'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 IssueThe Court also heard...

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

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

Sebin James

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