New Delhi, Sep 14 (PTI) The Prevention of Money Laundering Act was designed to strike a delicate balance between empowering the enforcement agencies and protecting individual rights, the Delhi High Court has said.
A bench of Justices Subramonium Prasad and Harish Vadiyanathan Shankar made the observation on September 12 while holding that before the Enforcement Directorate (ED) can seek permission from the adjudicating authority to retain seized or frozen property, an authorised officer must first pass a formal order explaining why retention for up to 180 days is necessary.
Without this crucial step, the bench said, the adjudicating authority cannot lawfully determine whether the property is linked to money laundering.
“We are of the opinion that the architecture of the Prevention of Money Laundering Act (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,” the bench said.
It added that judicial and quasi-judicial oversight was 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, the bench said.
It said a cardinal principle of statutory interpretation was that “when a statute prescribes a method to do a particular thing, it must be done in that manner alone and not otherwise”.
The bench was hearing an application filed by the ED challenging a February 2019 decision by the PMLA appellate tribunal, which denied the agency’s plea to retain seized/frozen properties linked to an accused, Rajesh Kumar Aggarwal, in a money laundering case.
The tribunal held that the manner in which the seized property was retained did not conform to the PMLA’s scheme.
According to the ED, accused Surendra Kumar Jain and Virendra Jain laundered money by infusion of cash from Jagat Projects into the bank accounts of the corporate entities controlled by them, in the guise of the same being share subscription money at a huge premium during the financial year 2008-2009.
Aggarwal, a CA, was a co-conspirator in the scam, the ED alleged. PTI UK ARI
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