* IN THE HIGH COURT OF DELHI AT NEW DELHI

% Judgment reserved on: 22.05.2025

Judgment pronounced on: 12.09.2025

+ MISC. APPEAL (PMLA) 03/2023 & CRL.M.A. 34701/2019 &

CRL.M.A. 38804/2019

DIRECTORATE OF ENFORCEMENT THROUGH

ASSISTANT DIRECTOR DELHI .....Appellant
Through: Mr. Samrat Goswami,
Advocate.

versus

RAJESH KUMAR AGARWAL .....Respondent

Through: Mr. Amit Khemka, Mr.
Sandeep Dash, Ms. Himani
Singh and Ms. Jeevika Dhyani,
Advocates.
CORAM:
HON'BLE MR. JUSTICE SUBRAMONIUM PRASAD
HON'BLE MR. JUSTICE HARISH VAIDYANATHAN
SHANKAR
JUDGMENT

HARISH VAIDYANATHAN SHANKAR, J.

1. The Appellant/ Directorate of Enforcement1 has preferred the

present appeal under Section 42 of the Prevention of Money
Laundering Act, 20022, challenging the Order dated 06.02.20193
passed in FPA-PMLA-1973/DLI/2017 by the learned Appellate
Tribunal (PMLA), New Delhi4. By the said order, the learned AT set

1
ED
2
PMLA/ Act
3
Impugned Order
4
AT/Tribunal
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 aside the Order dated 21.08.2017 passed by the learned Adjudicating
Authority (PMLA)5, which had allowed Original Application No.
106/2017 dated 15.06.2017 filed under Section 17(4) of the PMLA,
seeking retention of seized properties of the Respondent.

BRIEF FACTS:

2. The Appellant registered ECIR No. 01/DZ-II/2017 dated

11.02.2017 pursuant to Criminal Complaint No. 57463 of 2016 dated
29.11.2016 filed by the Serious Fraud Investigation Office6 under
Section 420 read with Section 120B of the Indian Penal Code, 18607,
before the learned Additional Chief Metropolitan Magistrate (Central)
Special Acts, Tis Hazari Courts, Delhi.
3. The investigation related to allegations that Mr. Surendra
Kumar Jain and Mr. Virendra Jain8, through the accounts of
corporate entities controlled by them, had indulged in the offence of
money laundering. It was also alleged that the said operation was
carried out with the assistance of certain professionals who acted as
mediators/ co-conspirators in carrying out the money laundering
operations. The Modus Operandi of carrying out the said laundering
was alleged to be by infusion of cash from M/s Jagat Projects into the
bank accounts of the corporate entities controlled by the Jain Brothers,
in the guise of the same being share subscription money at a huge
premium to the tune of Rs. 64.70, during the Financial Year 2008-
2009. The Respondent herein, a Chartered Accountant, was alleged to
be one of the professionals who acted as a mediator/ co-conspirator.

5
AA
6
SFIO
7
IPC
8
Jain Brothers
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 4. Post the investigation, on a strong reasonable belief, that
proceeds of crime, documents/ records related to offence of money
laundering could be recovered, a search under Section 17(1) of the
PMLA was conducted on 18.05.2017 at the office premises of the
Respondent, being, 202, 18/12, Jain Bhawan, WEA, Karol Bagh, New
Delhi- 110060.
5. As recorded in the Seizure Report (Panchanama) dated
18.05.2017, the search led to the seizure of 59 files, one laptop, three
computer hard drives, and Rs. 6,00,000/- in Indian currency.
6. In compliance with Section 17(2) of the PMLA, the ED
submitted the recorded reasons for the search in a sealed envelope to
the learned Chairman of the AA on 22.05.2017. On the same day, the
Respondent was arrested and later granted bail by the Special Court
(PMLA), New Delhi9, on 04.09.2017.
7. On 15.06.2017, the Appellant filed Original Application No.
106/2017 under Section 17(4) of the PMLA before the learned AA,
seeking retention of the seized property.
8. On 20.07.2017, the Appellant also filed a prosecution complaint
before the learned Special Court, against the Respondent for the
offence under Section 3, punishable under Section 4 of the PMLA.
The learned Special Court took cognizance of the offence on
04.09.2017.
9. Vide Order dated 21.08.2017, the learned AA allowed the
Original Application No. 106/2017.
10. Aggrieved by the said order, the Respondent filed an appeal
under Section 26 of the PMLA before the learned AT.

9
Special Court
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 11. The Tribunal, vide Order dated 06.02.2019, set aside the Order
dated 21.08.2017 on the grounds that it lacked any substantive
consideration or discussion on merits, particularly regarding the
retention of the Respondent's properties. While holding that the order
of the learned AA was sans reasons, the learned Tribunal also
examined the manner in which the property was sought to be retained
and held that the manner in which the seized property was retained did
not conform to the scheme of the Act and examined the relevant
provisions in respect of the same, and in particular, Sections 17, 20
and 8 of the PMLA and the interplay of the said Sections for the
purpose of examining the retention of the properties seized in the
present case.
12. It is this order dated 06.02.2019, of the learned AT, setting
aside the Order dated 21.08.2017 passed by the learned AA, is under
challenge before us.

SUBMISSIONS OF THE APPELLANT:

13. The learned Counsel for the Appellant would submit that the
prosecution complaint was filed on 20.07.2017 and was pending
consideration before the learned Special Court at the time the learned
AA passed the order of retention dated 21.08.2017; and therefore, in
accordance with Section 8(3)(a) of the PMLA, which was in force at
that time, the seizure ought to have continued due to the pendency of
the complaint before the said Court. The Appellant, in support of the
said proposition, relies upon paragraphs 178.1 to 178.4 of the
Judgment of the Hon’ble Supreme Court in Vijay Madanlal

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 Choudhary v. Union of India10, to contend that as the prosecution
was pending before the learned Special Court, the retention had to
continue.
14. The learned Counsel would further contend that the alleged
procedural non-compliance under Section 20 of the PMLA was never
raised before the learned AA by the Respondent and that this objection
was raised for the first time only at the appellate stage before the
learned AT, when the retention of the seized property had already been
confirmed by the learned AA.
15. It would also be the submission of the Appellant that Sections
17(4) and 20 or 21 of the PMLA operate differently in as much as
Section 17(4) applies when the ED, immediately after search and
seizure, elects to seek the learned AA's approval through a formal
application for continued retention, while Sections 20 and 21 apply
where the authorised officer may retain the seized property or
documents for up to 180 days without initially seeking such approval,
subject to recording written reasons and forwarding them to the
learned AA for information.
16. The learned Counsel for the Appellant would further argue that,
in the factual circumstances of the present case, there was no necessity
to invoke Section 20 of the Act, as the adjudication proceedings under
Section 8 had already been concluded well before the expiry of the
180-day period from the date of seizure; and therefore, compliance
with Section 20 of the PMLA became redundant.
17. It would also be submitted by the learned counsel for the
Appellant that the issuance of an order under Section 20 is neither a
legal precondition nor a procedural necessity for filing an application
10
(2023) 12 SCC 1
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 under Section 17(4) of the PMLA, as both provisions function
independently and are not mutually dependent; and consequently, the
absence of an Order for Retention under Section 20 of the PMLA
would not vitiate the continued retention of the property.
18. The learned counsel for the Appellant, in his oral arguments,
also submitted that the procedural requirements laid down under
Section 20 of the PMLA are merely directory in nature and not
mandatory, as the provision establishes a procedural framework rather
than imposing a binding obligation.
19. It would also be contended by the learned counsel for the
Appellant that the learned AT committed an error in setting aside the
Order dated 21.08.2017 passed by the learned AA solely on the
ground of non-consideration; and instead of quashing the order, the
learned Tribunal ought to have remanded the matter back to the
learned AA for fresh consideration.

