PMLA Section 17 Retention of Gold Upheld by SAFEMA Tribunal in Jewellery Case

By CA Vijayakumar Shetty Fema / RBI Judiciary September 19, 2026

TaxGuru Citation: 2026 taxguru.in 13322
Case Name: Vignesh Jewellery Vs Deputy Director (Appellate Tribunal under SAFEMA, New Delhi)
Appeal Number: Only available for paid members
Date of Judgement/Order: Only available for paid members
Courts: SAFEMA

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Vignesh Jewellery Vs Deputy Director (Appellate Tribunal under SAFEMA, New Delhi)

Huge Receipts from Accused Jeweller Without Corresponding Gold Sales Justify Retention of Seized Jewellery Under PMLA: SAFEMA Tribunal

Summary: The Appellate Tribunal under SAFEMA has upheld the retention of gold jewellery and bullion seized from two jewellery concerns which had received substantial amounts from an accused jeweller without establishing corresponding genuine sales.

Background of the case

An FIR was registered against M/s Pranav Jewellers, its founder, his wife and the branch manager on allegations that investors were induced to invest in various schemes on false promises of high returns.

It was alleged that the funds collected from investors were diverted through bogus purchases and that corresponding bogus closing stock was created in the books. The offences alleged included Sections 406, 420 and 120-B of the IPC and Section 5 of the Tamil Nadu Protection of Interests of Depositors Act.

Based on the scheduled offences, the Enforcement Directorate registered an ECIR and conducted searches at several premises connected with M/s Pranav Jewellers.

Appellant	Property seized
Vignesh Jewellery	Gold ornaments weighing 3,717 grams
Ruby’s Jewellery	Gold jewellery and bullion weighing approximately 5,885.140 grams, including 330 grams of bullion

The Enforcement Directorate filed applications under Section 17(4) of the PMLA seeking retention of the seized property. The Adjudicating Authority allowed the applications. Both jewellers challenged the retention order before the Tribunal.

Not named in FIR or ECIR

The appellants contended that they were not named as accused in either the FIR or ECIR. Therefore, their business premises could not have been searched and the jewellery belonging to them could not have been seized.

They maintained that their transactions with M/s Pranav Jewellers were genuine business transactions supported by bank statements and other records. Mere receipt of substantial amounts through banking channels could not establish layering or money laundering.

The Tribunal rejected this contention. It observed that search, seizure and retention under the PMLA are not confined to properties held by persons named as accused. The material consideration is whether the property has a connection with the proceeds of crime.

₹98 crore received without corresponding business

In the case of Vignesh Jewellery, the examination of its bank account revealed receipts of approximately ₹103 crore, out of which nearly ₹98 crore had been received from M/s Pranav Jewellers.

The Tribunal noted that the appellant did not have business operations of a magnitude corresponding to such enormous receipts. Its turnover before FY 2020-21 was insignificant and increased substantially only after its association with M/s Pranav Jewellers.

When the proprietor was asked to substantiate the sale of jewellery corresponding to the amounts received, he could not furnish supporting evidence. He also reportedly admitted that nearly 80% of the amounts involving Pranav Jewellers were adjusted through accounts.

These facts, coupled with the other material collected during the investigation, were considered sufficient to establish a prima facie connection with the layering of funds.

Ruby’s Jewellery received ₹50 crore

A similar position emerged in the case of Ruby’s Jewellery, which had received approximately ₹50 crore from M/s Pranav Jewellers during FY 2022-23.

Its partner could not furnish the relevant ledger account, purchase and sales records or other documents demonstrating actual sale of gold ornaments corresponding to the amount received.

Significantly, the partner stated that the firm was also carrying on some genuine business and that its entire business did not consist of accommodation entries. The Tribunal viewed this statement, along with the absence of supporting records for the ₹50 crore received, as material supporting the Enforcement Directorate’s case.

It therefore rejected the contention that the seized gold and bullion had no connection with the proceeds of crime.

Vague allegation of non-supply of documents rejected

The appellants alleged that the relied-upon documents were not supplied and that the proceedings were therefore contrary to the principles of natural justice.

The Enforcement Directorate contended that the documents had been furnished by email on 27.12.2023 and personally on 03.01.2024.

The Tribunal found that the appellants did not specifically deny receipt of the email. They also failed to identify which particular documents had not been supplied. A general assertion that the complete set was not received, without specifying the missing documents, was considered insufficient.

The earlier decision in Gurudev Jewellers v. Directorate of Enforcement was distinguished because, in that case, the appellant had specifically identified the documents which had not been furnished.

Separate order under Section 20 held unnecessary

The appellants relied upon the Delhi High Court’s decision in Directorate of Enforcement v. Rajesh Kumar Agarwal to contend that retention was invalid in the absence of a separate retention order under Section 20(1) of the PMLA.

The Tribunal rejected this contention and treated the Delhi High Court decision as having been rendered per incuriam, primarily because the Supreme Court’s decision in Vijay Madanlal Choudhary v. Union of India had allegedly not been brought to the High Court’s notice.

According to the Tribunal, once property is seized under Section 17, an application must be filed before the Adjudicating Authority under Section 17(4) within 30 days. The Adjudicating Authority is empowered under Section 8(3) to permit retention of such property. A simultaneous or additional order by the authorised officer under Section 20 was held unnecessary.

The Tribunal reasoned that Sections 17(4) and 8 provide sufficient statutory safeguards and that insisting upon parallel proceedings under Section 20 would result in duplication and delay.

Final decision

The Tribunal dismissed both appeals and upheld the retention of the seized gold jewellery and bullion.

However, it clarified that the retention would remain subject to the final outcome of the criminal proceedings.

Author’s comments

The decision reiterates that regular banking transactions do not, by themselves, establish the genuineness of the underlying business. Where crores of rupees are received from an accused entity, the recipient must demonstrate corresponding purchases, sales, stock movement, invoices, delivery documents and entries in its regular books.

Merely producing a bank statement showing receipt through banking channels would establish the mode of receipt, but not the commercial substance of the transaction.

The decision on Sections 17 and 20 is, however, likely to remain contentious. The Tribunal has declined to follow the Delhi High Court’s ruling in Rajesh Kumar Agarwal by declaring it per incuriam. A Tribunal’s refusal to follow a High Court judgment—particularly by treating it as contrary to statute or an earlier Supreme Court decision—may itself become a subject of further judicial scrutiny.

The case ultimately turns on its peculiar facts: extraordinarily high receipts, absence of proportionate business, failure to produce corresponding sales records and admissions suggesting adjustment of funds through accounts. It should not be understood as permitting seizure of every trader’s stock merely because the trader had dealings with a person accused under the PMLA.

Cases Discussed

J.K. Tyre and Industries Ltd. Vs. Directorate of Enforcement (Delhi High Court)
Gurudev Jewelers Vs. Directorate of Enforcement (Appellate Tribunal under SAFEMA)
Directorate of Enforcement Vs. Rajesh Kumar Agarwal (Delhi High Court)
Vijay Madanlal Choudhary Vs. Union of India (Supreme Court)
S. Srividhya Vs. Directorate of Enforcement, Chennai (Appellate Tribunal under SAFEMA)
Commissioner, Customs, Central Excise and Service Tax, Patna Vs. Shapoorji Pallonji and Company Pvt. Ltd. and Ors. (Supreme Court)
State of Uttar Pradesh and Anr. v. Synthetics and Chemicals Ltd. and Anr. (Supreme Court)
Municipal Corporation of Delhi v. Gurnam Kaur (Supreme Court)
Shiv Shakti Coop. Housing Society, Nagpur Vs. Swaraj Developers and Ors. (Supreme Court)

FULL TEXT OF THE JUDGMENT/ORDER OF APPELLATE TRIBUNAL UNDER SAFEMA

This order would decide the appeals under Section 26 of the Prevention of Money Laundering Act, 2002 (in short `the Act of 2002’) challenging the order dated 15.04.2024 passed by the Adjudicating Authority on an application under Section 17(4) of the Act of 2002. The Adjudicating Authority allowed retention of the gold jewellery/bullion seized from the possession of the appellants.

2. The case was initiated by one Mr. Purushothothaman, who lodged a complaint with Economic Offences Wing, Trichy against M/s Pranav Jewellers, its founder Mr. Selvaraj Mathan, his wife Mrs. Karthika and Mr. Narayanan, Branch Manager of the company. The FIR bearing No.08/2023 was registered on 18.10.2023 alleging that the accused cheated the investors by luring them with false promise of high returns. The respondents recorded ECIR subsequent to the FIR and found that M/s Pranav Jewellers is engaged in the business of gold jewellery with Headquarters at Trichy and branches at Madurai, Chennai, Kumbakonam, Nagercoil and Coimbatore. The accused floated several investment schemes to lure the investors and accepted the investments with the false promise of high return, which failed and thereby committed an offence under Section 406,420 and 120-B of IPC and Section 5 of Tamil Nadu Protection of Depositors (In Financial Establishment) Act, 1947.

