2023 (1) TMI 1420 - AT - Money Laundering

Money laundering case: Cross-examination rights don't apply when witness statements from other proceedings are relied upon

Dr. U.S. Awasthi Versus The Adjudicating Authority, PMLA & Anr.

The Appellate Tribunal under SAFEMA at New Delhi dismissed an appeal challenging a Provisional Attachment Order in a money laundering case. The appellant ... Money Laundering - Provisional Attachment Order - validity of statements relied upon - denial of opportunity of cross-examination ignoring the fact that same is part of principle of natural justice - HELD THAT:- In the opinion of the Tribunal, the Appellant has failed to give cogent reasons for cross examination of the witnesses who were not even examined before the Adjudicating Authority. In those circumstances, it cannot be persuaded to accept the argument of the learned Counsel on the fact of this case. The cross examination is part of principle of natural justice but not in all the circumstances therefore it is not required to elaborately discuss the judgment referred by the learned Counsel for the Appellant. In the instant case, no witness has been examined before the Adjudicating Authority. If any witness would have been examined before the Adjudicating Authority, the prayer for cross examination of that witness could have been sought. Appellant is seeking cross examination of the witnesses who did not appear before the Adjudicating Authority for examination pursuant to the Regulation 21 of the Adjudicating Authority (Procedure) Regulation 2013 - In the instant case, the Appellant has failed to state that if cross examination is not permitted, it will cause serious prejudice to him. The case in hand does not show violation of principle of natural justice when Appellant failed to make statement on the contents of the statement of three persons despite supply of copies of the documents before passing Provisional Attachment Order. The Appellant did not avail the opportunity to submit explanation to the documents provided to him before passing Provisional Attachment Order and now wants to cross examine the witnesses. The default and failure of the Appellant therein is now sought to be corrected by seeking cross examination of three co-accused. Reference to the Regulation 21 of the Adjudicating Authority (Procedure) Regulation 2013 has been given to indicate powers of the Adjudicating Authority for summoning of the witnesses for examination. It can be exercised when appropriate case is made out - The cross examination can be sought when the witnesses is examined by the Adjudicating Authority and not in reference to statement made before other Authority. There are no case to cause interference in the order passed by the Adjudicating Authority and accordingly the appeal fails and is dismissed. Issues Involved:1. Denial of cross-examination by the Adjudicating Authority.2. Application of principles of natural justice.3. Validity of statements relied upon for Provisional Attachment Order.4. Procedural propriety and fairness in adjudication.5. Impact of alleged untrustworthiness of witness statements.Detailed Analysis:1. Denial of Cross-Examination by the Adjudicating Authority:The primary issue in this case was the denial of the Appellant's request to cross-examine three individuals whose statements were relied upon by the Adjudicating Authority in issuing a Provisional Attachment Order under the Prevention of Money Laundering Act, 2002. The Appellant argued that cross-examination is a fundamental aspect of the principle of natural justice and should have been allowed, especially since the statements were pivotal in the provisional attachment of property.The Tribunal analyzed the relevant provisions, including Section 6(15) of the Act of 2002 and Regulation 21 of the Adjudicating Authority (Procedure) Regulations, 2013. The Tribunal noted that while the Adjudicating Authority is not bound by the Code of Civil Procedure, it should be guided by principles of natural justice. However, Regulation 21 pertains to the issuance of commissions for examination, not explicitly for cross-examination, which is typically governed by the Evidence Act, not applicable here.2. Application of Principles of Natural Justice:The Tribunal emphasized that the principles of natural justice are flexible and depend on the facts and circumstances of each case. It held that cross-examination is not a rule but an exception and should be allowed only if a case is made out. The Tribunal found that the Appellant did not provide sufficient reasons to justify the cross-examination of witnesses who were not examined before the Adjudicating Authority.The Tribunal referred to the Supreme Court's judgment in K.L. Tripathi v. State Bank of India & Ors, which states that the right to cross-examine is part of fair play when the credibility of a person is in doubt or when there is a dispute over the facts. In this case, the Tribunal found no such dispute or doubt that warranted cross-examination.3. Validity of Statements Relied Upon for Provisional Attachment Order:The Appellant contended that the statements of Rajiv Saxena, A.D. Singh, and Sushil Kumar Pachisia were unreliable, with A.D. Singh having retracted his statement. The Appellant also cited a previous affidavit by the Enforcement Directorate (E.D.) declaring Rajiv Saxena's statement untrustworthy. However, the Tribunal found that the affidavit did not declare Saxena's statement untrustworthy but criticized him for not disclosing complete facts.The Tribunal noted that the Appellant had been given an opportunity to respond to the statements before the Provisional Attachment Order was passed but failed to do so. Therefore, the Tribunal concluded that the Appellant's request for cross-examination was not bona fide and appeared to be an attempt to delay proceedings.4. Procedural Propriety and Fairness in Adjudication:The Tribunal reviewed the procedural propriety of the Adjudicating Authority's actions. It found that the Authority had provided the Appellant with all necessary documents and statements before seeking his response, thus ensuring fairness in the decision-making process. The Tribunal held that there was no breach of natural justice, as the Appellant had the opportunity to explain the documents and statements but chose not to.5. Impact of Alleged Untrustworthiness of Witness Statements:The Tribunal addressed the Appellant's argument regarding the alleged untrustworthiness of Rajiv Saxena's statement. It clarified that the affidavit referenced by the Appellant did not declare Saxena untrustworthy but highlighted his failure to disclose complete facts. The Tribunal found no merit in the argument that the statements were unreliable, as the Appellant had not challenged their contents when given the opportunity.In conclusion, the Tribunal dismissed the appeal, upholding the Adjudicating Authority's order. It emphasized that cross-examination is not a right but a discretionary aspect of natural justice, applicable only when justified by the case's circumstances. The Tribunal found that the Appellant failed to demonstrate any prejudice or violation of natural justice that would warrant cross-examination or interference with the Adjudicating Authority's decision.