Telangana High Court
M/S Musaddilal Gems And Jewels (India) … vs The Deputy Director on 1 July, 2026
Author: P.Sam Koshy
Bench: P.Sam Koshy
IN THE HIGH COURT FOR THE STATE OF TELANGANA
AT HYDERABAD
THE HON'BLE SRI JUSTICE P.SAM KOSHY
AND
THE HON'BLE SRI JUSTICE NARSING RAO NANDIKONDA
C.M.S.A. No.21 of 2024
DATE: 01.07.2026
Between:
M/s. Musaddilal Gems and Jewels India Private Limited.
...Appellant
AND
The Deputy Director,
Directorate of Enforcement,
Ministry of Finance Department, Revenue,
03rd Floor, Shakar Bhawan,
Basheer Bagh, Hyderabad - 500 004.
...Respondent
JUDGMENT:
(per the Hon’ble Sri Justice P.Sam Koshy)
Heard Mr. B.Chandrasen Reddy, learned Senior Counsel for
Mr. B.Vamshidhar Reddy, learned counsel for the appellant; and
Mr. D.Narender Naik, learned Standing Counsel for Enforcement
Directorate for the respondent.
2. The instant appeal under Section 42 of the Prevention Money
Laundering Act, 2002 (for short the ‘PMLA, 2002’) has been filed by
Page 2 of 24
the appellant assailing the order dated 28.10.2024, in FPA-PMLA-
765/HYB/2024, passed by the Appellate Tribunal under SAFEMA at
New Delhi (under the PMLA, 2002).
3. Vide the impugned order; the Tribunal dismissed the appeal
preferred by the appellant affirming the order dated 22.08.2023, in
O.A.No.757 of 2022, passed by the Adjudicating Authority. Thus,
the present becomes Second Appeal on the part of the appellant
against the order of the Adjudicating Authority as also against the
order of the Appellate Tribunal.
4. The Office of the Assistant Director of Enforcement
Directorate, Hyderabad filed an application before the Adjudicating
Authority under Section 17(4) of the PMLA, 2002 seeking for
retention of the seizure made from the searches conducted during
17.10.2022 to 19.10.2022 at the premises of (i) M/s.MBS Jewelers
Private Limited; (ii) M/s. Musaddilal Gems and Jewels India Private
Limited; (iii) Mr. Sukesh Gupta, Director of M/s.MBS Jewelers and
(iv) Mr. Anurag Gupta, Director of M/s. Musaddilal Gems and
Jewels. In the application, the Assistant Director of Enforcement
Directorate had given the details and description of the various
documents seized in the course of search from each of the
premises. The application revealed the movable properties
Page 3 of 24
including cash and jewels; likewise, movable properties particularly
electronic devices were seized in the course of search and seizure.
After collecting all the seized documents, articles, cash and jewelry
and on analyzing the same, the Enforcement Directorate was prima
facie of the view that the seized properties could be a part of the
proceeds of crime related to a schedule offence. It was in this
context that initially an authorization under Section 17(1) of PMLA,
2002 got issued and in the course of investigation under the PMLA,
2002, the Enforcement Directorate had, on giving reasons,
requested for the retention of the records / properties / electronic
gadgets under Section 17(4) of the PMLA, 2002.
5. It is this application which the Adjudicating Authority under
the PMLA passed the order on 22.08.2023 allowing the application
of the Enforcement Directorate subject to the decision of the
Hon’ble Supreme Court in the SLP (Crl.) No.7965 of 2023. While
allowing the application, the learned Adjudicating Authority in its
operative part of the order has held as under:
“12. In light of the aforementioned circumstances, it is
imperative for the progress of the ongoing investigation and the fair
dispensation of justice that the Application filed by the Enforcement
Directorate be approved. The requested retention of records/
documents, cash, gold and precious stones/metals jewelleries,
electronic items/ digital devices of the Prevention of Money
Laundering Act (PMLA), which were seized during the searches
Page 4 of 24conducted on 17.10.2022, 18.10.2022 and 19.10.2022 as stated in
Original Application (OA) and page 13 of this order, should be
permitted to proceed.
a. Hence the Application as filed by the Enforcement Directorate is
allowed.
b. Hence OA-757 of 2022 is allowed. However, the above order is
subject to the decision of Hon’ble Supreme Court in SLP No. 7965
of 2023.”
