Court upholds rejection of cross-examination application under Money Laundering Act, stresses appeal process

The court upheld the Adjudicating Authority's decision to reject the petitioner's application for cross-examination of witnesses under the Prevention of Money Laundering Act. It emphasized that the principles of natural justice were substantially complied with, and there was no prejudice to the petitioner. The court clarified that orders rejecting such applications are appealable under Section 26 of the Act and directed the petitioner to approach the Appellate Tribunal within a month. The court stressed the importance of procedural orders being challenged through the appropriate appellate process rather than writ petitions.

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Issues Involved:
1. Rejection of the application for cross-examination of witnesses.
2. Compliance with principles of natural justice.
3. Appealability of the order under Section 26 of the PMLA.

Summary:

1. Rejection of the application for cross-examination of witnesses:
The petitioner challenged the impugned order dated 6th March 2023, passed by the Adjudicating Authority under the Prevention of Money Laundering Act, 2002 (PMLA), which rejected the petitioner's application for the right to cross-examine witnesses. The Adjudicating Authority held that the petitioner had been given the opportunity to rebut and explain the evidence and documents relied upon by the Directorate of Enforcement (ED), thereby complying substantially with the principles of natural justice. The Authority concluded that there was no prejudice caused to the petitioner by the refusal to permit cross-examination.

2. Compliance with principles of natural justice:
The court observed that the principles of natural justice must be tested on the touchstone of prejudice. The Adjudicating Authority cited the case of G. Gopalakrishnan v. Deputy Director, Directorate of Enforcement, Chennai, emphasizing that natural justice should not be expanded unnaturally without considering administrative realities. The court noted that the petitioner, charged with serious offenses of money laundering, could not claim a violation of natural justice based on self-serving perceptions. The Authority also referred to the case of Abbeys Realcon LLP v. Directorate of Enforcement, which held that cross-examination is not a rule but an exception in attachment proceedings under PMLA.

3. Appealability of the order under Section 26 of the PMLA:
The court reiterated that orders passed by the Adjudicating Authority under Section 8 of PMLA are appealable under Section 26 of the Act. The court referenced the case of Dr. U.S. Awasthi v. Adjudicating Authority PMLA & Anr., which interpreted that orders rejecting applications for cross-examination are integral to the adjudication process and thus appealable. The court emphasized that procedural orders by the Adjudicating Authority should be challenged before the Appellate Tribunal, PMLA, rather than through writ petitions.

Conclusion:
The court declined to entertain the writ petition, directing the petitioner to approach the Appellate Tribunal, PMLA, within one month. The period during which the writ petition was pending would be deductible from the limitation period for filing the appeal. The Appellate Tribunal was instructed to ensure compliance with principles of natural justice and to consider whether the cross-examination was rightly rejected on factual grounds. The petitioner was also permitted to challenge the confirmation order dated 29th March 2023 before the Appellate Tribunal. The petition was disposed of with these observations.

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