3. During the course of investigation, the respondents conducted searches at various places, which include the premises of the appellants, where transactions with M/s Pranav Jewellers were found. The following articles were seized from the premises of the appellants:

S.No.	Premises details	Details of seizure
2.	Office premises of Vignesh Jewellwey, No.85, Jaffersha Street, Trichy-620008	Gold Ornaments weighing 3,717 Grams (net weight)
3.	Office premises of Ruby’s Jewellery, No.61, Diamond Bazaar, Trichy-620008.	Gold Jewellery and bullion having total weight 5,885.140 Grams (net weight)

4. The Adjudicating Authority has allowed retention of the aforesaid articles, also found transactions of the appellants with the accused company M/s Pranav Jewellers, which is involved in commission of crime and aggrieved by it, the present appeals have been filed.

Arguments of counsel for the appellants:

5. The learned counsel for the appellants submitted that 3717 gms. of gold has been seized from the office premises of appellant Vignesh Jewellery during the course of search, while from the office premises of appellant Ruby’s Jewellery, the seizure of jewellery of 5585.140 gms. and 330 gms. of bullion was done. Both the appellants alleged to be the supplier of the gold to M/s Pranav Jewellers. At the time of search, when they were asked to disclose the source for possession of the jewellery/gold and in the case of Ruby’s jewellery about 330 gms. of bullion, the appellants failed to explain the transactions with the accused M/s Pranav Jewellers running in crores without significant business with the accused M/s Pranav Jewellers and, therefore, the Adjudicating Authority allowed retention of the seized gold/bullion. It was without realizing that the appellants have not been named as an accused in the FIR or the ECIR. In view of the above, there was no reason to allow retention of the seized bullion/gold/jewellery in the hands of the appellants. It is more so when the business relations of the appellants with M/s Pranav Jewellers got established with the production of the bank statements and other documents. Hence, merely for the reason that the appellants remained recipient of the huge amount in their bank account cannot be taken to be a case of layering of proceeds of crime by M/s Pranav Jewellers. All these facts have been ignored by the respondents and even by the Adjudicating Authority, thus the impugned order would not be sustainable in the eyes of law, rather it deserves to be set aside.

6. The learned counsel for the appellants further submitted that the Adjudicating Authority failed to supply Relied Upon Documents (RUDs). They have failed to follow the procedure prescribed for adjudication of the application under Section 17(4) of the Act of 2002 and even the principles of natural justice. The appellants asked for supply of the RUDs so as to defend their case but denied by the respondents/Adjudicating Authority. Thus, the impugned order has been passed in violation of the principles of natural justice and the prescribed procedural rules. In view of the above also, the impugned order needs to be interfered.

7. The learned counsel for the appellants further submitted that what supplied to the appellants was a Panchnama referring the details of the seized articles/record. The respondents failed to supply the documents mentioned in the Panchnama to provide a fair opportunity of hearing to the appellants. The respondents erroneously referred to Section 21(2) of the Act of 2002 to seek copy of the documents in ignorance of the fact that it is the duty of the Adjudicating Authority to supply RUDs while issuing show cause notice. The failure of the Adjudicating Authority to follow the procedure provided under the Act and Rules should render the impugned order to be illegal. The reference of the judgment of the Delhi High Court in the case of J.K. Tyre and Industries Ltd. Vs. Directorate of Enforcement reported in 2021 SCC Online Del 4836 was given wherein it was held that the Adjudicating Authority is duty bound to serve all the relied upon documents. In the instant case, the respondents failed to do so and thus a serious view should be taken by the Tribunal for the aforesaid failure.

8. The learned counsel for the appellants further referred to the order passed by this Tribunal in the case of Gurudev Jewelers Vs. Directorate of Enforcement in Appeal No.1284/CHN/2024 dated 28.10.2025 where non-supply of the copy of the documents, relevant for consideration of case was held to be fetter. The order in the case (supra) was passed in reference to the same FIR and, therefore, interference in the impugned order may be made as the ratio propounded therein applies to the present case.

9. The learned counsel for the appellants had made reference of the additional rejoinder filed by the respondents before the Adjudicating Authority. It was to the effect that the e-mail dated 27.12.2023 for supply of the documents in reference to the direction of the Adjudicating Authority dated 08.11.2022 was given. It was supplied even in person on 03.01.2024. The fact aforesaid was contested by the appellant. The e-mail was not containing all the documents and accordingly the impugned order needs to be set aside.

10. The learned counsel for the appellants further submitted that the Adjudicating Authority has passed a detailed order, but it is without recording reasons to justify retention of the records seized from the possession of the appellants. The order passed by the Adjudicating Authority is a non-speaking order though Section 8 of the Act of 2002 mandates a reasoned order. In view of the above also, the impugned order is not sustainable in the eyes of law.

11. The learned counsel for the appellants further submitted that no justification could be given by the respondents to retain the gold/jewllery, apart from the bullion seized from the possession of the appellants when they were not connected with the commission of crime. The seizure of the movable property without connecting it with the commission of crime shows non-application of mind while sending the Original Application under Section 17(4) of the Act of 2002 to the Adjudicating Authority and thereupon Adjudicating Authority allowed the retention of the gold/jewellery and mobile phone.

12. The learned counsel for the appellants made a reference of the judgment of Delhi High Court in the case of Directorate of Enforcement Vs. Rajesh Kumar Agarwal in Misc. Appeal (PMLA)No.03/2023 dated 12.09.2025 where in absence of the retention under Section 20 of the Act of 2002, the order passed by the Adjudicating Authority was held to be illegal.

13. The learned counsel for the appellants further submitted that seizure of the gold and jewellery was done by an arbitrary action of the respondents. Hence, the impugned order should be interfered by this Tribunal.

14. The learned counsel for the appellants lastly submitted that the entities were having sufficient business to show justification for a transaction with M/s Pranav Jewellers (the accused company). The detail of the business in different years from 2019-2023 was given to indicate that receipt of the amount in the account of the appellants firm could not have been taken to be unusual.

15. The learned counsel for the appellants in written arguments submitted certain additional grounds which were not argued before this Tribunal and without even pleadings in the appeal so as to be contested by the respondent, if any. It is in regard to the non-submission of the Prosecution Complaint within 365 days from the date of the impugned order. No such pleadings exist in the appeal so as to be refuted and otherwise this Tribunal has experienced general averments in the written arguments without verification of the fact, rather in all the cases, such statement of facts were found to be incorrect and accordingly this Tribunal would consider the issues raised by the appellants in its oral arguments and not beyond that and that too when it has been raised beyond the pleadings of the appeal without giving an opportunity to the respondent to contest the allegations. The argument of the appellants was accordingly closed, as was raised during the course of arguments.

Arguments of counsel for the respondents:

16. The learned counsel for the respondents has contested the appeals on all the grounds in oral arguments raised by the appellants. Elaborate arguments were made on each issue and would be referred while recording finding by this Tribunal. It is to avoid repetition of facts and otherwise for the sake of brevity.

Finding of the Tribunal:

17. I have considered the rival submissions made by the counsel for the parties and scanned the matter carefully.

18. The brief facts pertaining to the registration of the case by one Mr. Purushothaman have been given in the opening paras of this order. The allegation was made against M/s Pranav Jewellers, its founder Mr. Selvaraj Mathan, his wife Mrs. Karthika and Mr. Narayanan, Branch Manager of the company. They alleged to have cheated the investors by luring them with false promise of high return. It was alleged that several investment schemes were floated by the accused, but after investment, the investors were not given due return, rather the accused diverted those funds into the bogus purchase and correspondingly bogus closing stock was created in the books. Accordingly, the FIR was registered for the offence under Section 406,420 and 120-B of IPC and Section 5 of Tamil Nadu Protection of Depositors (In Financial Establishment) Act, 1947.

19. During the course of investigation, the respondents conducted searches on 13 premises belonging to the Managing Partner of M/s Pranav Jewellers and its related parties. So far as the appellants are concerned, their premises were also searched finding their transactions with accused M/s Pranav Jewellers. The gold ornaments weighing 3,717 gms were seized from the possession of Vignesh Jewellery while 5885.140 gms gold and 330 gms. bullion were seized from the hands of Ruby’s Jewellery. After seizing the gold ornaments/jewellery and bullion, Original Application was sent to the Adjudicating Authority within 30 days under Section 17(4) of the Act of 2002 to seek retention of the seized properties in the hands of the appellants. The Adjudicating Authority allowed retention of the seized articles. The order aforesaid has been challenged by the appellants raising manifold issues which have been contested by the respondents by raising counter arguments and accordingly I would be recording my finding on each issue.