SUBMISSIONS OF THE RESPONDENT:

20. Per Contra, the learned Counsel for the Respondent, at the very
outset, would raise objection regarding the maintainability of the
present appeal on the ground of delay, contending that while the
statute permits 60 days for filing an appeal before this Court, the
instant appeal has been filed after an inordinate delay of 143 days.
21. Learned Counsel for the Respondent, while supporting the
Impugned Order, would submit that the order passed by the learned
AA was erroneous and legally unsustainable, as it lacked any
substantive reasoning or detailed consideration on the merits of the
issue, and had been passed in a mechanical manner without any
application of the mind.
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 22. With reference to the statutory scheme, the learned Counsel for
the Respondent would argue that upon seizure of property or records,
within a period of 30 days, an application under Section 17(4) would
necessarily have to be filed praying for retention of the seized
property/ records or continuation of freezing before the learned AA.
23. The Respondent would contend that the wording of Section
17(4) of the PMLA does not provide for the provision of any reasons
or material to be appended to such an Application,
24. He would contend that Section 20 of the PMLA and the
provisions thereof, and in particular Section 20(1), provide for
“Reasons to Believe” to be recorded for the purpose of retention of
what is seized. He would further contend that under Section 20(2), the
order for retention has to be immediately forwarded along with the
material on the basis of which the Retention Order has been passed to
the learned AA.
25. He would thus contend that a reading of Section 17(4), with
Sections 20(1) and 20(2), would suggest that the same was to ensure
that the learned AA would have all the necessary inputs for the
purpose of making an adjudication under Section 8, which
adjudication would have to be a fresh/ independent adjudication, made
on the basis of the inputs received being the Application under Section
17(4) along with the Retention Order with the Reasons to Believe
under Section 20(1) as well as the relevant material on the basis of
which the said order was passed as prescribed under Section 20(2) of
the PMLA.
26. He would contend that such an order under Section 8(3) of the
PMLA, once passed, would be valid for 365 days from the date of
seizure.
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 27. The Respondent would thus contend that unless such a retention
order under Section 20(1) & (2) or 21(1) is passed, the learned AA
cannot proceed under Section 8(1) and thereafter make a
determination under Section 8(2) of the PMLA. He would further
submit that it is only after such a determination under Section 8(2), the
learned AA can proceed to the next step, which is, confirmation of the
retention of what is seized or frozen, and upon confirmation, continue
for 365 days and if decided otherwise, would have to be released after
a period of 180 days, as prescribed under Section 20(3) of the PMLA.
28. It would thus be submitted that the procedure as has been
statutorily prescribed has not been complied with, making the
continued retention bad in law.
29. The Respondent would also submit that when the law prescribes
a specific procedure for doing an act, that procedure must be followed
strictly and exclusively, and in support of this, the Respondent would
upon the judgment of the Hon’ble Supreme Court in State of
11
Rajasthan v. Mohinuddin Jamal Alvi and state that the failure of
the ED to comply with the requirements of Section 20 renders the
action legally flawed, justifying the decision of the learned AT to set
aside the retention order passed by the learned AA.
30. The Respondent would further rely on the judgment of the
Hon’ble Supreme Court in State of Orissa v. Mamta Mohanty12,
wherein it was held that any order that is legally bad at its inception
cannot be cured or legitimized at a later stage, thereby reinforcing the
argument that the retention order, being vitiated by procedural
illegality, was rightly quashed by the learned AT.

11
(2016) 12 SCC 608
12
(2011) 3 SCC 436
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 31. The learned Counsel for the Respondent would also contend
that the PMLA is a special Act and the provisions need to be followed
strictly and relies upon the Judgment of the Hon’ble Supreme Court in
Anita Malhotra v. Apparel Export Promotion Council13.
32. The Learned Counsel would controvert the arguments regarding
the contention of the Appellant that the present matter was one where
the learned AT should have remanded the matter back, by contending
that neither Section 26 nor Section 42 of the PMLA provides for
remand and that the same cannot be read into the provisions by
implication.
33. It is also contended that no remand is possible after the passage
of 180 days, as the learned AA becomes functus officio by virtue of
Section 20(3). He would state that if the matter is remanded back, the
Order under Section 8(3) would result in the kicking in of the
provisions under Section 20(3) mandating the return of what is seized
or unfreezing of what is frozen.

ANALYSIS & FINDING:

34. This Court has heard the parties at length and has carefully
examined the pleadings, the Impugned Order, and the written
submissions filed post-hearing by both sides.
35. At the outset, it is pertinent to note that the present appeal was
initially filed by the Appellant on 06.04.2019, and vide order dated
30.08.2019, after allowing the Appellant’s application seeking
condonation of delay in re-filing, the notice was issued in this matter.
Subsequently, the Respondent filed an application seeking the recall of
the said order dated 30.08.2019.

13
(2012) 1 SCC 520
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 36. The said application, which raises the issue of limitation, has
been pending consideration before this Court along with the present
Appeal. In the said application, the Respondent has contended that
there was a delay of 143 days beyond the period prescribed under
Section 42 of the PMLA, and therefore, the appeal is liable to be
dismissed as barred by limitation.
37. It is an undisputed fact that the appeal was originally filed on
06.04.2019 and was subsequently re-filed from time to time by the
Appellant after curing defects. The initial filing was within the
statutory limitation period of 60 days, as prescribed under Section 42
of the PMLA. Section 42 provides for an appeal to be filed within 60
days from the date of the impugned order, extendable by a further
period of 60 days upon sufficient cause being shown.
38. The preliminary issue in the present case is limited to the delay
in re-filing the appeal after curing defects, and not the delay in the
original filing itself. It is well settled in law that the standards for
condonation of delay in initial filing of an appeal and those applicable
to delay in re-filing after curing defects are distinct. The rigour
applicable to condonation of delay in the initial institution of an
appeal is not to be applied with equal strictness to delay in re-filing.
However, even in the case of re-filing, the party seeking condonation
has to show sufficient cause for the delay. In Perumon Bhagvathy
Devaswom v. Bhargavi Amma14, the Hon’ble Supreme Court aptly
observed:

“13. ……….
(iv) The extent or degree of leniency to be shown by a court
depends on the nature of application and facts and circumstances of

14
(2008) 8 SCC 321
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 the case. For example, courts view delays in making applications in
a pending appeal more leniently than delays in the institution of an
appeal. The courts view applications relating to lawyer's lapses
more leniently than applications relating to litigant's lapses. The
classic example is the difference in approach of courts to
applications for condonation of delay in filing an appeal and
applications for condonation of delay in refiling the appeal after
rectification of defects.
…….”

39. Similarly, in Northern Railway v. Pioneer Publicity Corpn. (P)

Ltd15, although in the context of Section 34(3) of the Arbitration and
Conciliation Act, 1996, the Hon’ble Supreme Court reiterated the
principle that delays in re-filing should be assessed with greater
leniency, considering overall circumstances. The relevant paragraphs
of the said judgment are as follows:

“4. We find that said Section 34(3) has no application in re-filing

the petition but only applies to the initial filing of the objections
under Section 34 of the Act. It was submitted on behalf of the
respondent that Rule 5(3) of the Delhi High Court Rules states that
if the memorandum of appeal is filed and particular time is granted
by the Deputy Registrar, it shall be considered as fresh institution.
If this Rule is strictly applied in this case, it would mean that any
re-filing beyond 7 days would be a fresh institution. However, it is
a matter of record that 5 extensions were given beyond 7 days.
Undoubtedly, at the end of the extensions, it would amount to re-
filing.
5. We are not inclined to accept this contention, particularly since
the petitioner has offered an explanation for the delay for the
period after the extensions.
6. Having regard to the overall circumstances of the case, we
consider it appropriate in the interest of justice to set aside the
impugned order.
7. Accordingly, the appeal is allowed and the impugned order
[Northern Railway v. Pioneer Publicity Corpn. (P) Ltd., 2015 SCC
OnLine Del 11646] of the High Court is set aside. We further
direct that the objections of the appellant under Section 34 be taken
on the file of the court and the matter be disposed of in accordance

15
(2017) 11 SCC 234
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 with law. The parties are directed to appear before the appropriate
court on 28-11-2016 after obtaining certified copy of this order.”