6. Aggrieved of the order passed by the Adjudicating Authority,
the appellant preferred an appeal before the Appellate Tribunal
under Section 26 of the PMLA, 2002. The Appellate Tribunal also
having dealt with all the issues which the appellant had raised, vide
the impugned order dated 28.10.2024, dismissed the appeal.
7. It is these two orders i.e. the order of the Adjudicating
Authority dated 22.08.2023 and the order of the Appellate
Authority dated 28.10.2024 which are under challenge in the
instant appeal under Section 42 of PMLA, 2002.
8. The matter originates from an FIR being registered by CBI on
the alleged fraud, cheating and wrongful cause caused to one
M/s. Minerals and Metal Trading Corporation Limited (for short
‘MMTC Ltd.’) by Mr. Sukesh Gupta, the Managing Director of M/s.
MBS Group. After the FIR was lodged, a charge sheet vide
CC.No.25 of 2014, dated 27.11.2014, was also filed against
Page 5 of 24
Mr. Sukesh Gupta for the offences under Section 120(b) read with
Section 429, 469, 471, 477-A of IPC and Section 13(2) read
with Section 13(1) of the Prevention of Corruption Act, 1988. The
estimated loss caused to M/s. MMTC Ltd. was over Rs.226 crores of
principal amount. Meanwhile, an ECIR/05/HYZO/2014 was also
registered on 25.02.2014 against Mr. Sukesh Gupta, Managing
Director of M/s. MBS Group. Meanwhile, however on the basis of
the search and seizure conducted, seizures were made of the items
those were reflected in the application filed by the Assistant
Director, Enforcement Directorate under Section 17(4) of PMLA,
2002.
9. Learned Senior Counsel for the appellant challenged the
impugned order on the ground that the two authorities have failed
to appreciate the fact that the High Court in a Criminal Petition i.e.
Crl.P.No.431 of 2023 had quashed the ECIR case registered against
Mr. Sukesh Gupta. It was also the contention of the learned Senior
Counsel for the appellant that the Adjudicating Authority as also
the Tribunal has failed to appreciate the aspect that the only
relationship which the appellant had with the business of
Mr. Sukesh Gupta was that of pure business transactions under
proper invoices and on payment of GST as also the income tax.
According to the learned Senior Counsel for the appellant, the
Page 6 of 24
partnership firm of M/s. Musaddilal and Sons subsequently stood
dissolved and the amount generated from the said distribution of
the share, which went to each of the partners is what was pumped
in as an unsecured loans, which was also reflected in the balance
sheets. It was also the contention of the learned Senior Counsel for
the appellant that the impugned order also suffers from lack of
reasons more particularly establishing as to how the seized
material were directly or indirectly the proceeds of crime in the
teeth of the explanation that were provided by the appellant. That
the orders of the Adjudicating Authority as also the Appellate
Tribunal failing to establish the fact that the jewelry was procured
from the proceeds of crime, the entire proceeding gets vitiated
holding it to have been fundamentally fraud, misconceived and
illegal.
10. Learned Senior Counsel for the appellant has also questioned
the proceedings initiated to be barred by limitation as the order
passed under Sub-Section (5) of Section 5 of PMLA, 2002 was
beyond a period of 180 days from the date of search and seizure
dated 17.10.2022. It was also contended by the learned Senior
Counsel for the appellant that the stay granted in Crl.P.No.431 of
2023 insofar as case of Mr. Sukesh Gupta is concerned, the stay
period cannot be excluded for the purpose of calculating the
Page 7 of 24
limitation, for the reason that the appellant was not a party to the
said ECIR proceedings nor was he made as an accused by the CBI
in any of those cases. According to the learned Senior Counsel for
the appellant, neither the appellant company nor any of the
Directors being an accused in ECIR case registered against
Mr. Sukesh Gupta, they are in no manner connected with any of
the scheduled offences nor do they have nexus with the said
person insofar as alleged illegal criminal act on the part of the
accused in the ECIR case and therefore, the assets belonging to
the appellant is not in any manner a part of the proceeds of crime
as there is no nexus between ECIR case or the case put forth by
the CBI against Mr. Sukesh Gupta.
