 Procedural scheme under PMLA, 2002 until conclusion of trial.

 Process of and Difference between ‘Provisional Attachment Order’ and

‘Search & Seizure’ of properties.

PART I: PROCEDURAL SCHEME UNDER PMLA, 2002

The Prevention of Money Laundering Act, 2002 is a comprehensive self-contained statute
enacted to prevent the offence of money laundering, confiscate and seize the property obtained
from the laundered money, and deal with matters connected therewith. Administered by the
Enforcement Directorate ('ED'), the PMLA establishes a parallel, and in many respects more
stringent, procedural regime than the general criminal law framework under the BNSS.
The procedural scheme under PMLA encompasses two broad tracks operating simultaneously:
(i) the civil/quasi-civil track relating to attachment, adjudication and confiscation of property,
and (ii) the criminal track relating to investigation, arrest, prosecution and trial of the
offence of money laundering. This memorandum traces the full lifecycle of a PMLA
proceeding from initiation of investigation to conclusion of trial.

A. INITIATION: ENFORCEMENT CASE INFORMATION REPORT (ECIR)

The PMLA does not require registration of a FIR to commence proceedings. Instead, the
Enforcement Directorate registers an internal document called the Enforcement Case
Information Report (ECIR), which serves as the trigger for PMLA action.

1. Nature of ECIR
The ECIR is the foundational document of a PMLA inquiry. It is typically registered when the ED
receives information of a scheduled offence (a predicate offence listed in the Schedule to the
PMLA) in connection with which proceeds of crime are alleged to have been generated.
Crucially, an ECIR can be registered even on the basis of an FIR filed by a State police agency
or chargesheet filed by another investigation agency.

Vijay Madanlal Choudhary & Ors. v. Union of India & Ors.

(2022) SCC OnLine SC 929 | Supreme Court of India | July 27, 2022
The Supreme Court held that the ECIR is an internal document of the ED. Unlike an FIR which is
a statutory document under the CrPC/BNSS, there is no provision in the PMLA requiring the ED
to record the ECIR or furnish a copy thereof to the accused. If at the time of arrest the ED
discloses the grounds of arrest to the person arrested, the mandate of Article 22(1) of the
Constitution is fulfilled. The ECIR is therefore not equivalent to an FIR and need not be supplied
as of right.
2. Prerequisite: Scheduled Offence
A fundamental precondition for the commencement of PMLA proceedings is the existence of a
'scheduled offence.' The Schedule to the PMLA lists approximately 29 categories of offences
drawn from various statutes including the Indian Penal Code, Narcotic Drugs and Psychotropic
Substances Act, Prevention of Corruption Act, Customs Act, Companies Act, Unlawful Activities
(Prevention) Act, and others. Without a valid underlying scheduled offence, the ED lacks
jurisdiction to act under the PMLA.

Pavana Dibbur v. Enforcement Directorate

(2023) SCC OnLine SC 1497 | Supreme Court of India
The Supreme Court affirmed that the existence of a scheduled offence is a sine qua non (without,
which not) for PMLA proceedings. The predicate offence need not result in conviction, but
proceeds of crime must be traceable to a scheduled offence. The Court further held that even a
person not accused of the predicate offence can be proceeded against under Section 3 PMLA if
they have knowingly assisted in concealing proceeds of crime.

B. INVESTIGATION STAGE
Once an ECIR is registered, the ED undertakes an inquiry (the PMLA uses the term 'inquiry'
rather than 'investigation,' though the distinction is largely terminological) to trace and identify
proceeds of crime.

1. Summons under Section 50

Section 50 of the PMLA empowers the Director, or any officer not below the rank of Deputy
Director authorised by the Director, to summon any person whose attendance is considered
necessary for giving evidence or producing records in any inquiry. Persons so summoned are
bound to appear, state the truth, and produce records. Statements recorded under Section 50
are admissible as evidence.

Vijay Madanlal Choudhary v. Union of India (Section 50 Holding)

(2022) | Supreme Court of India
The Court upheld Section 50 and held that statements recorded by ED officers do not violate the
right against self-incrimination under Article 20(3) of the Constitution. The protection of Article
20(3) applies only to a 'person accused of an offence,' i.e., a person formally accused. A person
merely summoned as a witness or for inquiry is not an 'accused' at that stage. Hence testimonial
compulsion under Section 50 does not offend Article 20(3) unless the person has been formally
accused.