20. The learned counsel for the appellants submitted that without naming the appellants in the FIR or the ECIR, the search of their premises was conducted and even the gold jewellery and bullion, apart from the gold ornaments, were seized from their premises. It was done, without showing any connection with the crime.

21. To analyze the issue aforesaid, elaborate arguments were made by the respondents to indicate the status of the appellants referring to their bank statements and how they got involved in layering of the funds acquired by the accused. It was submitted that on examination of the bank account of the appellant Vignesh Jewellery, it was revealed that a sum of Rs.103 Crores has come to their account and out of which Rs.98 Crores came from the accused. There was no substantial business corresponding to the amount and otherwise the appellant was not involved in the business of that magnitude. From the documents found with the accused and others, apart from the appellant, it has revealed the receipt of huge amount from the accused in the year 2022-23 without corresponding transaction in the shape of sale of gold or jewellery and, therefore, a prima facie conclusion was drawn about layering the proceeds by the accused in the appellant firm. The statements of the accused recorded under Section 50(2) and 50(3) could fortify the allegation against the appellant Vignesh Jewellery for receipt of the amount without actual business.

22. A reference to the statement of Shri Praveen Kumar, Proprietor of the appellant Vignesh Jewellery was given. On a specific question asked to Shri Praveen Kumar about the sale of jewellery to the accused company M/s Pranav Jewellers to the extent of the amount received in their bank account, it was stated that he cannot prove the sale of gold or jewellery matching the amount received by the entity. On a further question about the involvement of the appellant to provide accommodation entry, it was given out that he does not understand the accommodation business and otherwise he was buying jewellery of a very small amount. For the balance of huge amount, Shri Praveen Kumar, Proprietor of the appellant company did not offer his comments. On a further question, he had admitted that before the Financial Year 2020-21, total turnover of the company was insignificant. The turnover increased with the association of M/s Pranav Jewellers. It was followed with the admission about the adjustment of the amount of M/s Pranav Jewellers which was through the accounts involving 80% of the amount to this effect. The fact aforesaid coupled with the material collected by the respondents was sufficient to co-relate the appellant Vignesh Jewellery for layering of the amount. Thus, the argument of the learned counsel for the appellants that there was no material to connect the appellant Vignesh Jewellery with the proceeds of crime, cannot be accepted.

23. The position of fact is similar in regard to the appellant Ruby’s Jewellery. The statement of Shri Balu Shankar, Partner of the entity was recorded under Section 50(2) of the Act of 2002. It is finding that appellant Ruby’s Jewellery has received a sum of Rs.50 Crores from M/s Pranav Jewellers in the year 2022-23. The Partner Shri Balu Shankar submitted that the firm is into the business of manifold gold ornaments and on further asking about the details of sale and purchase of the gold ornaments and how the business of the entity can be said to be genuine, Shri Balu Shankar offered no comments on the aforesaid. The appellant Ruby’s Jewellery failed to produce any material to show actual business to justify receipt of Rs.50 Crores from the accused company in the year in which the appellant company received Rs.50 Crores. He was further asked to provide ledger account of the current financial year to find out whether the entity is into genuine business or not. The witness submitted that he cannot provide ledger account or any document for the aforesaid. It is apart from the related documents which may include books of accounts as per law. Shri Balu Shankar stated that they are into some genuine business also and the entire business is not for providing accommodation entries. It can be drawn that the receipt of the amount from the accused company was nothing but proceeds of crime in the hands of the appellant Ruby’s jewellery. Looking to the fact aforesaid, I am not able to accept the argument raised by the appellant that without any connection with the proceeds of crime, gold jewellery/bullion has been seized in the hands of the appellant.

24. The learned counsel for the appellants further submitted that the RUDs were not supplied to the appellants so as to defend their case before the Adjudicating Authority. It is more specifically when they asked to supply the RUDs to defend their case. Thus, the proceedings were in violation of the principles of natural justice and the Act of 2002. The counsel for the respondents contested the issue and submitted that all the RUDs were served to the appellants through e-mail dated 27.12.2023 and in person on 03.01.2024. The counsel for the appellants submitted that mere dispatch of e-mail by the respondents is not a proof of service of documents.

25. I have considered the rival submissions and find that RUDs were supplied to the appellants through e-mail, as stated by the respondents though, according to the appellants, the complete set of documents were not received and otherwise mere dispatch of e-mail cannot be considered to be proof of supply of the documents. The statement of the appellants in that regard is unspecific. They have not denied receipt of the e-email for supply of documents, rather what has been stated is that it cannot be taken to be proof of service of RUDs, meaning thereby the appellants had received e-mail for supply of documents. If the complete set of documents were not supplied, then the appellants were required to specify as to which documents were supplied by the respondents and as to which documents were not supplied to them. The argument is quite unspecific. The statement of the appellants for non-supply of the RUDs cannot be accepted. At this stage, it would be necessary to refer to the order of this Tribunal in the case of Gurudev Jewelers (supra). In the said case, the allegation of the appellant was very specific to state that out of many documents, the documents specified in the order were not supplied and accordingly the order was passed on a specific allegation, which is missing in the present case. The appellants in their argument could not specify as to which documents were not supplied to them, rather a vague statement against the e-mail to prove supply of documents was made. The appellants have admitted receipt of the e-mail but it is with the further statement that mere dispatch of e-mail cannot be taken as a proof for supply of documents. It is without qualifying that the e-mail was sent without supply of documents or specifying as to which document was not supplied. The vague allegation for non-supply of documents cannot be accepted to make out a ground to cause interference in the impugned order.

26. The learned counsel for the appellants further referred to the supply of Panchnama without realizing that subsequent to that RUDs were sent through e-mail and given in person pursuant to the direction of the Adjudicating Authority. Thus, it was not only a supply of Panchnama but supply of RUDs and thereby the reference of the judgment of the High Court in the case of J.K. Tyre and Industries Ltd. (supra) would be of no relevance on the facts of this case. The facts of the case are distinguishable than involved in the case (supra). In the light of the aforesaid, I am unable to accept the argument of the counsel for the appellants with regard to the supply of only Panchnama and not the RUDs.

27. The learned counsel for the appellants further submitted that the Adjudicating Authority has passed a non-speaking order going against the mandate of Section 8 of the Act of 2002. The perusal of the order would show it to be a detailed and otherwise this Tribunal is passing the order dealing with each and every issue raised by the appellants. The case could have been remanded back to the Adjudicating Authority for passing a detailed order dealing with all the issues raised by the appellants, however, it would delay further proceedings and till then, retention of the gold ornaments/jewellery and bullion would remain. This Tribunal is thus passing a detailed and speaking order to deal with all the issues raised by the appellants.

28. The learned counsel for the appellants further made reference to the judgment of the Delhi High Court in the case of Rajesh Kumar Agarwal (supra) to hold that in absence of an order under Section 20(1) of the Act of 2002 for retention of the articles seized at the time of search, the impugned order would not be sustainable in the eyes of law. I have considered the aforesaid submission also and find that the counsel appeared on behalf of the ED while arguing the appeal in the case of Rajesh Kumar Agarwal (supra) failed to refer the judgment of the Apex Court in the case of Vijay Madanlal Choudhary Vs. Union of India 2022 SCC Online SC 929 where the jurisdiction of the Adjudicating Authority under Section 17 of the Act of 2002 was spelt out.

29. The judgment in the case of Rajesh Kumar Agarwal (supra) is de hors the judgment of the Apex Court, thus was not applied by this Tribunal. The detailed order was passed in the case of S. Srividhya Vs. Directorate of Enforcement, Chennai (Appeal No. 6566/CHN/2023) dated 02.04.2026. This Tribunal even found the judgment of the Delhi High Court in the case of Rajesh Kumar Agarwal (supra) per incuriam because it was passed contrary to the statutory provisions and even with substitution though it does not lie in the domain of the High Court. The relevant paras of the judgment in the case of S. Srividhya (supra) are quoted hereunder for ready reference:

“Legal Issues on Section 20 of the Act of 2002:

28. The challenge to the order on the Original Application under Section 17(4) of the Act has been made for non-compliance of Section 20(2) of the Act of 2002.

29. The learned counsel for the appellants submitted that the compliance of Section 20(1) and (2) is mandatory after the compliance of Section 17(4). In absence of an order under Section 20(1) for retention of the property under seizure or continuance of frozen property, the action of the respondents is dehors to the provisions of the Act of 2002. To support the argument, learned counsel made reference of the judgment in the case of Rajesh Kumar Agarwal (supra).

30. A serious contest to the aforesaid argument was made by the counsel for the respondents. In the light of the aforesaid, we need to examine the legal issues and would refer to the relevant paras of the judgment of the Delhi High Court in the case of Rajesh Kumar Agarwal (supra) and Section 8,17,18 and 20 of the Act of 2002 to analyze the framework of the legislation and its interpretation by Delhi High Court.

