Mukesh Talreja Vs Directorate of Enforcement (Bombay High Court)
ED Cannot Retain Seized Property Beyond 180 Days Without Adjudicating Authority’s Permission: Bombay HC
Summary: The Bombay High Court held that the Enforcement Directorate loses authority to retain seized property or continue freezing it beyond 180 days unless the Adjudicating Authority permits such continuation. Allowing Mukesh Talreja’s petition, the Court directed the ED to return his seized documents and digital devices and release his frozen locker within one week from the date of the order.
The decision rested on the statutory limitation governing retention under Section 20 of the Prevention of Money Laundering Act, 2002 (PMLA). The Court found it unnecessary to decide the petitioner’s separate argument concerning the quashing of the predicate offence and the Enforcement Case Information Report (ECIR), since the absence of permission for continued retention was sufficient to grant relief.
The petitioner, a director of Chellaram Mills Private Limited, challenged the ED’s seizure of documents and digital devices and freezing of Locker No. 1643. The agency had conducted searches at various places, including his office premises, on 21 February 2022, and recorded the seizure and freezing under panchnamas.
The proceedings arose from ECIR No. ECIR/07/HIU/2021, recorded on 16 April 2021, based on FIR No. 0129 of 2021 registered at Wada Police Station. The petitioner was an accused in that FIR.
On 17 March 2022, the ED filed Original Application No. 646 of 2022 before the Adjudicating Authority, seeking retention of the seized material and confirmation of the freezing order. A show cause notice followed on 30 March 2022, requiring the petitioner to submit a written response by 12 May 2022.
The petitioner submitted his reply and participated in the hearing held on 2 August 2022. He informed the Adjudicating Authority that the predicate FIR had been quashed by the Bombay High Court on 4 May 2022. Subsequently, the Delhi High Court quashed the ECIR on 26 September 2022, noting the absence of a surviving predicate offence.
Challenges to those orders reached the Supreme Court. The judgment records disposal of the special leave petitions on 12 February 2024, followed by proceedings seeking review or clarification, which were disposed of on 29 July 2024. Meanwhile, the petitioner continued requesting release of the seized articles and de-freezing of his locker.
The ED also moved an application under Section 175(3) of the Bharatiya Nagarik Suraksha Sanhita, 2023, before the Judicial Magistrate First Class, Wada. That application for further investigation was rejected on 1 October 2024.
Before the High Court, the petitioner principally submitted that 180 days had long expired after the seizure, and no order permitted continued retention or freezing. He argued that, in the absence of the required permission, the ED’s continued custody of the articles and restriction over the locker were unlawful.
The ED acknowledged that the statutory period had elapsed. However, it referred to Supreme Court proceedings in Citizens Whistle Blower Forum v. Union of India, and a status report filed pursuant to directions in those proceedings. The report referred to transactions involving Jasol Investments and Trading Company Private Limited and stated that it had borrowed ₹125 crore from the petitioner.
The High Court nevertheless found the statutory position decisive. It explained that Section 17 governs search, seizure and freezing, including an application to the Adjudicating Authority within 30 days seeking retention of seized material or continuation of freezing.
The Court then examined Sections 20(1) and 20(3). It noted that property seized under Section 17 could remain retained or frozen for 180 days. On expiry of that period, the property must be returned unless the Adjudicating Authority permits retention or continuation of freezing beyond that period.
Two facts were undisputed: more than 180 days had elapsed, and no order authorised continued retention or freezing. The petitioner had answered the show cause notice and attended the hearing, but there was also no confirmation order under Section 8.
Accordingly, the Court held that, by operation of law and efflux of time, the ED had lost authority to retain the articles or continue freezing the locker. Filing the retention application and conducting a hearing had not resulted in the permission necessary to sustain the restrictions beyond the statutory period.
The Court therefore allowed the petition and directed the ED to release and hand over possession of Locker No. 1643 at India Safety Vaults Private Limited, Mumbai, and return all documents and digital devices seized during the search of 21 February 2022, within one week.
The ruling turns on the absence of an order permitting continued retention beyond 180 days. The Court expressly declined to examine the alternative ground concerning extinction of the predicate offence because the statutory lapse itself entitled the petitioner to relief. Rule was made absolute.
