TaxTMI 
TaxTMI 
TaxTMI 
2023 (3) TMI 1367
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....s heard along with Mr. V. Ramakrishna Reddy learned standing counsel for the Respondents. In W.P. No. 34627 of 2022, Mr. Vedula Srinivas representing Mrs. Vedula Chitralekha was heard for the Petitioners and Mr. V. Ramakrishna Reddy, learned standing counsel was heard for the Respondents. In I.A. No. 1 of 2022 in 41133 of 2022 and I.A. No. 1 of 2022 in W.P. No. 44343 of 2022, Mr. T. Niranjan Reddy learned senior counsel representing Mr. Avinash Desai was heard for the Petitioners and Mr. T. Surya Karan Reddy learned Additional Solicitor General of India for Southern Zone was heard for the Respondents therein. 3. Factual Background in W.P. No. 34238 of 2022: i) An inquiry was initiated by the Department of Revenue Intelligence, Hyderabad against the Petitioner herein for alleged illegal manufacturing and sale of DPP and HCL. In furtherance of the said inquiry, the Petitioner was arraigned as an accused in relation to offences committed under the Narcotic Drugs and Psychotropic Substances Act, 1985. Subsequently, Directorate of Enforcement (hereinafter referred as 'ED') initiated investigation under the Prevention of Money Laundering Act, 2002 (hereinafter referred as 'PMLA') vide ....
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....visional attachment order bearing PAO No. 6 of 2022 dated 08.03.2022 was passed by the ED attaching various moveable and immoveable properties worth Rs. 1984.84 Crores of the Karvy group of companies including its directors under Section 5(1) of the PMLA. Subsequently, an original complaint bearing OC No. 1680 of 2022 dated 06.04.2022 was filed before the Adjudicating Authority. iii) While the adjudication in OC No. 1680 of 2022 was pending, the ED passed another the provisional attachment order bearing PAO No. 15 of 2022 dated 28.07.2022 attaching moveable and immoveable properties worth Rs.110,70,18,735/- of the Petitioners herein in relation to the loans obtained by entities forming part of Karvy group of companies from Lakshmi Vilas Bank (now DBS Bank). iv) Pursuant to PAO No. 15 of 2022, an original complaint bearing OC No. 1799 of 2022 dated 26.08.2022 was filed before the Adjudicating Authority, which in turn, after satisfying itself that an offence of money laundering was committed, issued a show cause notice dated 19.09.2022 seeking to show cause as to why the provisional attachment should not be confirmed. v) The Petitioners in W.P. No. 41133 of 2022 challenge original....
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....ferred to as the Petitioner. ii) The facts in the case suggest an alleged commission of a scam during the demonetization in November, 2016. A complaint was lodged by the Deputy Director of Income Tax, Hyderabad based on which a first information report bearing FIR No. 75 of 2016 dated 07.12.2016 was registered under Sections 120B, 420, 467, 471, 474, 477A & 109 r/w Section 34 of the IPC by PS Jubilee Hills. Subsequently, the FIR was transferred to CCS Police and a fresh first information report bearing FIR No. 263 of 2016 dated 11.12.2016 was registered against the accused persons including the Petitioner's husband. iii) Based on FIR No. 263 of 2016, the ED registered a case bearing ECIR/11/HYZO/2016 for investigation into the offence of money laundering which resulted due to the alleged scam. In furtherance of the same a prosecution complaint bearing SC No. 474 of 2018 in ECIR/11/HYZO/2016 was filed before the Metropolitan Sessions Judge cum Special Court under PMLA. iv) As per the allegations, three companies - M/s Mussadilal Jewellers Pvt. Ltd., M/s Mussadilal Gems and Jewels Pvt. Ltd. and M/s Vaishnavi Bullion Pvt. Ltd. were involved in the scam. The people running the busin....
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....ore the Adjudicating Authority seeking confirmation of the provisional attachment dated 01.02.2021. The Adjudicating Authority issued a show cause notice dated 03.03.2021 to the Petitioner herein and her husband to show cause as to why the provisional attachment of properties should not be confirmed. The Petitioner submitted her reply to the said show cause notice on 12.06.2021 and thereafter an oral hearing was conducted by the Adjudicating Authority on 05.07.2021. After the hearing, no proceedings have taken place and the provisional attachment order has not been confirmed till date. x) The Petitioner, inter alia, contends that the properties that were attached belong to her and have no connection to the alleged demonetization scam. Her properties cannot be attached as part of proceeds of crime, merely because certain amounts were transferred from the bank account of her husband's company. xi) Further, the Petitioner contends that the provisional attachment order has not been confirmed even after a lapse of 180 days. Therefore, no confirmation order can be passed and the proceedings arising out of PAO No. 1 of 2021 dated 01.02.2021 have to be set aside. 7. Contentions of the P....
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....alternative remedy exists, if the authority acts without jurisdiction. Reliance was placed on Kumar Pappu Singh v. Union of India 2021 SCC OnLine AP 983. 8. Contentions of the Respondent (Directorate of Enforcement: i) An order can be passed by the Adjudicating Authority consisting of a single member. Under Section 6(5)(b) of the PMLA, discretion is vested with the chairperson to constitute the Adjudicating Authority with one or two members. Therefore, PMLA permits constitution of Adjudicating Authority with a single member. Reliance was placed on Dyani Antony Paul v. Union of India 2020 SCC OnLine Kar 4995, Alaknanda Realtors Pvt. Ltd. v. Deputy Director, Directorate of Enforcement MANU/DEOR/140156/2022 and G. Gopalakrishnan v. The Deputy Director, Directorate of Enforcement MANU/TN/3622/2019. ii) Further, a single member constituting the Adjudicating Authority need not be a judicial member. Petitioners cannot rely upon the decisions in L. Chandra Kumar (supra), Madras Bar Association (supra) and Rojer Mathew (supra) as the same dealt with tribunals constituted under Article 323B of the Constitution of India. In this regard, reliance was placed on J. Sekar v. Union of India 2....
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..... Issue No.1: Whether the scheme under PMLA permits an Adjudicating Authority consisting of a single member? i) Relying on Section 6 (2) of the PMLA, the Petitioners contend that the Adjudicating Authority constituted under the PMLA shall necessarily consist of a Chairperson and two other members. The Petitioners contend that there cannot be an Adjudicating Authority consisting of a single member. To examine the issue at hand, the relevant provisions of the PMLA are extracted below: 2(a). - "Adjudicating Authority" means an Adjudicating Authority appointed under sub-section (1)of section 6 6. Adjudicating Authorities, composition, powers, etc.- (1) The Central Government shall, by notification, appoint an Adjudicating Authority] to exercise jurisdiction, powers and authority conferred by or under this Act. (2) An Adjudicating Authority shall consist of a Chairperson and two other Members: Provided that one Member each shall be a person having experience in the field of law, administration, finance or accountancy. (3) A person shall, however, not be qualified for appointment as Member of an Adjudicating Authority,- (a) in the field of law, unless he- (i) is ....
