Single-Member PMLA Adjudicating Authority Can Pass Attachment, Retention Orders; Prima Facie Satisfaction Sufficient: Telangana High Court

The Telangana High Court has held that a single-member Bench of the Adjudicating Authority under PMLA can validly pass orders confirming provisional attachment and permitting retention of seized material. In doing so, it held that at that stage the standard is only one of prima facie satisfaction on the basis of material on record, not proof beyond reasonable doubt. Dismissing three writ petitions challenging two orders dated 19.04.2022 and 25.05.2022 passed by adjudicating authority, a division bench of Justice P. Sam Koshy and Justice Suddala Chalapathi Rao referred to Section 6 PMLA and observed:"A plain reading of these provisions makes it clear that while the Adjudicating Authority as an institution consists of a Chairperson and two Members, the actual adjudication can be done by a Bench constituted by the Chairperson consisting of one or two Members. The use of the words "may constitute" in Section 6(5)(b) clearly indicates that the provision is directory and not mandatory. The Chairperson has been given discretion to constitute Benches of one or two Members depending on the nature and complexity of the case. This is a well-recognized principle of administrative efficiency which enables speedy disposal of cases...This Court also recently in the case of Shri. B.Sreenivasa Gandhi vs. Adjudicating Authority and Another dealt with a similar issue concerning the composition of the Adjudicating Authority under Section 6 of the PMLA and held that a single-member Bench constituted by the Chairperson under Section 6(5)(b) is competent to exercise the powers of the Adjudicating Authority, and such constitution does not render the proceedings coram non judice. Thus, in the present case also the Chairperson who passed the impugned order is duly qualified and appointed in accordance with law". The bench further observed that the petitioners have not alleged any lack of jurisdiction or competence on the part of the Chairperson. They had raised a "technical objection" without demonstrating any prejudice or miscarriage of justice, the bench said. “The Bench is duty-bound to uphold the rule of law and to ensure that economic offenders do not escape the rigors of law through technical pleas or by abusing the process of the Court. The present writ petitions are nothing but an attempt to stall the proceedings under the PMLA and to frustrate the investigation," it added. The petitions arose from proceedings initiated after a complaint filed by the Directorate of Revenue Intelligence, Kolkata Zonal Unit, on 05.02.2020. According to the complaint, Preeth Kumar Agarwal was intercepted at Kolkata airport on 04.04.2018 while preparing to board a flight to Dubai, and gold weighing 54,096 grams, earlier cleared for export on personal hand-carry basis, was allegedly diverted after customs clearance to Sanjay Agarwal and then booked for delivery to Hyderabad through IndiGo domestic cargo, from where it was recovered.The DRI further alleged that the accused were habitual offenders who had, in a similar manner, smuggled large quantities of gold in the past and layered the sale proceeds through family-run firms and bank accounts. During investigation, authorities claimed to have found transactions of massive value, including around Rs.1184 crore in one Axis Bank account linked to M/s P.H. Jewellers and over Rs.400 crore in another account in the name of Radhika Agarwal.The Enforcement Directorate subsequently conducted searches on 09.03.2021 at the residential and business premises of Sanjay Agarwal, Radhika Agarwal, Ajay Kumar Agarwal and Preeth Kumar Agarwal. Various documents and property records were seized, and an application was moved under Section 17(4) PMLA for retention of the seized material for further investigation. A Provisional Attachment Order dated 27.08.2021 was also passed and later confirmed by the Adjudicating Authority on 25.05.2022.The petitioners challenged the retention order mainly on limitation, contending that it had been passed beyond the 180-day period. They also argued that the attached properties, including villas purchased in the names of Mahesh Agarwal, Pranita Agarwal and Mayur Agarwal, were not proceeds of crime, and that the Adjudicating Authority had failed to properly appreciate the source of funds used for their acquisition.Rejecting the limitation challenge, the Court held that the petitioners' computation ignored the Supreme Court's suo motu orders extending limitation during the COVID-19 pandemic. It also held that the Adjudicating Authority had given reasons while computing the limitation period and that, in any event, even assuming some delay, it would at best amount to a procedural irregularity, not something that would automatically vitiate the proceedings absent proof of prejudice or miscarriage of justice.On merits, the Court held that there was sufficient prima facie material to justify both retention and attachment. It referred to the alleged transfer of villas...

Single-Member PMLA Adjudicating Authority Can Pass Attachment, Retention Orders; Prima Facie Satisfaction Sufficient: Telangana High Court

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Single-Member PMLA Adjudicating Authority Can Pass Attachment, Retention Orders; Prima Facie Satisfaction Sufficient: Telangana High Court

Ananya Tangri

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