2. Search and Seizure (Section 17 & 18)

Parallel to summons under Section 50, the ED may exercise its powers of search and seizure
under Section 17 (search of premises/property) and Section 18 (search of persons). These
powers are subject to detailed procedural requirements.

3. Attachment of Property (Section 5)

Simultaneously with investigation, the ED may provisionally attach property believed to be
proceeds of crime under Section 5. This civil-quasi remedy runs concurrently with the criminal
investigation.

C. ARREST UNDER SECTION 19

Section 19(1) of the PMLA empowers an authorised ED officer to arrest a person if, on the
basis of material in his possession, he has reason to believe that such person has been guilty of
an offence punishable under Section 4 PMLA. The reasons for arrest must be recorded in
writing.

Procedural Requirements for Arrest

Requirement Statutory / Judicial Source
Reasons for arrest must be recorded Section 19(1) PMLA
in writing before arrest
Grounds of arrest must be Pankaj Bansal v. Union of India (2023)
communicated in writing to the
arrested person
Copy of written grounds to be given to Ram Kishor Arora v. Directorate of Enforcement (2023)
arrested person within 24 hours
Material forming basis of arrest must Section 19(2) PMLA
be forwarded to Adjudicating Authority
in sealed envelope immediately after
arrest
Arrested person to be produced Section 19(3) PMLA; Article 22(2) Constitution
before Special Court / Magistrate
within 24 hours of arrest
Special Court to consider bail under Section 45 PMLA; Vijay Madanlal Choudhary (2022)
the 'twin conditions' of Section 45
PMLA

Pankaj Bansal v. Union of India

 (2023) 14 SCC 577 | Supreme Court of India
A landmark ruling that the ED is mandatorily required to furnish written grounds of arrest to the
arrested person at the time of arrest itself, and not merely communicate them orally. This was a
significant departure from the position in Vijay Madanlal and constituted a substantial procedural
safeguard for accused persons. Non-compliance renders the arrest illegal.

High Court of Punjab and Haryana – Non-Compliance with Section 19(2)

2024 – Bhushan Steel Case (PMLA Landmark Judgments 2024, Part I)
The High Court held that non-compliance with Section 19(2) – which requires forwarding of
reasons for arrest to the Adjudicating Authority immediately after arrest in a sealed envelope –
vitiates both the arrest and the order of remand. The word 'immediately' in Section 19(2) was
interpreted as 'contemporaneously.' The High Court emphasized that this compliance must be
effected before passing the order of remand and must be placed before the Magistrate as proof
of compliance.

D. BAIL UNDER SECTION 45 – THE TWIN CONDITIONS

Bail in PMLA matters is governed by Section 45, which imposes two conditions that must be
satisfied before any court can grant bail to a person accused of an offence under Section 4
PMLA. These conditions substantially depart from the default position under general criminal
law.

Section 45 PMLA – Twin Conditions for Bail

No person accused of an offence under Section 4 PMLA shall be released on bail unless: (i) the
Public Prosecutor has been given an opportunity to oppose the application for release; AND (ii)
where the Public Prosecutor opposes the application, the Court is satisfied that there are
reasonable grounds for believing that the accused is NOT guilty of the offence AND that the
accused is NOT likely to commit any offence while on bail. This effectively reverses the ordinary
presumption of innocence at the bail stage.

