PMLA | Person Need Not Be Named As Accused In Complaint To Retain Seized Property Under Section 8(3) : Supreme Court

While dealing with a challenge to retention of an accused's electronic items, documents, etc. under the Prevention of Money Laundering Act, the Supreme Court recently observed that a person need not be named as an accused in the complaint in order for Section 8(3)(a) (dealing with continuation of retention) to apply. Rather, it is sufficient if a complaint alleging commission of an offense under Section 3 of the Act is pending."clause (a) will apply during the continuation of the proceedings relating to an offence under the PMLA in a Court...For attracting clause (a), it is enough if a complaint alleging commission of offence under Section 3 of the PMLA is pending. It is not necessary for the applicability of clause (a) that the person affected by the order under Section 8(3) must be shown as an accused in the complaint. The complaint under Section 44 will always relate to the offence under Section 3 punishable under Section 4 of the PMLA. The order of cognizance is of the offence and not of the accused or the offender", observed a bench of Justices Abhay S Oka and N Kotiswar Singh.To briefly put facts of the case, an ECIR was registered against the respondent and others in 2017. During the course of search, various electronic items, documents and cash were seized by ED. After an order under Section 17(4) of PMLA (dealing with retention of seized or frozen property), the Adjudicating Authority passed a confirmation order dated 04.04.2018 under Section 8(3). Subsequently, a complaint was filed under Section 44 of PMLA, on which cognizance was taken by the Special Court on 19.02.2018.In an appeal filed by the respondent, the Appellate Authority and the High Court took a view that the order under Section 17(4) PMLA, which was confirmed on 04.04.2018, would cease to exist after completion of period of 90 days, as provided in amended Section 8(3)(a) of PMLA. Challenging the High Court order, the appellant-authority moved the Supreme Court.It contended that Section 8, which was amended from time to time, applied as it existed from 14.05.2015 to 18.04.2018. Notably, till 18.04.2018, Section 8(3)(a) did not contain any time-limit. It provided that the order of the Adjudicating Authority of seizure of the record will continue during the pendency of proceedings relating to any offence under PMLA before a court.Alternatively, the appellant argued that even if Section 8, as in force from 19.04.2018 to 19.03.2019, was applied, the order of retention or seizure was to continue during investigation for a period not exceeding 90 days "or the pendency of the proceedings relating to any offence under the PMLA".The contention of the respondent, on the other hand, was that he was not made accused in the complaint filed by ED under Section 44 PMLA. He submitted that the electronic items, documents etc. seized were unnecessarily retained by ED for a long time though the same were not relevant for the complaint. Calling the continuing retention "unjust", the respondent also stated that even as on date, the documents/items were not relied upon or used by ED in the complaint. The Court, at the outset, observed that Section 8, as was in force from 14.05.2015 till 18.04.2018, was applicable to the case. Though the respondent did not deny that this was the applicable provision, he argued that he was not named as an accused in the complaint filed under Section 44 PMLA and therefore there were no proceedings pending [as required by Section 8(3)].The Court, however, noted that when the order under Section 8(3) was passed, the proceedings of the complaint under Section 44 PMLA were pending before the Special Court and cognizance of the offence under Section 3 of the PMLA was taken on the basis of the complaint. Further, the complaint was filed on the basis of the ECIR in which the respondent was shown as an accused.The Court held that the respondent was not required to be named as an accused in the complaint for the purposes of Section 8(3)(a) PMLA. "when an order under sub-Section (3) of Section 8 of the PMLA was passed, in view of clause (a) of sub-Section (3) of Section 8 as applicable on that day, the order was to continue till the disposal of the complaint", it said.Insofar as the High Court and the Appellate Authority had applied the amended Section 8 which came into force on 19.04.2018, the Court held that provision was not applicable in the said terms when the order dated 04.04.2018 was passed under Section 8(3). However, assuming that the amended provision was applicable, it added that even after completion of investigation for 90 days, the order under Section 8(3) was to continue to operate as the complaint remained pending.In conclusion, the Court set aside the orders of the High Court and the Appellate Authority and restored order dated 04.04.2018 passed by the Adjudicating Authority, with a clarification that the same shall continue to remain in force till the disposal of the complaint.Case Title: Union of India v. J.P....

PMLA | Person Need Not Be Named As Accused In Complaint To Retain Seized Property Under Section 8(3) : Supreme Court

Debby Jain

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