Cases Discussed
- Citizens Whistle Blower Forum Vs Union of India & Ors., SLP (C) No(s). 2993/2025 (Supreme Court)
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
1. Rule. Rule is made returnable forthwith with the consent of the parties and is taken up for final disposal.
2. The Petitioner has invoked the Writ jurisdiction of this Court challenging the seizure of documents, digital devices and locker under the provisions of Prevention of Money Laundering Act, 2002 (“PMLA”). It is his case that on 21.02.2022, the Enforcement Directorate (“ED”) conducted a raid at various places including the office premises of Petitioner and seized documents, digital devices and freezed Locker No. 1643 belonging to the Petitioner under Panchnamas. Aggrieved by this action of the ED, the Petitioner has approached this Court.
3. The chronology of events which is germane to decide the issue that falls for our consideration is as follows:-
3.1. On 16.04.2021, the Respondent No.1 – ED recorded ECIR No. ECIR/07/HIU/2021 predicated upon FIR No. 0129 of 2021 registered at Wada Police Station, wherein, the Petitioner was an accused.
3.2. On 17.03.2022, the ED filed OA No. 646 of 2022 before the Adjudicating Authority (PMLA) seeking retention of the seized materials and confirmation of the freezing order dated 21.02.2022.
3.3. On 30.03.2022, the Adjudicating Authority issued a Show Cause Notice to the Petitioner directing the submission of a written reply on or before 12.05.2022. The Petitioner submitted a detailed reply to the Show Cause Notice within the stipulated time frame.
3.4. On 04.05.2022, this Court quashed FIR No. 0129 of 2021 which formed the predicate offence of the aforesaid ECIR.
3.5. On 02.08.2022, the Petitioner appeared before the Adjudicating Authority and informed him that no predicate offence subsisted against the Petitioner.
3.6. The ED approached the Hon’ble Supreme Court challenging this Court’s order dated 04.05.2022. On 26.09.2022, the Delhi High Court quashed the present ECIR, noting that without a predicate offence, proceedings under PMLA could not be sustained. This decision of the Delhi High Court was carried to the Hon’ble Supreme Court by ED.
3.7. In the meanwhile, considering that 180 days had lapsed since the seizure dated 21.02.2022, the Petitioner requested ED to de-freeze the locker and release the documents and digital devices (“articles”) of the Petitioner.
3.8. On 12.02.2024, the Hon’ble Apex Court disposed off the SLPs arising from the challenge to the orders of this Court and that of the Delhi High Court.
3.9. On 04.03.2024, a Review Petition was filed by M/s Indiabulls and Ors., seeking recall/modification of the order of the Hon’ble Apex Court dated 12.02.2024.
3.10. On 23.07.2024, the ED filed an Application under Section 175(3) of the BNSS, 2023 before the Judicial Magistrate First Class, Wada. In the meanwhile, the Petitioner kept on requesting ED to release the seized property but to no avail.
3.11. On 29.07.2024 the Hon’ble Supreme Court upon consideration, modified/clarified a part of the order dated 12.02.2024, thereby disposing of the Review Petition.
3.12. On 01.10.2024, JMFC, Wada rejected the Application filed for further investigation by ED.
4. Heard Mr. Singh for the Petitioner, Ms. Jagtap for Respondent No. 1. Perused the Petition and the documents annexed with it.
5. The principal submission advanced on behalf of the Petitioner is that a period of 180 days from the seizure is prescribed by Section 20 of PMLA during which the ED can retain or continue to freeze any property which has been seized under Section 17 of PMLA. Since, the seizure was conducted on 21.02.2022, the period of 180 days has expired long ago. In the absence of any permission from the Adjudicating Authority to permit retention or continuation of freezing beyond a period of 180 days, the property shall be returned to the person from whom it was seized. In the absence of any confirmation order and the lapse of more than 180 days from the date of the seizure, its continued retention is illegal and hence, must be set aside. The second limb of submission by learned counsel for the Petitioner is that the predicate offence as well as the ECIR have been quashed by Courts of competent jurisdiction and this quashment has now reached finality with the disposal of the review by the Hon’ble Supreme Court. Hence, even otherwise, no prosecution under the provisions of PMLA can continue against the Petitioner.
