'Can Single Member Constitute PMLA Adjudicating Authority?': Karnataka High Court Asks In ED Probe Against Partnership Firm

While hearing a challenge to money laundering proceedings against a partnership firm, the Karnataka High Court on Thursday (March 26) orally asked the Union of India and the Enforcement Directorate whether a single member can constitute the adjudicating authority under the Prevention of Money Laundering Act. The court posed the question while hearing a plea by 'Puppys Tours & Travels' wherein its stakeholders are accused of a money laundering in connection with an online gaming application called KING567. The partnership firm had challenged proceedings initiated by the agency, including search and seizure following a complaint registered in connection with allegations of betting and gambling activities.For context, on March 12 among various contentions, the petitioners had raised a challenge regarding the composition of the PMLA Adjudicating Authority. It was argued by the petitioners that Section 6 of the PMLA Act requires a three-member Adjudicating Authority comprising persons with expertise in law, administration, and finance, but currently, only one member is functioning nationwide, who is a cost accountant without legal expertise. On Thursday, Advocate Mayank Jain appearing for the petitioners stated before Justice M Nagaprasanna that the Additional Solicitor General had previously stated that he will secure instructions and make his submissions with regard to the improper coram of the Adjudicating Authority. Thereafter ASG Arvind Kamath appearing for the Union, rebutted the petitioners' argument on 'quorum non judice' and submitted that five Indian High Courts have already settled the matter in several cases. However the court orally said that the adjudicating authority under PMLA cannot be constituted by a single member.To this the ASG submitted that he has prepared the compilation of thirteen judgments from five high courts, including Karnataka, regarding the same. “Can a single member be the adjudicating authority?”, the court orally asked again.“It can be a single member; it need not be someone with a judicial background. These issues are no longer res integra…I will take Your Lordship through the scheme of Section 6 of PMLA Act…”, ASG responded. At this stage Jain said, “Telangana, Delhi and Madras High Court judgments are against the said submission. Karnataka (HC), I don't think there is any judgment". The court then orally asked the asked the ASG if it is an admitted fact that a single member constitutes the adjudicating authority and if the aforesaid single member is a cost accountant. ASG answered in the affirmative to the court's enquiry.“So two facts are admitted…We will see what can be done about the admitted facts”, the court orally said about the dispute regarding the adjudicating authority's composition.“Most of the arguments raised by my learned friend [about adjudicating authority] has been answered by the courts, more so by the division benches in our compilation of judgments”, ASG added. Meanwhile Jain submitted that in none of these judgments (in UOI's compilation) Vijay Madanlal Chaudhary judgment had been cited. “It was all based upon the judgment in Union of India v. J. Sekhar…because the initial judgment was J. Sekhar. The initial judgment was that of J. Sekhar from the Delhi High Court… Based on J.Sekhar, the rest of the judgments have come," Jain added. On a lighter note, ASG said that the Union will file their compilation of judgments so that the court can go through it at a leisurely pace, considering that there are some upcoming holidays in between.Meanwhile advocate Zoheb Hossain appearing for the ED refuted the arguments raised by the petitioners and said that the judgments compiled by them contain references to Vijay Madan Lal, and the assertions of the petitioner were factually incorrect.The court thereafter listed the matter on April 18 for further hearing and continued operation of the interim order. 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.ED had registered the ECIR on 22.07.2025 based on multiple FIRs filed over the course of 15 years, for betting and gambling activities wherein the petitioners were allegedly involved.The allegation levelled against the petitioners is that they laundering money obtained through the gaming app through various channels. The petitioners have sought a declaration that the search, seizure, freezing and retention of assets carried out by the ED are illegal, along with a plea to quash the show cause notice issued under Section 8(1) PMLA and release its assets.Case Title: Puppys Tours And Travels LLP v. Union of India & Anr.Counsel for petitioner: Advocates Mayank Jain, Rajath, Madhur Jain and Arpit GoelCase No: WP 964/2026 & Connected Matters

'Can Single Member Constitute PMLA Adjudicating Authority?': Karnataka High Court Asks In ED Probe Against Partnership Firm

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'Can Single Member Constitute PMLA Adjudicating Authority?': Karnataka High Court Asks In ED Probe Against Partnership Firm

Sebin James

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