Musaddilal Gems and Jewels India Private Limited Vs Deputy Director (Telangana High Court)
The appeal under Section 42 of the Prevention of Money Laundering Act, 2002 (PMLA) challenged the Appellate Tribunal’s order dated 28.10.2024, which affirmed the Adjudicating Authority’s order dated 22.08.2023 allowing the Enforcement Directorate’s application under Section 17(4) for retention of records, cash, jewellery, precious stones, electronic items and digital devices seized during searches conducted between 17.10.2022 and 19.10.2022. The Enforcement Directorate had sought retention on the basis that the seized properties could form part of the proceeds of crime relating to a scheduled offence.
The appellant contended that the ECIR against another individual had been quashed by the High Court, that its transactions were genuine business dealings supported by invoices, GST and income tax records, that the seized properties were not proceeds of crime, and that the proceedings were barred by limitation. It also argued that neither the appellant nor its directors were accused in the scheduled offence and relied on judicial decisions relating to the effect of quashing of the ECIR and limitation. The Enforcement Directorate submitted that investigation revealed the appellant company was used as a conduit to layer and integrate proceeds of crime, that financial records disclosed unexplained loans and investments, that the flow of funds lacked credible sources, and that the search, seizure and retention were carried out after recording reasons to believe under the PMLA.