Key Aspect Position under PMLA

Default principle Jail is the rule; bail is the exception (reversal of ordinary
criminal law presumption)
Burden at bail stage On the accused to demonstrate prima facie innocence to
the court's satisfaction
Section 24 – Reverse Burden Once material facts are proved, the accused is presumed
to have engaged in money laundering unless proven
otherwise
Anticipatory bail Available under Section 482 BNSS but subject to the
rigours of Section 45 PMLA as per Vijay Madanlal
 Default bail (s.187 BNSS) The right to default bail exists under PMLA – a significant
pro-accused safeguard
Section 436A Benefits of half the maximum sentence for computation of
bail eligibility are available
Constitutional bail (Articles 226/32) Twin conditions of Section 45 apply even to petitions under
Articles 226 and 32

Nikesh Tarachand Shah v. Union of India

(2018) 11 SCC 1 | Supreme Court of India
The Supreme Court struck down the pre-2018 version of Section 45 as unconstitutional for
violating Articles 14 and 21 on account of linking bail conditions to the nature of the scheduled
offence rather than to the money laundering offence itself. Parliament thereafter amended
Section 45 in 2018 to apply the twin conditions uniformly to the offence of money laundering
under Section 4.

Arvind Dham v. Directorate of Enforcement ('Wherewithal Test')

January 6, 2026 | Supreme Court of India (Justices P.V. Sanjay Kumar & Alok Aradhe)
The Supreme Court introduced what may be termed the 'Wherewithal Test' – holding that where
the State lacks the wherewithal to conclude the trial within a reasonable timeframe, the gravity of
the offence cannot override the accused's right to liberty. The Court held that when pre-trial
detention approaches the length of the potential sentence, Section 45's twin conditions must
yield to Constitutional imperatives. Delay in trial attributable to the prosecution is a ground that
must weigh heavily in favour of bail.

E. COGNIZANCE, FILING OF COMPLAINT & SPECIAL COURT

Unlike ordinary criminal proceedings where the police file a chargesheet (under Section 193
BNSS) and the Magistrate takes cognizance thereof, the PMLA creates a distinct mechanism
for filing of complaint and trial.

1. Filing of Prosecution Complaint

Upon completion of investigation, the ED files a 'prosecution complaint' (equivalent of a
chargesheet) before the Special Court. Under Explanation II to Section 44(1)(b) (inserted by the
2019 Amendment), the complaint is deemed to include any subsequent complaint in respect of
further investigation against the same or additional accused. This enables the ED to file
supplementary complaints bringing in additional evidence or accused persons.

2. Special Courts under Section 44

Section 44 of the PMLA establishes that offences under the Act are triable by Special Courts
constituted under the Act. The Special Court exercises jurisdiction over both the scheduled
offence and the money laundering offence. Section 44(1)(d) provides that the Special Court
holds trial in accordance with the provisions of the CrPC/BNSS as applicable to a trial before a
Court of Session.

Feature Position under PMLA

Court Special Court constituted under PMLA by Central/State
Government
Cognizance Taken upon complaint by ED under Section 44(1)(b); no
committal required
Standard for cognizance Prima facie case for offence under Section 3 must exist;
otherwise dismissed under Section 225 BNSS
Scheduled offence trial May be committed to the same Special Court under
Section 44(1)(c)
Independence of jurisdiction Jurisdiction of Special Court not dependent on orders in
scheduled offence proceedings
Supplementary complaint Deemed part of original complaint; investigation and trial
can proceed simultaneously

3. Pre-Cognizance Hearing – BNSS Regime (Post-July 1, 2024)

A significant development post July 1, 2024 is the application of Section 223(1) of the BNSS to
PMLA complaints. Unlike Section 200 CrPC (which did not require a pre-cognizance hearing),
Section 223 BNSS mandatorily requires the Magistrate/Special Court to afford the accused an
opportunity to be heard before taking cognizance. This has been confirmed to apply to PMLA
complaints filed after July 1, 2024.

Kushal Kumar Agarwal v. Directorate of Enforcement

Supreme Court of India | 2024-25
The Supreme Court held that the proviso to Section 223(1) of the BNSS 2023, which mandates a
pre-cognizance hearing, applies to complaints filed under Section 44(1)(b) PMLA after July 1,
2024. Non-compliance with this mandatory provision renders the cognizance order invalid. The
Court set aside the Special Judge's cognizance order solely on the ground of non-compliance.
This ratio has since been followed by the Delhi and Kerala High Courts.