40. In the present case, the Appellant, in the application seeking

condonation of delay in re-filing (which was allowed vide order dated
30.08.2019), had attributed the delay primarily to administrative
difficulties. Taking into account that the Appeal has remained pending
for almost six years and that notice was already issued vide order
dated 30.08.2019 after considering the application seeking
condonation of delay in re-filing, this Court is of the considered
opinion that, at this belated stage, it may not be necessary to undertake
the exercise of a detailed scrutiny into the alleged 143-day delay in re-
filing. Accordingly, without getting into the aspect of the objection
regarding the delay in the re-filing, we propose to examine the matter
on merits.
41. We are of the view that the core issue for adjudication in the
present matter pertains to the applicability of Section 20 of the PMLA,
which governs the retention of property and records following search
and seizure operations conducted by the ED under Section 17 of the
PMLA. We are also of the view that the fact that, this point was not
raised by the Appellant before the learned AA and was raised only
before the learned AT, is of no significance since the same is a pure
question of law relating to the statutory scheme of the Act, which can
be raised at any point in time. The non-raising of the same before the
learned AA does not prejudice the Respondent or vitiate the Judgment
of the learned AT.
42. Section 17 of the PMLA lays down the procedure for search and
seizure. Sub-section (1) permits the search and seizure of any record
or property, after forming a “reason to believe”, based on the material
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 in his possession. This, in our opinion, is the first procedural safeguard
provided to a person before his property or records are seized.
43. Sub-section (1A) of Section 17 provides an alternative where
immediate search and seizure of the property or record is not
practicable. In such cases, the authorized officer may pass an order to
freeze the property. However, the officer retains the discretion to seize
the frozen property later, provided it becomes practicable to do so
before the relevant adjudicatory stage.
44. Sub-section (2) provides that the ED must immediately forward
the material and the order passed by the authorized officer to the
learned AA, following the search and seizure or the issuance of the
freezing order.
45. Sub-section (3) empowers the authority to carry out seizure
where, during a survey conducted under Section 16 of the PMLA,
there arises a reasonable apprehension regarding concealment,
transfer, or tampering with the property.
46. Section 17(4) requires the authorized officer of the ED to file an
application before the learned AA within 30 days of the search,
seizure, or freezing order, seeking permission for retention of the
seized or frozen property.
47. Section 17 (as amended up-to-date) states as follows:

“17. Search and seizure. — (1) Where the Director or any other
officer not below the rank of Deputy Director authorised by him
for the purposes of this section, on the basis of information in his
possession, has reason to believe (the reason for such belief to be
recorded in writing) that any person—
(i) has committed any act which constitutes money-laundering, or
(ii) is in possession of any proceeds of crime involved in money-
laundering, or
(iii) is in possession of any records relating to money-laundering,
or
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 (iv) is in possession of any property related to crime,
then, subject to the rules made in this behalf, he may authorise any
officer subordinate to him to—
(a) enter and search any building, place, vessel, vehicle or aircraft
where he has reason to suspect that such records or proceeds of
crime are kept;
(b) break open the lock of any door, box, locker, safe, almirah or
other receptacle for exercising the powers conferred by clause (a)
where the keys thereof are not available;
(c) seize any record or property found as a result of such search;
(d) place marks of identification on such record of property, if
required or make or cause to be made extracts or copies therefrom;
(e) make a note or an inventory of such record or property;
(f) examine on oath any person, who is found to be in possession or
control of any record or property, in respect of all matters relevant
for the purposes of any investigation under this Act:
[***]
(1-A) Where it is not practicable to seize such record or property,
the officer authorised under sub-section (1), may make an order to
freeze such property whereupon the property shall not be
transferred or otherwise dealt with, except with the prior
permission of the officer making such order, and a copy of such
order shall be served on the person concerned:
Provided that if, at any time before its confiscation under sub-
section (5) or sub-section (7) of Section 8 or Section 58-B or sub-
section (2-A) of Section 60, it becomes practical to seize a frozen
property, the officer authorised under sub-section (1) may seize
such property.
(2) The authority, who has been authorised under sub-section (1)
shall, immediately after search and seizure or upon issuance of a
freezing order, forward a copy of the reasons so recorded along
with material in his possession, referred to in that sub-section, to
the adjudicating authority, in a sealed envelope, in the manner, as
may be prescribed and such adjudicating authority shall keep such
reasons and material for such period, as may be prescribed.
(3) Where an authority, upon information obtained during survey
under Section 16, is satisfied that any evidence shall be or is likely
to be concealed or tampered with, he may, for reasons to be
recorded in writing, enter and search the building or place where
such evidence is located and seize that evidence:
Provided that no authorisation referred to in sub-section (1) shall
be required for search under this sub-section.

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 (4) The authority seizing any record or property under sub-section
(1) or freezing any record or property under sub-section (1-A)
shall, within a period of thirty days from such seizure or freezing,
as the case may be, file an application, requesting for retention of
such record or property seized under sub-section (1) or for
continuation of the order of freezing served under sub-section (1-
A), before the adjudicating authority.”
(emphasis supplied)

48. The second limb pertains to Section 20 of the PMLA, which

deals with the retention of property seized or frozen under Section 17.
Before delving into its substantive applicability, it is appropriate to
reproduce Section 20 (as amended up-to-date), which reads as under:
“20. Retention of property.— (1) Where any property has been
seized under section 17 or section 18 or frozen under sub-section
(1A) of section 17 and the officer authorised by the Director in this
behalf has, on the basis of material in his possession, reason to
believe (the reason for such belief to be recorded by him in writing)
that such property is required to be retained for the purposes of
adjudication under section 8, such property may, if seized, be
retained or if frozen, may continue to remain frozen, for a period
not exceeding one hundred and eighty days from the day on which
such property was seized or frozen, as the case may be.
(2) The officer authorised by the Director shall, immediately after
he has passed an order for retention or continuation of freezing of
the property for purposes of adjudication under section 8, forward
a copy of the order along with the material in his possession,
referred to in sub-section (1), to the Adjudicating Authority, in a
sealed envelope, in the manner as may be prescribed and such
Adjudicating Authority shall keep such order and material for such
period as may be prescribed.
(3) On the expiry of the period specified in sub-section (1), the
property shall be returned to the person from whom such property
was seized or whose property was ordered to be frozen unless the
Adjudicating Authority permits retention or continuation of
freezing of such property beyond the said period.
(4) The Adjudicating Authority, before authorising the retention or
continuation of freezing of such property beyond the period
specified in sub-section (1), shall satisfy himself that the property is
prima facie involved in money-laundering and the property is
required for the purposes of adjudication under section 8.
(5) After passing the order of confiscation under sub-section (5) or
sub-section (7) of section 8, Special Court, shall direct the release
of all property other than the property involved in money-

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 laundering to the person from whom such property was seized or
the persons entitled to receive it.
(6) Where an order releasing the property has been made by the
Special Court under sub-section (6) of section 8 or by the
Adjudicating Authority under section 58B or sub-section (2A) of
section 60, the Director or any officer authorised by him in this
behalf may withhold the release of any such property for a period
of ninety days from the date of receipt of such order, if he is of the
opinion that such property is relevant for the appeal proceedings
under this Act.
(emphasis supplied)

49. Section 20 comprises six sub-sections, which prescribe a

detailed mechanism concerning the retention of seized or frozen
property. Sub-sections (1) and (2) set out the essential preconditions
and procedures for retaining such seized or frozen property, for a
period not exceeding 180 days from the date of seizure or freezing, by
the ED.
50. Sub-section (3) prescribes the consequences of the lapse of the
initial 180-day period and Sub-section (4) prescribes the manner in
which the learned AA is to approach any retention for a period beyond
the 180 days. We add a caveat here that the said “prima facie”
satisfaction is not by itself the procedural requirement and this aspect
will be made clearer in the later part of this Judgment.
51. Sub-sections (5) and (6) address the subsequent course of action
to be taken upon the final decision of the Special Court concerning the
seized or frozen property and are not really relevant for the present
purposes.
52. At the outset, it needs to be borne in mind that the entire
Scheme of Search and Seizure is set out in Chapter V of the PMLA. It
is evident that the fact that all the provisions set out in the said
Chapter deal expressly with the said subject of Search and Seizure and

