A search by the Enforcement Directorate today often includes seizure of mobile phones, laptops and hard drives. These devices may contain emails, chats, documents, account details and other material relevant to an investigation. But once that data has been extracted, a fundamental question arises, does the ED still need to keep the original device?

The PMLA does not answer this question clearly. The Act works with two concepts, “property” and “records”. A phone or laptop can be both. The device is movable property, while the data stored in it may be a record. That distinction matters because Sections 20 and 21 prescribe different rules for retention.

What the PMLA actually provides

Section 17 allows the ED to search and seize a record or property where the statutory conditions are met. Under Section 17(4), the officer must approach the Adjudicating Authority within thirty days for retention of the seized property or continuation of a freezing order.

Section 20 deals with retention of property. The authorized officer must record reasons to believe that the property is required for adjudication under Section 8. Retention is initially limited to 180 days, subject to further orders of the Adjudicating Authority. Section 21 deals with retention of records. It also permits retention for 180 days where the records are required for an inquiry and gives the person from whom they were seized a right to obtain copies.

The difficulty starts with electronic devices. Section 2(1)(v) defines property widely enough to include movable property. Section 2(1)(w) defines records to include material stored in a computer. In Sarla Gupta v. Directorate of Enforcement, 2025 LiveLaw (SC) 541, the Supreme Court recognized that computer-stored material falls within the definition of records and that Section 21 gives a statutory right to copies of retained records.

Is the phone property or is it a record?

The Appellate Tribunal considered this issue directly in Rishi Kamlesh Agarwal v. Deputy Director, ED. It held that a computer may be treated as property in one case and as a record in another. If the device itself is the property in question, Section 20 may apply. If it is seized because of the information stored in it, Section 21 may apply.

In most searches, the ED is interested in the data, not the market value of the phone or laptop. If that data has been safely copied and preserved, the need to keep the physical device becomes a separate question.The issue is still not fully settled. In M/s Musaddilal Gems and Jewels (India) Pvt. Ltd. v. Deputy Director, the Telangana High Court dealt with electronic devices along with other movable properties in proceedings concerning Sections 17(4) and 20. There is still no single test for deciding how every electronic device should be treated.

Seizure and retention are not the same thing

A valid seizure does not by itself justify indefinite retention. This is the main point emerging from the recent Delhi High Court decisions on Section 20.In Anirudh Pratap Agarwal v. Directorate of Enforcement and connected matters, the Delhi High Court held that Section 20 is a separate and mandatory safeguard. After property is seized, the ED must independently record reasons to believe that continued retention is required. A later order under Section 8(3) cannot cure the absence of a valid retention order under Section 20.The same reasoning has been followed in later cases including Ravi Aggarwal and Utkarshh Pahwa. On 21 July 2026, the Supreme Court declined to interfere with Anirudh Pratap Agarwal. The dismissal of the SLP is not a declaration of law under Article 141, but the Delhi High Court judgment remains undisturbed. For digital devices, the point is simple. The ED must be able to show the legal basis on which the original device continues to be retained. The fact that it was lawfully seized on the date of search is not, by itself, an answer to continued retention months or years later.

The Tribunal is moving towards 'clone and return'

The clearest practical solution has come from the Appellate Tribunal. In Saurabh Jaiswal v. Deputy Director, ED, decided on 2 February 2026, digital devices had remained with the ED for more than two years. The Tribunal distinguished between devices which formed part of the prosecution complaint and those which did not. Devices not relied upon were directed to be released. The ED could retain clone copies for further investigation, while the owners were required to preserve the originals for a limited period and produce them if called upon.A similar approach was considered by the Delhi High Court in Bhuraji Mulaji Prajapati v. Deputy Director, ED. The Tribunal had ordered release of devices which were not part of the prosecution complaint after clone copies were taken, while permitting retention of devices which formed part of the complaint. On 26 May 2026, the High Court found no infirmity in those directions.

These decisions do not create an absolute rule that every device must be returned once a clone is made. But they recognise an important distinction. The ED may need the evidence stored in the device without needing continued possession of the device itself.

There is no automatic 365-day rule

It would also be incorrect to say that every phone or laptop must automatically be returned after 180 days or 365 days. Section 8(3)(a) permits retention to continue, subject to the statutory conditions, during investigation for a period not exceeding 365 days and during the pendency of proceedings relating to an offence under the PMLA before a court.In Union of India v. J.P. Singh, 2025 LiveLaw (SC) 338, the Supreme Court rejected the argument that retention must end merely because the person from whom documents or electronic items were seized was not made an accused in the prosecution complaint. The Court held that, for Section 8(3)(a), pendency of a complaint alleging an offence under Section 3 could be sufficient.

The position may also be different where the device itself forms part of the prosecution complaint or has been placed before the Special Court. In Dr Kanwar Deep Singh v. Union of India, decided on 7 July 2026, the Delhi High Court referred to a Tribunal order refusing release of documents and digital devices which had become part of the prosecution complaint. The High Court did not decide the wider questions concerning privacy, access to mobile phones or self-incrimination and left those questions open.

The real question is whether the original device is still required

The law needs a device-specific approach. A retention order should answer four basic questions. Is the device being retained as property under Section 20 or as a record under Section 21? Has the data been forensically imaged? Does the device form part of the prosecution complaint or material before the Special Court? Why is the original hardware still required? If further forensic examination of the original device is genuinely required, continued custody may be justified. The same may be true where the device itself is alleged to represent proceeds of crime, or where it has become part of the evidence before the Special Court. But where the ED only needs the data, the data has been preserved through a verified forensic clone, and the device is not relied upon in the prosecution complaint, continued retention of the original is much harder to justify.

The wider law on digital searches also supports closer scrutiny. The Supreme Court proceedings in Ram Ramaswamy v. Union of India and Foundation for Media Professionals v. Union of India concern safeguards for search and seizure of digital devices. Pending final guidelines, the Union had stated that central agencies would follow the 2020 CBI Manual on digital evidence. In Vinay Kumar Gupta v. State of Madhya Pradesh, 2026 LiveLaw (SC) 180, although not a PMLA case, the Supreme Court cautioned against treating surrender of a mobile phone as a routine requirement of cooperation where protection against self-incrimination is involved.

The better view is not that the ED can never retain an original device, or that cloning always requires immediate return. The test should be continuing necessity. The ED should be able to explain why the original phone or laptop is still needed after the relevant data has been preserved. Where there is no such reason, taking a verified clone and returning the original offers a fair balance between investigation and the rights of the person from whom the device was seized.

A phone may contain evidence. That does not necessarily mean the investigation needs the phone itself for the entire life of the case.

Authors are Advocates practicing at Delhi High Court and Appellate Tribunal, PMLA. Views are personal.