31. According to the counsel for the respondents, legislature has not enacted two overlapping provisions for one action. He referred the relevant paras of the judgment in the case of Rajesh Kumar Agarwal (supra) and submitted that the judgment aforesaid is per incuriam, because it has gone against the statutory provision, thus, should not be applied. The counsel for the appellants made a serious contest on the aforesaid and accordingly we would be taking up the issue in reference to the rival submissions and for that even to examine the provisions and the judgment of Delhi High Court in the case of Rajesh Kumar Agarwal (supra).

32. The learned counsel for the respondents submitted that in the case of Rajesh Kumar Agarwal (supra), the Hon’ble High Court has rewritten the provision while giving interpretation to Section 8(3) and 17(4) of the Act of 2002. It may have been due to lack of proper assistance to the Hon’ble High Court. The judgment of Delhi High Court (supra) is even in conflict with the judgment of the Apex Court in the case of Vijay Madanlal Choudhary (supra). The learned counsel for the respondents first made reference of Para 55 of the judgment which is reproduced hereunder:

“55. It is here that the Appellant sets up a two-pronged challenge:

(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”.

Learned counsel for the respondents submitted that para quoted above refers to correct interpretation of the provisions. He thereupon made a reference of para 58 of the judgment, wherein Sections 8(3), 17 and 18 have been referred as it exist but from Para 59 onwards, many words under the statutory provisions were substituted by Delhi High Court in the case of Rajesh Kumar Agarwal (supra) making part of Section 8(3) and 17(4) to be redundant and for that reason, the judgment is to be treated per incuriam. It is also in conflict to the judgment of the Apex Court in the case of Vijay Madanlal Choudhary (supra).

33. The argument aforesaid needs to be analysed after appreciation of the rival submissions and accordingly we may at the first instance refer to Sections 8,17 and 20 and are quoted hereunder:

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, he 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 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 sub-section (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 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,

(Emphasis added)

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 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 of an offence 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:

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.

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

(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 or 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:

(1A) Where it is not practicable to seize such record or property, the officer authorized 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, any time before its confiscation under sub-section (5) of sub-section (7) of section 8 or section 58B or sub-section (2A) of section 60, it becomes practical to seize a frozen property, the officer authorized 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.

(4) The authority seizing any record or property under sub-section (1) or freezing any record or property under sub-section (1A), 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 (1A), before the Adjudicating Authority”.

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-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”.

The learned counsel for the respondents referred Para 59 to 62, 64 to 74 and 76 of the judgment in the case of Rajesh Agarwal (supra) to allege rewriting of the statutory provision by the High Court and otherwise in conflict to the judgment of the Apex Court. We may accordingly quote Para 59 to 62, 64 to 74 and 76 of the judgment in the case of Rajesh Kumar Agarwal (supra) and are quoted thus:

“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 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).

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 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 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, MISC. APPEAL (PMLA) 03/2023 Page 24 of 41 is to be sent to the learned AA, once again, for the purposes of adjudication under Section 8.

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”.

34. The learned counsel for the respondents referred to Section 8(3) of the Act to indicate that High Court has virtually rewritten the provision in regard to the retention of the property under seizure. To examine the issue, we may quote relevant part of Section 8(3) at the cost of repetition and is quoted thus;

(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,………………………………………………………. or retention of property or record seized or frozen under section 17 or section 18 and record a finding to that effect…

The relevant part of Section 8(3) in regard to the seized or frozen property has been quoted leaving the part which is for provisional attachment of the property. It is to demonstrate that after an exercise under Section 8 (2), if the property is found to be involved in money laundering, the Adjudicating Authority is given power for an order in writing for retention of the property seized or frozen under Section 17 and 18 of the Act. It is not to confirm the retention and, therefore, the learned counsel has made much emphasis on the relevant part of the provision of Section 8(3) which has been rewritten by the High Court substituting the power of the Adjudicating Authority from “retention” to “confirm the retention”.

35. The learned counsel for the respondents further submitted that the finding of the Delhi High Court in reference to Section 17 of the Act of 2002 is even in conflict to the judgment of the three judges’ bench of the Supreme Court in the case of Vijay Madanlal Choudhary (supra). Para 84 of the said judgment is referred and quoted thus:

“84. As noticed earlier, in terms of Section 17(2) of the 2002 Act immediately after the search and seizure, the Authority conducting the search is obliged to forward a copy of the reasons recorded and materials in his possession to the Adjudicating Authority in a sealed envelope. This sealed envelope is required to be preserved for period as specified under the Rules framed in that regard so that it is not tempered with in any manner and to ensure fairness of the procedure including accountability of the Authority. Not only that in terms of Section 17(4) of the 2002 Act the Authority seizing the record or property is obliged to submit an application before the Adjudicating Authority within a period of thirty days therefrom for the retention of the said record and Adjudicating Authority in turn gives opportunity to be heard by issuing show cause notice to the person concerned before passing order of retention of record or property, as the case may be, under the 2002 Act and the Rules framed therefor. The Authorities carrying out search and seizure is also made accountable by providing for punishment under Section 62 of the 2002 Act for vexatious search and giving false information. All these inbuilt safeguards prevent arbitrary exercise or misuse of power by the authorities appointed under the 2002 Act”.

36. The Apex Court has given framework of Section 17 of the Act of 2002 and the power of the Adjudicating Authority along with the procedure before passing the order of retention of the property or record or its continuation. The Apex Court has categorically held that Section 17(4) postulates an application before the Adjudicating Authority within a period of thirty days for retention of the record. The Adjudicating Authority, after giving an opportunity of hearing, pass an order of retention of the property seized or frozen, as the case may be. The judgment of the Delhi High Court (supra) from Para 59 onwards is in conflict with the judgment of the Apex Court in the case of Vijay Madanlal Choudhary (supra), thus should not be applied. The learned counsel for the respondents made specific reference to Paras 59 and 60 of the judgment in the case of Rajesh Agarwal (supra) and for ready reference, those paras are quoted hereunder again:

37. It is submitted that the finding in Paras 59 and 60 is not only contrary to the statutory provisions but even to the judgment of the Supreme Court in the case of Vijay Madanlal Choudhary (supra). In fact, the Delhi High Court ignored the word “or” used under Section 8(3) to separate two parts of the provisions, one regarding confirmation of provisional attachment of the property under Section 5(1) of the Act of 2002 and the other for retention of the property or record seized or frozen under Section 17 or 18 of the Act of 2002. The word “or” has to be given meaning. It is submitted that the word “and” is used as conjunction and “or” for disjunction. In this regard, reference of the judgment of the Apex Court in the case of Commissioner, Customs, Central Excise and Service Tax, Patna Vs. Shapoorji Pallonji and Company Pvt. Ltd. and Ors. reported in (2024) 3 SCC 358 was given. Paras 31 and 32 of the said judgment are quoted hereunder:

“31. Having noticed some of the precedents in the field of interpretation of statutes, we now move on to a little bit of English grammar. The word “or” as well as the word “and” is a conjunction; and it is well known that a conjunction is used to join words, phrases, or clauses. On how the conjunctions “or” and “and” are to be read, guidance could be drawn from authoritative texts and judicial decisions. As per Justice G.P. Singh’s Principles of Statutory Interpretation, the word “or” is normally disjunctive while the word “and” is normally conjunctive. In English law, the position is clear as crystal, as explained by Lord Scrutton in Green v. Premier Glynrhonwy Slate Co. Ltd., that one does not read “or” as “and” in a statute unless one is obliged, because “or” does not generally mean “and” and “and” does not generally mean “or”.

32. When the meaning of the provision in question is clear and unambiguous by the usage of “or” in Clause 2(s), there remains no force in the submission of Ms Bagchi that “or” should be interpreted as “and”. In our opinion, the word “or” employed in Clause 2(s) manifests the legislative intent of prescribing an alternative. Going by the golden rule of interpretation that words should be read in their ordinary, natural, and grammatical meaning, the word “or” in Clause 2(s) clearly appears to us to have been used to reflect the ordinary and normal sense, that is, to denote an alternative, giving a choice; and, we cannot assign it a different meaning unless it leads to vagueness or makes Clause 2(s) absolutely unworkable”.

Paras quoted above make it clear that the word “or” is normally disjunctive while the word “and” is normally conjunctive. The word “or” used under Section 8(3) is to separate two actions, one is for confirmation of the provisional attachment of the property under Section 5(1) of the Act of 2002 and the other is for retention of seized and frozen property under Section 17 and 18 of the Act of 2002. The Delhi High Court in the case of Rajesh Kumar Agarwal (supra) changed the word “retention” to “confirm the retention” going beyond its jurisdiction and according to the counsel for the respondents, it ignored the word “or” between two actions.