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....may be continued before the Adjudicating Authority from the stage at which the vacancy is filled. (11) The Chairperson or any other Member may, by notice in writing under his hand addressed to the Central Government, resign his office: Provided that the Chairperson or any other Member shall, unless he is permitted by the Central Government to relinquish his office sooner, continue to hold office until the expiry of three months from the date of receipt of such notice or until a person duly appointed as his successor enters upon his office or until the expiry of his term of office, whichever is the earliest. (12) The Chairperson or any other Member shall not be removed from his office except by an order made by the Central Government after giving necessary opportunity of hearing. (13) In the event of the occurrence of any vacancy in the office of the Chairperson by reason of his death, resignation or otherwise, the senior-most Member shall act as the Chairperson of the Adjudicating Authority until the date on which a new Chairperson, appointed in accordance with the provisions of this Act to fill such vacancy, enters upon his office. (14) When the Chairperson of the A....
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....mber of such authority. The Petitioners therein contended that the Real Estate (Regulation and Development) Act, 2016 does not contemplate delegation of powers to hear complaints to a single member which ought to be heard by the authority consisting of two members. Similar to the present case, the Petitioners therein contended that such delegation of power to a single member is illegal and orders passed by such single member are without jurisdiction. The Apex Court negatived the contention of the Petitioners therein and held that where statutory mandate permits delegation of powers by a competent authority to a single member, such single member can exercise such delegated powers. v) The relevant paragraphs including the contentions of the parties therein are extracted below: 88. Mr. Gopal Sankarnarayanan, learned counsel for the appellants submits that if this Court comes to the conclusion that other than adjudging compensation wherever provided all other elements/components including refund of the amount and interest etc. vests for adjudication by the authority, in that event, such power vests with the authority constituted under Section 21 and is not open to be delegated in ex....
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....unsel further submits that the question is not whether the delegation per se to a single member is bad, but the question is whether the power to hear complaints in reference to Sections 12, 14, 18 and 19 delegated to a single member is permissible under the law. It may be noticed that the authority has been vested with several other powers and functions under the Act, which the authority has consciously not delegated to a single member. 98. Learned counsel further submits that pursuant to the delegation of power under Section 81 by the special order dated 5th December, 2018 read with Regulation 24, a single member has been authorized by the authority to hear the matters related to refund of the amount under Section 31 of the Act. **** 113. Section 81 of the Act 2016 empowers the authority, by general or special order in writing, to delegate its powers to any member of the authority, subject to conditions as may be specified in the order, such of the powers and functions under the Act. What has been excluded is the power to make regulations under Section 85, rest of the powers exercised by the authority can always be delegated to any of its members obviously for expeditious....
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....ers that Section 81 of the Act empowers even delegation to any officer of the authority or any other person, it is true that the authority, by general or special order, can delegate any of its powers and functions to be exercised by any member or officer of the authority or any other person but we are not examining the delegation of power to any third party. To be more specific, this Court is examining the limited question as to whether the power under Section 81 of the Act can be delegated by the authority to any of its member to decide the complaint under Section 31 of the Act. What has been urged by learned counsel for the promoters is hypothetical which does not arise in the facts of the case. If the delegation is made at any point of time which is in contravention to the scheme of the Act or is not going to serve the purpose and object with which power to delegate has been mandated under Section 81 of the Act, it is always open for judicial review. 118. The further submission made by learned counsel for the appellants that Section 81 of the Act permits the authority to delegate such powers and functions to any member of the authority which are mainly administrative or cleri....
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....ia 2018 SCC OnLine Del 6523 held that constitution of Adjudicating Authority with a single member under PMLA is valid. The relevant paragraphs are extracted below: 79. The Court next takes up the question of the composition of the AA on which extensive arguments were advanced by the learned counsel for the Petitioners. In this context, it must be noticed that under Section 6 PMLA, the AA is supposed to consist of the Chairperson and two other members - one of whom shall be a person having experience in the field of law. Section 6(3) further sets out what the qualifications for appointment as a member of an AA should be. One of those qualifications is that the person has to be qualified for appointment as a District Judge or a person in the field of law or a member of an Indian Legal Service. The other qualification is possession of a qualification in the field of finance, accountancy or administration as may be prescribed. It is, therefore, not the case that all the members of the AA should be judicial members. 80. It is seen that under Section 5 PMLA, the jurisdiction of the AA "may be exercised by the Benches thereof". Under Section 6(5)(b) PMLA, a Bench may be constituted b....
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....t with. It can be further noticed that under sub-section. (13) of Section 6, if the vacancy arises in the office of the Chairperson by reason of death, resignation or otherwise, the senior most member would act as the Chairperson and such Chairperson would exercise the power as provided under Section 6 of the PML Act. viii) The Madras High Court in G. Gopalakrishnan (supra) expressed a similar view that Adjudicating Authority under PMLA can consist of one member. The relevant paragraphs are extracted below: 78. But looking at the entire scheme of PMLA, Section 6 and other connected provisions of PMLA and regulations as referred to by the learned Senior Counsel, this Court can infer that it is possible to have less than three Member to act as Adjudicating Authority. This inference is not without any definite reasons as the language of Sub Section 7 of Section 6 provides for constitution of Bench even by two Members. Sub Section 7 of Section 6 reads as under: **** 81. The above provisions make it very clear that it is possible to have less than Three Members to constitute as Adjudicating Authority. 82. In fact, in the decision of the Delhi High Court in "J. Sekar versus ....
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....icial functions. Therefore, a member of the Adjudicating Authority having no experience in the field of law cannot pass a judicial order. ii) To decide the present issue, it is imperative to decide the following questions: A. Whether the action of issuing a show cause notice under Section 8(1) of the PMLA by the Adjudicating Authority is quasi-judicial in nature? B. Whether the action of passing an order confirming provisional attachment under Section 8(3) of the PMLA is quasi-judicial in nature? iii) Before answering the above questions, it is appropriate to discuss what constitutes a quasi-judicial action. The Apex Court in Shivji Nathubha v. Union of India (1960) 2 SCR 775 relying on a decision of a Constitution Bench consisting of six judges in Province of Bombay v. Khushaldas S. Advani 1950 SCC 551 explained the distinction between an administrative act and a quasi-judicial act. The Court therein held that the act will be treated as quasi-judicial act if the body exercising power had legal authority, by exercising such power it should decide a lis between the parties and while exercising such power it should act judicially. The Court relied on Khushaldas S. Advani (sup....
