Can PMLA Adjudicating Authority Be Single Bench? Is Judicial Member Necessary? Supreme Court Reserves Judgment

The Supreme Court on Tuesday reserved judgment on a batch of petitions raising the question whether the Adjudicating Authority, constituted under Section 6 of the Prevention of Money Laundering Act, which confirms attachment orders passed by the Enforcement Directorate, must include a judicial member and whether it can function as a single-member bench.

A bench of CJI Surya Kant, Justice Bagchi and Justice V Mohana was dealing with a batch of cases pertaining to (a) constitutional validity of the second proviso to Section 5 PMLA and (b) vitiation of proceedings on account of non-compliance with Section 5(1) or Section 8(1) relating to furnishing of "reasons to believe", etc.

During the hearing, Justice Bagchi, noting that the Authority has to confirm the attachment within 180 days, asked Additional Solicitor General Anil Kaushik if the Authority can be expected to apply mind given the huge number of cases.

"We are looking at a law (PMLA) which requires application of mind by one Tribunal in 3000 cases in 6 months...what is happening Mr Kaushik is if law leaves a gap, then because of draconian nature, it gives a timeline...(that by 180 days you finish)...can you imagine the pressure which is being put on a Tribunal comprising of whatever 3, 2, or 1 member...to look into 3000 or 5000 cases within 6 months? Will there be a real application of mind? Or just signing on [...]?" Justice Joymalya Bagchi asked. 

During the hearing, the Court was also told by Senior Advocate Gopal Sankaranarayanan (for petitioners) that out of 8851 cases initiated by ED during a specific period, only 60 went to trial. The senior counsel underlined that provisions relating to attachment of property, etc. would have applied in all the 8851 cases, leading to serious civil consequences without the case eventually having gone to trial. 

"ED itself on its website says 8851 cases are the one they initiated, out of which only 60 went to trial. So those 8851 - all these provisions apply...Adjudicating Authority...you freeze something for 20-30 years and then eventually at the end of it...", Sankaranarayanan submitted. Opposing the submission, ASG Anil Kaushik said that the figure did not seem to be correct.

"It's your website", retorted Sankaranarayanan. Justice Bagchi then asked as to how many cases resulted in attachment, "There are not on trial, Mr Kaushik...the number of attachments throughout the country...how many attachments?" Sankaranarayanan replied to the query, saying the number stood at 3501. 

Though it was requested that the cases be tagged and heard alongwith the petitions seeking review of the Vijay Madanlal Chaudhary judgment, the bench declined. The cases were heard today and orders reserved. 

Briefly put, the cases came in appeal from the decisions of different High Courts. One of these decisions, by a Division Bench of the Delhi High Court, upheld the constitutional validity of the second proviso to Section 5(1) PMLA. On the issue whether a Single Bench of the AA can exercise powers and conduct proceedings under Section 8 PMLA, the High Court held that there can be single-member benches of the AA and AT (Appellate Tribunal) under PMLA. Such single-member benches need not mandatorily have to be JMs (Judicial Magistrate) and could be AMs (Administrative Member) as well, it observed.

In one of the special leave petitions (preferred by the ED), the High Court decision, which also held that the writ petitions were maintainable, was stayed. 

Petitioners' arguments 

Senior Advocate Vikram Chaudhri appeared for some petitioners aggrieved by show-cause notices and orders of AA, who contended that the authority was coram non judice, as it did not have 3 members or comprise any legal member. Chaudhri argued that in terms of Section 2(1)(a) read with Section 6(1) and (2) of PMLA, the AA must consist of the Chairperson and 2 other members. Further, each member shall be a person having experience in the fields of law, administration and finance/accountancy. 

The senior counsel also submitted that the presence of a judicial member in the AA is a must and proceedings are vitiated if such member is absent. He urged, "When Vijay Madanlal Chaudhary was rendered, it was definitely a 3-member body. Today, scenario for the last few years has been entirely different."

According to Chaudhri's submissions, a single member was functioning as AA for a long time and only recently, another member (law) was taken on board, who used to be an ED officer.

Chaudhri also drew the court's attention to Section 6(5) PMLA, which allows the AA to exercise its jurisdiction through benches of 1-2 members. He contended that attachment of property can only be for a maximum period of 180 days, provided within 30 days, a complaint is filed and on that a reasoned show-cause is issued in terms of Section 8(1). With reference to the 30-day period, he contended that the AA is performing a function where it is determining the offence of money laundering (as it decided whether the property is involved in money laundering and/or is "proceeds of crime").  

It was further claimed that when a prosecution under PMLA is launched, authorities also seek confiscation of property, which is provisionally attached and confirmed by the AA, a quasi-judicial authority. Therefore, the first "sentinel on the qui vive" is the AA, which is "not performing an administrative function". 

Responding to Chaudhri's submissions, Justice Bagchi observed that the Chairperson of AA does not have to be from the field of law. The judge further remarked that the AA enjoys a wide spectrum of powers and the statute has left it upon the discretion of the Chairperson as to what quorum shall decide which power. 

Justice Bagchi also observed that with regard to title of a property, the AA has no power. Rather, the power lies with the Special Court. When a property is confiscated, what is the transferred is the possession. When Chaudhri alleged that ED has taken possession of properties across the country despite provisional attachment orders, Justice Bagchi said, "no, they can't, if you have possession". The judge added that provisional attachment is a power restricted to a finite period (180 days), which restricts right to transfer property, not possession. "It's an injunction order" quipped CJI. 

Senior Advocate Niranjan Reddy argued that upon confirmation by AA (which need not have a judicial member as per ED), dispossession can take place and it will happen immediately before a person has opportunity of going before Appellate Tribunal which will have a judicial member. 

Appearance: Senior Advocates Vikram Chaudhri, Gopal Sankaranarayanan, Niranjan Reddy, S Nagamuthu, Siddharth Aggarwal; ASG Anil Kaushik; Advocates Mayank Jain, Madhur Jain and Arpit Goel 

Case : Mukesh Kumar and Anr. v. Union of India and Ors. | SLP(C) No. 32234/2026