TaxTMI 
TaxTMI 
2023 (8) TMI 1051
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt was awarded a DGS and D rate contract for supply of its products namely desktop, computers, laptops and computers peripherals to the Government sector which were produced under the brand named "CHIRAG". 3. In June 2011, IDBI Bank and the appellant entered into a loan syndication agreement they becoming the lead banker. On 01.02.2023, State Bank of Patiala (presently the State Bank of India) entered the consortium bankers who agreed to release to sanction limit of Rs. 50 crores upon receipt of a no-objection certificate from IDBI Bank. It is stated that IDBI Bank to be issued letter dated 22.02.2013 based on which the State Bank of India released Rs. 25 crores DD in favour of the appellant. By another letter dated 28.02.2013 credit information report of the appellant was furnished by IDBI to State Bank of India. Subsequently by letter dated 08.03.2013, it was stated by IDBI Bank that the aforementioned two letters were not issued by them and they sought for written clarification. Forensic report obtained by the State Bank of India stated that the letter dated 22.02.2013 there was no concrete evidence of forgery. On 11.05.2015, IDBI Bank requested CBI to initiate criminal proceed....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dicating authority, the first respondent cannot discharge its functions when the authority has not been formed as per the mandate under Section 6 of the PMLA Act as the first respondent is the only Member, that is Member (Finance) and there is no judicial member appointed to the adjudicating authority. It was contended that the first respondent, Member (Finance) prior to being appointed as the adjudicating authority was in the employment in the Government of India whereby there is a likelihood of bias and this according to the appellant has become more evident because of the manner in which the adjudicating authority as proceeded and according to the appellant his action was tainted with malafide, there were procedural lapses and that the authority was acting in a pre-meditated manner to harass the appellant. It was further contended that a tribunal or quasi-judicial authority cannot proceed without there being any judicial member and more particularly in the light of the mandate under Section 6 of the PMLA Act. Further it was contended that the manner in which the hearing was conducted and concluded on 12.05.2023 is in clear violation of the principles of natural justice as the ap....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n with one or two members as deemed fit by the Chairperson and therefore there is no irregularity in the Chairperson taking up the matter himself. The respondent placed reliance on the decision of the High Court of Delhi in M/s. Gold Croft Properties Private Limited Versus Directorate of Enforcement in WP(C) No. 2191/2023 dated 28.02.2023. 8. The learned Single Bench held that on a comprehensive interpretation of Section 6, it is clear that not only has the Chairperson the discretion to constitute a bench with only one member but the norm also as per Section 6(7) of the Act is that the bench will consist of a single member and, only if the case is of a critical nature, a bench consisting of two members will be assigned the hearing. Thus, the court concluded that the Chairperson as a single member has proceeded to take up the hearing of the application under Section 17 of the PMLA Act which, in the light of Section 6, cannot be held to be vitiated on the ground of quorum non judis. 9. The learned Single Bench next proceeded to consider the argument of the appellant with regard to the apprehension of bias. After taking note of the facts and the submissions of either side, it was he....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... reasons of the PMLA Act, which stresses that it is being realized world over that money laundering poses a serious threat not only to the financial systems of the country but also to the integrity and sovereignty. After taking note of the objects for which the PMLA Act was enacted, the Hon'ble Court held merely because the adjudicating authority is trying to expedite the proceedings, it cannot be said that it is biased against the appellant. Accordingly, it was held that there is no scope of entertaining the writ petition at this stage however, further opportunity of hearing was directed to given to the appellant before closing the hearing on the pending interim applications. 12. Before us the contention advanced by the learned single bench was reiterated by the learned senior counsel and it was contended that Section 6(5)(b) of the PMLA Act envisages for a single and a double member bench but since the adjudicating authority is presently functioning with only one member, the option to appoint several members is not available and in the absence of three members to the adjudicating authority, it is quorum non judis. Reliance was placed on the decision of the Hon'ble Supreme Court ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ity. In reply, the learned senior advocate for the appellant while reiterating the submissions, submitted that they are not urging the other points which were adjudicated by the learned single bench but their contention is that the adjudicating authority has no jurisdiction to proceed with the matter as it has become quorum non judis. Further it is contended that the decision in Gold Croft Properties and Alaknanda Realtors are distinguishable on facts and cannot apply to the case on hand. 14. We have elaborately heard the learned advocates for the parties and carefully perused the materials placed on record. 15. Keeping in view the urgent need for preventing of money-laundering and related activities, confiscation of the proceeds of crimes and India's obligations under various international conventions to take action for preventing and combating money-laundering a Bill namely, the Prevention of Money-laundering Bill, 1998 was introduced in the Lok Sabha on 04.08.1998. Thereafter the Prevention of Money-laundering Act, 2002 (15 of 2003) was enacted in the year 2003. Even before the Act came into force, the Act was amended by the Prevention of Money-Laundering (Amendment) Act, 2005....