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.... as to what constitutes a quasi-judicial action. The Court therein held that actions of authorities will be treated as judicial functions if such an authority conducts proceedings by hearing parties and passes orders thereon and where a right to appeal is available against such orders. Further, the Court noted that where actions of quasi-judicial authorities have trappings of judicial functions, such actions will be treated as quasi-judicial actions. The relevant paragraphs are extracted below: 14. The authority of the Central Government entertaining an appeal under Section 111(3) being an alternative remedy to an aggrieved party to a petition under Section 155 the investiture of authority is in the exercise of the judicial power of the State. Clause (7) of Section 111 declares the proceedings in appeal to be confidential, but that does not dispense with a judicial approach to the evidence. Under Section 54 of the Indian Income Tax Act (which is analogous) all particulars contained in any statement made, return furnished or account or documents produced under the provisions of the Act or in any evidence given, or affidavit or deposition made, in the course of any proceedings unde....
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....ieve that any person has committed an offence under Section 3 or is in possession of proceeds of crime, it may serve a notice of not less than thirty days on such person calling upon him to indicate the sources of his income, earning or assets, out of which or by means of which he has acquired the property attached under sub-section (1) of Section 5, or, seized or frozen] under Section 17 or Section 18, the evidence on which he relies and other relevant information and particulars, and to show cause why all or any of such properties should not be declared to be the properties involved in money-laundering and confiscated by the Central Government: Provided that where a notice under this sub-section specifies any property as being held by a person on behalf of any other person, a copy of such notice shall also be served upon such other person: Provided further that where such property is held jointly by more than one person, such notice shall be served to all persons holding such property. (2) The Adjudicating Authority shall, after- (a) considering the reply, if any, to the notice issued under subsection (1); (b) hearing the aggrieved person and the Director or any ot....
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....al Court finds that the offence of moneylaundering has been committed, it shall order that such property involved in the money-laundering or which has been used for commission of the offence of money-laundering shall stand confiscated to the Central Government. (6) Where on conclusion of a trail under this Act, the Special Court finds that the offence of money-laundering has not taken place or the property is not involved in moneylaundering, it shall order release of such property to the person entitled to receive it. (7) Where the trial under this Act cannot be conducted by reason of the death of the accused or the accused being declared a proclaimed offender or for any other reason or having commenced but could not be concluded, the Special Court shall, on an application moved by the Director or a person claiming to be entitled to possession of a property in respect of which an order has been passed under sub-section (3) of Section 8, pass appropriate orders regarding confiscation or release of the property, as the case may be, involved in the offences of money-laundering after having regard to the material before it. (8) Where a property stands confiscated to the Centra....
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....i-judicial in nature? i) According to this Court, the action of issuing show cause notice under Section 8(1) of the PMLA is quasi-judicial in nature as the same has trappings of judicial functions involving application of mind. ii) As stated above, before issuing a show cause under Section 8(1) of the PMLA, the Adjudicating Authority has to independently reach a conclusion based on the complaint before it that 'reasons to believe' exist regarding the commission of money laundering. After reaching such conclusion, the Adjudicating Authority shall issue a show cause notice recording its reasons for having a belief that an offence of money laundering was committed and directing the concerned person to show cause why such properties should not be attached. If the Adjudicating Authority on perusal of the complaint reaches a conclusion that no reasons to believe exist, it can refuse to issue a show cause notice. Therefore, the requirement of having 'reasons to believe' is pre-requisite to issue a show cause notice under Section 8(1) of the PMLA. iii) Further, the phrase 'reasons to believe' in the said provision assumes importance as the same was incorporated as a procedural safeguar....
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....stance and effect in conformity with or according to the intent and purpose of the PMLA. 30. However, as discussed above, the substance and effect of the notice cannot be in conformity with or according to the intent and purpose of the Act, which incorporates the well established principle of natural justice, audi alteram partem, which gives the noticee a right to contest the notice, its basis as well as the contents of the notice elaborately, if the basis of the notice under Section 8(1), that is, the "reasons to believe" of the AA are not disclosed in the notice. 31. It has to be noted here that one of the arguments of the respondents is that the AA adopted the reasons to believe attributed while passing the POA, which reasons were allegedly communicated to the noticee. 32. However, such argument is unacceptable in view of the independent provisions of Sections 5 and 8 which, at each of those stages, contemplate independent reasons to believe. Section 5 stipulates that if the authority concerned has reason to believe, to be recorded in writing, on the basis of material in his possession, that a crime as contemplated therein may have been committed, he may, by an order in....
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....tribute a meaningful interpretation to the said provision. **** 50. Under such circumstances, since nothing has come before the court to prove that the notice given to the petitioner under Section 8(1) of the PMLA disclosed the reasons to believe as contemplated in such section, which was a prerequisite of the notice and had to be arrived at by the AA independently, the notice itself was illegal, being bad in law. 51. That apart, even as argued by the respondents themselves, the AA apparently adopted the reasons to believe recorded while passing the POA, without arriving at any independent findings on such reason to believe, let alone communicate the same to the noticee/petitioner. The said inaction on the part of the AA vitiates the notice under Section 8(1) as well. 52. In such view of the matter, no proceeding could be initiated on the basis of the notice under Section 8(1) issued to the present petitioner, thereby rendering the notice under Section 5(1) infructuous, post facto, since the notice under Section 5(1) ultimately merged in the notice under Section 8(1) as the latter was a continuation of the process initiated by the former. v) Therefore, Adjudicating Au....
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....Court held that formation of opinion is based on subjective satisfaction and the same has to be preceded by application of mind as regards consideration of relevant factors and rejection of irrelevant ones. 23. In Barium Chemicals (Supra) the Supreme Court observed the following- 28. ....... An action, not based on circumstances suggesting an inference of the enumerated kind will not be valid. In other words, the enumeration of the inferences which may be drawn from the circumstances, postulates the absence of a general discretion to go on a fishing expedition to find evidence. No doubt the formation of opinion is subjective but the existence of circumstances relevant to the inference as the sine qua non for action must be demonstrable. If the action is questioned on the ground that no circumstances leading to an inference of the kind contemplated by the section exists, the action might be exposed to interference unless the existence of the circumstances is made out. Therefore, it is clear from the principle laid down by the Apex Court that an opinion can be formed only by application of mind which should be based on relevant materials. In other words, relevant factors and....
