IN WPA 12335 OF 2023- CALC HC- PMLA: Chairperson adjudicating proceedings as Single Member cannot be the reason to vitiate proceedings on ground of coram non-judice, holds Calcutta High Court
Justice Sabyasachi Bhattacharyya [16-06-2023]

Read More: R. P. Infosystems Limited v.  The Adjudicating Authority

Simran Singh

New Delhi, June 19, 2023: The Calcutta High Court, while dealing with a petition challenging the impugned order of the Prevention of Money Laundering Act, 2002 (PMLA) authority on the ground of coram non judice, held that on a comprehensive interpretation of Section 6 of PMLA, it was clear that the Chairperson not only had the discretion to constitute a Bench with only one Member, but Section 6(7) of PMLA laid down the norm stating that the Bench could consist of a single Member and, only if the case was of a critical nature, a Bench consisting of two Members would be assigned the hearing. The Court took note of the fact that the Chairperson, as a single Member, had proceeded to take up the hearing of the application under Section 17 of the PMLA which, in light of Section 6, could not be held to be vitiated on the ground of coram non judice.

In the matter at hand, the Enforcement Directorate (ED/respondent 2) objected the jurisdiction of the Court to take up the present matter and stated that the matters relating to police had been excluded by way of a notification dated 30-09-2022 issued by the order of the then Chief Justice which clarified that matters relating to CBI and Central Agencies in writ petitions under Article 226 of the Constitution were already included within the comprehensive reading of the special category ‘Police’ in the Appellate Side Rules, therefore, there was no need to mention ‘CBI and Central Agencies’ separately in the notification. Thus it was contended that since ED was a Central Agency, the said exclusion applied to the present case. It was further stated that petitioners had been repeatedly attempting to stall the proceedings under Section 17(4) of PMLA.

It was averred by the petitioner that the challenge had not been filed against any inaction or action of the Police or any Central Agency, including the ED, but the challenge had been preferred with regard to the jurisdiction of the Adjudicating Authority under the Prevention of Money Laundering Act, 2002, which was a quasi-judicial statutory authority and not a ‘central authority’. Thus, it was argued that the Court had jurisdiction to entertain and decide the matter. It was further contended that the Adjudicating Authority had bias against the petitioners since the venue of the first hearing was fixed at the ED Office who was a complainant himself and such fixation of venue vitiated the authority of the Chairperson. It was submitted that the Adjudicating Authority neither granted any opportunity of being heard nor an opportunity of filing any objections.

The Bench while dealing with the objection as to coram non judice was concerned, stated that there were two interpretations possible regarding the provisions of Section 6 of the PMLA. The one in favour of the petitioners which was on the basis of sub-section (2) of Section 6, which stipulated that an Adjudicating Authority would consist of a Chairperson and two other Members. The qualifications of the Members had also been provided in the proviso. Hence, as per the Scheme of PMLA, the Adjudicating Authority had to comprise of three Members in total, out of whom one would be the Chairperson. However, it had been argued that at present the Adjudicating Authority was functioning only with a Chairperson, without any other Member having been appointed to fill the vacancies. Thus, the question of coram non judice arose.

On the other hand, sub-section (5)(b) provided that a Bench may be constituted by the Chairperson with one or two Members, as the Chairperson of the Adjudicating Authority may deem fit. Hence, it was evident that the Chairperson had the discretion even to function with only one Member, which could very well be herself/himself. Proceeding on such premise, the objection as to coram non judice could not be accepted.

The Bench while dealing with the apprehension of bias against the petitioners noted explanation granted by the respondents stating that the  CGO Complex, where the first sitting was scheduled, housed all the offices of Central Government including the ED office. Although in the Notice it was indicated that the meeting would be held in the ED office, it was held in a different Government office of the same building which was on the same floor as that of the ED.

The Bench stated that the present case was only at the preliminary stage of hearing of an application under Section 17 of the PMLA, which pertained to search and seizure. Under sub-section (4) of Section 17, the authority seizing or freezing any record or property would, within a period of 30 days from such seizure or freezing, filed an application requesting for retention of such record before the Adjudicating Authority. Moreover, the petitioners themselves had applied for examination of the records by an independent authority on the apprehension of tampering of documents, on the basis of which a revisional court had already directed the examination of the records to be done by the Central Forensic Science Laboratory. Thus, admittedly, the records were lying in the office of the ED and the administrative convenience of holding a meeting at the office of the ED could also not be brushed aside, since the records, which were the borne of contention in the present application, were admittedly lying with the ED and might be difficult to be transmitted elsewhere due to security reasons.

The Bench held that the mere selection of the ED office as a venue in the present context, in the absence of any other clinching factor to indicate bias, would not vitiate the proceeding, more so since the matter had not yet reached the final hearing stage. That apart, it was also an admitted position that the petitioners themselves participated, through counsel, in the first hearing, which was ultimately not held in the ED office but elsewhere in the same building. Thus, the objection as to venue had now turned stale, having never been agitated at the relevant point of time by the petitioners.

The Bench in regards to the rejoinder stated that the Chairperson of the Adjudicating Authority made it clear that he would not rely on the rejoinder. Hence, at this belated stage, the petitioner could not resile and agitate its perceived lack of opportunity to deal with the rejoinder. Hence, the same was also not a valid defence for the petitioners.

The Bench was of the view that the Chairperson did not commit any jurisdictional error by constituting the Bench as a single Member as himself, to entertain and proceed with the hearing of the application pending before the Adjudicating Authority. In fact, sufficient opportunity had been given to the petitioners by the Adjudicating Authority to present their case.

The Bench was of the view that repeated attempts of the petitioners to come up in challenge in connection with the pending proceeding indicated that the petitioners wanted to stall the same unnecessarily and such dilatory tactics on the part of the petitioners ought not to be encouraged.

With regard to the allegation of undue haste of the Adjudicating Authority by the petitioner, the Bench examined the Statement of Objects and Reasons of PMLA, which stressed that it was being realised, world over, that money-laundering posed a serious threat not only to the financial systems of the countries, but also to their integrity and sovereignty. “In view of an urgent need for the enactment of a comprehensive legislation inter alia for preventing money laundering and connected activities (within which serious crimes like illicit drug trafficking had also been included), confiscation of proceeds of crime, setting up of agencies and mechanisms for coordinating measures for combating money-laundering, etc. the connected Bill is introduced. The seriousness and implicit urgency involved in a proceeding to combat such grave issues would justify some amount of urgency. Thus, it cannot be said that merely because the Adjudicating Authority is trying to expedite the proceeding, it is biased against the petitioners.”

Accordingly, the Bench was of the view that there was no scope of entertaining the writ petition at this stage. However, in order to allay the apprehension of bias in the mind of the petitioners, a further opportunity of hearing ought to be given to the petitioners before closing the hearing on the pending interim applications. Thus, the Adjudicating Authority was directed to afford an opportunity of hearing to the petitioners and thereafter to pass necessary orders. As clarified by it earlier, the Adjudicating Authority would also not rely on the rejoinder filed by the ED, unless adequate opportunity was given to the petitioners to file a written objection thereto.