2026 (3) TMI 850 - HC - Money Laundering

Service of relied upon documents: electronic transmission is valid, and authority must supply additional relied documents and allow supplementary replies.

Adjudicating Authority procedures under the Adjudicating Authority (Procedure) Regulations require that relied upon documents be served; electronic ... Validity of service of summons and notices relied upon documents by electronic transmission satisfied the requirements of Rule 13(2) read with Rule 13(11) of the Adjudicating Authority (Procedure) Regulations, 2013 and Section 13 of the Information Technology Act, 2000 - recording of reasons to believe under Section 8(1) PMLA - obligation to serve complete relied upon documents and Adjudicating Authority's duty to determine sufficiency. Validity of electronic service of summons and notices - HELD THAT: - The Court applied Rule 13(3)(iii) which permits service by electronic mail and Rule 13(11) which regards transmission through electronic mode as valid service under the Information Technology Act, 2000. In the facts of this case the notice and RUDs communicated by PDF via email were held to constitute valid service. [Paras 20] Service by email was held to be valid. Recording of reasons to believe under Section 8(1) PMLA - HELD THAT: - The Court examined the reasons recorded by the Adjudicating Authority, which identified prima facie involvement in money laundering upon perusal of the RUDs and investigation material, and found no fault in the recording of those reasons. [Paras 26] The recording of reasons to believe by the Adjudicating Authority was upheld as not illegal. Obligation to serve complete relied upon documents in a bound paper book - Adjudicating Authority's duty to determine sufficiency of relied upon documents - HELD THAT: - Although Rule 13(2) prescribes service of complete relied upon documents in a bound paper book with affidavit and proof of service, the Court declined to decide on the factual sufficiency of the documents supplied. The Court directed the Adjudicating Authority to first determine whether the documents requested by the petitioners constitute relied upon documents and, if so, to direct the Enforcement Directorate to supply them within two weeks. The Court further directed that, if additional documents are supplied, the petitioners be allowed two weeks to file a supplementary reply. Parties aggrieved by the Adjudicating Authority's decision on supply may seek remedies under Section 26 of the PMLA, 2002. [Paras 28, 30] The matter of sufficiency of relied upon documents was left to the Adjudicating Authority to decide; the Authority was directed to order supply of further RUDs if appropriate and to allow a two week period for a supplementary reply. Final Conclusion: The writ petition was disposed of by upholding electronic service and the Adjudicating Authority's reasons to believe, while remitting the factual question of completeness of relied upon documents to the Adjudicating Authority with directions to order supply where appropriate and to permit a supplementary reply; parties remain free to pursue remedies under Section 26 of the PMLA, 2002. Issues: (i) Whether the Adjudicating Authority/Enforcement Directorate complied with Rule 13(2) of the Adjudicating Authority (Procedure) Regulations, 2013 by serving complete relied upon documents in a bound paper book on the petitioners and whether the petitioners are entitled to relief for non-supply of such documents.Analysis: The Court examined Rule 13 of the Adjudicating Authority (Procedure) Regulations, 2013, which requires service of summons/notice along with complete relied upon documents in a bound paper book and permits service by electronic means under sub-regulation (11). The Court noted that the Adjudicating Authority had furnished certain documents (Original Application and RUD-1, RUD-2A, RUD-2B, RUD-3) by electronic transmission and USB/PDF, and that the petitioners had made repeated requests for additional specified documents and sought time to file replies. The Court observed that the Adjudicating Authority has powers under the PMLA and the Regulations (including Rules 15, 16 and 21) to allow inspection, discovery, examination of witnesses and to receive evidence, and that questions regarding completeness of relied upon documents are within the authority's competence to decide. The Court recognized that electronic service is valid under Section 13 of the Information Technology Act, 2000 and Rule 13(11) of the Regulations, but also noted the petitioners' contention that certain documents identified by them had not been supplied in the form they sought and that they required an opportunity to file supplementary replies if further relied upon documents were supplied.Conclusion: The petition is disposed by directing the Adjudicating Authority to first determine whether the documents requested by the petitioners constitute relied upon documents; if so, the Adjudicating Authority shall direct the Enforcement Directorate to supply such documents within two weeks. If further relied upon documents are supplied, the petitioners shall be given two weeks to file a supplementary reply. Parties aggrieved by the Adjudicating Authority's order regarding supply of relied upon documents may take appropriate steps under Section 26 of the PMLA, 2002. The directions are granted in favour of the petitioners to the extent indicated.