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....dicating Authority under the said provision are adjudicatory in nature and the same are quasi-judicial functions. iii) Therefore, according to this Court, the action of issuing a show cause notice under Section 8(1) of the PMLA and passing an order confirming provisional attachment under Section 8(3) of the PMLA are quasi-judicial in nature as they have trappings of judicial functions. 14. Now coming to the main question, whether quasijudicial functions like issuance of show cause notice under Section 8(1) of the PMLA and passing an order confirming provisional attachment under Section 8(3) of the PMLA can be passed by an Adjudicating Authority consisting of a member having no experience in the field of law. According to this Court, a quasi-judicial order cannot be passed by a bench of an Adjudicating Authority having no experience in the field of law. i) It is relevant to note that constitution of special quasijudicial bodies like tribunals gained traction by incorporation of Article 323A in the Constitution of India. The object behind constitution of such bodies was to have disputes adjudicated by people having specialized knowledge in the field of law for which the tribunals ....
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....ctive and efficacious than the High Court. I would therefore suggest that a District Judge or an Advocate who is qualified to be a Judge of the High Court should be regarded as eligible for being Vice- Chairman of the Administrative Tribunal and unless an amendment to that effect is carried out on or before 31st March, 1987, the impugned Act would have to be declared to be invalid, because the provision in regard to composition of the Administrative Tribunal cannot be severed from the other provisions contained in the impugned Act. iii) In R.K. Jain v. Union of India 1993 (4) SCC 119, the Apex Court held that persons appointed to tribunals exercising quasi-judicial functions shall necessarily have experience in law and such requirement is essential for effective adjudication. Adjudicatory functions cannot be left to technical members who have no experience in the field of law. The relevant paragraphs are extracted below: 67. The tribunals set up under Articles 323-A and 323-B of the Constitution or under an Act of legislature are creatures of the statute and in no case can claim the status as Judges of the High Court or parity or as substitutes. However, the personnel appointed ....
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.... utmost responsibility." 70. In a democracy governed by rule of law surely the only acceptable repository of absolute discretion should be the courts. Judicial review is the basic and essential feature of the Indian constitutional scheme entrusted to the judiciary. It cannot be dispensed with by creating a tribunal under Articles 323-A and 323-B of the Constitution. Any institutional mechanism or authority in negation of judicial review is destructive of basic structure. So long as the alternative institutional mechanism or authority set up by an Act is not less effective than the High Court, it is consistent with the constitutional scheme. The faith of the people is the bedrock on which the edifice of judicial review and efficacy of the adjudication are founded. The alternative arrangement must, therefore, be effective and efficient. For inspiring confidence and trust in the litigant public they must have an assurance that the person deciding their causes is totally and completely free from the influence or pressure from the Government. To maintain independence and imperativity it is necessary that the personnel should have at least modicum of legal training, learning and exper....
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....oth trained administrators and those with judicial experience would, by virtue of their specialised knowledge, be better equipped to dispense speedy and efficient justice. It was expected that a judicious mix of judicial members and those with grass-roots experience would best serve this purpose. To hold that the Tribunal should consist only of judicial members would attack the primary basis of the theory pursuant to which they have been constituted. Since the Selection Committee is now headed by a Judge of the Supreme Court, nominated by the Chief Justice of India, we have reason to believe that the Committee would take care to ensure that administrative members are chosen from amongst those who have some background to deal with such cases. v) Further, the Apex Court in Union of India v. R. Gandhi (2010) 11 SCC 1 discussed in length the law relating to constitution of tribunals and its composition. The Court therein explained the difference between regular Courts and tribunals constituted under a statute. The Court held that Courts comprise only of judges whereas a tribunal can have a combination of judicial and technical members. Judicial members are those members having experi....
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....hment upon the independence of the judiciary and the rule of law and would be unconstitutional. **** 94. We may examine this question with reference to the company jurisdiction exercised by the High Court for nearly a century being shifted to a tribunal on the ground that tribunal consisting of judicial and technical members will be able to dispose of the matters expeditiously and that the availability of expertise of the technical members will facilitate the decision making to be more practical, effective and meaningful. Does this mean that the legislature can provide for persons not properly qualified to become members? Let us take some examples. Can the legislature provide that a law graduate with a Master's degree in Company Law can be a judicial member without any experience as a lawyer or a Judge? Or can the legislature provide that an Upper Division Clerk having fifteen years' experience in the company law department but with a Law degree is eligible to become a judicial member? Or can the legislature provide that a "social worker" with ten years' experience in social work can become a technical member? Will it be beyond scrutiny by way of judicial review? ....
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.... Independent judicial tribunals for determination of the rights of citizens, and for adjudication of the disputes and complaints of the citizens, is a necessary concomitant of the rule of law. The rule of law has several facets, one of which is that disputes of citizens will be decided by Judges who are independent and impartial; and that disputes as to legality of acts of the Government will be decided by Judges who are independent of the executive. Another facet of the rule of law is equality before law. The essence of the equality is that it must be capable of being enforced and adjudicated by an independent judicial forum. Judicial independence and separation of judicial power from the executive are part of the common law traditions implicit in a Constitution like ours which is based on the Westminster model. **** 106. We may summarise the position as follows: (a) A legislature can enact a law transferring the jurisdiction exercised by courts in regard to any specified subject (other than those which are vested in courts by express provisions of the Constitution) to any tribunal. (b) All courts are tribunals. Any tribunal to which any existing jurisdiction of courts....
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.... and impartial judiciary to render justice. An independent judiciary can exist only when persons with competence, ability and independence with impeccable character man the judicial institutions. When the legislature proposes to substitute a tribunal in place of the High Court to exercise the jurisdiction which the High Court is exercising, it goes without saying that the standards expected from the judicial members of the Tribunal and standards applied for appointing such members, should be as nearly as possible as applicable to the High Court Judges, which are apart from a basic degree in Law, rich experience in the practice of law, independent outlook, integrity, character and good reputation. It is also implied that only men of standing who have special expertise in the field to which the Tribunal relates, will be eligible for appointment as technical members. Therefore, only persons with a judicial background, that is, those who have been or are Judges of the High Court and lawyers with the prescribed experience, who are eligible for appointment as High Court Judges, can be considered for appointment as judicial members. 109. A lifetime of experience in administration may m....
