New Delhi, Feb 22 : The Delhi High Court on Thursday stayed a single judge bench's order that mandated the return of seized property to its original owner if the Enforcement Directorate's investigation under the Prevention of Money-Laundering Act extends beyond 365 days without leading to any related offence proceedings.

A division bench of Acting Chief Justice Manmohan and Justice Manmeet Pritam Singh Arora, stayed Justice Navin Chawla's January 31 ruling in favour of Mahender Kumar Khandelwal, the Interim Resolution Professional (IRP) for Bhushan Power and Steel Ltd (BPSL).

Justice Chawla had pointed out that continuing to hold Khandelwal's property without initiating court proceedings or filing a complaint against him amounted to a confiscatory act devoid of legal authority, thus infringing upon Article 300A of the Constitution.

"The continuation of such seizure beyond 365 days, in absence of the pendency of any proceedings relating to any offence under this Act before a court or under the corresponding law of any other country before the competent court of criminal jurisdiction outside India, shall be confiscatory in nature, without authority of law and, therefore, violative of Article 300A of the Constitution of India," the order read.

Therefore, the judge had said, "the natural consequence of the investigation for a period beyond three hundred and sixty five days not resulting in any proceedings relating to any offence under the Act, in terms of Section 8(3) of the Act, is that such seizure lapses and the property so seized must be returned to the person from whom it was so seized".

Despite the ED's actions, Khandelwal, not initially named in the CBI's FIR that predicated the ED's case, had argued for the return of his property, asserting that no charges against him had been formalised within the stipulated 365-day period.

Allowing the plea, the single judge had directed to return the documents, digital devices, property, and other material seized from the petitioner pursuant to the search and seizure operation conducted on August 19 and 20, 2020, unless a competent court orders otherwise.

The court has now put a stay on the last order until March 11, the next date of hearing.

Additional Solicitor General S.V. Raju and special counsel Zoheb Hossain, representing the ED, argued for the necessity of the stay, while advocate D.P. Singh appeared on behalf of Khandelwal.

The ED, in a money laundering case against BPSL, seized documents, records, digital devices, and jewellery from Khandelwal's premises in August 2020. Khandelwal, who was not named in the FIR, sought the return of seized items after more than 365 days without any complaint against him, but the ED refused.

Justice Chawla had noted that if the ED wished to conduct a custodial investigation or arrest Khandelwal, it could move an appropriate application before the court, which it had not done. As the 365-day period had lapsed, he had held that the seized items were liable to be returned.

/IANS