6. Ms. Jagtap, learned retainer counsel for ED has fairly submitted that it is factually correct that a period of 180 days has elapsed since the date of seizure, however, she invited our attention to a proceeding before the Hon’ble Supreme Court in the case of Citizens Whistle Blower Forum Vs. Union of India and ors1 and has placed before us copies of several orders passed by Hon’ble Supreme Court dated 08.10.2025 and 09.11.2025. She would urge that by various orders, the Hon’ble Supreme Court had given certain directions to ED pursuant to which the ED filed a Status Report before the Hon’ble Supreme Court. In the said Status Report which is placed before us, retainer Counsel for ED has invited our attention to a reference whereby, it is averred that, one Jasol Investments and Trading Company Private Limited which had received funds from Indiabulls Housing Finance Private Limited, indirectly had made huge profits which has been siphoned of. In this context, the Status Report mentions that Jasol had borrowed funds of Rs. 125 Crores from the Petitioner.
7. Although, learned counsel for the Petitioner has pressed into service the argument that since the predicate offence against the Petitioner was extinguished, the articles of the Petitioner retained by the ED may be returned back to him and the frozen locker of the Petitioner may be de-freezed, we do not find necessary to examine this argument for the simple reason that the ED has not contested the fact that a period of 180 days has elapsed from the date of the seizure and by operation of law the ED has lost its authority to retain or freeze the said articles.
8. Setting out the provisions dealing with the aforesaid aspect, we note that Section 17 of PMLA deals with search and seizure. It authorizes the Director or any other officer not below the rank of Deputy Director authorized by him for the purposes of this section to 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, seize the said records or property found as a result of such search, make a note or an inventory of such record or property and in case it is not practicable to seize such record or property, he may make an order to freeze such property. Immediately upon such seizure, search or freezing order, he is required to forward a copy of the same along with the reasons assigned by him to the Adjudicating Authority in a sealed envelope and 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 or continuation of such freezing order before the Adjudicating Authority.
In the facts of the present case, on 21.02.2022 the ED has conducted search in terms of Section 17 of PMLA and under Panchnamas, seized the record and properties namely documents and digital devices found at the relevant places and frozen the locker in terms of Section 17 of the PMLA. In terms of Sub Section 4 of Section 17, the ED has filed OA No. 646 of 2022 before the Adjudicating Authority seeking retention of the seized material and confirmation of freezing order dated 21.02.2022.
9. A perusal of the record indicates that the Petitioner had submitted a detailed reply to the Show Cause Notice on 12.05.2022 followed by a hearing on 02.08.2022 during which the Petitioner informed the Adjudicating Authority that no predicate offence subsisted against the Petitioner.
Here it would be apposite to advert to Sub Section 1 of Section 20 of PMLA which sets out that the property which is seized under Section 17 can continue to remain frozen or retained for a period of 180 days from the date on which such property was seized or frozen, as the case may be and Sub Section 3 provides that on the expiry of 180 days, 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.
10. As mentioned hereinabove, the ED has not disputed the fact that the period of 180 days has lapsed from the date of seizure of articles and freezing of locker. It is also not in dispute that there is no order of the Adjudicating Authority permitting retention of the articles or continuation of the freezing of the locker beyond such period. The learned counsel for the Petitioner has pointed out that there is no confirmation of the order in terms of Section 8 of PMLA, although the Petitioner had responded to the show cause notice of ED and participated in the hearing conducted by the Adjudicating Authority. Thus, we find substance in the argument of the learned counsel for the Petitioner that by operation of law and efflux of time, the ED has lost the authority to continue to retain the articles or permit the continuation of the freezing of the locker. In such circumstances, the prayer of the Petitioner deserves to be answered in the affirmative. Consequently, the Petition succeeds and hence the following order.
ORDER
A. The Writ Petition is allowed in terms of prayer Clause (A) of the Petition.
B. The Respondent No. 1-ED is directed to release and hand over possession of Locker No. 1643 at M/s. India Safety Vaults Pvt. Ltd., Mumbai to the Petitioner and to return all documents and digital devices seized from the Petitioner during the search conducted on 21.02.2022 within a week from the date of this order.
C. Rule is made absolute.
Note:
1 SLP (C) NO(S) 2993/2025