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.... vii) The Apex Court in State of Gujarat v. Utility Users' Welfare Assn. (2018) 6 SCC 21 dealt with a similar issue regarding the constitution of tribunal under the Electricity Act, 2003. The Court held that the powers exercised under Section 86(1)(f) of the Electricity Act, 2003 are adjudicatory in nature and therefore, such powers can only be exercised by a judicial member having experience in law. It was further held that where the tribunal consists of a single member, it is mandatory that such member shall be a judicial member. The relevant paragraphs are extracted below: 116. In the context of the question which we are now dealing with, if we were to take the proposition as "no member having knowledge of law is required to be a member of the Commission" then we have a problem at hand. This is so because while interpreting Section 86 of the said Act, it has been expressed that the Commission has the "trappings of the court", an aspect we have agreed to hereinbefore. Once it has the "trappings of the court" and performs judicial functions, albeit limited ones in the context of the overall functioning of the Commission, still while performing such judicial functions which ....
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....e bodies for the same. That is, however, an aspect, which is in the wisdom of the legislature and that course is certainly open for the future if the legislature deems it so. However, at present there is a single Commission, which inter alia performs adjudicatory functions and, thus, the presence of a man of law as a member is a necessity in order to sustain the provision, as otherwise, it would fall foul of the principles of separation of powers and judicial review, which have been read to be a part of the basic structure of the Constitution. 120. We are also not in a position to accept the plea advanced by the learned Attorney General that since there is a presence of a Judge in the Appellate Tribunal that would obviate the need of a man of law as a member of the State Commission. The original proceedings cannot be cured of its defect merely by providing a right of appeal. 121. We are, thus, of the unequivocal view that for all adjudicatory functions, the Bench must necessarily have at least one member, who is or has been holding a judicial office or is a person possessing professional qualifications with substantial experience in the practice of law and who has the requisi....
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....ined in Section 8 (for members of CCI) the court perceives no infirmity in the impugned provision, having regard to the view taken previously, mandatorily, the CCI should have a judicial member, in keeping with the dicta in Madras Bar Association (supra), as reiterated in R. Gandhi (supra) and the recent ruling in Utility Users Welfare Association (supra). This would consequently mean that the provision of Section 8 has to be resorted to for selection at all times. This, in the opinion of the court is sufficient safeguard to ensure that executive domination in the selection process (of the panel, shortlisting the names for appointment) does not prevail. The structure of the provision (Section 9 of the Act) is that five members-including the Chief Justice of India (or his nominee) as the chair, man it. At the same time, the composition also ensures the participation of two outside independent experts. ix) Subsequently, the decision in Utility Users (supra) holding that a judicial order can only be passed by a judicial member and constitution of such tribunal without a judicial member is unconstitutional was followed by various High Courts. In Assam Power Distribution Company Ltd. ....
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....rders dated 21.09.2018 and 06.10.2018, suffer from the vice of coram non judice, the said orders are nonest and therefore, under the facts unique to this case, the belated challenge by way of this writ petition is not found to be fatal to the instant writ petition. The point of determination no. (c) stands answered accordingly. x) Similarly, the Madras High Court in Tamil Nadu Spinning Mills Association v. Tamil Nadu Electricity Regulatory Commission MANU/TN/6370/2022 relying on Utility Users (supra) held that adjudicatory functions can only be performed by a judicial member. The relevant paragraph is extracted below: 11. Article 141 of the Constitution of India states that the law declared by the Supreme Court shall be binding on all Courts within the territory of India. Article 144 states that that all authorities, civil and judicial, shall act in aid of the Supreme Court. In other words, it is the duty of the High Court to ensure that the directions of the Hon'ble Supreme Court are complied with in letter and spirit. The Hon'ble Supreme Court expressed its anguish on more than one occasion when the law Member vacancy was not filled up at all. When it has been declare....
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.... the State, urged that the jurors were not equal to the task involved in a proper determination of the controversy. The High Court directed the trial court to hold an inquiry and report on this aspect of the case. On a consideration of the report submitted by that court, the High Court recorded its finding to the following effect: "Out of the five jurors selected by the learned Sessions Judge, three had sufficient knowledge of English, fourth knew very little English and could not read the documents produced in the case and the fifth also had not sufficient knowledge of English; he could understand a letter written in English with some difficulty and could not read English newspapers. This is what we find from a report made by the learned Sessions Judge after summoning the jurors and examining them on a letter issued by us. We are satisfied that the two jurors, Shri Sheikh Ashiq Ali and Shri Farman Ali, were not in a position to decide the question of authorship of the forged documents satisfactorily. It was not merely a question of understanding the contents of the documents produced in the case; the jurors also had to decide whether they were written or signed by the responden....
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....d at by the High Court, as quoted above, the position is clear in law that irrespective of the result, it was no trial at all. The question of prejudice does not arise because it is not a mere irregularity, but a case of "mis-trial", as the Judicial Committee put it. It is unfortunate that a prosecution which has been pending so long in respect of an offence which is said to have been committed about eleven years ago, should end like this, but it will be open to the State Government, if it is so advised, to take steps for a re-trial, as was directed by the Judicial Committee in the reported case referred to above. xiii) In the present case, as the show cause notices and the orders confirming provisional attachment were passed by a member having no experience in the field of law, such show cause notices and orders are non-est and void in the eyes of law. As stated above, a member having no experience in the field of law is ineligible to pass judicial orders. xiv) It is relevant to note that under Section 6(2) of the PMLA, members having experience in the field of law and members having experience in the fields of finance, accountancy or administration can be appointed. Section 6(....
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....ion of the Adjudicating Authority violates the Articles 14, 19(1)(g), 21, 50, 323-B of the Constitution of India, a PIL was filed before the Apex Court which was decided as Pareena Swarup (supra). The Court decided the matter accepting changes/amendments to Rules, 2007 dealing with qualifications of members having experience in the fields of finance, accountancy or administration. However, none of the proposed amendments/changes provide having experience in the area of law and only provides addition of academic qualification. The relevant portion of the decision in Pareena Swarup (supra) is extracted below: 11. Mr Gopal Subramanium has informed this Court that the suggested actions have been completed by amending the Rules. Even otherwise, according to him, the proposed suggestions formulated by Mr K.K. Venugopal would be incorporated on disposal of the above writ petition. For convenience, let us refer to the doubts raised by the petitioner and amended/proposed provisions as well as the remarks of the department in complying with the same: Sl. No. Issues Amended/Proposed provision Remarks 1. Rule 3(3) of the Adjudicating Authority Rules, 2007 does not explicitly specify....
