearing for the ED in its appeal, Additional Solicitor General (ASG) SV Raju argued that the single-judge verdict had many flaws. He sought a stay on the findings, apprehending that the judgment may be treated as a precedent.

The assertions were challenged by Advocate DP Singh who appeared for respondent Mahender Kumar Khandelwal. Singh was assisted by Circle of Counsels.

After considering the submissions, the Division Bench passed the stay order.

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