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 the Headings of the said Sections, though not conclusive, given the
express provisions contained in the Sections themselves and the fact
that all these Sections are contained in the Chapter which expressly
purport to be dealing with matters relating to Search and Seizure, the
Heading of the Chapter is the first indicator that the provisions in the
Chapter are a ring fenced set of provisions. Further, the procedure as
provided in the provisions is very elaborate and deals expressly with
the subject of “Search and Seizure”, without lending itself to any
ambiguity or doubt or need for a reference to a provision outside the
said chapter, till so occasioned and provided by the provisions
themselves.
53. Sub-section (1) of Section 20 concerns retention of property
that is either seized or frozen under Section 17 or 18, and in which
event, the authorized officer, duly empowered by the Director of ED,
based on the material in his possession, forms a reason to believe that
that the said property is required for adjudication under Section 8 of
the PMLA, and proceeds to pass an order for its retention/ continued
freezing.
54. Sub-section (2) of Section 20 further mandates that the officer
who passes the order for retention or continuation of freezing shall
immediately forward a copy of such order, along with the material or
evidence on which the order is based, to the learned AA in the manner
prescribed under the Prevention of Money Laundering (the Manner of
Forwarding a Copy of the Order of Retention of Seized Property along
with the Material to the Adjudicating Authority and the Period of its
Retention) Rules, 2005.
55. It is here that the Appellant sets up a two-pronged challenge:

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 (a). The Appellant would contend that Sections 17(4) and 20
operate differently since the provision of Section 17(4) comes
into play when the Appellant would decide to immediately
retain the property, for which purpose he makes an application
under the said provision and thereby seek an adjudication by the
learned AA in this regard; meaning thereby that the Appellant
can make an application for “Retention” of property, in respect
of which the learned AA can pass an order under Section 8(3)
and thereby retain the same. The concomitant to the same
would be that the Respondent can directly seek an adjudication
under Section 8(3) for “Retention” of seized goods/ property
without resort to the provisions of Section 20 of the PMLA.
(b). The second challenge is more factual in nature, and wherein the
Appellant would contend that, in the facts of the present matter,
since the adjudication process was completed before the period
of 180 days, there was no need to resort to Section 20 of the
PMLA.
56. We are afraid that we believe both prongs of the challenge are
toothless and unacceptable.
57. Since the Order sought to be defended herein was one passed
under Section 8, we propose to start by examining Section 8 of the
PMLA, which reads as under:

“8. Adjudication.— (1) On receipt of a complaint under sub-

section (5) of section 5, or applications made under sub-section (4)
of section 17 or under sub-section (10) of section 18, if the
Adjudicating Authority has reason to believe that any person has
committed an offence under section 3 or is in possession of
proceeds of crime, it may serve a notice of not less than thirty days
on such person calling upon him to indicate the sources of his
income, earning or assets, out of which or by means of which he
has acquired the property attached under sub-section (1) of section
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 5, or, seized or frozen under section 17 or section 18, the evidence
on which he relies and other relevant information and particulars,
and to show cause why all or any of such properties should not be
declared to be the properties involved in money-laundering and
confiscated by the Central Government:
Provided that where a notice under this sub-section specifies any
property as being held by a person on behalf of any other person, a
copy of such notice shall also be served upon such other person:
Provided further that where such property is held jointly by more
than one person, such notice shall be served to all persons holding
such property.
(2) The Adjudicating Authority shall, after—
(a). considering the reply, if any, to the notice
issued under sub-section (1);
(b). hearing the aggrieved person and the Director
or any other officer authorised by him in this
behalf; and
(c). taking into account all relevant materials
placed on record before him,
by an order, record a finding whether all or any of the properties
referred to in the notice issued under subsection (1) are involved in
money-laundering:
Provided that if the property is claimed by a person, other than a
person to whom the notice had been issued, such person shall also
be given an opportunity of being heard to prove that the property is
not involved in money-laundering.
(3) Where the Adjudicating Authority decides under sub-section
(2) that any property is involved in money-laundering, he shall, by
an order in writing, confirm the attachment of the property made
under subsection (1) of section 5 or retention of property or record
seized or frozen under section 17 or section 18 and record a finding
to that effect, whereupon such attachment or retention or freezing
of the seized or frozen property or record shall—
(a) continue during investigation for a period not exceeding
three hundred and sixty-five days or the pendency of the
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, as the case may be; and
(b) become final after an order of confiscation is passed
under sub-section (5) or sub-section (7) of section 8 or
section 58B or sub-section (2A) of section 60 by the
Special Court;
Explanation. — For the purposes of computing the period of
three hundred and sixty-five days under clause (a), the
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 period during which the investigation is stayed by any
court under any law for the time being in force shall be
excluded.
(4) Where the provisional order of attachment made under sub-
section (1) of section 5 has been confirmed under sub-section (3),
the Director or any other officer authorised by him in this behalf
shall forthwith take the possession of the property attached under
section 5 or frozen under sub-section (1A) of section 17, in such
manner as may be prescribed:
Provided that if it is not practicable to take possession of a property
frozen under sub-section (1A) of section 17, the order of
confiscation shall have the same effect as if the property had been
taken possession of.
(5) Where on conclusion of a trial of an offence under this Act, the
Special Court finds that the offence of money-laundering has been
committed, it shall order that such property involved in the money
laundering or which has been used for commission of the offence
of money-laundering shall stand confiscated to the Central
Government.
(6) Where on conclusion of a trial under this Act, the Special Court
finds that the offence of money laundering has not taken place or
the property is not involved in money-laundering, it shall order
release of such property to the person entitled to receive it.
(7) Where the trial under this Act cannot be conducted by reason of
the death of the accused or the accused being declared a
proclaimed offender or for any other reason or having commenced
but could not be concluded, the Special Court shall, on an
application moved by the Director or a person claiming to be
entitled to possession of a property in respect of which an order has
been passed under sub-section (3) of section 8, pass appropriate
orders regarding confiscation or release of the property, as the case
may be, involved in the offence of money-laundering after having
regard to the material before it.
(8) Where a property stands confiscated to the Central Government
under sub-section (5), the Special Court, in such manner as may be
prescribed, may also direct the Central Government to restore such
confiscated property or part thereof of a claimant with a legitimate
interest in the property, who may have suffered a quantifiable loss
as a result of the offence of money laundering:
Provided that the Special Court shall not consider such claim
unless it is satisfied that the claimant has acted in good faith and
has suffered the loss despite having taken all reasonable
precautions and is not involved in the offence of money
laundering:

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 Provided further that the Special Court may, if it thinks fit,
consider the claim of the claimant for the purposes of restoration of
such properties during the trial of the case in such manner as may
be prescribed.”