38. The learned counsel for the respondents further submitted that even if the word “or” is taken to be used as conjunction, then also Section 8(3) cannot postulate confirmation of retention of the property seized under section 17 and 18. The “confirmation of retention” would pre-suppose retention of the property or the record under Section 17 or 18. The specific reference of Section 17 and 18 has been given under Section8(3) of the Act. Section 17(4) of the Act is for submitting an application to the Adjudicating Authority to seek retention and an order for it is to be passed by the Adjudicating Authority under Section 8(3) of the Act. As per the judgment of the Supreme Court in the case of Vijay Madanlal Choudhary (supra) in para 84 quoted above, it has been ruled that the competent authority would be under an obligation to send the application to the Adjudicating Authority under Section 17(4) within a period of thirty days from the date of seizure to seek retention of the property or record. It is not to confirm the retention of record or property. The judgment of Delhi High Court (supra) virtually nullifies the judgment of the Apex Court in the case of Vijay Madanlal Choudhary (supra) and even Section 17(4) for sending the application to seek retention or continuance of the frozen or seized property or record. It is not only offending the provisions of statute but even the judgment of the Supreme Court in the case of Vijay Madanlal Choudhary (supra).

39. The learned counsel for the respondents further submitted that even if reference of Section 20 is taken, it does not make any reference to seek confirmation of retention of the order passed therein; rather, perusal of Section 20(4) reveals that the power of Adjudicating Authority under Section 8(3) is for authorizing the retention or continuance of the freezing of such property beyond a period specified under Section 20(1). The entire provision of Section 20 does not speak about “confirmation of retention” of property or record by the Adjudicating Authority. Thus, the import of the word “confirm” under Section 8(3) for retention of seized or frozen property in the case of Rajesh Kumar Agarwal (supra) is not only contrary to the provisions of the Act but also changing the complexion of the entire provision and otherwise stand contrary to the judgment of the Apex Court in the case of Vijay Madanlal Choudhary (supra).

40. Moving to Paras 61 and 62 of the judgment of the Delhi High Court, the learned counsel for the respondents again referred to substitution of the provisions of law. In Para 61, the Delhi High Court has laid down that once the power of confirmation is exercised, it would entitle retention of the seized or frozen property for a period beyond 180 days and upto 360 days. The provision of Section 8(3), therefore, would be exercisable for the purpose of retention of the property for a period beyond 180 days, meaning thereby the power of Adjudicating Authority for retention of the property or record is not exercisable for a period of 180 days. No such arrangement or provision to that effect exists in any of the provisions of the Act of 2002. The Delhi High Court has virtually re-written the provisions, having no jurisdiction to do so and accordingly counsel for the respondents laid much emphasis to analyse each issue carefully. Para 61 of the judgment (supra) is quoted hereunder for ready reference:

The para quoted above has reframed the provisions of the Act of 2002.

41. Reference of Para 66 of judgment of the Delhi High Court was also given. It is again in conflict with the view expressed by the Hon’ble Supreme Court in the case of Vijay Madanlal Choudhary (supra). Para 84 of the said judgment has been quoted earlier. According to the Delhi High Court, Section 17 of the Act of 2002 is completely silent on adjudication and does not provide a procedure to allow Adjudicating Authority to exercise the power immediately after a seizure and freezing being effected. Relevant portion of the said para is quoted hereunder at the cost of repetition:

“66. ……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”.

The finding recorded aforesaid is dehors to Section 17(4) of the Act of 2002. The learned counsel for the respondents submitted that Section 17(4) requires an application to the Adjudicating Authority within thirty days to seek retention of the freezing or seized record. It thus remains immediately after seizure or freezing of the property. The Delhi High Court has recorded the finding contrary to Section 17(4) of the Act. The Apex Court in the case of Vijay Madanlal Choudhary (supra) has otherwise reiterated the provision with a finding that it provides a complete procedure and safeguard. The judgment of the Apex Court in the case of Vijay Madanlal Choudhary (supra) in para 84 not only refers to the application under Section 17(4) within thirty days but it is to seek retention of the seized or frozen property by the Adjudicating Authority. It is by applying the procedure of giving an opportunity of hearing to the parties by issuing a show cause notice before passing an order of retention. The finding recorded in Para 66 is in conflict to the judgment of three judges’ Bench of the Supreme Court in the case of Vijay Madanlal Choudhary (supra). It is otherwise dehors to Section 8(3) of the Act of 2002, which provides for adjudication of an application under Section 17 and 18 of the Act, while according to the High Court in the case of Rajesh Agarwal (supra), Section 17 is silent for adjudication. The finding has been recorded by reading only one provision, while it was required to be read along with Section 8(3) of the Act of 2002.

42. The counsel for the respondents further made a reference of Para 68 of judgment of the Delhi High Court where again, analogy drawn in the earlier paras of the judgment in the case of Rajesh Kumar Agarwal (supra) has been reiterated. It is held that the power of Adjudicating Authority under Section 8(3) is only for “confirmation of retention”. The word “confirm” under Section 8(3) has been used in a case of provisional attachment of the property and not for seized or frozen property as the word “or” has been used between the two different actions governed by different provisions, one under Section 5(1) for provisional attachment of the property and the other under Section 17 and 18 to seek retention of seized or frozen property.

43. It is with the further submission that if Section 17(4) does not provide for adjudication of the application sent to the Adjudicating Authority, then such an application under Section 8(3) would remain for the sake of it, while the Apex Court in the case of Vijay Madanlal Choudhary (supra) has categorically held it to be for the purpose of adjudication for retention of seized and frozen property. According to the counsel for the respondents, the finding of the Delhi High Court in the case of Rajesh Kumar Agarwal (supra) is in conflict to the judgment of three judges’ bench of the Supreme Court in the case of Vijay Madanlal Choudhary (supra) thus would not be binding on any of the court.

44. The finding in Para 68 of judgment of the Delhi High Court is similar to what has been referred in earlier paras. In Para 68 of the judgment (supra), the power of the Adjudicating Authority for retention of seized and frozen property has been taken away which is not only opposed to the statutory provision but make it redundant. According to the counsel for the respondents, it is otherwise contrary to the judgment of the Supreme Court in the case of Vijay Madanlal Choudhary (supra). Part of the Para 68 of the judgment of Delhi High Court in the case of Rajesh Agarwal (supra) is quoted hereunder:

“68. ….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”.

The provision of Section 8(3) gives power to the Adjudicating Authority for retention of seized and frozen property, which has been taken away by the finding that it is only for confirmation and cannot be for retention. The finding in the para quoted above is opposed to the finding recorded by the three judges’ bench of the Supreme Court in the case of Vijay Madanlal Choudhary (supra) and the statutory provision.

45. The counsel for the respondents gave specific reference to Paras 69 to 70 and 76 of the judgment of the Delhi High Court in the case of Rajesh Kumar Agarwal (supra) which made certain part of Section 8(3) to be redundant, though the Delhi High Court lacks competence to nullify the statutory provisions. It cannot even re-write or substitute the word inserted by the legislature with intent.

46. The Delhi High Court in the case (supra) has otherwise reframed Section 8(3) for the power of the Adjudicating Authority for retention of seized or frozen property only after 180 days of the retention by the authorized officer of the ED under Section 20(1) whereas Section 8(3) does not provide exercise of power by the Adjudicating Authority after 180 days of the retention. Para 76 of the judgment of the Delhi High Court is quoted hereunder for ready reference:

“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”.

47. The counsel for the respondents submitted that in Para 76, the Delhi High Court has virtually re-written the provision of Section 8(3) and even Section 20(1) of the Act of 2002. If both the provisions are read together, it does not provide that the Adjudicating Authority would exercise the power for retention of seized or frozen property beyond a period of 180 days. The power of Adjudicating Authority has been kept limited for retention of the seized or frozen property beyond a period of 180 days. The finding is clearly dehors the statutory provisions and virtually re-writing the statute despite the fact that High Court is not having legislative competence. The learned counsel for the respondents accordingly prayed for recording of the finding in reference to detailed arguments referred to above. It is also in regard to the quoted paras of the Delhi High Court.

48. The learned counsel for the respondents further submitted that the power under two provisions i.e. Section 17 and 20 are separate and are not overlapping. The complete mechanism under Section 8 on submission of the application under Section 17(4) has been given while Delhi High Court made emphasis on the mechanism given under Section 20 to be complete in all respects. If Section 20 provides complete procedure and mechanism after retention of seized or frozen property, then what would be the consequence of the mechanism provided under Section 8?. Two provisions could not have been taken in conflict and, therefore, harmonious interpretation was required to be given. It otherwise makes last part of Section 8 to be redundant. It is for the reason that the power of retention of the Adjudicating Authority has been taken away in Para 68 of the judgment and is made for confirmation of retention, while Section 17 and 18 provides for an application within thirty days to seek retention from the Adjudicating Authority.