Tarsem Lal v. Directorate of Enforcement

(2024) Supreme Court of India | May 16, 2024
The Supreme Court clarified the full extent of applicability of CrPC to PMLA trials. Once
cognizance of a complaint under Section 44(1)(b) is taken, Sections 200-205 CrPC (now
Sections 223-226 BNSS) apply. The Court further held: (a) a bond under Section 88 CrPC is not
an order of bail; (b) if an accused does not appear after summons, the court may issue warrants;
 (c) an application for cancellation of warrants is not an application for bail, and hence Section 45
twin conditions do not apply at that stage.

F. STAGES OF TRIAL
The trial before the Special Court proceeds in stages substantially similar to a Sessions trial
under the BNSS, but with several PMLA-specific modifications.

Stage Filing of Prosecution Complaint by ED before Special Court

1

Stage Pre-Cognizance Hearing (Section 223 BNSS) – accused given opportunity to be heard
2 [post July 1, 2024]

Stage Taking of Cognizance by Special Court if prima facie case is made out
3

Stage Issuance of Summons/Warrants to accused (Section 204 CrPC / 226 BNSS); Court
4 issues summons, not warrants, in first instance

Stage Appearance of Accused before Special Court; Bail applications governed by Section 45
5 PMLA

Stage Supply of Documents to Accused (Section 207 CrPC / 230 BNSS); copies of complaint,
6 statements, documents etc.

Stage Framing of Charges – Special Court frames charges if there is grave suspicion of
7 commission of offence

Stage Plea of Accused – accused pleads guilty or not guilty

8

Stage Prosecution Evidence (Examination-in-Chief, Cross-Examination, Re-Examination of

9 Prosecution Witnesses)

Stage Statement of Accused under Section 313 CrPC / s.351 BNSS (accused's explanation of
10 prosecution evidence)

Stage Defence Evidence (if any)

11

Stage Final Arguments

12

Stage Judgment – Conviction / Acquittal

13

Stage Sentencing (if conviction) – Imprisonment up to 7 years, up to 10 years if scheduled

14 offence under NDPS Act (Section 4 PMLA)

Stage Order as to Confiscation (Section 8(5)–(6) PMLA) – property to be confiscated or

 15 returned depending on verdict

G. KEY TRIAL-SPECIFIC PROVISIONS

1. Reverse Burden of Proof – Section 24

Section 24 of the PMLA provides that once it is proved that the proceeds of crime are involved,
and in the case of a person charged with an offence under Section 3, the burden of proving that
such proceeds of crime are untainted property shall lie on the accused. This reversal of the
ordinary presumption of innocence was upheld by the Supreme Court in Vijay Madanlal
Choudhary as constitutionally valid in light of the special nature of money laundering offences.

2. Admissibility of Statements under Section 50

Statements recorded by ED officers under Section 50 during investigation are admissible as
evidence in trial, unlike statements recorded by police officers. This is a significant procedural
departure that dramatically alters the prosecution's burden at trial.

3. Discharge of Accused (Pre-Trial)

Under Sections 227-228 CrPC (s.250-251 BNSS) the Special Court may discharge an accused
at the charge-framing stage if it finds that there is no sufficient ground for proceeding against the
accused. Courts have held that charges under PMLA ought to be framed when there is 'grave
suspicion' of commission of the offence; if the trial appears to be an exercise in futility with no
prospect of conviction, the accused may be discharged. [Satish Mehra v. State (NCT of Delhi)
– cited in PMLA judgments 2024]

4. Confiscation of Property post-Trial

Under Section 8(5), after the conclusion of trial, if the Special Court convicts the accused, it
shall order confiscation of the property involved in money laundering. Under Section 8(6), if the
Special Court acquits the accused, it shall order release of the attached/seized property unless
it decides to retain such property in accordance with provisions of the PMLA.

H. APPEALS
Appeals from orders of the Special Court lie to the High Court under Section 44(2) read with the
relevant provisions of the BNSS. In respect of adjudication orders of the Adjudicating Authority,
appeal lies to the Appellate Tribunal under Section 26 of the PMLA. Further appeals from the
Appellate Tribunal lie to the High Court and ultimately to the Supreme Court.
PART II: PROVISIONAL ATTACHMENT ORDER (PAO) vs. SEARCH &
SEIZURE
Two of the most potent and frequently deployed powers under the PMLA are: (i) Provisional
Attachment under Section 5 (the PAO mechanism), and (ii) Search and Seizure of property
under Sections 17 and 18. While both mechanisms serve the overarching goal of preventing
dissipation of proceeds of crime, they differ fundamentally in their legal character, triggering
conditions, procedural requirements, duration, and consequences.