58. As is manifest, Section 8 is a provision for the purposes of

“Adjudication”. Section 8(3) does not deal with the act of simpliciter
“Retention”. In fact, a plain reading of Section 8(3) makes it evidently
clear that it provides that the learned AA will “…by an order in
writing confirm the attachment of the property made under sub-
section (1) of Section 5 or retention of property or record seized or
frozen under section 17 or section 18 and record a finding to that
effect, whereupon such attachment or retention or freezing of the
seized or frozen property or record shall - (a) continue during
investigation for a period not exceeding three hundred and sixty five
days or the pendency of the 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, as the case may be ….”.
59. In its plain terms, the Section deals with the circumstance where
the learned AA is to “confirm” the “retention of property”. It cannot
be read in a manner such as to translate into the order of Retention
itself, which, in our opinion, is the subject matter of Section 20.
60. Therefore, on a plain reading, it is manifest that the power
under Section 8(3), being one for confirming any retention, there
needs to be, in the first instance, an order for such retention, which can
be confirmed under Section 8(3).
61. The other aspect is that, the power of confirmation, once
exercised, would entitle the retention of the seized or frozen property

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 for a period beyond 180 days and up to 365 days. The provision,
therefore, is clearly not exercisable for the purpose of retention of the
property for the period of 180 days, as is sought to be contended.
62. If we were to accept the contention of the Appellant, it would
mean that any property so seized, upon the making of an application
under Section 17(4), would, on the basis of an order passed by the
learned AA, be able to be retained from the date of seizure for a period
of 365 days (during investigation).
63. Chapter V of the Act deals with “Summons, Searches and
Seizures, etc.” and as already dwelt upon earlier, it is manifest that the
said Chapter would necessarily have to be held to govern any such
action.
64. We take note of the fact that both Sections 17 and 20 form an
intrinsic and integral part of the said Chapter. Both Sections have been
reproduced earlier and are not being reproduced again.
65. Section 17(1) provides for the officer authorised in that behalf,
on the basis of information in his possession, formulating a reason to
believe, in respect of any person regarding the various aspects related
to money laundering as set out therein, either by himself or by
authorising an officer subordinate to him, to seize any record or
property and under Section 17(2), immediately after so doing, forward
a copy of the reasons so recorded for the purpose of seizing, along
with the material in his possession to the learned AA, who shall keep
the same, for the period as prescribed.
66. Interestingly, Section 17(2) does not state that the material that
is being sent to the learned AA is for the purpose of making any
adjudication. It would appear that, it is the intent of the legislature,
that the learned AA should have access to all relevant material for the
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 purpose of adjudication. However, the fact that Section 8 is clearly for
the purpose of adjudication and also the fact that Section 17 is
completely silent on the aspect of adjudication, makes it apparent that
Section 17, in fact, does not contemplate a procedure where
immediately after a seizure or freezing being effected, the
adjudicatory powers of the learned AA could be resorted to. In the
succeeding paragraphs, relating to Section 20, this aspect will be
further elaborated upon.
67. Section 17(4) of the PMLA, which has been reproduced in the
preceding paragraphs of this judgement, is what is sought to be relied
upon by the Appellant to contend that the same allows the Appellant to
file an application “…. requesting for retention of such record or
property seized…” before the learned AA and upon the filing of such
an application, the learned AA, without having an order of retention
under Section 20(1) can proceed to pass an order permitting the
retention of the same.
68. We are of the view that the same is clearly against the plain
reading of the Statute itself. Section 17(4) cannot confer upon Section
8(3), a power to pass an order of Retention. Section 8(3) is confined to
the confirmation of an order of retention. Surely, one cannot contend
that the authority which is statutorily conferred the power to
“confirm” an order can also pass the order. That is precisely what will
be the case in the event that the contentions of the Appellant were to
be accepted.
69. Moving now to an examination of Section 20 of the PMLA, the
provisions of which have already been extracted herein above. The
opening lines of Section 20(1) of the PMLA, “Where any property has
been seized under section 17…” and the words, “from the day on
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 which such property was seized”, taken together, to our mind, clearly
establish that Section 20 comes into play from the day of any seizure
and will have to be applied for any retention of seized goods upto a
period of 180 days. Put simplistically, post the action of seizing or
freezing under Section 17, the baton would be handed over to the
provisions of Section 20.
70. Further, this provision also clearly indicates that the said
retention is to be for the purpose of adjudication under Section 8;
meaning thereby that the retention is for the purpose of the exercise of
the power of adjudication by the learned AA under Section 8, which,
as indicated earlier, is to be exercised for the purpose of
“confirmation” of retention. A plain reading of Sections 20 (1) and (2)
leads us to firmly opine that the provisions of Section 20(1) will
necessarily have to be brought into play, before the adjudication under
Section 8, since the said retention can only be for the purposes of an
“adjudication” under Section 8.
71. Section 20(1) makes it evident that the authorised officer would,
under it, pass an order for retention.
72. Section 20(2) clarifies that an Order for Retention is to be
passed under Section 20(1) and further reiterates that the Order under
Section 20(1) is for the purposes of adjudication under Section 8.
73. The provisions of Section 20(1) apply for the period from the
day of seizure for a period upto 180 days. This is further clarified by
the provisions of Section 20(3), which provides that in the event that
the learned AA does not permit the retention or continuation of
freezing, the goods would be returned.
74. Section 20(2) mandates that the copy of the order of retention
passed under Section 20(1), along with the material in his possession,
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 is to be sent to the learned AA, once again, for the purposes of
adjudication under Section 8.
75. We also believe that the fact that Sub-section (3) of Section 20
stipulates that, upon the expiry of 180 days from the date of seizure or
freezing, the property shall be returned to the person from whom it
was seized or whose property was frozen, unless the learned AA
grants permission for continued retention or freezing, also clarifies the
entire issue further.
76. A plain reading of this provision makes it evident that the
learned AA exercises power only in respect of the retention of the
seized property beyond the period of 180 days, meaning thereby that
the power to retain the seized goods for a period of 180 days, was
never conferred upon the learned AA.
77. Section 20(4), which has been reproduced in the preceding
paragraphs of this judgment, fortifies our view even further, as a
reading of the said provision clearly indicates that, this is the juncture
from where the starting point of the exercise of powers of the learned
AA, under Section 8, which power, it is reiterated, is exercisable only
for the purposes of retention beyond the 180-day period, would have
to be considered to commence.
78. At this stage, the learned AA would have, the relevant material
under Section 17(2) and the material under Section 20(2). The learned
AA would thus, under Section 20(4), first satisfy itself, on the basis of
the material available with it for the purpose of exercising its powers
of adjudication, whether a prima facie case exists.
79. The satisfaction of the existence of a prima facie case is the
precursor to the exercise of the adjudicatory power under Section 8,

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 exercisable by the learned AA for the continuation of the retention of
the seized property beyond the period of 180 days.
80. The power under Section 8(3) of the PMLA, being one, which
permits the retention of property of a person, meaning thereby,
permitting the continuance of the deprivation of property from a
person who otherwise would be entitled to enjoy it to the fullest, the
same would necessarily have to be exercised in a manner only after
the person who is being deprived of the same is given the maximum
possible safeguards. We are also of the opinion that the lay of the
Statutory land, is clearly indicative of this and the contentions of the
Appellant in this regard would effectively circumvent, what we
believe are safeguards statutorily provided by the Legislature.
81. Regulations 21 to 25 of the Adjudicating Authority (Procedure)
Regulations, 2013 provide the procedural framework for conducting
adjudication under Section 8. These regulations empower the learned
AA to examine witnesses, mark exhibits, issue commissions, and
undertake other procedural steps necessary for a fair adjudication.
Regulations 21 to 25 of the Adjudicating Authority (Procedure)
Regulations, 2013 state as follows:

“21. Examination of witness and the issue of commissions. The

provisions of the Code of Civil Procedure, 1908 (5 of 1908)
relating to the issuing of commissions for examination of witnesses
and documents shall, as far as may be applicable, apply in the
matters of summoning and enforcing attendance of any person as
witness and issuing a commission for examination of such witness.

22. Recording of deposition. The deposition of the witness

whenever necessary shall be recorded in Form 8. A Certificate of
attendance, if requested for, will be issued in Form 9.

23. Numbering of witness. The witness called by the applicant

shall be numbered consecutively as P.Ws and those by the
defendant or any other persons not being applicants as D.Ws. and
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 any witness examined at the instance of the complainants shall be
numbered consequently as C.Ws, and the witness called by the
Adjudicating Authority shall be numbered as A.Ws.

24. Witness expenses payable. The Adjudicating Authority may,

if it considers necessary, direct the concerned party for the
payment of expenses to the witness, as the case may be.