49. The learned counsel submitted that the High Court failed to mark word “or” between two different actions under Section 8(3) of the Act vis-à-vis the power of the Adjudicating Authority. The learned counsel for the respondents gave the legal framework of the provisions which is also relevant. According to him, after an order of seizure or freezing, the competent officer would at the first instance comply Section 17(1) or 17(1A) of the Act of 2002. It should be followed by an original application under Section 17(4) within 30 days and once an application under Section 17(4) is sent to seek retention of the property under seizure or continuance of the frozen property, the Adjudicating Authority would exercise its power of adjudication conferred under Section 8(3) of the Act of 2002. It would either pass an order for retention or continuance of the seized or frozen property or to deny it. The final word for retention of seized property or continuance of frozen property is exercised by the Adjudicating Authority which has been taken away by the High Court, giving this power of retention under Section 20 of the Act to the officer authorized without realizing that power of the Adjudicating Authority under Section 8(3) could not have been made redundant while giving interpretation. It otherwise goes in conflict with the judgment of the Apex Court in the case of Vijay Madanlal Choudary (supra).

50. According to the counsel for the respondents, second part of action can be under Section 20 of the Act of 2002 which, according to him, is an alternative action provided by the legislature under their wisdom. It was submitted that if the Department chooses to take an action under Section 20(1) and 20(2), then such an action permits them to pass an order for retention of the property. Such an action by authorized officer would be on the basis of the material which may form “reasons to believe” to be recorded in writing and to be sent for adjudication under Section 8 (3) of the Act of 2002 but an order of retention passed by the authorized officer would be only for a period of 180 days from the date of seizure or freezing, subject to the order of Adjudicating Authority.

51. The learned counsel for the respondents submitted that there cannot be two overlapping provisions for one action. The legislature did not intend to make Section 20 of the Act to be mandatory; rather, seizure in the hands of the authorized officer “may” be required in a given case where it is necessary to retain a property till completion of investigation, etc. The period of such retention is kept limited to 180 days. However, according to the respondents, the power of retention of seized or frozen property has been given by Delhi High Court in the case of Rajesh Agarwal (supra) only to the authorized officer contrary to Section 8(3) of the Act.

52. According to the counsel for the respondents, there cannot be overlapping provisions for one and same action which may have serious consequences and even affect the person from his legal rights under Article 300A of the Constitution because as per the judgment in the case of Rajesh Kumar Agarwal (supra), the action under Section 20 is mandatory and till such action is taken, the Adjudicating Authority cannot pass an order under Section 8(3) of the Act. Section 20(1) does not mandate action to be immediate while it is given under Section 17(4) in view of mandate for an application within thirty days to seek retention. Action under Section 20(1) can be within 180 days from the date of seizure in a given case. The property, in that case would remain under seizure or frozen till then whereas on an application under Section 17(4) within 30 days, the Adjudicating Authority may decide the application within another 60 days or 80 days or so on to allow retention of the seized property or continuance of the frozen property or deny it. If the order is yet to be passed under Section 20(1) mandatorily, which can be even later than the period given above i.e. 60 days or 80 days or so on, it would be of no consequence in view of the fact that the order may have been passed by the Adjudicating Authority by that time and otherwise affect the constitutional and legal rights of the person on account of delay. The substance of the argument of the learned counsel for the respondents was that judgment of the Delhi High Court may not be applied. The reference of the judgment of the Apex Court has been given to show that the High Court or the Courts have no jurisdiction to rewrite or substitute the words in the statutory provisions as they have no legislative competence. It is also for the reason that the judgment in the case of Rajesh Kumar Agarwal (supra) is in conflict with the judgment of the Apex Court in the case of Vijay Madanlal Choudhary (supra).

53. The serious contest to the argument raised by the counsel for the respondents was made. The learned counsel for the appellants submitted that the judgment of the Delhi High Court in the case (supra) is not per incuriam; rather, it has given plain interpretation of the provisions relevant to the case. A prayer was made to reject the argument raised by the counsel for the respondents against the application of the judgment of Delhi High Court in the case of Rajesh Kumar Agarwal (supra).

54. We have considered the rival submissions of the parties and before we make analysis of the arguments, it would be gainful to refer the judgment of the Apex Court in the case of Vijay Madanlal Choudhary (supra). Para 84 of the said judgment has been quoted in the previous para where the Hon’ble Apex Court has made analysis of the provisions of Section 17(2) and 17(4) of the Act of 2002. It is with the conclusion that as per Section 17(4), the application is to be sent to the Adjudicating Authority within a period of thirty days of seizure or frozen property for the retention of the record or the property and the Adjudicating Authority in turn, gives an opportunity of hearing to the parties by issuing a show cause notice before passing an order of retention of record or property. The para aforesaid clarifies the jurisdiction of the Adjudicating Authority which is not for “confirmation of the retention” but to pass the order of “retention” itself. The judgment of Delhi High Court in the case of Rajesh Kumar Agarwal (supra) is in conflict with the judgment of the Apex Court in the case of Vijay Madanlal Choudhary (supra). We have perused the judgment of the Delhi High Court in the case of Rajesh Kumar Agarwal (supra) and find that proper assistance seems to have not been provided to the High Court, otherwise the Apex Court has dealt with the issue in reference to the powers of the Adjudicating Authority and the procedure to be applied under Section 17(2) and 17(4) of the Act of 2002. The judgment of the Delhi HighCourt in the case of Rajesh Kumar Agarwal (supra) is in conflict with the judgment of the Apex Court in the case of Vijay Madanlal Choudhary (supra) thus cannot hold field. The counsel for the appellants made a contest but could not clarify as to how the judgment of Delhi High Court can stand in conflict with the judgment of the Supreme Court in the case of Vijay Madanlal Choudhary (supra). Thus, argument made by the counsel for the respondents holds field. We may now refer to the judgment on the issue of per incuriam and before that the powers of the court to substitute the word in the statute or change the complexion of the provisions.

55. We may refer the judgments where the powers of the courts have been analyzed. The judgment of Supreme Court in the case of Lifestyle Equities C.V. and Ors. Vs. Amazon Technologies Inc reported in Special Leave to Appeal (C) No. 19767 of 2025 has been cited. Relevant paras are quoted hereunder: –

“58 . Over and above, we should bear in mind the following well-known Rule of interpretation of the statute reiterated by this Court in the case of Union of India v. Deoki Nandan Agarwal, reported in MANU/SC/0013/1992 : 1991:INSC:219 : 1992 Supp (1) SCC 323: It is not the duty of the Court either to enlarge the scope of the legislation or the intention of the Legislature when the language of the provision is plain and unambiguous. The Court cannot rewrite, recast or reframe the legislation for the very good reason that it has no power to legislate. The power to legislate has not been conferred on the Courts. The Court cannot add words to a statute or read words into it which are not there. Assuming there is a defect or an omission in the words used by the Legislature the Court could not go to its aid to correct or make up the deficiency. Courts shall decide what the law is and not what it should be. The Court of course adopts a construction which will carry out the obvious intention of the Legislature but could not legislate itself. But to invoke judicial activism to set at naught legislative judgment is subversive of the Constitutional harmony and comity of instrumentalities”.

Another judgment of Supreme Court is in the case of Union of India (UOI) and Ors. Vs. Deoki Nandan Aggarwal reported in Civil Appeal No. 3674 of 1988. Relevant paras are quoted hereunder: –

“14. We are at a loss to understand the reasoning of the learned Judges in reading down the provisions in paragraph 2 in force prior to November 1, 1986 as “more than five years” and as “more than four years” in the same paragraph for the period subsequent to November 1, 1986. It is not the duty of the Court either to enlarge the scope of the legislation or the intention of the legislature when the language of the provision is plain and unambiguous. The Court cannot rewrite, recast or reframe the legislation for the very good reason that it has no power to legislate. The power to legislate has not been conferred on the courts. The Court cannot add words to a statute or read words into it which are not there. Assuming there is a defect or an omission in the words used by the legislature the Court could not go to its aid to correct or make up the deficiency. Courts shall decide what the law is and not what it should be. The Court of course adopts a construction which will carry out the obvious intention of the legislature but could not legislate itself. But to invoke judicial activism to set at naught legislative judgment is subversive of the constitutional harmony and comity of instrumentalities. Vide P.K. Unni v. Nirmala Industries MANU/SC/0631/1990: [1990] 1 SCR 482; Mangilal v. Suganchand Rathi [1965] 5 SCR 239; Sri Ram Ram Narain Medhi v. The State of Bombay MANU/SC/0132/1958: [1959] SCR 489; Smt. Hira Devi and Ors. v. District Board, Shahjahanpur MANU/SC/0021/1952: [1952]1SCR1122; Nalinkhya Bysack v. Shyam Sunder Haldar and Ors. MANU/SC/0076/1953: [1953]4SCR533; Gujarat Steel Tubes Ltd. v. Gujarat Steel Tubes Mazdoor Sabha MANU/SC/0369/1979: (1980) ILLJ137SC; S. Narayanaswami v. G. Pannerselvam and Ors. MANU/SC/0362/1972:[1973]1SCR172; N.S. Vardachariv. G. Vasantha Pai and Anr. MANU/SC/0364/1972: [1973]1SCR886; Union of India v. Sankal Chand Himatlal Sheth and Anr. MANU/SC/0065/1977: [1978]1SCR423 and Commissioner of Sales Tax, U.P. v. Auriaya Chamber of Commerce, Allahabad MANU/SC/0411/1986: [1987]167ITR458(SC). Modifying and altering the scheme and applying it to others who are not otherwise entitled to under the scheme, will not also come under the principle of affirmative action adopted by courts some times in order to avoid discrimination. If we may say so, what the High Court has done in this case is a clear and naked usurpation of legislative power”.

