Whether Supreme Court 's COVID-19 Limitation Extension Orders Apply To Proceedings U/S 5 Of PMLA? Delhi High Court Answers

The Delhi High Court has clarified on the applicability of the Orders passed by the Supreme Court in In re: Cognizance for Extension of Limitation (Suo Motu W.P. (C) No. 3/2020) in light of the COVID-19 pandemic, to the proceedings under Section 5 of the Prevention of Money Laundering Act, 2002 (PMLA).

The Court was deciding a Letters Patent Appeal filed by the Enforcement Directorate (ED) against the Judgment of the Single Judge and a Writ Petition filed against a Provisional Attachment Order (PAO).

A Division Bench comprising Justice Anil Kshetarpal and Justice Harish Vaidyanathan Shankar observed, “… it is evident that the orders of the Hon’ble Supreme Court in In re: Cognizance for Extension of Limitation (supra) were intended to extend limitation periods prescribed under all general and special laws in relation to judicial and quasi-judicial proceedings, whether such limitation was condonable or not. Consequently, in the absence of any express exclusion, these directions would squarely apply to proceedings under the PMLA, including the limitation period prescribed for adjudication under Section 8 by the learned Adjudicating Authority, which indisputably exercises quasi-judicial functions.”

The Bench said that COVID-19 pandemic was not an ordinary occurrence; it was an unprecedented event in recent human history, one that may arise only once in generations and the relaxations granted by the Supreme Court during this extraordinary crisis cannot, and certainly should not, be equated with or exploited by authorities to claim undue advantage in normal circumstances.

Advocate (Special Counsel) Zoheb Hossain appeared for the Appellants, while Senior Advocate N. Hariharan appeared for the Respondents.

Facts of the Case

By the impugned Judgment, the Single Judge had allowed a Writ Petition of the Respondents and set aside the Notice/Summons issued by the Adjudicating Authority. The Single Judge had held that the said Notice/Summons was beyond the period of 180 days, as prescribed under Section 5(3) of the PMLA, from the date of PAO and thereby, had expired without any order being passed by the Adjudicating Authority under Section 8(3) of the PMLA.

The sole question that arose for consideration in this case was, whether in light of the COVID-19 pandemic, the Orders passed by the Supreme Court in In re: Cognizance for Extension of Limitation, extending limitation periods, would also apply to proceedings under Section 5 of the PMLA, which mandates that a provisional attachment must be confirmed within a maximum period of 180 days by the Adjudicating Authority under Section 8(3) of the PMLA.

Court’s Observations

The High Court in the above context of the case, held, “In view of these authoritative pronouncements, and considering the nature of the powers, functions, and responsibilities entrusted to the learned Adjudicating Authority, we have no hesitation in holding that under Section 8 of the PMLA, it exercises a quasi-judicial function. It determines questions affecting valuable rights in property, it is vested with legal authority under the statute, and it is bound to act judicially by ensuring notice, hearing, evaluation of evidence, and reasoned decision-making. Its role, therefore, is not administrative or executive but clearly quasi-judicial in nature.”

The Court noted that the Orders in In re: Cognizance for Extension of Limitation were intended to cover judicial and quasi-judicial proceedings across Courts, Tribunals and Authorities and were never meant to enlarge the time available for purely administrative acts of the executive, such as the filing of charge sheets under Section 167 of the Criminal Procedure Code, 1973 (CrPC).

“Unlike Section 167 of the CrPC, where the failure of the police alone triggers the consequence of bail, proceedings before the learned Adjudicating Authority under the PMLA require the participation of both parties. The Hon’ble Supreme Court’s pandemic-related directions were intended precisely to safeguard such adjudicatory processes from being defeated by logistical impossibilities faced by courts, tribunals, litigants and lawyers across the country”, it added.

The Court elucidated that applying the extension to proceedings under Section 8 of the PMLA does not create arbitrariness and the process remains under judicial scrutiny, ensuring fairness for all concerned.

“… unlike Section 167 of the CrPC, which imposes a complete embargo on personal liberty, attachment of property under the PMLA does not wholly deprive the concerned person of the enjoyment of such property. Section 5(4) of the PMLA expressly provides that nothing prevents the person interested from continuing to enjoy the attached property, even during attachment”, it said.

The Court remarked that in any case, there is no material on record to support the claim that the Adjudicating Authority was fully operational for the purpose of exercising its functions during the COVID-19 pandemic.

“The various restrictions and curbs on the facets of Article 21 of the Consitution were necessitated, keeping in mind the pandemic and its virulent nature. Curbs were imposed on travel and also on a person’s liberty in cases where one was found to be infected. Such curbs, by their very nature, show that the Courts and public were well aware of the need for the same to be imposed”, it added.

The Court further observed that if, due to extraordinary circumstances, that of the Covid-19 pandemic, the Adjudicating Authority is unable to complete the adjudication within the stipulated period, the ED, being merely a party to those proceedings, cannot be made to suffer adverse consequences for a delay beyond its control.

“… the absence of reference to the PMLA cannot be interpreted adversely against the ED. … On this issue, we find ourselves in agreement with the submission of the learned counsel for the ED that while the Ordinance specifically dealt with taxation-related laws, the Hon’ble Supreme Court‘s directions in In re: Cognizance for Extension of Limitation (supra), issued under Articles 141 and 142 of the Constitution, operated in a wider field to ensure that justice was not defeated by procedural or logistical impossibilities during the pandemic”, it said.

Conclusion

The Court also noted that the relaxations granted by the Apex Court during the COVID-19 pandemic must be understood strictly in the exceptional context in which they were granted.

“In the prevailing circumstances, to give an unexceptional interpretation to the Provisions of Section 5(3) would, to our mind render the entire exercise of provisional attachment nugatory particularly since we have already held that the provisional attachment is the enabling part of the first step of what is a two-step exercise in respect of attachment (Provisional and confirmatory) and the one cannot be dissected from the other, keeping in mind the object and rationale of the PMLA and in view of the inability of the learned Adjudicating Authority to enter into the exercise of its quasi-judicial function being the second step, thereby rendering the first step itself otiose”, it concluded.

Accordingly, the High Court allowed the Letters Patent Appeal, dismissed the Writ Petition, and set aside the impugned Judgment.

Cause Title- Directorate of Enforcement & Anr. v. M/s Vikas WSP Ltd & Ors. (Neutral Citation: 2025:DHC:8490-DB)

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