Prevention of Money Laundering Act, 2002
Retention of Property and Records: Sections 20 and 21
A search or a survey ends with property seized, accounts frozen, or records taken away. Sections 20 and 21 decide what happens next. Property may be retained, or a freeze continued, for up to 180 days, and records may be retained on the same pattern, but only on recorded reasons and only under the eye of the Adjudicating Authority. If the Authority does not permit more, the property and records go back. This note sets out the rules on retention, continuation and return, and the use of retained records.
The 180-day hourglass for seized and frozen property and records
1. Retention of Property: Section 20
§ Section 20, in substance Retention order. Where property has been seized under Section 17 or 18, or frozen under Section 17(1A), and the officer authorised by the Director has, on the basis of material in his possession, reason to believe, recorded in writing, that it is required to be retained for adjudication under Section 8, it may be retained, or continue to remain frozen, for a period not exceeding 180 days from the seizure or freezing. Sealed forwarding. A copy of the order and the material is forwarded to the Adjudicating Authority in a sealed envelope. Return. On the expiry of the period, the property is returned to the person from whom it was seized, or the freezing ceases, unless the Adjudicating Authority permits retention or continuation beyond it. The Authority's test. Before permitting retention beyond 180 days, the Authority must be satisfied that the property is prima facie involved in money laundering and is required for adjudication. |
2. Retention, Continuation and Return
Stage | The position |
|---|---|
Retention of seized property | Up to 180 days on recorded reasons that it is needed for adjudication |
Retention of frozen property | The freeze continues for up to 180 days on the same basis |
Period of retention | Not more than 180 days from the seizure or freezing, unless extended by the Adjudicating Authority |
Continuation | Only with the Adjudicating Authority's permission, on its satisfaction that the property is prima facie involved and needed |
Return | At the end of the period without permission; or on release by the Special Court under s. 8(6) after acquittal or where no laundering is found |
Confiscation | On conviction, under s. 8(5), the property is confiscated rather than returned |
3. Retention of Records: Section 21
§ Records follow a similar pattern • Retention. Records seized in search or impounded in survey may be retained for up to 180 days, on recorded reasons that they are needed for adjudication, unless the Adjudicating Authority permits a longer period. • Copies. The person from whom the records were taken is entitled to obtain copies of them, so that his own business or defence is not paralysed. • Return. On expiry of the period without the Authority's permission, the records are returned. |
4. Use of Retained Records in Proceedings
i. Evidence. Retained records are used in adjudication under Section 8 and in the trial before the Special Court.
ii. Presumptions. Records found in the possession of a person during search or survey carry the presumptions in Section 22: that they belong to him, that their contents are true, and that signatures and handwriting are genuine.
iii. Electronic records. Their admissibility is governed by the Bharatiya Sakshya Adhiniyam, including the certificate requirement for secondary electronic evidence.
5. Freezing Must Rest on Real Reasons
§ The courts' insistence on reasons Opto Circuit India Ltd. v. Axis Bank, (2021) 6 SCC 707: a freeze without the statutory authorisation and recorded reasons is invalid. Vague suspicion is not enough. A 2025 ruling of the Delhi High Court that freezing orders under Section 17(1A) cannot rest on vague suspicion, and require legally sustainable reasons to believe, stood after the Supreme Court dismissed the ED's special leave petition in July 2026. Consequence for retention. Since retention under Section 20 continues a seizure or freeze, it too depends on genuine reasons, and falls with an invalid freeze. |
6. Frequently Asked Questions
How long can seized property be retained under the PMLA?
Up to 180 days from seizure or freezing under Section 20, on recorded reasons, unless the Adjudicating Authority permits a longer period.
When is retained property returned?
At the end of the 180 days if the Adjudicating Authority does not permit continuation, or on release by the Special Court after acquittal or where no laundering is found.
Can a person get copies of seized records?
Yes. Under Section 21, the person from whom records were taken is entitled to obtain copies.