'Judicial Member Freshly Appointed': ED Defends PMLA Adjudicating Authority's Composition Before Karnataka High Court

The Enforcement Directorate (ED) on Wednesday defended the composition of the PMLA Adjudicating Authority before the Karnataka High Court, submitting that a fresh judicial member has now been appointed pursuant to the principles laid down by the Supreme Court in the JSW case.

The submission was made by Additional Solicitor General Arvind Kamath before Justice M. Nagaprasanna, who was hearing a batch of petitions, including one filed by Puppy Tours & Travels, challenging various actions taken by the ED.

On March 27, the Court had orally asked the Union of India and ED whether a single member can constitute the adjudicating authority under the Prevention of Money Laundering Act. This, after the petitioners had argued that the Adjudicating Authority's composition-functioning with only one member-was vitiated by the principle of coram non judice.

Today, at the outset, Kamath informed the Court of the fresh appointment, stating, “One development in this matter—proceedings before the Adjudicating Authority were primarily challenged on the ground that it was a single member. Now the judicial member has been freshly appointed in pursuance of JSW principles…”

Responding to the said development, the Court observed that if the Authority was previously functioning without proper jurisdiction, the proceedings would need to begin afresh:

“…Then it should begin de novo. Evidence collected or proceedings by a tribunal without jurisdiction cannot be relied upon. If that's the case, start de novo….”, the court orally remarked.

The ASG, however, clarified that no evidence had yet been recorded before the Authority. “Show cause notice was issued, parties have appeared, some of them have filed objections. No evidence has been taken,” he said.

The petitioners nevertheless maintained that the appointment of one additional judicial member did not resolve the statutory composition issue. “The issue is still there since the authority envisages 3 members…Even assuming another judicial member was appointed, the authority still doesn't have 3 members. As per Vijay Madanlal, the authority must have 3 members. That's how the provision interpretation was done,” it was submitted.

The petitioner also pointed to an ED notification dated July 1, 2005, which mandated that Adjudicating Authorities must have three members, “….There is no other notification. The authority even in Vijay Madanlal says three members must be there. Power cannot be exercised under Section 6(7) unless there are three members….”

For context, as per Section 6(7) of the PMLA Act, if the Chairperson or a Member finds that a case warrants hearing by two Members, the Chairperson may transfer the matter to such bench as deemed fit.

The ASG vehemently rebutted the petitioners' arguments, submitting that the composition issue is no longer a matter of debate.

“…The question of whether a single member bench can constitute the Adjudicating Authority is no longer res integra," the ASG submitted, referring to the Delhi High Court's decision in Goldcorp and the Supreme Court's judgment in Jayasekhar.

The ASG placed reliance on judgments from five different High Courts-including Delhi, Calcutta, Madras, and Telangana-all of which, according to the ED, had held that a single-member Adjudicating Authority is valid in law.

“…Section 6(2) of PMLA says the Adjudicating Authority should have a Chairperson and two members. However, the bench may be constituted by the Chairperson with one or two members as the Chairperson may deem fit[as per Section 6(7)]. Therefore, it is possible to have single member benches," the ASG submitted, quoting from the Jayasekhar judgment.

The ASG further argued:

“…As the Telangana High Court has said, the adjudicating authority doesn't decide on criminality; it's a mode of civil determination. The coram non judice question doesn't arise. It is a lawful tribunal, even if a single member conducts proceedings.”

Advocate Mayank Jain for the petitioners countered that the judgments cited by the Union had not considered the Supreme Court's landmark decision in Vijay Madanlal Chaudhary v. Union of India.

“…None of the judgments cited a clear distinction between 'adjudicating authority' and 'benches'. They are only on whether a single judge bench can adjudicate or not. None of the judgments say the authority should not have three members. It only says the Adjudicating Authority may form one or two member benches(as per Section 6(7)). But how will that discretion be exercised unless there are three members?” Jain submitted.

Advocate Zoheb Hossain, appearing for the ED, refuted the petitioners' claims and addressed the composition issue, relying on the statute, i.e., Section 6(13) and 6(14).

“…Section 6(14) of PMLA says the Adjudicating Authority will operate even without full strength. Section 6(7) is not a right for the person to invoke. If during the hearing, a member feels the matter requires reference to a larger bench, that is a different matter….”

Addendum Issue

The Court also heard arguments on the petitioners' challenge to the ED's search and seizure proceedings and its practice of adding predicate offences through addendums to the ECIR.

Kamath however submitted that there was no legal bar against the ED adding such addendums.

On the search and seizure issue, Kamath submitted that the ED had recorded reasons to believe on August 21, 2025, and obtained approval from the Additional Director. Searches were thereafter conducted at 31 premises between August 30 and September 9, during which approximately ₹10 lakh in cash, agreements and laptops were seized.

The ASG added: “…Section 17 has built-in safeguards. There is no demonstration that any such safeguards have been violated. All procedural safeguards have been complied with."

The petitioners had argued that the predicate offences on the basis of which the ECIR was registered had either been closed or resulted in discharge.

"The day on which ECIR was registered and on the date of search, there was no scheduled offence at all. All schedule offences were either closed or there was a discharge," the petitioners submitted.

The ASG also invoked the Supreme Court's decision in JSW to argue that proceedings should be allowed to take their own course before the Adjudicating Authority:

"In JSW, the Apex Court said that proceedings should be allowed to take their own course before the Adjudicating Authority. As per JSW, these parties should be relegated to Adjudicating Authority."

After hearing both sides and after accepting compilations on issues raised, the court has reserved the matter for orders.

Background

The primary issue raised before the Court concerned whether the ED has the power to add predicate offences through addendums. The second aspect to be examined was whether the ED could club together multiple FIRs arising from separate transactions using a single ECIR. The third issue was whether the adjudicating authority and the proceedings before it was vitiated by the principle of 'coram non judice'.

To recap, the Karnataka High Court had on January 29 directed ED's adjudicating authority not to close its search and seizure proceedings initiated against a partnership firm under scanner for betting and gambling, until the high court decides the firm's plea questioning the proceedings.

The plea claims that the ED had registered a complaint in 2025 allegedly on the basis of FIRs under various provisions including IPC Section 420 (cheating), registered over a period of 10-15 years relating to alleged betting and gambling activities. The plea claims that the ED had alleged that several persons are involved in online betting and gambling activities and proceeds of crime have been generated from the same, which has been laundered attracting penal consequences under Section 3 of the PMLA.

The petitioner has alleged that the ED conducted search and seizure on 22.08.2025 to 09.09.2025 and seized valuables and has also frozen various bank accounts without valid reasons.

Case Title: Puppys Tours And Travels LLP v. Union of India & Anr.

Case No: WP 964/2026 & Connected Matters