High Court: Tribunal Misread PMLA Section 17; Search Valid Even Without Complaint Against Same Person

The Enforcement Directorate filed an appeal under Section 42 of the Prevention of Money Laundering Act, challenging a 2019 order of the PMLA Appellate Tribunal that had directed de-freezing of assets seized from the late Amlendu Pandey. The backdrop of the case lies in the 2007 Income Tax raids on Hassan Ali Khan and his associates, which exposed several foreign bank accounts in Switzerland and Singapore. ED initiated a PMLA investigation, registered an ECIR, arrested the principal accused, filed a prosecution complaint in 2011, and obtained confirmation of attachments of various properties. Despite this, ED believed money-laundering activities continued, prompting further searches.

During his appeal before the Tribunal under Section 26, Pandey passed away, and his daughter was substituted. In May 2019, the Tribunal allowed the appeal largely on the premise that no prosecution complaint existed against Pandey and ordered the de-freezing of the assets, leading to the present appeal.

Core Issue: Whether the Appellate Tribunal erred in holding that the absence of a prosecution complaint against the deceased respondent rendered the Section 17 PMLA search and retention unsustainable.

HC’s Ruling: The High Court held that the Tribunal had fundamentally misread Section 17 of the PMLA. The Court clarified that, prior to its 2019 amendment, the only statutory precondition for a Section 17 search was the existence of a prior complaint or forwarding of a report under Section 157 CrPC. A prosecution complaint linked to the ECIR had already been filed in 2011, and cognizance had been taken by the Special Court. Section 17 permits the search of “any person” believed to possess proceeds of crime, records, or property related to the offense, even if that person is not accused in the scheduled offense. Thus, the Tribunal’s conclusion that the absence of a complaint specifically against Amlendu Pandey invalidated the search was “fallacious” and not supported by the statute.

As both sides agreed that these issues required fresh consideration, the High Court set aside the 2019 order and remanded the matter to the Appellate Tribunal for adjudication afresh.

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