In W.P.(C) 125/2023-DEL HC- Application for cross-examination filed before Adjudicating Authority would not be alien to Sec.8 proceedings under PMLA and would be integral part of process of adjudication: Delhi HC 
Justice Pratibha M. Singh [10-01-2023]

Read Order: DR. U.S. AWASTHI v. ADJUDICATING AUTHORITY PMLA & ANR.  

Mansimran Kaur

New Delhi, January 16, 2023: In a case pertaining to the Prevention of Money Laundering Act, 2002, the Delhi High Court has opined that when the Appellate Tribunal can entertain an appeal against the final order passed by the Adjudicating Authority, any interim orders or procedural orders passed as part of the process of adjudication would, thus, be ‘orders under this Act’.
 

Justice Pratibha M. Singh disposed of the present writ petition instituted to impugn the order passed by the Adjudicating Authority (PMLA), by which the application of the Petitioner - Dr. U. S. Awasthi seeking permission to cross-examine three persons was rejected.

The Single Judge-Bench was of the opinion that since  the entire process of adjudication under the PMLA Act  is to be concluded within 180 days,  hence the present writ petition was  directed to be transmitted by the Registry to the Appellate Tribunal, so that the same could be taken up in an expeditious manner.

The brief background of the matter was that the Central Bureau of Investigation registered an FIR dated May 17, 2021 against the petitioner. The said RC also contained certain scheduled offences under the Prevention of Money Laundering Act, 2002. The ECIR dated May 20, 2021 was, thereafter, registered by the second respondent - Enforcement Directorate and investigation under the PMLA was commenced. 

A provisional attachment order was issued by the ED wherein investment to the tune of Rs.42,15,01,623/- of the Petitioner and investment to the tune of Rs.8,80,17,793/- of the Petitioner’s spouse were provisionally attached as ‘proceeds of crime’. A show cause notice was, thereafter, issued under Section 8(1) of the PMLA.

 At that stage, the petitioner filed the application dated November, 2022 seeking right to cross-examine the above-mentioned witnesses.

The premise on which the application has been filed is that under Section 11 of the PMLA, the Adjudicating Authority has to mandatorily adhere to the provisions of the Code of Civil Procedure, 1908 and hence, grant the Petitioner the right to cross-examination. The said application was rejected by the Adjudicating Authority by the impugned order. 

After considering the submissions from both the sides, the Court dealt with the issue of maintainability. In view of the same, the Court took into account Section 26 of the PMLA Act. 

The Court noted that the powers of the Adjudicating Authority, under Section 8 of PMLA, are quite vast. The said provision stipulates the various steps to be taken, prior to the passing of the final order by the Adjudicating Authority. The Adjudicating Authority has to consider the show cause notice, the reply of the notice/s, hear the aggrieved person, as also, the Director or any officer authorised on his behalf, take into account all relevant materials placed before it, and thereafter, by an order record a finding whether any or all of the property is involved in money laundering under Section 8(2) of the Act.

 After arriving at a conclusion under Section 8(2), the Adjudicating Authority is to decide the question as to whether the attachment has to be confirmed or modified or detached under Section 8(3) of the PMLA. 

The entire process has to be concluded within 180 days from the date of issuance of the show cause notice, provisional attachment order under Section 5 of the PMLA. Thus, the proceedings before the Adjudicating Authority have to proceed in a speedy manner and go through the various steps provided under Section 8 of PMLA. 

“An application for cross-examination filed before the Adjudicating Authority would be an integral part of the process of adjudication and would not be alien to Section 8 proceedings, when considered in this above statutory scheme and context”, the Court further noted. 

However, the question here was whether a writ petition was to be entertained against such an order.

In view of the same, the Court opined  “when the Appellate Tribunal can entertain an appeal against the final order passed by the Adjudicating Authority, any interim orders or procedural orders passed as part of the process of adjudication would, thus, be ‘orders under this Act’”. 

It is not to say that against each such order an appeal would be liable to be entertained. It is for the Appellate Tribunal to decide as to whether an appeal ought to be entertained at all. Construing Rule 2 of the Prevention of Money-Laundering (Appeal) Rules, 2005 to the contrary would, in fact, mean that parallel proceedings would continue in writ petitions against procedural orders and before the Appellate Tribunal, once the final order is passed. This could lead to conflicting orders and lack of uniformity and consistency in dealing with the procedures to be followed by the Adjudicating Authority and other authorities under the PMLA.

At the stage of Section 8 proceedings, if cross examination is permitted in every case, it may result in delay and defeat the purpose of the said adjudication However, whenever deemed necessary, the opportunity of cross-examination ought to be afforded. It cannot be presumed that the said request is to delay or scuttle. The request for cross examination must be examined seriously and not in a routine manner, the Court noted. 

The Bench thus relegated the Petitioner to the Appellate Tribunal under PMLA for agitating the challenge to the impugned order. Since the entire process of adjudication was to be concluded within 180 days, the present writ petition was directed to be transmitted by the Registry to the Appellate Tribunal.