2017 (8) TMI 1012 - AT - Money Laundering

Tribunal allows appeals, directs reevaluation within 3 months, emphasizes judicial role

Jharkhand Rai University, Rai Technology University, Malvika Foundation, Integrated Institute of Excellence Society, Eastern Institute for Integrated Learning in Management Versus The Joint Director Directorate of Enforcement, Kolkata

The Tribunal allowed the appeals, set aside the impugned order on the ground of parity, and directed the Adjudicating Authority to decide the matters on ... Eligibility of hearing officer as a judicial Member - offence under PMLA - Held that:- hearing officer was not a judicial Member - Held that:- The hearing was fixed on 08.06.2015, Monday, despite the 6th June being Saturday. The notice was issued by E-mail. At the request of the appellant, the matter was adjourned to 11th June, 2015. On 11th June, 2015 the application was filed for re-call of order dated 8th June, 2015 and also to file the reply within one week, however no time was granted. The application was dismissed in limine and on the other hand the matter were reserved by the Adjudicating Authority. Left with no option, the appellants aggrieved by the said order dated 11th June, 2015 filed the writ petition before Hon’ble High Court of Karnataka on 16th June, 2015 for recalling of order who passed interim order directed not to pronounce and sign the order if the same has not been pronounced. However, the Adjudicating Authority passed the impugned on 15th June, 2015. Admittedly the officer who have passed the impugned order is not the Judicial officer. We are of the view that the proceedings conducted in violation of principles of natural justice and contrary to the PMLA and Regulation Act, 2013. The appellants were only asking for one week time to file the reply, however the said request was refused. We are of view that once it is held by the Hon’ble Court that the hearing officer was not a judicial Member and was not competent to decide the matter of a party who was one of the defendant in the common OC, the said final judgment has to be applied in favour of other defendants also who are parties to the same OC. For the reasons stated above, all the appeals are allowed. The impugned order is set-aside on the ground of parity only and however not on merit Issues Involved:1. Jurisdiction and constitution of the Adjudicating Authority.2. Violation of principles of natural justice.3. Legitimacy of the attachment of properties.4. Applicability of the Sikkim High Court judgment to other defendants.Detailed Analysis:Jurisdiction and Constitution of the Adjudicating Authority:The appellants challenged the jurisdiction and constitution of the Adjudicating Authority, arguing that the provisional attachment order, show cause notice, and the impugned order dated 15.06.2015 were issued by a single Member Bench lacking the required judicial member. According to Section 6(5)(b) of the PMLA, the Adjudicating Authority must include a member with a legal background due to the judicial nature of its functions. The Sikkim High Court's judgment emphasized that serious legal issues require a Bench with a Judicial Member, which was not the case here, making the proceedings unsustainable and without jurisdiction.Violation of Principles of Natural Justice:The appellants contended that the Adjudicating Authority adopted a procedure violative of natural justice principles by not granting reasonable time to file replies and rushing to pass orders. Notices for hearings were sent via email on weekends with insufficient time for preparation, and applications for adjournment were summarily dismissed. The Karnataka High Court's interim order on 16.06.2015, directing the Adjudicating Authority not to pronounce the order, was disregarded as the order was already passed on 15.06.2015.Legitimacy of the Attachment of Properties:The appellants argued that the attachment of their properties was illegitimate as the proceeds of crime were allegedly generated by EIILM University, not by them. They claimed that the money received from legitimate sales could not be termed as 'proceeds of crime' under Section 2(1)(u) of the PMLA. The Adjudicating Authority failed to appreciate that attaching both the land sold and the consideration received amounted to double attachment, which is not contemplated under the PMLA.Applicability of the Sikkim High Court Judgment:The Sikkim High Court's final judgment on 22.09.2015 directed the Central Government to appoint a Judicial Member to the Adjudicating Authority and to reconstitute the Bench. The Tribunal held that this judgment was binding and applicable to the present appellants, who were similarly situated defendants in the same O.C. No. 409/2015. The Tribunal rejected the respondent's argument that the judgment should not apply to the appellants, emphasizing that ignoring a binding judgment amounts to indiscipline and improper conduct.Conclusion:The Tribunal allowed the appeals, set aside the impugned order on the ground of parity, and directed the Adjudicating Authority to decide the matters on merit within three months. The attachment of properties was ordered to continue. The Tribunal underscored the importance of judicial members in adjudicating serious legal issues and upheld the principles of natural justice.