56. The learned counsel for the respondents further referred to the judgment of the Apex Court in the case of Manish Kumar Vs. Union of India (Writ Petition (C) No.26 of 2020) reported in (2021) 5 SCC 1. The relevant para 236 of the said judgment is quoted hereunder:

“326. Further, the appeal to invoke the principle of reading down the proviso is untenable. In his judgment for the majority Sawant, J. in Delhi Transport Corpn. v. D.T.C. Mazdoor Congress104 held as follows:

“255. It is thus clear that the doctrine of reading down or of recasting the statute can be applied in limited situations. It is essentially used, firstly, for saving a statute from being struck down on account of its unconstitutionality. It is an extension of the principle that when two interpretations are possible — one rendering it constitutional and the other making it unconstitutional, the former should be preferred. The unconstitutionality may spring from either the incompetence of the legislature to enact the statute or from 104 (1991) Suppl.(1) SCC 600 its violation of any of the provisions of the Constitution. The second situation which summons its aid is where the provisions of the statute are vague and ambiguous and it is possible to gather the intentions of the legislature from the object of the statute, the context in which the provision occurs and the purpose for which it is made. However, when the provision is cast in a definite and unambiguous language and its intention is clear, it is not permissible either to mend or bend it even if such recasting is in accord with good reason and conscience. In such circumstances, it is not possible for the court to remake the statute. Its only duty is to strike it down and leave it to the legislature if it so desires, to amend it. What is further, if the remaking of the statute by the courts is to lead to its distortion that course is to be scrupulously avoided. One of the situations further where the doctrine can never be called into play is where the statute requires extensive additions and deletions. Not only it is no part of the court’s duty to undertake such exercise, but it is beyond its jurisdiction to do so.”

In the judgments aforesaid, substitution or rewriting of the words in the statutes has not been accepted; rather, it has been held to be without jurisdiction. The judgments aforesaid have been referred to at the first instance because this Tribunal should be slow to render any judgment of the High Court to be per incuriam unless a case is made out.

57. The learned counsel for the respondents has raised the issue of per incuriam by referring and citing other judgments. For the aforesaid, the judgment of the Supreme Court in the case of M.P. Rural Road Development Authority and Ors. Vs. L.G. Chaudhary Engineers and Ors. (Civil Appeal No. 974 of 2012 – Arising out of SLP (C) No. 907/2011) has been cited. Relevant Paras are quoted hereunder:

“33. Lord Greene, Master of Rolls formulated the principles on the basis of which a decision can be said to have been rendered ‘per incuriam’. The principles are: 23-03-2026. Where the court has construed a statute or a rule having the force of a statute its decision stands on the same footing as any other decision on a question of law, but where the court is satisfied that an earlier decision was given in ignorance of the terms of a statute or a rule having the force of a statute the position is very different. It cannot, in our opinion, be right to say that in such a case the court is entitled to disregard the statutory provision and is bound to follow a decision of its own given when that provision was not present to its mind. Cases of this description are examples of decisions given per incuriam.

34. The decision in Young (supra) was subsequently approved by the House of Lords in Young v. Bristol Aeroplane Company, Ltd. reported in 1946 AC 163 at page 169 of the report.

35. Lord Viscount Simon in the House of Lords expressed His Lordship’s agreement with the views expressed by the Lord Greene, the Master of Rolls in the Court of Appeal on the principle of per incuriam (see the speech of Lord Viscount Simon at page 169 of the report)

36. Those principles have been followed by the Constitution Bench of this Court in The Bengal Immunity Company Ltd. v. The State of Bihar and Ors. reported in MANU/SC/0083/1955 : 1955 (2) SCR 603 (See the discussion in pages 622 and 623 of the report)”.

58. The same principle has been reiterated by Lord Evershed, Master of Rolls, in Morelle Ld. v. Wakeling and Anr. (1955) 2 QB 379 at page 406. The principle has been stated as follows:

“ …As a general rule the only cases in which decisions should be held to have been given per incuriam are those of decisions given in ignorance or forgetfulness of some inconsistent statutory provision or of some authority binding on the court concerned; so that in such cases some part of the decision or some step in the reasoning on which it is based is found, on that account, to be demonstrably wrong…”

59. In the case of State of Utter Pradesh and Anr. v. Synthetics and Chemicals Ltd. and Anr. reported in MANU/SC/0616/1991 : (1991) 4 SCC 139, the Apex Court held the doctrine of ‘per incuriam’ in practice means ‘per ignoratium’ and noted that English Courts have developed this principle in relaxation of the rule of stare decisis and referred to the decision in the case of Bristol Aeroplane Company Ltd. (supra). The Hon’ble Apex Court also made it clear that the same principle has been approved and adopted by the Supreme Court while interpreting Article 141 of the Constitution (see para 41).

60. In the case of Municipal Corporation of Delhi v. Gurnam Kaur reported in MANU/SC/0323/1988 : (1989) 1 SCC 101, a three- Judge Bench of the Apex Court explained the principle of per incuriam very elaborately in paragraph 11 at page 110 of the report and in explaining the principle of per incuriam, the learned Judges held:

“…A decision should be treated as given per incuriam when it is given in ignorance of the terms of a statute or of a rule having the force of a statute..”.

61. We may further refer to the judgment of the Apex Court in the case of Shiv Shakti Coop. Housing Society, Nagpur Vs. Swaraj Developers and Ors. reported in (2003) 6 SCC 659. Paras 18 to 25 of the judgment are quoted hereunder for ready reference:

“18. As regards the field of operation of amended provision, it is to be noted that the language of amended provision is clear.

19. It is a well-settled principle in law that the court cannot read anything into a statutory provision which is plain and unambiguous. A statute is an edict of the legislature. The language employed in a statute is the determinative factor of legislative intent. Words and phrases are symbols that stimulate mental references to referents. The object of interpreting a statute is to ascertain the intention of the legislature enacting it. (See Institute of Chartered Accountants of India v. Price Waterhouse.) The intention of the legislature is primarily to be gathered from the language used, which means that attention should be paid to what has been said as also to what has not been said. As a consequence, a construction which requires for its support, addition or substitution of words or which results in rejection of words as meaningless has to be avoided. As observed in Crawford v. Spooner courts cannot aid the legislatures’ defective phrasing of an Act, we cannot add or mend, and by construction make up deficiencies which are left there. (See State of Gujarat v. Dilipbhai Nathjibhai Patel. It is contrary to all rules of construction to read words into an Act unless it is absolutely necessary to do so. [See Stock v. Frank Jones (Tipton) Ltd. Rules of interpretation do not permit courts to do so, unless the provision as it stands is meaningless or of a doubtful meaning. Courts are not entitled to read words into an Act of Parliament unless clear reason for it is to be found within the four corners of the Act itself. (Per Lord Loreburn, L.C. in Vickers Sons and Maxim Ltd. v. Evans, quoted in Jumma Masjid v. Kodimaniandra Deviah.)

20. The question is not what may be supposed and has been intended but what has been said. “Statutes should be construed not as theorems of Euclid. Judge Learned Hand said, “but words must be construed with some imagination of the purposes which lie behind them. (See Lenigh Valley Coal Co. v. Yansavagels,) The view was reiterated in Union of India v. Filip Tiago De Gama of Vedem Vasco De Gama.

21. In D.R. Venkatachalam v. Dy. Transport Commr. it was observed that courts must avoid the danger of a priori determination of the meaning of a provision based on their own preconceived notions of ideological structure or scheme into which the provision to be interpreted is somewhat fitted. They are not entitled to usurp legislative function under the disguise of interpretation.