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....Bench considering the nature of the lis before it to ensure that the orders are passed in satisfaction of all the principles relevant and acceptable in law. Prima facie, therefore, I am of the view that the order does not appear to pass the muster of the law laid down in Tamil Nadu Generation and Distribution Corporation Limited (supra). xvii) In the present case, the ED relying on J. Sekar (supra) contended that the decisions of the Apex Court on constitution of tribunals with members having experience in law are not applicable to the present case as those decisions dealt with constitution of tribunals under Article 323A and Article 323B of the Constitution of India and Adjudicating Authority is not constituted under the said constitutional provisions. The relevant paragraphs of J. Sekar (supra) are extracted below: 82. It was then contended on the strength of the decisions in L. Chandrakumar v. Union of India (1997) 3 SCC 261; Eastern Institute for Integrated Learning v. Joint Directorate 2016 Cri LJ 526, Vishal Exports Overseas Ltd. v. Union of India (decision dated 9th March 2016 of the Gujarat High Court in SCA No. 13949 of 2014) and Uday NavinchandraSanghani v. Union of I....
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.... adjudicatory functions. Once it is found that functions of a body like Adjudicating Authority are quasi-judicial in nature and which have trappings of judicial functions, such functions can only be decided by a person having legal experience. xix) As stated in R.K. Jain (supra), it is essential that a person whose rights are in question and who may face penal consequences, shall be heard and his/her case shall be decided and adjudicated by a body capable and eligible to decide such issues. It may not be wrong to say that getting a dispute adjudicated by a qualified and duly constituted quasi-judicial body is a facet of natural justice. xx) To decide this issue, this Court holds that issuance of show cause notice under Section 8(1) of the PMLA and passing an order under Section 8(3) of the PMLA confirming the provisional attachment of properties are quasi-judicial functions. Therefore, an Adjudicating Authority consisting of a single member cannot pass quasi-judicial orders, unless such single member has experience in the field of law. Any quasi-judicial function performed by a single member having experience in the field of finance, accountancy or administration is non-est and w....
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....riod of 180 days. iv) It is relevant to note that the Apex Court in In re: Limitation (supra) took suo moto cognizance of the Covid-19 pandemic situation and extended the period of limitation from 15.03.2020 for the purpose of filing petitions/applications/suits/ appeals/all other proceedings under any general or special law before any Court or Tribunal. The object of such extension was in recognition of the difficulties that might be faced by lawyers/litigants to file their applications physically. The relevant paragraphs of In re: Limitation (supra) are extracted below: 1. This Court has taken suo motu cognizance of the situation arising out of the challenge faced by the country on account of Covid-19 virus and resultant difficulties that may be faced by litigants across the country in filing their petitions/applications/suits/appeals/all other proceedings within the period of limitation prescribed under the general law of limitation or under special laws (both Central and/or State). 2. To obviate such difficulties and to ensure that lawyers/litigants do not have to come physically to file such proceedings in respective courts/tribunals across the country including this Cou....
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....he Negotiable Instruments Act, 1881 and any other laws, which prescribe period(s) of limitation for instituting proceedings, outer limits (within which the court or tribunal can condone delay) and termination of proceedings. vi) For instance, Section 29A of the Arbitration & Conciliation Act, 1996 provides a time limit of 12 months within which an award has to be passed. By virtue of In re: Limitation, 2022 (supra), the period from 15.03.2020 to 28.02.2022 shall be excluded to compute the period of 12 months under Section 29A of the Arbitration & Conciliation Act, 1996. Similarly, Section 12A(3) of the Commercial Courts Act, 2015 provides an outer time period of three months within which pre-institution mediation shall be completed. However, by virtue of In re: Limitation, 2022 (supra), the period from 15.03.2020 to 28.02.2022 shall be excluded to compute the period of 3 months. Therefore, In re: Limitation, 2022 (supra) states that wherever a statute prescribes a maximum period within which proceedings have to be completed, the period from 15.03.2020 to 28.02.2022 shall be excluded to compute such maximum period. vii) To decide the applicability of In re: Limitation (supra) in ....
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.... order of vacation of such stay order shall be counted. (2) The Director, or any other officer not below the rank of Deputy Director, shall, immediately after attachment under sub-section (1), forward a copy of the order, along with the material in his possession, referred to in that sub-section, to the Adjudicating Authority, in a sealed envelope, in the manner as may be prescribed and such Adjudicating Authority shall keep such order and material for such period as may be prescribed. (3) Every order of attachment made under sub-section (1) shall cease to have effect after the expiry of the period specified in that sub-section or on the date of an order made undersub-section (3) of Section 8, whichever is earlier. (4) Nothing in this section shall prevent the person interested in the enjoyment of the immovable property attached under sub-section (1) from such enjoyment. Explanation.-For the purposes of this sub-section, "person interested", in relation to any immovable property, includes all persons claiming or entitled to claim any interest in the property. (5) The Director or any other officer who provisionally attaches any property under sub-section (1) shall, wi....
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....rt can exclude certain period while computing the period of 180 days. For instance, this Court in Karvy Realty (India) Ltd. v. The Adjudicating Authority MANU/TL/2356/2022 noting that the Petitioner therein did not have sufficient time to effectively reply to the show cause notice under Section 8(1) of the PMLA granted extra time of two months reply to the show cause notice. The Court therein directed that such extra time of two months shall be excluded to compute the period of 180 days. The relevant paragraph is extracted below: 22. In view of the above discussion, this Writ Petition is disposed of granting two months time from today to the petitioners to submit their explanation/reply to the show cause notice dated 19.09.2022. However, it is made clear that the petitioners herein shall not seek further extension of time and they shall submit explanation/reply within the said extended period of two months by keeping in view the object and legislative intent of Section 8 of the Act, that the adjudicating process is time bound. It is relevant to note that for the purpose of computing the period of 180 days, the period which was extended by this Court for submitting reply is exclud....
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....e Mad 1244] is taken to its logical end, due to difficulties and due to present Pandemic, police may also not produce an accused within 24 hours before the Magistrate's Court as contemplated by Section 57CrPC, 1973. As noted above, the provision of Section 57 as well as Section 167 are supplementary to each other and are the provisions which recognise the right of personal liberty of a person as enshrined in the Constitution of India. The order of this Court dated 23-3-2020 [Cognizance for Extension of Limitation, In re, (2020) 19 SCC 10] never meant to curtail any provision of the Code of Criminal Procedure or any other statute which was enacted to protect the personal liberty of a person. The right of prosecution to file a charge-sheet even after a period of 60 days/90 days is not barred. The prosecution can very well file a charge-sheet after 60 days/90 days but without filing a charge-sheet they cannot detain an accused beyond a said period when the accused prays to the court to set him at liberty due to non-filing of the charge-sheet within the period prescribed. The right of prosecution to carry on investigation and submit a chargesheet is not akin to right of liberty of ....