11. Lastly, it was contended by the learned Senior Counsel for
the appellant that the Appellate Tribunal as also the Adjudicating
Authority failed to look into the aspect that in order to bring the
seized articles within the ambit of proceeds of crime as defined
under Section 2(1)(u) of PMLA, 2002 the basic ingredient is that of
there being a criminal activity relating to a scheduled offence
available so as to establish the seized property to be proceeds of
crime. In the instant case, there is no allegation of any criminal
activity to have been undertaken by the appellant so as to
constitute an offence of money laundering and also in order to
Page 8 of 24
make the appellant guilty of an offence of money laundering.
Therefore, according to him the entire case of the prosecution is
liable to be vitiated only on this aspect.
12. Learned Senior Counsel for the appellant relied upon two
judgments, one by the Hon’ble Supreme Court in the case of Sri
Chamudi Mopeds Limited vs. Church of South India Trust
Association 1 and other by the Delhi High Court in the case of
Baljeet Singh v. School Management of Guru Harikishan
Public School and others 2. The aforesaid two judgments were
cited in respect of the arguments advanced by him stating that
subsequent to the quashing of the ECIR, the order passed under
Section 17(4) of the PMLA, 2002 and which has also been affirmed
by the Appellate Tribunal becomes bad in law in the teeth of the
aforesaid two judgments. In addition, the learned Senior Counsel
for the appellant also relied upon another decision of the Delhi High
Court in the case of Mohan Kumar Khanelwal vs. Directorate
of Enforcement 3 and also the decision of Madras High Court in
the case of M.Sathyanandan vs. State of Tamil Nadu 4, both of
which were on the aspect of limitation.
1
1992 (3) SCC Page 1
2
2018 SCC OnLine Delhi 10795
3
2024 (SCC) Online Delhi 645
4
2010 SCC Online Madras 4618
Page 9 of 24
13. Per contra, the learned Standing Counsel for Enforcement
Directorate opposing the instant appeal submits that a threadbare
perusal of the two impugned orders would go to show that all the
aspects which were raised and contested before the two forums
have been duly considered with and decided accordingly. Learned
Standing Counsel would submit that the investigations have
revealed that appellant company’s financial operations were used
as a conduit to layer and integrate proceeds of crime derived from
predicate offences. It is further submitted that while the appellant
contends that M/s. Musaddilal Gems and Jewels (India) Pvt. Ltd. is
an independent entity unrelated to M/s. MBS Jewelers Pvt. Ltd. or
Mr. Anurag Gupta, investigation has revealed otherwise. Evidence
gathered indicates that M/s. Musaddilal Gems and Jewels (India)
Pvt. Ltd. was incorporated in the year 2013 shortly after
Mr. Anurag Gupta ceased being a director of M/s. MBS Jewellers
Pvt. Ltd., and was used as a conduit to launder proceeds of crime.
Mr. Anurag Gupta, despite no longer being a director, was found to
have financial and operational involvement with M/s. Musaddilal
Gems and Jewels (India) Pvt. Ltd., including unexplained loans and
share capital investments by him and his family members. These
connections demonstrate that the appellant company is not entirely
Page 10 of 24
independent but is closely associated with the individuals and
entities under investigation for money laundering.
14. According to the learned Standing Counsel for Enforcement
Directorate, investigation into M/s. MBS Jewellers Pvt. Ltd. and its
associated entities revealed a large-scale fraud involving the
Buyer’s Credit Scheme of M/s. MMTC Ltd. resulting in significant
losses to the exchequer. The connection between M/s. Musaddilal
Gems and Jewels (India) Pvt. Ltd. and the M/s. MBS Group has
been established through financial records and the movement of
tainted funds and the evidence indicates that the proceeds of crime
generated through the fraudulent activities of M/s. MBS Group
were layered and integrated into the appellant company.
