The Delhi High Court has underscored that the Prevention of Money Laundering Act (PMLA) is designed to strike a “delicate balance” between empowering enforcement agencies and safeguarding the rights of individuals.
A division bench of Justices Subramonium Prasad and Harish Vadiyanathan Shankar, while ruling on a plea filed by the Enforcement Directorate (ED), held that before the agency can approach the adjudicating authority to retain seized or frozen property, an authorised officer must first pass a formal order justifying such retention for up to 180 days.
“Without this crucial step, the adjudicating authority cannot lawfully determine whether the property is linked to money laundering,” the bench observed, stressing that the processes of search, seizure, freezing, attachment, and retention are “embedded with procedural safeguards” to ensure state action remains lawful, proportionate, and subject to independent scrutiny.
The court noted that judicial and quasi-judicial oversight was envisaged at every stage of the PMLA framework to prevent arbitrary exercise of power and uphold constitutional values. It stressed that the statute’s integrity rests on the “rigorous application of the procedural mandates” it prescribes.
“When a statute prescribes a method to do a particular thing, it must be done in that manner alone and not otherwise,” the bench said, reiterating a cardinal rule of statutory interpretation.
The ruling came in an application filed by the ED challenging a February 2019 decision of the PMLA Appellate Tribunal, which denied the agency’s request to retain properties seized and frozen in a case involving accused Rajesh Kumar Aggarwal.
The tribunal had ruled that the retention did not conform to the scheme of the PMLA.
According to the ED, businessmen Surendra Kumar Jain and Virendra Jain allegedly laundered money by infusing cash from Jagat Projects into corporate entities under their control. The funds were allegedly shown as share subscription money at an inflated premium during 2008–2009. Aggarwal, a chartered accountant, was accused of conspiring with them.