A. PROVISIONAL ATTACHMENT ORDER (PAO) – SECTION 5

1. Statutory Basis and Purpose

Section 5(1) of the PMLA empowers the Director, or any officer not below the rank of Deputy
Director authorised by the Director, to provisionally attach property that is believed to be
proceeds of crime. The attachment operates as a legal interdict preventing the owner from
transferring, dealing with, or disposing of the attached property.

Section 5(1) PMLA – Provisional Attachment: Statutory Text (Paraphrased)

Where the Director (or authorised Deputy Director), having reason to believe (reasons recorded
in writing) on the basis of material in his possession, that: (a) any person is in possession of any
proceeds of crime; AND (b) such proceeds of crime are likely to be concealed, transferred or
dealt with in any manner which may result in frustrating any proceedings relating to confiscation
of such proceeds of crime under the Chapter; he may, by order in writing, provisionally attach
such property for a period not exceeding 180 days.

2. Conditions Precedent for Issuance of a PAO

• The Director or Deputy Director must have 'reason to believe' – a higher standard than
mere suspicion. The reasons must be based on material in the officer's possession.
• The reasons must be recorded in writing before the order is made.
• The person against whom proceedings under PMLA have been initiated must be in
possession of proceeds of crime.
• Such proceeds must be likely to be concealed, transferred or dealt with in a manner that
would frustrate confiscation proceedings.
• The property attached must be 'proceeds of crime' or property equivalent in value to
proceeds of crime.

Vijay Madanlal Choudhary v. Union of India (Section 5 Holding)

(2022) | Supreme Court of India
 The Supreme Court upheld Section 5 as constitutionally valid. The Court held that the expression
'reason to believe' must meet the safeguards inbuilt in Section 5(1) and the second proviso
thereto. Not only tainted property (i.e., property acquired directly from proceeds of crime) but also
any other asset of equivalent value of the offender of money laundering can be attached,
provided there is a link or nexus with the offence. If tainted property cannot be traced or is
deficient, any other asset of equivalent value can be attached.

3. Scope of Attachable Property

The scope of property that may be attached under Section 5 is broad:
• Any property directly or indirectly derived or obtained from proceeds of crime.
• Any property of equivalent value to the proceeds of crime (even if not the tainted
property itself).
• Property held in the name of third parties if it can be traced to proceeds of crime.
• Immovable property, movable property, financial assets, bank accounts, etc.

Delhi High Court – Provisional Attachment and Third Parties

PMLA Adjudicating Authority Jurisprudence
Courts have consistently held that an innocent purchaser of attached property has limited
remedies under the PMLA framework. The burden shifts to such persons to demonstrate that
they are bona fide purchasers for value without knowledge of the money laundering, in
proceedings under Section 8(1) before the Adjudicating Authority.

4. Post-Attachment Procedure (Section 5(4) and (5))

Timeline / Step Requirement
Contemporaneously with attachment Reasons recorded in writing must be preserved and
forwarded to Adjudicating Authority in sealed envelope
Within 30 days of attachment Director/officer must file a complaint before the
Adjudicating Authority (AA) stating facts of attachment
[Section 5(5)]
Adjudicating Authority issues notice AA issues show cause notice under Section 8(1) to the
person whose property is attached, calling upon them to
disclose sources of income/acquisition
AA hearing AA conducts hearing; person may disclose source of
income and produce evidence
AA order under Section 8(2)/(3) AA decides whether property is or is not involved in
money laundering; if involved, confirms attachment
[Section 8(3)]
PAO validity period Not exceeding 180 days from date of order;
automatically ceases if not confirmed by AA
 Post-confirmation (Section 8(4)) ED entitled to take physical possession of confirmed
attached property

Adjudicating Authority's Confirmation under Section 8(3)

Enforcement Directorate Guidelines / PMLA Scheme
Once the Adjudicating Authority confirms the attachment under Section 8(3), the property
remains attached: (a) during investigation for a period not exceeding 365 days; or (b) for the
pendency of proceedings relating to any offence under the PMLA before a court; or (c) during the
pendency of corresponding law proceedings – whichever is later. This means post-confirmation,
the attachment effectively remains operative until the conclusion of trial.