15. Learned Standing Counsel for Enforcement Directorate would
further submit that the investigation revealed that their total
declared income, as per their income tax returns, are insufficient to
justify the capital contributions made to M/s. Musaddilal Gems and
Jewels (India) Pvt. Ltd., and that Mr. Shashank Gupta declared an
income of Rs.3.47 lakhs in the financial year 2012-13 and Rs.4.30
lakhs in the financial year 2013-14 contradicts the claim that he
had sufficient funds to make such investments. The appellant has
not provided credible evidence demonstrating as to how the capital
Page 11 of 24
infusion aligns with the income and resources declared in financial
records. The investigation has shown that the funds transferred to
the appellant company, including the unsecured loans and capital
investments, do not have a credible source. The argument
regarding inherited stock does not address the core issue of the
unexplained and disproportionate financial contributions made by
the family members.
16. According to learned Standing Counsel for Enforcement
Directorate, the alleged transfer of gold stock and its subsequent
conversion into unsecured loans raises questions about the
legitimacy of these transactions. The financial documentation does
not sufficiently explain the transition of assets and the alignment of
these transactions with declared incomes. It is further submitted
that while the appellant claims these were legitimate transactions,
the investigation has shown that the flow of funds and stock
adjustments were structured to obscure the origin of assets and
the financial trail remains inconsistent with declared resources. It is
further submitted that the search conducted in the year 2022 was
based on additional material and was fully in compliance with the
provisions of the PMLA, 2002. The retention of assets is necessary
to prevent their dissipation and ensure their availability for
adjudication under the PMLA. The “reasons to believe” required
Page 12 of 24
under Section 17 were duly recorded prior to the search, and the
seizure was carried out in accordance with the law. The search
warrant and panchanama were lawfully issued based on credible
material evidence linking the appellant company to the proceeds of
crime.
17. With all the aforesaid submissions, learned Standing Counsel
for Enforcement Directorate prayed to dismiss the present appeal.
18. Having heard the contentions put forth on either side and on
perusal of records, it is necessary at the outset to know the fact
that the challenge in the instant appeal is to an order passed under
Section 17(4) of the PMLA, 2002. For ready reference, Section
17(4) is reproduced hereunder:
“The authority seizing any record or property under sub-section (I)
or freezing any record or property under sub-section (J A) 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 (1 A), before the
Adjudicating Authority.”
19. An application for retention is one which is moved under
Section 17(4) of the PMLA, 2002 and an order is passed under
Section 20(1) of the PMLA, 2002. For ready reference, Section
20(1) is also reproduced hereunder:
Page 13 of 24
“20. Retention of property.- (1) Where any property has been
seized under section 17 or section 18 or frozen under sub-section
(JA) 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.”
20. A plain reading of the aforesaid two provisions would in itself
indicate that the power vested upon the Adjudicating Authority is a
subjective one. All that the Adjudicating Authority is required to do
is peruse the records and arrive at from the basis of materials in its
possession that there are “reasons to believe”. Such property seized
or frozen is required to be retained for the purpose of adjudication
under Section 8 of the PMLA, 2002. Thus, the order of retention is
one which is passed for the purpose of adjudicating the proceedings
initiated under Section 8. While deciding the proceedings or in the
course of adjudication of the proceedings under Section 8, the
Adjudicating Authority has to reach to a conclusion holding as to
whether all or few of the properties referred to in the notice issued
to the concerned person is one who is involved in money
laundering. Once such properties are held to be in money
laundering, the Adjudicating Authority by an order in writing
Page 14 of 24
confirms the provisional attachment order. Subsequent to the
confirmation of the provisional attachment order, the Adjudicating
Authority thereafter proceeds for confiscation of the attached
properties.
21. In the instant case, it is only the order passed for retention
which has been confirmed by the Appellate Tribunal, put to test
before this Bench. For the said reason we need to look into the
finding given by the Adjudicating Authority at the first instance.