22. While interpreting a provision the court only interprets the law and cannot legislate it. If a provision of law is misused and subjected to the abuse of process of law, it is for the legislature to amend, modify or repeal it, if deemed necessary. (See CST v. Popular Trading Co.22) The legislative casus omissus cannot be supplied by judicial interpretative process

23. Two principles of construction and the other in regard to reading the statute as a whole – appear to one relating to casus omissus be well settled. Under the first principle a casus omissus cannot be supplied by the court except in the case of clear necessity and when reason for it is found in the four corners of the statute itself but at the same time a casus omissus should not be readily inferred and for that purpose all the parts of a statute or section must be construed together and every clause of a section should be construed with reference to the context and other clauses thereof so that the construction to be put on a particular provision makes a consistent enactment of the whole statute. This would be more so if literal construction of a particular clause leads to manifestly absurd or anomalous results which could not have been intended by the legislature. “An intention to produce an unreasonable result”, said Danckwerts, L.J. in Artemiou v. Procopiou (All ER p. 544 I), “is not to be imputed to a statute if there is some other construction available”. Where to apply words literally would “defeat the obvious intention of the legislation and produce a wholly unreasonable result”, we must “do some violence to the words” and so achieve that obvious intention and produce a rational construction Per Lord Reid in Luke v. IRC where at AC p. 577 (All ER p. 664 1) he also observed: “This is not a new problem, though our standard of drafting is such that it rarely emerges.”

24. It is then true that,

“when the words of a law extend not to an inconvenience rarely happening, but do to those which often happen, it is good reason not to strain the words further than they reach, by saying it is casus omissus, and that the law intended quae fraquentius accident

” But,” on the other hand,

“it is no reason, when the words of a law do enough extend to an inconvenience seldom happening, that they should not extend to it as well as if it happened more frequently, because it happens but seldom (see Fenton v. Hampton)

A casus omissus ought not to be created by interpretation, save in some case of strong necessity. Where, however, a casus omissus does really occur, either through the inadvertence of the legislature, or on the principle quod semel aut bis existit proetereunt legislatores, the rule is that the particular case, thus left unprovided for, must be disposed of according to the law as it existed before such statute casus omissus et oblivioni datus dispositioni juris communis relinquitur; “a casus omissus,” observed Buller, J. in Jones v. Smart “can in no case be supplied by a court of law, for that would be to make laws”.

25. The golden rule for construing wills, statutes, and in fact, all written instruments has been thus stated:

“The grammatical and ordinary sense of the words is to be adhered to unless that would lead to some absurdity or some repugnance or inconsistency with the rest of the instrument, in which case the grammatical and ordinary sense of the words may be modified, so as to avoid that absurdity and inconsistency, but no further” (see Grey v. Pearson 22).

The latter part of this “golden rule” must, however, be applied with much caution. “If”, remarked Jervis, C.J.,”the precise words used are plain and unambiguous in our judgment, we are bound to construe them in their ordinary sense, even though it lead, in our view of the case, to an absurdity or manifest injustice. Words may be modified or varied. where their import is doubtful or obscure. But we assume the functions of legislators when we depart from the ordinary meaning of the precise words used, merely because we see, or fancy we see, an absurdity or manifest injustice from an adherence to their literal meaning” (see Abley v. Dale, ER p. 525)”.

The Apex Court in the judgment (supra) has ruled the jurisdiction of the court while giving interpretation to the statutory provisions. It clarified limited jurisdiction of the court while giving interpretation of the provisions and if the judgment of the Delhi High Court is applied on the aforesaid and otherwise clarified by the counsel for the respondents, it goes against the principles set by the Supreme Court in the judgment (supra).

62. To analyze the issue, we would be taking the arguments in reference to relevant provision considered by the Delhi High Court in the case (supra). It would be at the cost of repetition, Section 8(3) of the Act of 2002 is quoted hereunder:

8. Adjudication.—

(1) to (2)……

(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 purpose of computing the period of three hundred and sixty five days under clause (a), the period during which the investigation is stayed by any court under any law for the time being in force shall be excluded”.

Section 8 is titled for “Adjudication”. Sub-section (3) quoted above make a reference of sub-section (2) where the Adjudicating Authority can decide that the property is involved in money laundering and in that case the power conferred under Section 8(3) is two fold, one is to pass an order in writing to “confirm” the provisional attachment of the property made under sub-section (1) of Section 5 “or” (second part divided by use of words “or”) to order in writing for “retention” of the property or record seized or frozen under Section 17 or Section 18.

63. There is a deliberate deviation of the powers of Adjudicating Authority for two distinct and different action, one in regard to the provisional attachment of the property and another for retention of seized or frozen property. According to the counsel for the respondents, the High Court was not having competence to substitute the power of the Adjudicating Authority from “retention” to “confirmation” of retention of the property seized or frozen under Section 17 and 18.

64. It is stated that when the word “confirmation” for seizure and freezing of the property has not been used either under Section 8(3) or Section 17 or18 and even under Section 20(1) and (2) of the Act, how such a power can be conferred by the High Court. The consequences are otherwise said to be serious because ultimate power of retention of the property under seizure or continuance of the property frozen has been conferred to the Adjudicating Authority. It has been diverted to the authorized officer of the ED with confirmation of such an order by the Adjudicating Authority. It is nothing but rewriting of Section 8(3) of the Act for retention of seized or frozen property to that of “confirmation”.

65. The learned counsel for the respondents submitted that there exists substitution of the powers of the Adjudicating Authority by the High Court under Section 8(3). It is by diverting the jurisdiction of the Adjudicating Authority from “retention” of the seized or frozen property to “confirmation” and giving power of retention to the authorized officer making Section 8(3) to be redundant to that extent and makes the judgment to be per incuriam to the Statute and thus cannot be applied. It otherwise remains in conflict to the judgment of the Apex Court in the case of Vijay Madanlal Choudhary (supra).

66. The counsel for the respondents further referred to the concluding part of the judgment in the case (supra) and even Para 87 and other paras where it has been held that if Section 17(4) is taken for the purpose of retention of seized or frozen property, then, according to the High Court, it was nothing but a short cut without providing statutory safeguards. The counsel for the respondents submitted that provision of Section 17 coupled with Section 8 has been ignored by the High Court because required safeguards have been provided even under Section 17 coupled with Section 8 of the Act. It has been clearly ruled by the Apex Court in Para 84 of the judgment in the case of Vijay Madanlal Choudhary (supra). If an overlapping action after Section 17 is to be resorted to by taking the action under Section 20, it may not only delay the proceedings but would be an overlapping action which may affect even the person whose property is seized or frozen because original application under Section 17(4) is to be filed within 30 days and according to the High Court in the judgment (supra) it should be followed by an order under Section 20(1) where order for retention can be passed within a period to remain in operation for 180 days and according to the Delhi High Court, the Adjudicating Authority would thereupon pass the order to continue seizure or freezing beyond a period of 180 days. It would affect the person whose property is seized or frozen. If the application under Section 17(4) is considered by the Adjudicating Authority immediately, it can pass an order either to allow retention of seized or frozen property or to deny which would be delayed with simultaneous or overlapping action under Section 20(1) and (2) going against the constitutional mandate and otherwise the High Court has taken away the effect of Section 17(4) in

Para 87 of the judgment in the case of Rajesh Kumar Agarwal (supra) while it is settled law of the land that immediately after seizure or freezing, the original application has to be sent to the Adjudicating Authority within 30 days to seek retention. It is so held by the Apex Court in Para 84 of the judgment in the case of Vijay Madanlal Choudhary (supra).

67. Accordingly, we accept the argument of the learned counsel for the respondents and thereby fail to accept the argument of the learned counsel for the appellants in reference to the judgment of the Delhi High Court in the case of Rajesh Kumar Agarwal (supra).

30. Paras quoted above deal with the issue dealt with by the High Court in the case (supra) and each relevant paras of the judgment in the case of Rajesh Kumar Agarwal (supra) have been referred to the extent it was relevant for an appropriate interpretation. The judgment in the case (supra) has been rendered per incuriam, and thus cannot be applied.

31. The appellants have raised additional issues in the written arguments though were not argued while making oral arguments, otherwise it is going beyond the pleadings. The arguments contrary to the pleadings of the appeal, that too when it is factual in nature cannot be accepted to the surprise of the respondents because they had no opportunity to deal with the issues which were not raised in the appeal otherwise not even argued during the course of oral arguments with an opportunity to the respondents to contest it.

32. In the light of the discussion made above, I do not find a case in favour of the appellants. Appeals are accordingly dismissed.

The retention of the gold and jewellery is, however, made subject to the final outcome of the criminal proceedings.

Filed under FEMA Prevention of Money Laundering Act

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Name: CA Vijayakumar Shetty

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PMLA Section 17 Retention of Gold Upheld by SAFEMA Tribunal in Jewellery Case

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Vignesh Jewellery Vs Deputy Director (Appellate Tribunal under SAFEMA, New Delhi)

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Vignesh Jewellery Vs Deputy Director (Appellate Tribunal under SAFEMA, New Delhi)

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