2026 (3) TMI 920 - HC - Money Laundering

Service of relied-upon documents: Adjudicating Authority must decide completeness and order supply with opportunity to reply.

Rule 13(2) requires supply of complete relied-upon documents in a bound paper book with affidavit and proof of service, while the Regulations permit ... Validity of service by electronic mode under procedural regulations - adequacy of reasons to believe recorded by the Adjudicating Authority - failed to produce any documentary evidence of its source - obligation to supply relied upon documents and opportunity to file supplementary reply. Validity of service by electronic mode under procedural regulations - Service of summons/notice by electronic mail to the petitioner in compliance with Rule 13 read with Section 13 of the Information Technology Act, 2000 is valid. - HELD THAT:- The Court examined Rule 13(2), Rule 13(3)(iii) and Rule 13(11) of the Adjudicating Authority (Procedure) Regulations, 2013 and held that while Rule 13(2) prescribes service along with complete relied upon documents in a bound paper book, the Regulations expressly provide for electronic communication. Service of the notice and relied upon documents by email/PDF was therefore regarded as valid service under the Regulations read with the Information Technology Act, 2000; accordingly there is no doubt as to validity of service by email in the present case. [Paras 20] Service upon the petitioner through email is valid. Adequacy of reasons to believe recorded by the Adjudicating Authority - The reasons to believe recorded by the Adjudicating Authority in the show cause notice do not suffer from illegality on the face of the record. - HELD THAT:- The Court reviewed the reasons recorded in the show cause notice which recited prima facie review of facts and RUDs indicating involvement in money-laundering and noted that the Adjudicating Authority had articulated the basis for its prima facie conclusion while also reserving final view after hearing. On that basis the Court found no illegality in the recording of reasons to believe by the Adjudicating Authority in the show cause notice. [Paras 26] No illegality was found in the Adjudicating Authority's reasons to believe as recorded in the show cause notice. Obligation to supply relied upon documents and opportunity to file supplementary reply - Whether the documents already supplied constitute the complete relied upon documents was left to the Adjudicating Authority, and the matter was remitted to the Authority with directions to determine supply and to permit supplementary reply if further documents are supplied. - HELD THAT:- Although the petitioner complained that complete relied upon documents in a bound paper book were not supplied, the Court did not decide on the completeness of the RUDs. Instead the Court directed the Adjudicating Authority to first determine whether the documents requested by the petitioner are relied upon documents and, if so, to direct the Enforcement Directorate to supply them within two weeks. The Court further directed that, if further relied upon documents are supplied, the petitioner shall be allowed two weeks to file a supplementary reply. Aggrieved parties were left free to pursue remedies under Section 26 of the PMLA, 2002. [Paras 29, 30] The Adjudicating Authority shall decide on completeness of RUDs and, if additional RUDs are to be supplied, direct supply and permit the petitioner to file a supplementary reply within two weeks of supply; parties may pursue remedies under Section 26 if aggrieved. Final Conclusion: The writ petition was disposed by (i) upholding validity of service by email, (ii) finding no illegality in the Adjudicating Authority's recorded reasons to believe, and (iii) remitting the question of completeness and supply of relied upon documents to the Adjudicating Authority with directions to supply any additional RUDs and permit a time-bound supplementary reply. Issues: (i) Whether the Adjudicating Authority and the Enforcement Directorate complied with Rule 13(2) of the Adjudicating Authority (Procedure) Regulations, 2013 in supplying the complete relied upon documents to the petitioner and whether valid service was effected by electronic transmission.Analysis: The Court examined Rule 13(2) which mandates service of complete relied upon documents in a bound paper book along with affidavit and proof of service, and noted sub rules permitting electronic communication (Rule 13(3)(iii) and Rule 13(11)) and the reference to Section 13 of the Information Technology Act, 2000. The Court observed the factual record showing that certain RUDs (RUD-1, RUD-2A, RUD-2B, RUD-3) and the Original Application were transmitted to the petitioner by electronic means and that inspection of records was permitted by the Adjudicating Authority. The Court recognised that the Adjudicating Authority has broad powers (including inspection, summons, and compelling production of documents) and that Section 8(1) and Section 8(2) PMLA require the AA to consider replies and materials placed before it. Given the factual dispute whether all relied upon documents were supplied in the prescribed form, the Court held that determination of whether the documents already furnished are the complete relied upon documents falls within the jurisdiction and fact finding function of the Adjudicating Authority. The Court therefore directed the Adjudicating Authority to first decide if the petitioner's requested documents qualify as relied upon documents and, if so, to direct the ED to supply them and to permit the petitioner a period to file a supplementary reply, leaving open appellate remedy under Section 26 PMLA.Conclusion: The writ petition is disposed directing the Adjudicating Authority to determine whether the documents requested by the petitioner constitute relied upon documents; if so, to direct the Enforcement Directorate to supply them to the petitioner within two weeks; to permit the petitioner two weeks to file a supplementary reply upon supply; and to leave parties free to pursue remedies under Section 26 of the PMLA, 2002. The petition is disposed of accordingly.