25. Marking of documents. Every document filed by the applicant

shall be marked as Ex. A1 and the document filed by the
complainant shall be marked as Ex. C1 and the documents filed by
the defendants or other person not being applicant shall be marked
as Ex. Dl and so on.”

82. In light of the statutory provisions, the above discussion, and

the scheme of the PMLA, the conclusions, as relevant for the present
purposes, which, though not exhaustive, may be summarised as
follows:
(a). The ED initiates action under the PMLA by conducting search
and seizure under Section 17(1).
(b). Upon executing a search and seizure or passing a freezing order,
the ED is statutorily obligated to immediately inform the
learned AA and forward the reasons recorded along with the
relevant material, as mandated under Section 17(2).
(c). Within 30 days of such search, seizure, or freezing, the ED must
file an Application under Section 17(4), before the learned AA
for confirmation and adjudication in accordance with Section
8(1), (2), and (3) of the PMLA.
(d). Prior to the point in time when the power for confirmation of
retention of the seized/ frozen property or records is required to
be confirmed by the learned AA for the period beyond 180 days,
in exercise of its powers under Section 8(3), the Provisions of

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 Section 20(1) and Section 20(2) read with Section 20(3) would
have to be necessarily held to be the power under which the
seized goods are permitted to be retained for a period up to 180
days.
(e). Therefore, after informing the learned AA under Section 17(2)
and before filing the requisite application under Section 17(4),
the ED, if it believes the retention of the seized or frozen
property is necessary for adjudication under Section 8, would
have to necessarily invoke Section 20.
(f). Filing an application under Section 17(4) before the learned AA
does not ipso facto permit the ED to retain the seized property
unless it also complies with the requirements of Section 20.
Failure to do so would amount to a violation of the express
procedure established by law.
(g). Section 20(1) mandates that the officer authorized by the
Director of ED must have in his possession, material leading to
a reasonable belief that the continued retention is required for
adjudication under Section 8. This belief must be based on
tangible evidence and recorded in writing. Upon forming such a
belief, the officer shall pass an order for such retention or
continued freezing for a period not exceeding 180 days from the
date of seizure or freezing.
(h). Once such a belief is formed and recorded in an order, it must
be communicated to the learned AA under Section 20(2). This
communication becomes relevant as part of the record and basis
for the learned AA’s adjudication.
(i). Under Section 20(4), the learned AA may allow continued
retention or freezing only if it is satisfied that:
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 (i) The property is prima facie involved in money
laundering; and
(ii) The property is required for adjudication under
Section 8.
(j). On the basis of the Application under Section 17(4), made
within 30 days of the seizure, the learned AA, after satisfying
itself on the foundational requirement under Section 20(4) of
“prima facie” satisfaction, would thereafter, along with the
relevant material and Reasons to believe under Sections 17(2)
and 20(2) undertake the mandatory procedural requirements set
out in Sections 8(1) and 8(2) and under 8(3), pass an order, in
writing, confirming the retention, whereupon, the seizure would
continue beyond 180 days and up to 365 days, during the
investigation.
(k). The learned AA, upon receiving such application, forms an
opinion under Section 8(1), issues notice, and provides the
concerned person an opportunity to respond with evidence and
be heard under Section 8(2). Thereafter, based on the material
on record, the learned AA determines whether the property in
question is involved in money laundering. Based on the
decision under Section 8(2), the learned AA, under Section 8(3),
confirms the retention of property or records seized or frozen
under Section 17 or 18 for a period beyond 180 days.
(l). Before forming any such opinion, the learned AA must adhere
to the procedural requirements of Sections 8(1) and (2), and in
doing so, may invoke the relevant provisions of the
Adjudicating Authority (Procedure) Regulations, 2013.
(m). Section 8(2) imposes a duty upon the learned AA to:
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 (i) consider the reply, if any, submitted by the
aggrieved person;
(ii) hear both, the aggrieved person and the ED; and
(iii) take into account all relevant materials placed
on record.
(n). The scope of Section 8(2) of the PMLA is not confined to the
response and hearing of the parties; it also includes all materials
previously submitted by the ED, during and after the search,
seizure and retention.
(o). The decision of the learned AA is appealable before the learned
AT, and if aggrieved by the decision of the learned AT, a further
challenge may lie before the appropriate High Court.
(p). In case there is no order for retention, Section 20(3) provides
that, upon expiry of the 180-day period, the property must be
returned to the person from whom it was seized or whose
property was frozen.
83. The PMLA, being a special legislation with significant
economic implications, occupies a distinct place in the statutory
framework of financial regulation and jurisprudence. Recognising the
evolving nature of economic offences and the growing threat of
money laundering to the integrity of national and international
financial systems, the PMLA has been extensively amended over time,
almost a dozen times, to address exigencies, close legal loopholes, and
reinforce its enforcement architecture. The list of amendments, which
underscores the evolving scope and rigor of the statute, includes:
(a). The Prevention of Money Laundering (Amendment) Act, 2005
(20 of 2005).

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 (b). The Prevention of Money Laundering (Amendment) Act, 2009
(21 of 2009).
(c). The Prevention of Money Laundering (Amendment) Act, 2012
(2 of 2013).
(d). The Finance Act, 2015 (20 of 2015).
(e). The Black Money (Undisclosed Foreign Income and Assets)
and Imposition of Tax Act, 2015 (22 of 2015).
(f). The Finance Act, 2016 (28 of 2016).
(g). The Finance Act, 2018 (13 of 2018).
(h). The Prevention of Corruption (Amendment) Act, 2018 (16 of
2018).
(i). The Finance Act, 2019 (7 of 2019).
(j). The Aadhaar and Other Laws (Amendment) Act, 2019 (14 of
2019).
84. Section 20 of the PMLA was comprehensively amended by the
Prevention of Money Laundering (Amendment) Act, 2012 (2 of
2013), reflecting the legislature's intent to introduce a more robust and
clearly delineated procedure concerning the retention of seized or
frozen property. The substantive nature of this amendment implies that
these provisions are not merely directory or procedural but are
mandatory and of critical legal consequence. If they were of lesser
import, such comprehensive legislative substitution would have been
unnecessary. Furthermore, the amendments to Section 20 triggered
corollary changes across other provisions of the Act, reinforcing the
view that the amended provisions form a central part of the scheme for
lawful seizure and retention.
85. The Appellant’s contention that once the learned AA confirms
the seizure under Section 8 within the statutory period of 180 days,
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 non-compliance with procedural safeguards, if any, under Sections 20
becomes inconsequential, is legally flawed and merits outright
rejection. Such an argument, if accepted, would render the statutory
safeguards illusory and undermine the checks instituted by Parliament
against potential abuse of power by enforcement agencies.
86. Such an interpretation would, in our opinion, run contrary to the
express mandate of the Statute, as resort to Section 17(4) without
referral or resort to the Provisions of Section 20, would effectively
render the provisions of Section 20 nugatory. The argument of the
Appellant that the resort to the provisions of Section 17(4), is at an
“initial stage”, in our opinion, is incorrect. This argument, to our
mind, propounds a “cheat code” to the statutory intent as is otherwise
apparent.
87. In our view, the Statute does not provide for any such route
wherein the provisions of Section 17(4) can be directly resorted to.
For the purpose of “retention” or freezing, resort to Section 17(4), in
the manner as sought for, effectively translates into a short-cut,
bypassing, what we believe is the express mandate of the Statute,
providing statutory safeguards, necessitated by the fact that
consequences of such retention would have an extreme and draconian
effect on the person whose property is seized or frozen.
88. Any such order without following the required procedure
would, in our opinion, not survive and is, in fact, void ab initio.
89. The Hon’ble Supreme Court in State of Orissa v. Mamata
Mohanty (supra) held that an order which is void ab initio cannot be
salvaged or legitimised by any subsequent action or development.
Thus, confirmation by the learned AA cannot cure initial procedural
violations or validate unlawful retention carried out without adherence
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 to statutory requirements. The relevant portion of the judgment states
as follows:
“Order bad in inception
37. It is a settled legal proposition that if an order is bad in its
inception, it does not get sanctified at a later stage. A subsequent
action/development cannot validate an action which was not lawful
at its inception, for the reason that the illegality strikes at the root
of the order. It would be beyond the competence of any authority to
validate such an order. It would be ironic to permit a person to rely
upon a law, in violation of which he has obtained the benefits. If an
order at the initial stage is bad in law, then all further proceedings
consequent thereto will be non-est and have to be necessarily set
aside. A right in law exists only and only when it has a lawful
origin. (Vide Upen Chandra Gogoi v. State of Assam [(1998) 3
SCC 381: 1998 SCC (L&S) 872: AIR 1998 SC 1289], Mangal
Prasad Tamoli v. Narvadeshwar Mishra [(2005) 3 SCC 422: AIR
2005 SC 1964] and Ritesh Tewari v. State of U.P. [(2010) 10 SCC
677: (2010) 4 SCC (Civ) 315: AIR 2010 SC 3823]).”
(emphasis supplied)

