Court Rules ED Lost Authority to Retain Documents, Digital Devices, and Freeze Locker Under PMLA Without Adjudicating Authority's Permission
In a significant judgment delivered on October 14, 2026, the Bombay High Court (Division Bench) ruled in favor of Mukesh Talreja, directing the Enforcement Directorate (ED) to release a locker and return all documents and digital devices seized during a raid conducted under the Prevention of Money Laundering Act, 2002 (PMLA). The Court held that the ED had no authority to continue retaining the seized property or freeze the locker beyond the statutory period of 180 days without an order from the Adjudicating Authority.
The case arose from a search conducted by the ED on February 21, 2022, during which the agency seized documents, digital devices, and froze Locker No. 1643 belonging to Mr. Talreja. The seizure was part of an investigation based on an ECIR (Enforcement Case Information Report) linked to an FIR registered against the petitioner. The ED filed an application with the Adjudicating Authority seeking permission to retain the seized materials and continue the freezing order. However, the statutory period of 180 days, prescribed under Section 20 of PMLA for such retention, expired without any order permitting extension.
The petitioner challenged the continued retention and freezing of his property, arguing that the ED's authority ceased by operation of law upon expiry of the 180-day period. He further contended that the predicate offence and the ECIR had been quashed by competent courts, which was confirmed finally by the Supreme Court's disposal of related review petitions.
The Court examined the relevant provisions of the PMLA, particularly Sections 17 and 20. Section 17 empowers the ED to search, seize, and freeze property suspected to be proceeds of crime but mandates that the agency must seek the Adjudicating Authority's permission for retention or freezing beyond 180 days. Section 20 explicitly requires that seized property be returned to the person from whom it was seized once the 180-day period lapses unless extended by the Adjudicating Authority.
Despite the ED's submissions referring to ongoing investigations and Supreme Court directions in related matters, the Court found no dispute regarding the expiry of the 180-day period nor any order permitting continued retention or freezing. The Court held that by efflux of time, the ED lost the authority to retain the seized articles or keep the locker frozen.
Accordingly, the Bombay High Court allowed the writ petition, directing the ED to release the locker and return all seized documents and digital devices within one week of the order.
This judgment underscores the strict statutory limits on the duration for which seized property can be retained under the PMLA and reinforces judicial oversight over enforcement actions to prevent unlawful deprivation of property.
Bottom Line:
Prevention of Money Laundering Act, 2002 - Search and seizure - Retention of seized documents and digital devices and continuation of freezing of locker beyond 180 days - In absence of any order of Adjudicating Authority permitting retention or continuation of freezing beyond statutory period, ED loses authority by operation of law to retain seized articles or continue freezing - Seized property liable to be returned and locker liable to be de-freezed.
Statutory provision(s): Prevention of Money Laundering Act, 2002 Sections 17, 20
Mukesh Talreja v. Directorate of Enforcement, (Bombay)(DB) : Law Finder Doc Id # 3001076
