Judicial Member in money-laundering adjudication: serious law-and-fact disputes require court-like Bench composition

Section 6 of the Prevention of Money-Laundering Act, 2002 is discussed as not mandating a Judicial Member in every Adjudicating Authority Bench, but requiring the Bench composition to reflect the nature of the lis. Where the matter involves serious questions of law and fact with substantial civil consequences, the Bench should have the assistance of a Judicial Member to preserve judicial experience and the essential trappings of a court. The absence of a Judicial Member was treated as a serious infirmity, yet the proceedings were not quashed because prejudice had not been shown and the noticee had not yet replied to the show cause notice. The matter was to continue before a properly constituted Bench.

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Issues: Whether the Bench of the Adjudicating Authority constituted under Section 6(5)(b) of the Prevention of Money-Laundering Act, 2002 was required to include a Judicial Member when it was called upon to decide serious questions of law and fact, and whether the impugned proceedings were liable to be quashed on that ground.

Analysis: Section 6 of the Prevention of Money-Laundering Act, 2002 governs the composition and functioning of the Adjudicating Authority. The provision does not, in terms, make every Bench invariably dependent on the presence of a Judicial Member; however, the nature of the lis remains relevant while constituting the Bench. Where the proceeding involves serious questions of law and fact and the Authority is required to exercise adjudicatory power with far-reaching consequences, the Bench should have the assistance of a Judicial Member to ensure judicial experience and the essential trappings of a court. The absence of a Judicial Member in the present case was noted as a serious infirmity, particularly because the proceedings were ex parte and the matter had substantial civil consequences. At the same time, the Court found no sufficient material to justify immediate quashing of the proceedings, as prejudice had not been demonstrated and the petitioner had not yet responded to the show cause notice.

Conclusion: The absence of a Judicial Member in the constitution of the Bench was held to be objectionable in the circumstances, but the proceedings were not quashed. The petitioner succeeded only in part, and the matter was directed to be proceeded with after appointment of a Judicial Member and constitution of a proper Bench.

Ratio Decidendi: Where an adjudicatory tribunal is required to determine serious questions of law and fact with significant civil consequences, its Bench should include a Judicial Member so that the adjudication bears the essential trappings of a court.

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