5. Enjoyment of Immovable Property During Attachment [Section 5(4)]

Section 5(4) provides that the provisional attachment of immovable property shall not prevent
any person who has any interest in, or claim to, the enjoyment of the property from enjoying it
pending attachment. This is an important protection ensuring that attachment is not used to
deprive persons of shelter or livelihood.

6. Cessation of PAO
• The PAO automatically ceases if the Adjudicating Authority does not pass an order
under Section 8(2) within 180 days of the date of the attachment order.
• If the AA, by order, records a finding that the property is NOT involved in money
laundering, the PAO ceases from the date of such order.
• If no complaint is filed within 30 days under Section 5(5), the PAO is liable to be
invalidated.

B. SEARCH AND SEIZURE – SECTIONS 17 & 18

1. Section 17 – Search of Premises and Seizure of Property/Records

Section 17(1) empowers the Director or any officer not below the rank of Deputy Director
authorised by the Director, to conduct searches of premises, places, or vehicles if, on the basis
of information in his possession, he has reason to believe that any person:
• Has committed any act constituting money laundering; OR
• Is in possession of any proceeds of crime involved in money laundering; OR
• Is in possession of any records relating to money laundering; OR
• Is in possession of any property related to crime.

Section 17 – Key Procedural Safeguards (as affirmed in Vijay Madanlal Choudhary)

 Section 17 restricts the power of search to senior ED officials (Director or Deputy Director). The
officer must have 'reason to believe' (not mere suspicion) based on information in his possession.
The reasons must be recorded in writing. These recorded reasons, along with the material, must
be forwarded to the Adjudicating Authority in a sealed envelope. This ensures transparency,
accountability and judicial oversight over the exercise of the drastic power of search and seizure.

2. Procedure During Search under Section 17

• Search can be conducted only after a report is forwarded to a Magistrate or a complaint
is filed before a Magistrate or Court [Prevention of Money Laundering (Forms, Search &
Seizure) Rules, 2005].
• Search must be conducted in the presence of at least two independent witnesses
('panchas') from the locality.
• The officer conducting the search can obtain entry by breaking locks or doors if
necessary.
• Vehicles, vessels or aircraft may be stopped for search purposes.
• The occupier of the building/place may be present during search.

3. Seizure and Freezing under Section 17

Upon search, the ED officer may:
• Seize any record or property found as a result of the search.
• Where seizure of a property is impracticable (e.g., immovable property or large
machinery), make an order for freezing of such property under Section 17(1-A). Once
frozen, the property cannot be transferred without permission of the freezing authority.

Post-Seizure / Freezing Requirement Statutory Source

Reasons for search and seized material to be Section 17(1) r/w PML Rules 2005
forwarded to Adjudicating Authority in sealed
envelope
Within 30 days of seizure/freezing, ED must file Section 17(4) PMLA
an application before the AA under Section
17(4) seeking permission for retention or
continuation of freezing
Section 20 PMLA – Fresh recording of reasons Section 20 PMLA
to believe that property is required for
adjudication under Section 8 (this is substantive
and mandatory, not procedural)
AA to be satisfied of money laundering, issue Section 8 PMLA
show cause notice, conduct hearing, and
confirm retention
Confirmed retention continues for 365 days or Section 8(3) PMLA
pendency of proceedings, whichever is later
 Anirudh Pratap Agarwal v. Enforcement Directorate
Misc. Appeal (PMLA) 21 of 2024 | Delhi High Court | 2024
The Delhi High Court enunciated the Three-Phase Graded Framework for search, seizure and
retention under the PMLA: Phase 1 – Search and Seizure/Freezing under Section 17; Phase 2 –
Application for Retention and fresh recording of 'reasons to believe' under Section 20; Phase 3 –
Adjudication and Confirmation by the Adjudicating Authority under Section 8. The Court held that
no step can be skipped or substituted. Section 20 is substantive and mandatory in nature – it
forms the critical bridge between seizure and adjudication. Non-compliance with any step renders
the entire chain of action illegal.

