SAFEMA Tribunal dismisses appeals challenging Adjudicating Authority proceedings, rejects bias claims and document disclosure requests under Section 17(1)

The Appellate Tribunal under SAFEMA dismissed all appeals challenging the Adjudicating Authority's proceedings. The Tribunal rejected the appellant's request for a fresh bench, finding no violation of natural justice principles despite the appellant's claims of institutional bias. The court held that the AA provided adequate reasoning in its orders, though succinctly, and noted the AA operates under strict 180-day time constraints. The Tribunal also dismissed appeals seeking judicial member presence on the bench and supply of "reasons to believe" documents under Section 17(1) PMLA, ruling that such disclosure was not required at the pre-adjudication administrative stage.

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Issues Involved:
1. Constitution of a fresh bench for hearing by an independent body.
2. Stay of proceedings pending before the Adjudicating Authority.
3. Supply of "reasons to believe" recorded under Section 17(1) of the PMLA, 2002.

Issue-wise Detailed Analysis:

1. Constitution of a Fresh Bench (Appeal No. FPA-PMLA-861/DLI/2024):
The appellant sought directions to constitute a fresh bench for hearing the Original Application by an independent body and before an impartial forum. The appellant argued that the Adjudicating Authority was constituted against the principle of natural justice, citing the principle "Nemo debet esse judex in propria causa" (No man shall be a judge in his own cause). The appellant contended that the current Adjudicating Authority, headed by a Member Finance with a background in the Department of Revenue, lacked independence and impartiality. The appellant relied on several judgments, including Union of India v. R. Gandhi, to support the argument that administrative support to tribunals should not come from their parent organizations.

The Tribunal noted that the Adjudicating Authority under PMLA is not a tribunal and cited precedents where administrative authorities performed adjudication functions under several central enactments. The Tribunal also referenced the Supreme Court's judgment in Pareena Swarup v. Union of India, which upheld the composition of the Adjudicating Authority under PMLA. The Tribunal concluded that the appellant's reliance on the recommendations in R. Gandhi was misplaced and that the Adjudicating Authority's composition did not violate principles of natural justice.

2. Stay of Proceedings (Appeal No. FPA-PMLA-862/DLI/2024):
The appellant sought to stay the proceedings until the coram of the Adjudicating Authority, as stipulated under Section 6(7) of PMLA, 2002, was functional. The appellant argued that the current Adjudicating Authority, comprising only one non-judicial member, violated Sections 6(2) and 6(7) of PMLA, which require a three-member body including a member from the field of law.

The Tribunal referred to multiple judgments from various High Courts, including the Delhi High Court in J. Sekar v. Union of India, which upheld the validity of single-member benches of the Adjudicating Authority. The Tribunal noted that the Adjudicating Authority could function with a single member and that the appellant's contention lacked merit. The Tribunal also emphasized that the Adjudicating Authority operates under a tight timeframe and that the appellant's multiple miscellaneous applications appeared to be an attempt to delay proceedings.

3. Supply of "Reasons to Believe" (Appeal No. FPA-PMLA-863/DLI/2024):
The appellant sought the supply of "reasons to believe" recorded by the concerned officer of the Directorate under Section 17(1) of PMLA, 2002. The appellant argued that the absence of these reasons violated the principles of natural justice and relied on the judgment of the Delhi High Court in J. Sekar v. Union of India.

The Tribunal referred to the Supreme Court's judgment in Narayanyappa v. Commissioner of Income Tax, which held that reasons for initiating proceedings need not be communicated at the initial stage. The Tribunal also cited its own decision in Neeraj Singhal v. Deputy Director, Directorate of Enforcement, which held that reasons to believe recorded under Section 17(1) need not be supplied. The Tribunal concluded that the statutory compliance under PMLA had been met and that the appellant's application lacked merit.

Conclusion:
All three appeals were dismissed. The Tribunal upheld the validity of the Adjudicating Authority's composition, rejected the request for a stay of proceedings, and ruled that the reasons to believe recorded under Section 17(1) need not be supplied to the appellant.

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