Order passed by Adjudicating Authority can be appealed before Appellate Tribunal u/s 26 of PMLA: Delhi HC [Read Order]

The Delhi High Court held that any order passed by the adjudicating authority can be appealed before an appellate tribunal under section 26 of the Prevention of Money Laundering Act, 2002 ( PMLA).

The Appellant, Gold Croft Properties Pvt Ltd challenged the Judgment passed by the Single Judge upholding the Order passed by the Adjudicating Authority under the Prevention of Money Laundering Act, 2002 ( PMLA) disposing of an application filed by the Appellant herein wherein the Appellant had prayed for deferment of the proceedings before Adjudicating Authority on the ground that the Bench at that point of time suffered from ―coram non-judical as no Adjudicating Authority had been constituted in terms of Section 2 (a) read with Section 6 (1) and (2) of the PMLA, 2002.

The State Bank of India lodged a complaint alleging that the accused had committed a diversion of funds for purposes other than the funds availed from the State Bank of India. An FIR bearing No. RC2232022A0002 dated 07.02.2022 was registered by CBI for the commission of the alleged offence under Section 409, 420 r/w Section 120B of IPC, 1860 and Section 13(2) r/w 13(1)(d) of the Prevention of Corruption Act, 1988.

It was stated that the Appellant was not named as an accused in the aforesaid FIR. The Respondent/Enforcement Directorate (ED) registered an ECIR against the Appellant and other accused persons. A Provisional Attachment Order was passed under Section 5(1) of the PMLA, 2002. The original Complaint was filed by the Respondent/Enforcement Directorate before the Adjudicating Authority for adjudication of the complaint and for passing Orders by confirming the Provisional Attachment Order (PAO).

Mr. Vijay Aggarwal, Counsel for the Appellant, submitted that the Appellant had moved an application under Section 6(7) of the PMLA contending that the matter is of such a nature that it ought to be heard by a Bench consisting of two members. He further contended that the application ought not to have been decided without affording a hearing to the Appellant.

Section 5 of the PMLA postulates that where the Director or any other officer not below the rank of Deputy Director authorised by the Director, based on material on possession has reason to believe which has to be recorded in writing that any person has any proceeds of crime and such proceeds of crime are likely to be concealed, transferred or dealt with in any manner which may result in frustrating any proceedings, he may, by order in writing, provisionally attach such property for a period not exceeding 180 days from the date of the order.

Section 26 of the PMLA provides for an appeal before the Appellate Tribunal against any Order passed by the Adjudicating Authority. There was a fully functional Appellate Tribunal at the time when the Order was passed by the Adjudicating Authority, and therefore, the writ petition was not maintainable before the Single Judge.

The bench comprising Chief Justice Satish Chandra Sharma and Justice Subramonium Prasad observed that “the Act provides complete machinery for the assessment/reassessment of tax, imposition of penalty and for obtaining relief in respect of any improper orders passed by the Revenue Authorities, and the assessee could not be permitted to abandon that machinery and to invoke the jurisdiction of the High Court under Article 226 of the Constitution when he had adequate remedy open to him by an appeal to the Commissioner of Income Tax (Appeals). The remedy under the statute, however, must be effective and not a mere formality with no substantial relief.

The Court held that the order of a Single Judge confirming the Order passed by the Adjudicating Authority does not warrant any interference.

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