Background of the Case
The case arose from an investigation initiated by the Directorate of Revenue Intelligence (DRI) after intercepting an individual at Kolkata airport in 2018. Authorities alleged that gold meant for export was diverted and later transported domestically.
Subsequent investigations suggested a broader operation involving alleged smuggling of large quantities of gold over time, with proceeds allegedly routed through multiple bank accounts and investments. The ED initiated proceedings under the PMLA, leading to seizure of documents and provisional attachment of properties linked to the accused and their associates.
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The petitioners challenged two key orders of the Adjudicating Authority—one allowing retention of seized materials and another confirming provisional attachment of assets.
The petitioners argued that the orders were legally flawed and violated provisions of the PMLA. They claimed that:
- The retention order was passed beyond the statutory time limit.
- The adjudicating authority was improperly constituted, as the order was passed by a single member.
- There was no credible evidence linking the attached properties to proceeds of crime.
They also maintained that the sources of funds used for purchasing properties were legitimate and not adequately considered.
The High Court carefully examined both procedural and substantive challenges.
On the issue of bench composition, the court clarified that the law permits a single-member bench of the Adjudicating Authority. It observed that the relevant provisions allow flexibility and do not mandate a multi-member bench in every case.
“The statute clearly enables the Chairperson to constitute a bench of one or two members depending on the nature of the case,” the bench noted.
Regarding limitation, the court held that the calculation of timelines must exclude the period affected by COVID-19, in line with Supreme Court directions. It found no error in the adjudicating authority’s computation.
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On merits, the court said there was sufficient prima facie material to justify the ED’s actions. It highlighted factors such as:
- Alleged links between the petitioners and the main accused
- Lack of satisfactory explanation for the source of funds used in property purchases
- Patterns suggesting possible layering of funds
“The material on record is sufficient at this stage to support the conclusion that the properties may be linked to proceeds of crime,” the bench observed.
The Telangana High Court dismissed all three writ petitions. It upheld the orders dated 19.04.2022 and 25.05.2022 passed by the Adjudicating Authority, allowing retention of seized materials and confirming attachment of properties.
The court concluded that no illegality or procedural violation was made out and found no grounds to interfere with the ongoing investigation.
Case Details
Case Title: Sanjay Agarwal & Others vs Union of India & Others
Case Number: W.P. Nos. 45761, 31957 & 31958 of 2022
Judges: Justice P. Sam Koshy & Justice Suddala Chalapathi Rao
Decision Date: 26 March 2026