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....ma v. State of Uttarakhand [Vivek Sharma v. State of Uttarakhand First Bail Application No. 511 of 2020, order dated 12-5-2020 (Utt)] in its judgment dated 12-5-2020 has after considering the judgment of this Court dated 23-3-2020 passed in Cognizance for Extension of Limitation, In re [Cognizance for Extension of Limitation, In re, (2020) 19 SCC 10] has taken the view that the order of this Court does not cover police investigation. We approve the above view taken by the learned Single Judge of the Madras High Court in Settu v. State [Settu v. State, 2020 SCC OnLine Mad 1026] as well as by the Kerala High Court [Mohd. Ali v. State of Kerala, 2020 SCC OnLine Ker 1742] , the Rajasthan High Court [Pankaj v. State, 2020 SCC OnLine Raj 867] and the Uttarakhand High Court [Vivek Sharma v. State of Uttarakhand First Bail Application No. 511 of 2020, order dated 12-5-2020 (Utt)] noticed above. xv) Relying on the decision in S. Kasi (supra), a learned single judge of the Delhi High Court in Vikas WSP Ltd. (supra) held that provisional attachment of properties deprives a party of his right to property. Therefore, In re: Limitation (supra) does not extend to PMLA proceedings in computation....
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.... Supreme Court. This becomes more evident from the order dated 06.05.2020 passed by the Supreme Court in I.A. 48411/2020, whereby it was pleased to extend the period of limitation prescribed under the Arbitration and Conciliation Act, 1996 and under Section 138 of the Negotiable Instruments Act, 1881, observing as under:- 31. In fact, the most relevant in this series of orders to the present controversy is the order dated 10.07.2020, which clearly shows that the above referred two orders of the Supreme Court were only in relation to the period of limitation and did not extend the period to do something required under a Statute or the period of validity of an order, as in the present case. Realizing such difference, the Supreme Court extended the period to pass an Arbitral Award under Section 29A and for completion of pleadings under Section 23(4) of the Arbitration and Conciliation Act, 1996 as also for completing the process of compulsory pre-litigation, mediation and settlement under Section 12A of the Commercial Courts Act, 2015, however, refused to extend the period of validity of a cheque. This itself shows that the orders of the Supreme Court are not a universal extension ....
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....ional attachment of properties. The relevant paragraphs are extracted below: 13. Considering the records available, submission of the parties and judgments/order relied upon by them and following the judgment of the Hon'ble Supreme Court in the case of S. Kasi (supra) in my considered opinion the Adjudicating authority/Respondent No. 2 cannot be called a litigant or advocate or a quasi-judicial authority and cannot take the benefit of the order of the Hon'ble Supreme court passed in Suo moto Writ Petition (Civil) No. 3 of 2020 (supra) by taking the stand that on the expiry of validity of the said provisional attachment order after 180 days under Section 5 (3) of the aforesaid Act, the same would be deemed to have been extended automatically by virtue of the aforesaid order of the Hon'ble Supreme Court when he was not required to pass any formal order of extension of the same under Section 8 (3) of the aforesaid Act. I am of the considered opinion that such stand of the Respondent No. 2 is legally not sustainable since the impugned order of provisional attachment of bank accounts and postal accounts in question of the petitioner, dated 11th December, 2019, which has ex....
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....roperty. The relevant paragraphs are extracted below: 15. It is further relevant to state that the orders passed by the Supreme Court in the Suo Motu writ petition mention specific provisions in specific statutes such as Sections 23(4) and Section 29A of The Arbitration and Conciliation Act, 1996, Section 12A of the Commercial Courts Act, 2015 and Section 138 provisos (b) and (c) of the Negotiable Instrument Act, 1881. On an examination of the specific statutes mentioned by the Supreme Court, it will be seen that all these statutes prescribed provide for specific time frame for instituting a suit, filing a claim/counter claim or an application in furtherance of a remedy provided under the statute. The intention was hence to preserve the right of a litigant to seek a remedy under the Act and not to deprive a litigant of such right of remedy where the litigant has not been able to physically come to the Court or to the Tribunal to file the proceeding in aid of the right. 16. The right thus conferred by the Supreme Court is in relation to the prescribed period of limitation in instituting a proceeding. **** 18. Section 5(3) is a clear embargo on the order of attachment cont....
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....g of written statements beyond the prescribed time-limit. 22. The reasoning in S. Kasi would apply to the present case. The Supreme Court recognised that the 23rd March, 2020 order in the Suo Motu writ petition was for the benefit of those whose remedy may be barred by time because of not being able to physically come to Court to file proceedings. The Supreme Court made a distinction between the benefit given to litigants and extension of time for filing of a chargesheet by the police as contemplated under Section 167(2) of the Cr.P.C. The Court also noted the element of personal liberty of a person which was required to be protected. Although, the right of the petitioners before the Court is more to do with the right not to be deprived of property save by authority of law - Article 300A, the petitioners have established a case where such right is under threat by the action of the ED. The litigants have been conferred a benefit under Section 5(1)(b) and 5(3) of the PMLA on the failure of the Authority to take action within the specified time frame. If the Authority does fail to take requisite steps, the right to relief arises immediately after exhaustion of the 180 days window a....
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.... even after confirmation of provisional attachment order until a formal confiscation order is passed. Section 5(4) clearly states that nothing in Section 5 including the order of provisional attachment shall prevent the person interested in the enjoyment of immovable property attached under sub-section (1) from such enjoyment. The need to take possession of the attached property would arise only for giving effect to the order of confiscation. This is also because sub-section (6) of Section 8 postulates that where on conclusion of a trial under the 2002 Act which is obviously in respect of offence of money-laundering, the Special Court finds that the offence of money-laundering has not taken place or the property is not involved in money-laundering, it shall order release of such property to the person entitled to receive it. Once the possession of the property is taken in terms of sub-section (4) and the finding in favour of the person is rendered by the Special Court thereafter and during the interregnum if the property changes hands and title vest in some third party, it would result in civil consequences even to third party. That is certainly avoidable unless it is absolutely ne....