22. In the course of investigation the authorities came to know
about the misdeeds of MBS Group, in which one Mr. Sukesh Gupta
as also one Mr. Anurag Gupta were the directors. In the course of
investigation it was found that the aforementioned MBS Group
purchased huge quantity of gold bullion from MMTC Ltd. without
paying full amount for the said gold bullion. At the same time, the
MBS Group after purchase of such gold bullion, used the same for
its business activities in spite of knowing fully well about the huge
outstanding payment on the part of MBS Group payable to MMTC
Ltd. and continued delivery of gold bullion under the Buyers Credit
Scheme which was alleged to be part of a criminal conspiracy with
Mr. Sukesh Gupta and the amount payable by MBS Group
meanwhile was also got paid using MMTC funds without approval of
Page 15 of 24
the corporate office of MMTC Ltd. resulting in huge loss of over 500
crores.
23. In the course of investigation, it was also revealed that
immediately on an FIR getting lodged on 03.01.2013 against
Mr. Sukesh Gupta, M/s. MBS Jewelliers Pvt. Ltd. and M/s. MBS
Impex Private Limited by the CBI, Mr. Anurag Gupta resigned from
the directorship of all companies to escape the clutches of
investigation. At the same time, Mr. Anurag Gupta incorporated a
new company in the name and style of M/s. Musaddilal Gems and
Jewels on 12.04.2013. In the said company, Ms. Vandana Gupta,
wife of Mr. Anurag Gupta and Mr. Shashank Gupta, son of Mr.
Anurag Gupta, were also made as the shareholders and directors.
The Enforcement Directorate, in the course of investigation found
that the new company established by Mr. Anurag Gupta was started
with an initial fund of Rs.38 lakhs, a share capital of Rs.1 lakh, and
an unsecured loan of Rs.37 lakhs from the directors. However, on
scrutiny of income tax returns it was observed that the two
directors Ms. Vandana Gupta and Mr. Shashank Gupta, both of
them together also did not have with them evidence worth Rs.37
lakhs in the year 2013 to invest in the company. Later on also both
Ms. Vandana Gupta and Mr. Shashank Gupta further invested Rs.6
lakhs of share capital in the said company, however they were not
Page 16 of 24
able to give justification in respect of the source of income insofar
as the investment of Rs.6 lakhs made in the company by them. In
addition they had also given an unsecured loan of Rs.4.84 crores
and Rs.4.62 crores respectively to the said company by way of
unsecured loan, the source of which also was not able to be
satisfactorily explained. Similar were the findings which were prima
facie reflected in the course of investigation in respect of large
number of transactions of investments made by the directors of the
appellant’s company.
24. In the absence of any satisfactory material available in
establishing the flow of funds, particularly the unsecured loans
being provided, the Adjudicating Authority found those facts are
“reasons to believe” and the amount of investment made to be the
“proceeds of crime”.
25. A bare perusal of the order passed by the Adjudicating
Authority would go to show that the Adjudicating Authority has in
depth dealt with the factual matrix of the case and also threadbare
perused the entire documents that were placed before the
Adjudicating Authority and thereafter has reached to the conclusion
so far as the “reasons to believe” is concerned and the findings of
the Adjudicating Authority are reflected in the impugned order
Page 17 of 24
insofar paragraph No.7, which is the conclusion that the
Adjudicating Authority has arrived at.
26. Thus, from the reading of the findings and the conclusion
arrived at by the Adjudicating Authority, this Bench has no
hesitation in reaching to the conclusion that the Adjudicating
Authority has, in fact, met with all the requirements as is required
under the statute as also the said order being in tune with the
judicial precedents on the issue.
27. Next what we need to scrutinize is whether the findings
arrived at by the Appellate Tribunal in its impugned order dated
28.10.2024 also to be in accordance with law, or does it suffer the
latches pointed out by the appellant, or was there any procedural
lapse on the part of the authority in the course of deciding the
appeal.
28. One of the points strongly harped upon by the learned Senior
Counsel for the appellant was that since the ECIR itself stood
quashed by the High Court, all further proceedings initiated are of
no consequence.