X X X X Extracts X X X X
X X X X Extracts X X X X
....note of the decision of the Hon'ble Supreme Court in Director of Enforcement Versus MCTM Corporation Private Limited (1996) 2 SCC 471. In the light of the said decisions, it has to be necessarily held that the proceedings before the adjudicating authority appointed under Section 6 of the PMLA Act and the declaration/adjudication and confiscation of properties involved in money laundering by the adjudicating authority does not constitute the prosecution nor the order of confiscation would constitute a punishment inflicted by the court or the judicial tribunal. 18. The endeavor of the learned senior advocate for the appellant is to convince us that the adjudicating authority has to mandatorily consists of a Chairperson and two members and Sub Section (3) of Section 6 also stipulates the qualification for appointment as members of an adjudicating authority and in terms of Clause (a) (i) of Section 6(3), a member has to be appointed who is qualified for appointment as District Judge. To support this argument reliance was placed on the decision in the case of Pareena Swaroop and Madras Bar Association. In Pareena Swaroop, a member of a Bar filed a writ petition under Article 32 of the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....erts from different fields with a role as described above, the appointment of its Chairperson should be left to the recommendations of the Selection Committee. The Hon'ble Supreme Court considered the proposed amendments which were suggested (supra) and held that the same are in tune with the scheme of the Constitution as well as the principle laid down by the Hon'ble Supreme Court in several decisions and accordingly the proposed amendments were approved and the Union of India was directed to implement the said provisions. 21. In the light of the above decision, it is manifestly clear that the functions of the adjudicating authority are civil in nature to the extent that it does not decide on the criminality of the offences nor does it have power to levy penalties or impose punishment. Thus, the decision in Pareena Swaroop would go to support the stand taken by the Enforcement Directorate before this Court. The decision in Madras Bar Association pertain to the constitutionality of various provisions concerning the selection, appointment, tenure, conditions of service and ancillary matters relating to various tribunals which act in aid of the judicial branch. While considering suc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r the matter is of such a nature that it ought to be heard by a bench consisting of two members, the case or matter may be transferred by the Chairperson or as the case may be, referred to him for transfer, to such bench as the Chairperson may deem to fit. 26. It is important to note that Sub Section (1) of Section 6 empowers the Central Government to appoint an adjudicating authority by way of a notification to exercise jurisdiction, powers and authorities conferred by or under the Act and in terms of Sub Section (2) such adjudicating authority shall consists of a Chairperson and two other members. Thus, a combined reading of Sub Section (1) and (2) of Section 6 shows that in terms of the said provision, the Central Government is empowered to appoint the adjudicating authority which shall consists of a Chairperson and two other members. The Central Government in exercise of the said powers conferred under Sub Section (1) of Section 6 of the PMLA Act by notification in GSR 437(E) dated 01.07.2015 appointed an adjudicating authority to exercise jurisdiction, powers and authority conferred by or under the Act and such adjudicating authority shall consists of a Chairperson and two me....
X X X X Extracts X X X X
X X X X Extracts X X X X
....out is stipulated in Sub-Section (5) of Section 6 and in terms of Clause (b) of Sub Section (5) of Section 6, a single member bench of the adjudicating authority is competent to adjudicate any matter under the provisions of the Act. Any other interpretation as suggested by the appellant, if acceded to would make the provisions of the Act unworkable, apart from such interpretation not being in line and in tenor with the provisions of Section 6. Therefore, the contention raised by the appellant has to necessarily fail. 27. The Hon'ble Division Bench of the High Court of Delhi in J. Sekar Versus Union of India (2018) SCC Online (Delhi) held that under Section 6(5)(b) of the PMLA Act, a bench may be constituted by the Chairperson of the adjudicating authority "with one or two members" as the Chairperson may deem fit. It was held that it is possible to have a single member bench. The word "bench" therefore does not connote plurality; that could, even under Section 6(5)(b) of the PMLA Act be a "single member bench". Further it was held that when Section 6(6) of the PMLA Act states that a Chairperson can transfer a member from one bench to another, it has to be noted in the above context....