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....ll effect is required to be given to such orders and directions. [ To complete the scenario, we may indicate in the passing that even after we had heard this matter, there had been re-surge of Covid-19 cases with spread of a new variant of the virus. The drastic re-surge in the number of Covid cases has led this Court to again deal with the matter in SMWP No. 3 of 2020 on an application bearing No. 21 of 2022; and by the order dated 10-1-2022 [Cognizance for Extension of Limitation, In re, (2022) 3 SCC 117 : (2022) 2 SCC (Civ) 46 : (2022) 1 SCC (Cri) 580 : (2022) 1 SCC (L&S) 501], this Court again restored the principal order dated 23-3-2020 [Cognizance for Extension of Limitation, In re, (2020) 19 SCC 10 : (2021) 3 SCC (Cri) 801] and in continuation of the previous orders, has further directed that the period from 15-3-2020 till 28-2-2022 shall stand excluded for the purposes of limitation as may be prescribed under any general or special laws in respect of all judicial or quasi-judicial proceedings. Be that as it may, the fresh order in SMWP No. 3 of 2020 need not be elaborated for the present purpose.] **** 32.2. In fact, in S. Kasi case [S. Kasi v. State, (2021) 12 SCC 1 ....
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.... and has categorically held that the same cannot be applied in a matter involving proceedings before a Court. The second respondent was exercising a quasi-judicial function and the ratio in S. Kasi case cannot be applied to such a quasi-judicial authority. In any case, we keep this issue open to enable the petitioner to agitate the same before the Appellate Tribunal. xxiv) This Court also disagrees with the view adopted in Vikas WSP Ltd. (supra), Gobindo Das (supra) and Hiren Panchal (supra). The decision in Vikas WSP Ltd. (supra) was stayed by a Division Bench of the Delhi High Court vide order dated 08.01.2021 in LPA 362/2020. In any case, the question regarding the application of In re: Limitation (supra) was left open. xxv) As far as Gobindo Das (supra), is concerned, though it is true that Adjudicating Authority is not a litigant, the authorized officer representing the ED is a litigant to the proceedings initiated under PMLA and for the purpose of application of In re: Limitation (supra). Therefore, where the ED has been diligent in provisionally attaching the property and filing the original complaint within 30 days under Section 5 of the PMLA, prejudice cannot be caused ....
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....ovisional attachment of properties in that case ceased to have effect as the 180-day period under Section 5(3) of the PMLA lapsed and the said provisional attachment of properties was not confirmed. The learned single judge accepted the contention of the Petitioner and held that provisional attachment of properties ceases to have effect if the same is not confirmed within a period of 180 days. The learned single judge held that the Adjudicating Authority becomes functus officio after the expiry of the 180-day period and cannot act on the original complaint under Section 5(5) of the PMLA. In other words, the learned single judge held that even the original complaint ceases to have effect after the lapse of the 180-day period. The relevant paragraphs are extracted below: 25. In the present case, the Act clearly deprives the person against whom the Provisional Attachment Order is passed of his right to deal in the property against which the attachment is ordered. Such deprivation can therefore, be for a maximum of 180 days and no further, except where such order is confirmed by the Adjudicating Authority prior thereto under Section 8(3) of the Act. Once the 180 day period has lapsed....
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....the time limit of 180 days is only applicable to the stage of Section 8(3) of the PMLA and is not applicable to the stage of 8(2) of the PMLA. In other words, the Calcutta High Court in Fairdeal Supplies (supra) held that the Adjudicating Authority under Section 8(3) of the PMLA cannot confirm the provisional attachment of properties after a lapse of 180 days. However, even after a lapse of the 180-day period, it can give a finding whether such provisionally attached properties were involved in the offence of money laundering or not under Section 8(2) of the PMLA. viii) The decision in Fairdeal Supplies (supra) states that Adjudicating Authority does not become functus officio after a lapse of 180 days for all purposes. The Adjudicating Authority can still continue with the adjudication and give a finding under Section 8(2) of the PMLA. However, it cannot confirm the provisional attachment under Section 8(3) of the PMLA. The relevant paragraphs in Fairdeal Supplies (supra) are extracted below: x) In the light of the discussion as above, I am unable to agree with the view taken by a Learned Single Judge of Delhi high Court in Vikas WSP (supra) cited by the petitioners that the Ad....
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....ighest cannot be confirmed under Section 8(3) if the Adjudicating Authority finds that the property is involved in money-laundering. The embargo to confirm an order of provisional attachment in a given case where such order of provisional attachment has lost its force by efflux of 180 days, however cannot be an impediment for the Adjudicating Authority in hearing a matter in terms of section 8(1) and 8(2) of PMLA. The narrow construction of the stature as sought to be made by the petitioners, therefore cannot be accepted as it will lead to holding 180 days to be the time period for completing adjudication under Section 8(2) of PMLA. xiii) Since I have already held that the Adjudicating Authority does not become functus officio on expiry of the period of 180 days from the passing of the order of provisional attachment unless such order is confirmed under Section 8(3) in view of the provisions of Section 5(3) of the PMLA, the Adjudicating Authority in the instant case, is, free to proceed with the Complaint Case being Complaint no. 1262 of 2020 till the Sec. 8(2) stage i.e., to give a finding whether the property is involved in moneylaundering or not. xiv) So far as the issue o....
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....on-existent. xi) Once the period of 180-day lapses, the provisional attachment of properties ceases to have effect. In such cases, the ED has to re-initiate the process of attachment under Section 5(1) of the PMLA by passing a fresh provisional attachment order by recording their reasons to believe. While issuing the said fresh attachment order, the ED shall again strictly follow the entire procedure as prescribed under Sections 5 & 8 of the PMLA and the relevant Rules thereunder. xii) In other words, ED should record the reasons to believe before issuing the fresh provisional attachment order, forward such fresh provisional attachment order to the Adjudicating Authority and the Adjudicating Authority shall again satisfy itself that the properties were involved in money laundering and shall issue a fresh show-cause notice in relation to the fresh provisional attachment order, the parties shall again be given a right of hearing before passing orders under Sections 8(2) and 8(3) of the PMLA. Needless to say that after issuance of the fresh provisional attachment order, the confirmation shall be completed within a period of 180 days. xiii) As far as the decision in Fairdeal Supplie....
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....attachment order under Section 5(1) of the PMLA. However, following the decision in Fairdeal Supplies (supra), if in relation to the earlier provisional attachment, the Adjudicating Authority already records a finding under Section 8(2) of the PMLA that the properties were involved in money laundering, then the entire process in relation to the fresh provisional attachment order is redundant as a view is already expressed against the person whose property is sought to be attached. xvii) In other words, a person whose property is sought to be attached by issuing a fresh provisional attachment order is prejudiced as a finding is already recorded against him in relation to the earlier provisional attachment order. The effect of such a situation is a farce. The procedure to be followed after issuing a fresh provisional attachment order under Sections 5 & 8 of the PMLA i.e., recording of reasons to believe by the authorized officer and the Adjudicating Authority, issue of show cause notice and consequent adjudication is rendered ineffective as the Adjudicating Authority had already reached the conclusion that the properties were involved in money laundering. Therefore, this Court disag....