4. Section 18 – Search of Persons

Section 18 empowers an officer not below the rank of Deputy Director to search any person if
he has reason to believe that such person has secreted about his person any article or
document which may be relevant to proceedings under the PMLA. Specific provisions exist for
the search of women (to be conducted by a female officer) and for the recording of such search.
A statement by a person searched is admissible.

C. COMPARISON: PAO vs. SEARCH & SEIZURE

The following comparative analysis highlights the critical distinctions between the Provisional
Attachment Order mechanism and the Search & Seizure power:

Parameter Provisional Attachment Order Search & Seizure (Section

(Section 5) 17/18)
Statutory Authority Section 5 PMLA Section 17 / Section 18 PMLA
Nature of Power Civil / quasi-civil remedy for Investigative / coercive remedy for
securing property; preventive in gathering evidence and securing
nature proceeds of crime
Who Can Exercise Director or any officer not below Director or any officer not below
Deputy Director, authorised by Deputy Director, authorised by
Director Director
Trigger / Threshold Reason to believe (recorded in 'Information in possession' (reason
writing) that person possesses to believe) that person has
proceeds of crime AND such committed money laundering, or is
proceeds are likely to be in possession of proceeds of crime,
concealed/transferred frustrating property or records relating to
confiscation money laundering
Target Property (movable or immovable) Premises, places, vehicles, vessels,
identified as proceeds of crime or aircraft; property and records found
equivalent value property therein; also persons under Section
18
 Purpose Preservation of property to prevent Evidence gathering; securing
dissipation pending adjudication proceeds of crime; tracing and
and trial identifying tainted property
Physical Possession No physical possession initially; Physical custody of seized
person continues in possession property/records passes to the ED
though legally restrained from immediately upon seizure. Freezing
dealing with property. ED takes order restricts dealing with property
possession only after confirmation in situ.
by AA under Section 8(4)
Validity Period Maximum 180 days from date of Initial seizure is for 30 days;
issuance; ceases if AA does not continuation requires application to
confirm within 180 days AA under Section 17(4); retention
under Section 20 pending
adjudication
Notice to Affected AA issues show cause notice under Notice to affected person at the
Person Section 8(1) within 180 days; not stage of AA proceedings under
less than 30 days' notice Section 8 after application by ED
within 30 days
Procedural Next Step File complaint before AA within 30 File application before AA within 30
days under Section 5(5) days under Section 17(4); record
fresh reasons under Section 20
Enjoyment of Property Person with interest can continue to Seized/frozen property is under
enjoy immovable property during custody/restraint of ED; no
attachment [Section 5(4)] enjoyment permitted
Prerequisite FIR / Not required; can be initiated even Requires report/complaint to have
Complaint before FIR in some cases been forwarded to Magistrate [as
per PML Rules 2005]
Constitutional Validity Upheld by SC in Vijay Madanlal Upheld by SC in Vijay Madanlal
Choudhary (2022) Choudhary (2022); Section 17 held
to contain in-built safeguards
Role in PMLA Ensures proceeds of crime do not Enables gathering of evidence and
Framework disappear; operates at tracing of property; operates at
attachment/adjudication level investigation level
Appeal Against AA confirmation – appeal to Against the search/seizure itself –
Appellate Tribunal under Section primarily by way of writ petition
26; then to High Court before High Court under Article 226

D. THE THREE-PHASE GRADED FRAMEWORK (SEARCH →

RETENTION → ADJUDICATION)
As crystallised by the Delhi High Court in Anirudh Pratap Agarwal v. Enforcement
Directorate (2025), the post-search process under the PMLA follows a mandatory three-phase
graded framework. No phase can be skipped, and each phase has its own independent
substantive requirements:
 PHASE 1 Trigger: Information in possession giving reason to believe money
Search & Seizure laundering / proceeds of crime. Action: Search, seize records and
Section 17 PMLA property or freeze impractical-to-seize property. Requirement: Reasons
to be recorded in writing; forwarded to AA in sealed envelope; search in
presence of panchas.