90. Similarly, in Ritesh Tewari v. State of U.P.16, the Apex Court

reiterated that statutory compliance is not an empty formality and any
deviation from express procedural mandates cannot be condoned
under the pretext of subsequent validations. The relevant paragraphs
of the said judgement observed as follows:
“32. It is settled legal proposition that if an order is bad in its
inception, it does not get sanctified at a later stage. A subsequent
action/development cannot validate an action which was not lawful
at its inception, for the reason that the illegality strikes at the root
of the order. It would be beyond the competence of any authority to
validate such an order. It would be ironical to permit a person to
rely upon a law, in violation of which he has obtained the benefits.
(Vide Upen Chandra Gogoi v. State of Assam [(1998) 3 SCC 381:
1998 SCC (L&S) 872]; Satchidananda Misra v. State of
Orissa [(2004) 8 SCC 599: 2004 SCC (L&S) 1181]
and SBI v. Rakesh Kumar Tewari [(2006) 1 SCC 530: 2006 SCC
(L&S) 143].)
33. In C. Albert Morris v. K. Chandrasekaran [(2006) 1 SCC 228]
this Court held that a right in law exists only and only when it has a
lawful origin.

16
(2010) 10 SCC 677
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 34. In Mangal Prasad Tamoli v. Narvadeshwar Mishra [(2005) 3
SCC 422] this Court held that if an order at the initial stage is bad
in law, then all further proceedings consequent thereto will be non-
est and have to be necessarily set aside.”
(emphasis supplied)

91. It is thus clear that although the PMLA empowers the ED to

seize or freeze property suspected to be involved in money laundering,
such powers are embedded within a stringent procedural framework
aimed at ensuring accountability, transparency, and protection of
individual rights. The exercise of such coercive powers must strictly
conform to the statutory checks and balances provided within the Act.
92. We reiterate that, Section 20(1) would necessarily get attracted,
at the very first instance, in respect of any action taken for the
Retention of property or the continuance of freezing of any property.
Section 20(1) mandates that a separate and independent opinion must
be formed by an officer authorised by the Director, who may not
necessarily be the same officer as authorized under Section 17(1),
stating reasons justifying such retention. After forming an independent
reason to believe, which would naturally have to form the basis for the
order for retention, the order would be required to be forwarded along
with the material in his possession, without delay, under Section
20(2). Such an order would draw sustenance from the reason to
believe and would necessarily have to form a part of the order, as any
order without the appurtenant reasoning would not be an order at all.
This is all the more relevant since the said order effectively seeks to
prolong the curtailment of the enjoyment of valuable rights of a party
who has suffered any such seizure or freezing of property.
93. We are of the opinion that these provisions are not directory or
mere procedural niceties but are substantive and mandatory in nature.

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 The statutory text leaves no scope for discretion or implied exceptions
for retaining property or records without following the prescribed
procedure. Allowing retention of seized property without strict
adherence to these provisions would amount to a violation of the
legislative mandate and would undermine the very purpose of
incorporating procedural safeguards in the PMLA.
94. This, all the more since, it is well settled that although the right
to property is no longer a fundamental right under the Constitution of
India, it retains its status as a constitutional and legal right under
Article 300A. No person can be divested of their property save by
authority of law. This position was unequivocally reaffirmed by the
Hon’ble Supreme Court in Laxman Lal v. State of Rajasthan17 as
follows:
“16. Article 300-A of the Constitution mandates that:
“300-A. Persons not to be deprived of property save by
authority of law. —No person shall be deprived of his
property save by authority of law.”
Though the right to property is no longer a fundamental right but
the constitutional protection continues inasmuch as without the
authority of law, a person cannot be deprived of his property.
Accordingly, if the State intends to appropriate the private property
without the owners' consent by acting under the statutory
provisions for compulsory acquisition, the procedure authorised by
law has to be mandatorily and compulsorily followed. The power
of urgency which takes away the right to file objections can only
be exercised by the State Government for such public purpose of
real urgency which cannot brook delay of few weeks or few
months. This Court as early as in 1964 said that the right to file
objections under Section 5-A is a substantial right when a person's
property is being threatened with acquisition; such right cannot be
taken away as if by a side wind (Nandeshwar Prasad v. State of
U.P. [AIR 1964 SC 1217]).”
(emphasis supplied)

17
(2013) 3 SCC 764
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 95. Similarly, in Sukh Dutt Ratra v. State of H.P.18, the Apex Court
emphasised that the constitutional right to property commands
protection from arbitrary state action and must be respected in all
enforcement actions. The relevant paragraphs of the said judgment are
set out below:
“Analysis and conclusion
13. While the right to property is no longer a fundamental right
[“Constitution (Forty-fourth Amendment) Act, 1978”], it is
pertinent to note that at the time of dispossession of the subject
land, this right was still included in Part III of the Constitution. The
right against deprivation of property unless in accordance with
procedure established by law, continues to be a constitutional right
under Article 300-A.
14. It is the cardinal principle of the rule of law, that nobody can be
deprived of liberty or property without due process, or
authorisation of law. The recognition of this dates back to the
1700s to the decision of the King's Bench
in Entick v. Carrington [Entick v. Carrington, 1765 EWHC (KB)
J98 : 95 ER 807] and by this Court in Wazir Chand v. State of
H.P. [Wazir Chand v. State of H.P., (1955) 1 SCR 408 : AIR 1954
SC 415] Further, in several judgments, this Court has repeatedly
held that rather than enjoying a wider bandwidth of lenience, the
State often has a higher responsibility in demonstrating that it has
acted within the confines of legality, and therefore, not tarnished
the basic principle of the rule of law.
15. When it comes to the subject of private property, this Court has
upheld the high threshold of legality that must be met, to
dispossess an individual of their property, and even more so when
done by the State. In Bishan Das v. State of Punjab [Bishan
Das v. State of Punjab, (1962) 2 SCR 69: AIR 1961 SC 1570] this
Court rejected the contention that the petitioners in the case were
trespassers and could be removed by an executive order, and
instead concluded that the executive action taken by the State and
its officers, was destructive of the basic principle of the rule of law.
This Court, in another case — State of U.P. v. Dharmander Prasad
Singh [State of U.P. v. Dharmander Prasad Singh, (1989) 2 SCC
505: (1989) 1 SCR 176],held: (SCC p. 516, para 30)
“30. A lessor, with the best of title, has no right to resume
possession extra-judicially by use of force, from a lessee,
even after the expiry or earlier termination of the lease by
forfeiture or otherwise. The use of the expression “re-
entry” in the lease deed does not authorise extra-judicial

18
(2022) 7 SCC 508
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 methods to resume possession. Under law, the possession
of a lessee, even after the expiry or its earlier termination
is juridical possession and forcible dispossession is
prohibited; a lessee cannot be dispossessed otherwise than
in due course of law. In the present case, the fact that the
lessor is the State does not place it in any higher or better
position. On the contrary, it is under an additional
inhibition stemming from the requirement that all actions
of Government and Governmental authorities should have
a “legal pedigree”.”
(emphasis supplied)