29. It was also the contention of the learned Senior Counsel for
the appellant that merely because there is a stay in operation
Page 18 of 24
issued by the Hon’ble Supreme Court does not mean that the ECIR
stands restored, rather it is only the effect and operation of the
judgment of the High Court in Crl.P.No.4313 of 2023 which stands
stayed. However, technically the ECIR, in terms of the order of the
High Court for all practical purposes stands quashed and therefore
the generation of income in the said circumstances cannot be said
to be from any criminal activity. In that regard also, it cannot be
brought within the purview of proceeds of crime as defined under
Section 2(1)(u) of the PMLA, 2002.
30. This contention of the learned Senior Counsel for the
appellant is hard to accept for the simple reason that admittedly the
Hon’ble Supreme Court in SLP (Crl.) No.7965 of 2023 stayed the
operation of the judgment of the High Court quashing the ECIR. As
a consequence of staying of the judgment of the High Court, it has
to be construed as if the order of the High Court is ineffective as of
now. If the judgment of the High Court becomes ineffective,
automatically it would lead to a situation where the stage prior to
the judgment of the High Court as it stood getting revived. The
judgment in the case of Sri Chamudi Mopeds Limited (supra)
referred to by the learned Senior Counsel for the appellant also
cannot be made applicable in a straight-jacket formula to the facts
of the present case for the simple reason that once when we hold
Page 19 of 24
that the judgment of the High Court quashing the ECIR has been
stayed by the Hon’ble Supreme Court, we come to the conclusion
that as a consequence of the stay, the judgment becomes
ineffective and cannot be brought into operation. It does not, under
any circumstances, would also mean that as long as the matter is
pending before the Hon’ble Supreme Court, it has to be presumed
that the ECIR stands quashed. Rather, it is the other way round of
the judgment becoming inoperative and the position of the ECIR
getting restored, or else the very purpose of obtaining a stay of the
judgment of the High Court becomes redundant and would be of no
purpose whatsoever.
31. Some of the other reasons to disagree with the arguments of
the learned Senior Counsel for the appellant are:-
a) If the principles advanced by the appellant of treating the
ECIR to remain quashed pending the SLP before the Hon’ble
Supreme Court and based on the said judgment of the High
Court if all corresponding proceedings emanating from the
FIR and ECIR and subsequent developments were to be
dropped or closed, think of the situation if ultimately the SLP
stands allowed?
Page 20 of 24
b) What would be the effect of all those proceedings which were
either dropped or closed as a consequence of the allowing the
SLP?
c) Will they all automatically get revived or restored?
In the opinion of this Bench these would give rise to many
complications and therefore the said contention of the appellant
seeking interdiction of the two orders under challenge is not made
out.
32. Coming to the objection of the appellant that the continuation
of seizure being illegal as it is barred by limitation under Section
8(3)(a) of the PMLA, 2002, we need to first consider the provision
of Section 8(3)(a)&(b) and the explanation attached to the said
provision. For ready reference, Section 8(3)(a)&(b) of PMLA, 2002
and the explanation is reproduced hereunder:
“(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, 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] [Inserted by Finance Act,
2018 (Act No.13 of 2018) dated 29.3.2018.] or] the
pendency of the proceedings relating to any [offence under
this Act before a court or under the corresponding law of any
Page 21 of 24other 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 5 8
B 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.]”
Reading of the aforementioned explanation makes it explicit
that the period during which the investigation is stayed by any
Court and any law for the time being shall be excluded.
33. The prosecution complaint was lodged on 16.02.2024 with
SR.No.689 of 2024; the provisional attachment order No.7 of 2021
stood confirmed on 18.08.2022, the High Court in Crl.P.No.4313 of
2023 passed an interim stay order on 20.01.2023, and the said
Crl.P. stood allowed on 03.04.2023 quashing the ECIR, and the
Hon’ble Supreme Court in SLP (Crl.) No.7965 of 2023 had stayed
the judgment of the High Court on 21.07.2023. In terms of the
explanation provided under Section 8(3), the duration during which
the stay was in operation under any Court and any law, the said
period would have to be excluded for the purpose of counting the
limitation. If the duration of stay is excluded in the instant case,
there is no dispute so far as the prosecution complaint being filed
within a period not exceeding 365 days.