PHASE 2 Within 30 days of seizure: ED files application under Section 17(4)

Retention / Freezing before AA. Section 20 (mandatory, substantive): Authorised officer must
Section 20 PMLA independently record FRESH reasons to believe that the property is
required for the purposes of adjudication under Section 8. This is not a
formality – it is the critical bridge between seizure and adjudication.
Without Section 20 compliance, retention cannot be confirmed.

PHASE 3 Adjudicating Authority receives application and must record prima facie
Adjudication reasons to believe that money laundering was committed. AA issues
Section 8 PMLA show cause notice (minimum 30 days) to affected person. Hearing
conducted. AA passes order: (a) confirms attachment/retention if
property involved in money laundering [Section 8(3)], or (b) releases
property if not involved. Post confirmation: property remains attached
for 365 days / pendency of proceedings. ED takes possession under
Section 8(4).

E. INTERACTION BETWEEN PAO AND SEARCH & SEIZURE

The PAO and search & seizure are not mutually exclusive and in practice often operate
simultaneously within a single PMLA proceeding. The following dynamics are noteworthy:

• Concurrent Operation: The ED may issue a PAO under Section 5 to attach identified
property while simultaneously conducting searches under Section 17 to seize additional
property and gather evidence. Both proceed to the Adjudicating Authority through their
respective routes.
• Confirmed Attachment Leads to Possession: In both cases – PAO confirmed under
Section 8(3) and property seized/frozen under Section 17 confirmed under Section 8(3)
– the ED is entitled to take physical possession of the property under Section 8(4). The
route to confirmation differs; the end result is the same.
• Coordinated with Prosecution Complaint: Once the prosecution complaint is filed
before the Special Court, the trial court's jurisdiction over the property is engaged
alongside the Adjudicating Authority's civil jurisdiction. Section 8(6) ultimately empowers
the Special Court to order confiscation (on conviction) or return (on acquittal) of
attached/seized property.
• ECIR Drives Both Powers: Both the PAO and search & seizure powers are triggered
by the same ECIR. The ECIR serves as the parent document that authorises both
streams of ED action.

Abdullah Ali Balsharaf v. Directorate of Enforcement (2019)

Delhi High Court
The Delhi High Court held that the Enforcement Directorate acting under the PMLA cannot
exercise powers under Section 102 CrPC (Police officer to seize property) simultaneously with
powers under Section 17(1)(a) PMLA. The scheme of seizure and checks and balances under
the PMLA is substantively different from the CrPC. Section 17(1)(a) PMLA is inconsistent with
Section 102 CrPC, and by operation of Section 65 PMLA (which provides that CrPC applies only
where not inconsistent with PMLA), Section 102 CrPC cannot be applied in PMLA matters.
PART III: PMLA PROCEEDINGS

CRIMINAL TRACK CIVIL/ADJUDICATION TRACK

Registration of ECIR Concurrent: Search/Seizure / PAO
Summons under Section 50 (inquiry) PAO under Section 5 OR Search & Seizure under
Section 17
Search & Seizure under Section 17/18 Complaint to AA within 30 days (Section 5(5) /
Section 17(4))
Arrest under Section 19 (if warranted) AA issues show cause notice under Section 8(1) –
min. 30 days
Production before Special Court within 24 hrs Hearing before Adjudicating Authority
Bail hearing under Section 45 (Twin AA Confirmation under Section 8(3) – 365 days / till
Conditions) proceedings
Filing Prosecution Complaint before Special ED takes possession under Section 8(4)
Court
Pre-cognizance hearing [BNSS Section 223] Property managed / administered pending trial
Taking of Cognizance by Special Court Appellate Tribunal if AA order challenged [Section
26]
Supply of documents to accused [Section 207
CrPC]
Charge Framing (grave suspicion test)

Trial – Prosecution Evidence (Section 50

statements admissible)
Statement under Section 313 CrPC

Defence Evidence

Final Arguments

Judgment – Conviction / Acquittal Confiscation [Section 8(5)] or Release [Section

8(6)] of property