AI Drafter 
TaxTMI 
TaxTMI 
2026 (1) TMI 1594
X X X X Extracts X X X X
X X X X Extracts X X X X
....s under Article 226 of the Constitution of India seeking quashment of the show-cause notice dated 12.09.2025, issued by respondent No.1, under Section 8 of the Prevention of Money Laundering Act, 2002 (for short 'PMLA Act'). 3. The brief facts of the case relevant for adjudication of the present dispute are that petitioner No.1 is a government employee and has been implicated in an First Information Report registered by CBI, ACB, Hyderabad Branch, vide RC.No.10(A)/2019- CBI/ACB/Hyderabad, dated 08.07.2019, under Section 13(2) read with 13(1)(b) of the Prevention of Corruption Act, 1988 (as amended in the year 2018) and under Section 109 of the Indian Penal Code, 1860. Subsequent to the lodging of the aforementioned First Information Report and charge-sheet being issued, the Enforcement Directorate registered an ECIR under the provisions of the PMLA Act vide ECIR No. ECIR/HYZO/19/2019, and invoking Section 5(1) of the PMLA Act issued Provisional Attachment Order (PAO) No.30/2025, dated 06.08.2025, attaching various movable and immovable properties standing in the name of petitioner No.1 and his family members. Thereafter, the impugned show-cause notice was issued on 12.09.2025 un....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ons put forth on either side and on perusal of records, it would be trite at this juncture to refer to the provisions of Section 6 of the PMLA Act. For ready reference, Section 6 of the PMLA Act is reproduced hereunder: "The Central Government shall, by notification, appoint 1[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 qualified for appointment as District Judge; or (ii) has been a member of the Indian Legal Service and has held a post in Grade I of that service; (b) in the field of finance, accountancy or administration unless he possesses such qualifications, as may be prescribed. (4) The Central Government shall appoint a Member to be the Chairperson of the Adjudicating Authority. (5) ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 theexpiry 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 Adjudicating Authority is unable to discharge his functions owing to absence, illness or any other cause, the senior-most Member shall discharge the functions of the Chairperson of the Adjudicating Authority until the date on which the Chairperson of the Adjudicating Authority resumes his du....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Therefore, the proposition that powers under Section 8 of PMLA can be exercised by the Adjudicating Authority comprising only from member in the field of law does not deserve acceptance as the same would render provisions of Section 6(5) and 6(7) of PMLA nugatory and ineffective. 24. Insofar as decision in Utility Users' Welfare Association (supra), on which reliance has been placed, it is noteworthy that the Supreme Court in aforesaid decision dealt with Section 86(1)(f) of the Electricity Act, 2013 and held that Commission has the option of adjudicating the disputes between the licensees and generating companies or refer the same to arbitration. In the aforesaid context, the Supreme Court dealt with the issue whether the State Regulatory Commission constituted under Electricity Act which necessarily performs the function of adjudication is required to have one member who was or is holding a judicial office or is a person possessing professional qualification with substantial experience in the practice of law. The aforesaid decision is of no assistance to the respondents. 25. It is also pertinent to note that the validity of Sections 6(2), 6(3)(a)(ii) and 6(5)(b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sory and only acceptable composition, enabling the AA to exercise the power vested in it by the statute. It further reveals that the statute provides a threefold legislative design, permitting the AA to function in three distinct configurations, either as a three-member authority or for purposes of functional expediency, as a two-member Bench or even as a single-member Bench, depending on the nature of the matter before it. 47. The aforesaid interpretation of the provision also aligns with the fundamental principle of statutory interpretation, ut res magis valeat quam pereat, which mandates that every statutory provision must be given effect and shall not be rendered as ineffectual, inoperative or redundant. In view of the aforesaid, if the argument advanced by the learned counsel for the Petitioner is accepted and the provisions of Section 6 of the PMLA are interpreted in a manner that it prohibits the existence or constitution of AA as a single member Bench, such interpretation would nullify the effects and intention behind adding Section 6(5)(b) and Section 6(7) of the PMLA, which is impermissible under the recognised principles of statutory provisions. A similar view h....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f 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 by the Chairperson of the AA "with one or two members" as the Chairperson may deem fit. Therefore, it is possible to have single-member benches. The word 'bench' therefore does not connote plurality. There could, even under Section 6(5)(b) PMLA, be a 'single member bench'. When Section 6(6) PMLA states that a Chairperson can transfer a member from one bench to another bench, it has to be understood in the above context of there also being single-member benches." 15. Another reason which compels this Bench not to entertain the present writ petition is that an alternative statutory remedy is available to the petitioner under the PMLA Act itself, rather than seeking quashment under Article 226 of the Constitution of India. Recently, the Hon'ble....
X X X X Extracts X X X X
X X X X Extracts X X X X
....statute under which the action complained of has been taken itself contains a mechanism for redressal of grievance. 32. We are therefore of the considered view that the High Court has grossly erred in entertaining and allowing the petition under Article 226 of the Constitution. 33. While dismissing the writ petition, we will have to remind the High Courts of the following words of this Court in the case of Satyawati Tondon (supra) since we have come across various matters wherein the High Courts have been entertaining petitions arising out of the DRT Act and the SARFAESI Act in spite of availability of an effective alternative remedy: "55. It is a matter of serious concern that despite repeated pronouncement of this Court, the High Courts continue to ignore the availability of statutory remedies under the DRT Act and the SARFAESI Act and exercise jurisdiction under Article 226 for passing orders which have serious adverse impact on the right of banks and other financial institutions to recover their dues. We hope and trust that in future the High Courts will exercise their discretion in such matters with greater caution, care and circumspection."" 16. ....