96. We are of the opinion that the architecture of the PMLA is

designed to strike a delicate balance between empowering
enforcement agencies and protecting individual rights. The processes
of search, seizure, freezing, attachment, and retention are embedded
with procedural safeguards to ensure that state action is not only
lawful but also proportionate and subject to independent scrutiny.
Judicial and quasi-judicial oversight is envisaged at every stage to
prevent the arbitrary exercise of power and to uphold constitutional
values. The integrity of this framework rests on the rigorous
application of the procedural mandates enshrined in the statute.
97. A cardinal principle of statutory interpretation, as reiterated by
courts time and again, is that when a statute prescribes a method to do
a particular thing, it must be done in that manner alone and not
otherwise. Therefore, if Section 20 stipulates a defined mechanism for
the retention of seized property or records, it is imperative that such
procedure is strictly followed.
98. This legal position was reaffirmed by a three-judge Bench of
the Hon’ble Supreme Court in OPTO Circuits (India) Ltd. v. Axis
Bank19, wherein the Court stressed that procedural compliance under

19
(2021) 6 SCC 707
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 the PMLA is not optional, especially when individual rights are at
stake. The relevant paragraphs of the said judgement are herein below:
“8. A perusal of the above provision would indicate that the
prerequisite is that the Director or such other authorised officer in
order to exercise the power under Section 17 of the PMLA, should
on the basis of information in his possession, have reason to
believe that such person has committed acts relating to money-
laundering and there is need to seize any record or property found
in the search. Such belief of the officer should be recorded in
writing. Sub-section (1-A) to Section 17 of the PMLA provides
that the officer authorised under sub-section (1) may make an order
to freeze such record or property where it is not practicable to seize
such record or property. Sub-section (2) provides that after search
and seizure or upon issuance of a freezing order the authorised
officer shall forward a copy of the reasons recorded along with
material in his possession to the adjudicating authority in a sealed
envelope. Sub-section (4) provides that the authority seizing or
freezing any record or property under sub-section (1) or (1-A) shall
within a period of thirty days from such seizure or freezing, as the
case may be, file an application before the adjudicating authority
requesting for retention of such record or properties seized.
9. For the purpose of clarity, it is emphasised that the freezing of
the account will also require the same procedure since a bank
account having alleged “proceeds of crime” would fall both under
the ambit “property” and “records”. In that regard, it would be
appropriate to take note of Sections 2(1)(v) and 2(1)(w) of the
PMLA which defines “property” and “records”. The same read as
follows:
“2. (1)(v) “property” means any property or assets of
every description, whether corporeal or incorporeal,
movable or immovable, tangible or intangible and includes
deeds and instruments evidencing title to, or interest in,
such property or assets, wherever located;
***
2. (1)(w) “records” include the records maintained in the
form of books or stored in a computer or such other form
as may be prescribed;”
10. The scheme of the PMLA is well intended. While it seeks to
achieve the object of preventing money-laundering and bring to
book the offenders, it also safeguards the rights of the persons who
would be proceeded against under the Act by ensuring fairness in
procedure. Hence a procedure, including timeline is provided so as
to ensure that power is exercised for the purpose to which the
officer is vested with such power and the adjudicating authority is
also kept in the loop. In the instant case, the procedure
contemplated under Section 17 of the PMLA to which reference is
made above has not been followed by the officer authorised.
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 Except issuing the impugned Communication dated 15-5-2020 to
AML Officer to seek freezing, no other procedure contemplated in
law is followed. In fact, the impugned communication does not
even refer to the belief of the authorised officer even if the same
was recorded separately. It only states that the officer is
investigating the case and seeks for relevant documents, but in the
tabular column abruptly states that the accounts have to be “debit
freezed/stop operations”. It certainly is not the requirement that the
communication addressed to the Bank itself should contain all the
details. But what is necessary is an order in the file recording the
belief as provided under Section 17(1) of the PMLA before the
communication is issued and thereafter the requirement of Section
17(2) of the PMLA after the freezing is made is complied with.
There is no other material placed before the Court to indicate
compliance with Section 17 of the PMLA, more particularly
recording the belief of commission of the act of money-laundering
and placing it before the adjudicating authority or for filing
application after securing the freezing of the account to be made. In
that view, the freezing or the continuation thereof is without due
compliance with the legal requirement and, therefore, not
sustainable.
14. This Court has time and again emphasised that if a statute
provides for a thing to be done in a particular manner, then it has to
be done in that manner alone and in no other manner. Among
others, in a matter relating to the presentation of an election
petition, as per the procedure prescribed under the Patna High
Court Rules, this Court had an occasion to consider the Rules to
find out as to what would be a valid presentation of an election
petition in Chandra Kishore Jha v. Mahavir Prasad [Chandra
Kishore Jha v. Mahavir Prasad, (1999) 8 SCC 266] and in the
course of consideration observed as hereunder : (SCC p. 273, para
17)
“17. … It is a well-settled salutary principle that if a
statute provides for a thing to be done in a particular
manner, then it has to be done in that manner and in no
other manner.”
Therefore, if the salutary principle is kept in perspective, in the
instant case, though the authorised officer is vested with sufficient
power; such power is circumscribed by a procedure laid down
under the statute. As such the power is to be exercised in that
manner alone, failing which it would fall foul of the requirement of
complying with due process under law. We have found fault with
the authorised officer and declared the action bad only insofar as
not following the legal requirement before and after freezing the
account. This shall not be construed as an opinion expressed on the
merit of the allegation or any other aspect relating to the matter and
the action initiated against the appellant and its Directors which is
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 a matter to be taken note of in appropriate proceedings if at all any
issue is raised by the aggrieved party.”
(Emphasis supplied)

99. As already elaborated upon earlier, the interpretation as sought

to be canvassed by the Appellant effectively puts paid to the expressed
timelines delineated in Sections 20 and 8(3) of the PMLA. The same
is clearly impermissible in view of the determinative position of law
as elaborated by the Hon’ble Supreme Court.
100. We now turn our attention to the order in question. In the instant
case, the learned AA, while adjudicating under Section 8 the
application filed by the ED under Section 17(4), passed the order
dated 21.08.2017, recording the following:

“Discussions: -
1. No submissions have been filed by defendant side.
2. Counsel for Applicant pleads retention as per O.A.
3. After considering the original application, submissions of
Defendant, it is held that condition laid down for retention are
satisfied and OA is allowed accordingly.
4. Original Application is allowed accordingly.
5. The order of retention shall:
(a) continue during the pendency of the proceedings relating to any
offence under this Act before a court or under corresponding law
of any other country before competent court of criminal
jurisdiction outside India as the case may be;
(b) become final after an order of confiscation is passed under sub-
section (5) or sub-section (7) of section age 8 or section 58B or
sub-section (2A) of section 60 by the Adjudicating Authority.”

101. As is manifest, the order does not reveal any reason being
accorded for the decision to confirm the retention of the property. In
our opinion, the same does not satisfy the statutory mandate and
suffers from a mechanical and superficial approach, devoid of the
mandatory inquiry envisaged under Sections 8(2) and 8(3). The
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 absence of a response from the Respondent cannot absolve the learned
AA of its statutory duty to independently assess the materials placed
before it and determine whether the property is indeed involved in
money laundering. The legislative scheme does not permit automatic
confirmation or passive endorsement; it mandates active, reasoned
adjudication.
102. In light of the foregoing analysis, this Court is of the firm and
considered view that the Order dated 21.08.2017 passed by the learned
AA is legally unsustainable. Consequently, the present appeal does not
merit any interference with the Impugned Order dated 06.02.2019
passed by the learned AT, which merits affirmation.
103. Accordingly, the present appeal, along with pending
application(s), if any, stands dismissed.
104. No order as to costs.

SUBRAMONIUM PRASAD, J.

HARISH VAIDYANATHAN SHANKAR, J.

SEPTEMBER 12, 2025/sm

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