Page 22 of 24
34. It is worth mentioning the paragraph Nos.178.1, 178.2 and
178.3 of the landmark judgment rendered by the Hon’ble Supreme
Court in the case of Vijay Madanlal Choudary vs. Union of
India 5, which for ready reference are reproduced hereunder:
“178.1. Reverting to sub-section (3), it postulates that where the
adjudicating authority records a finding whether all or any of the
properties referred to in the show-cause notice issued under sub-
section (1) by the adjudicating authority consequent to receipt of a
complaint/application that the property in question is involved in
money laundering, he shall, by an order in writing confirm the
attachment (provisional) of property made under Section 5(1) or
retention of property or record seized or frozen under Section 17 or
Section 18, and direct continuation of the attachment or retention or
freezing of the property concerned for a period not exceeding three
hundred and sixty-five days or the pendency of the proceedings
relating to any offence under the 2002 Act before a court or under
the corresponding law of any country outside India and become final
after an order of confiscation is passed under sub-section (5) or
sub-section (7) of Section 8 or Section 58-B or Section 60(2-A) by
the Special Court. The Explanation added thereat vide Act 7 of 2019
stipulates the method of computing the period of three hundred and
sixty-five days after reckoning the stay order of the court, if any.
178.2. The argument proceeds that the period of attachment
mentioned in Section 8(3)(a) of the 2002 Act does not clearly
provide for the consequence of non-filing of the complaint within
three hundred and sixty-five days from the date of attachment
(provisional). This argument clearly overlooks the obligation on the
Director or any other officer who provisionally attaches any property
under Section 5(1), to file a complaint stating the fact of such
attachment before the adjudicating authority within thirty days in5
[2022 SCC OnLine SC 929]
Page 23 of 24terms of Section 5(5) of the 2002 Act. Concededly, filing of
complaint before the adjudicating authority in terms of Section 5(5)
within thirty days from the provisional attachment for confirmation
of such order of provisional attachment is different than the
complaint to be filed before the Special Court under Section
44(1)(b) for initiating criminal action regarding offence of money
laundering punishable under Section 4 of the 2002 Act.
178.3. Furthermore, the provisional attachment would operate only
for a period of one hundred and eighty days from the date of order
passed under Section 5(1) of the 2002 Act in terms of that
provision. Whereas, Section 8(3) refers to the period of three
hundred and sixty-five days from the passing of the order under
sub-section (2) of Section 8 by the adjudicating authority and
confirming the provisional attachment order and the order of
confirmation of attachment operates until the confiscation order is
passed or becomes final in terms of order passed under Section 8(5)
or 8(7) or 58-B or 60(2-A) by the Special Court. The order of
confirmation of attachment could also last during the pendency of
the proceedings relating to the offence of money laundering under
the 2002 Act, or before the competent court of criminal jurisdiction
outside India, as the case may be.”
35. In view of the aforesaid factual matrix and the legal position
as it stands, the objection of the appellant insofar as the limitation
is concerned, also stands decided against the appellant holding the
proceedings to be within limitation.
36. For all the aforesaid reasons stated in the preceding
paragraphs and the findings arrived at by the two forums and
specifically discussed in the instant appeal, we do not find any
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strong case made out by the appellant in holding the two impugned
orders to be bad in law. Rather, the two impugned orders are well-
reasoned orders in tune with the judicial precedents on the subject
matter and therefore there is hardly any scope of interference made
out. Therefore, the instant appeal being devoid of merit, deserves
to be and is accordingly dismissed.
37. As a sequel, miscellaneous petitions pending if any, shall
stand closed. However, there shall be no order as to costs.
_____________
P.SAM KOSHY, J
_________________________
NARSING RAO NANDIKONDA, J
Date: 01.07.2026
Mrm / GSD
