TMI Blog2024 (2) TMI 720X X X X Extracts X X X X X X X X Extracts X X X X ..... rity conferred under this Act. The said provision has been amended to make the Adjudicating Authority as a single entity and the current provision is extracted in paragraph No.7, which establishes now a single Adjudicating Authority for the entire country. Any law providing for the constitution of any authority would be legal if only it is manned by Judges/Judicial Officers or persons who were or eligible to be appointed as Judicial Officers (i) if it is a Judicial Tribunal created under Article 323A or 323B of the Constitution of India; (ii) if it transfers any adjudicatory functions hitherto exercises by the Courts in India; (iii) if it adjudicates the rights of parties has the trappings of a Court/Tribunal - In the instant case, the Adjudicating Authority is constituted under Section 6 of the PMLA. Admittedly, the said authority is not a Tribunal, constituted under Article 323-A or 323-B of the Constitution of India. It cannot also be said that any power which was being hitherto exercised by the Courts are transferred to the authority. The submission made on behalf of the petitioner is that since a complaint is filed and the authority hears the aggrieved person whose properti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore the Adjudicating Authority and even if the ad-interim order of attachment is made, a right of appeal is provided to a Appellate Tribunal and ultimately all contentions that the properties or materials are not the proceeds of the crime are not involved in money-laundering etc., has to be established and finally determined only by the Special Court and when such remedy is wide open to the Writ Petitioner herein, we do not find any reason to grant any other relief to the petitioner. Accordingly the question is answered that merely because there is power to the Chairman to constitute Single Member Bench, the same will not render the provision unconstitutional. Thus, finding no merits, the Writ Petition stands dismissed. - Hon'ble Mr. Sanjay V. Gangapurwala, Chief Justice And The Hon'ble Mr. Justice D. Bharatha Chakravarthy For the Appellant : Mr. S.R. Raghunathan for Mr. Manjunath Karthikeyan For the Respondents: Mr. A.R.L. Sundaresan Additional Solicitor General of India Assisted by Mr. N. Ramesh Special Public Prosecutor for R2 ORDER ORDER MADE BY THE HON'BLE MR. JUSTICE D. BHARATHA CHAKRAVARTHY A. The Writ Petition: This Wr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s issued to the petitioner to file a reply. C. The Case of the Petitioner: 3. It is at this stage, while keeping open its defence on merits to be taken up before the Adjudicating Authority, the vires of the provisions mentioned in para 1 above are challenged. It is the case of the petitioner that the Adjudicating Authority acts as a Tribunal and it has the trappings of a Court deciding the rights of the parties. It cannot be without a judicial member and thus the very constitution is illegal. The impugned provision also enables constitution of single Member Bench by which there can be a Bench without the legally qualified Member, which is per se illegal. D. The Case of the Respondents: 4. The Writ Petition is resisted by filing a counter affidavit on behalf of the respondents. It is submitted that the members of the Indian Legal Service are qualified to be appointed as Judicial Members. The Adjudicatory Authority is not a Tribunal but is in the form of an additional internal safe guard. The Adjudicatory Authority is like the original authority under the Income Tax Act, Customs Act etc., and the deciding of lis starts only at the Appellate Tribunal, which is co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al functions are entrusted to any Tribunal, their composition must contain Judicial Members and appointment of Technical members is only an exception. To contend that the Adjudicating Authority is not a regulatory body but a Tribunal exercising judicial functions, he would rely upon the Judgment of the Hon ble Supreme Court in State of Gujarat Vs. Utility Users Welfare Association [(2018) 6 SCC 21] more particularly to paragraph Nos. 104, 110, 117, 118, 120 and 121. 5.5 Mr. S.R. Raghunathan, would press into service the Judgment in Associated Cement Companies Ltd Vs. P.N. Sharma and another [AIR 1965 SC 1595], more specifically to paragraph Nos. 7 and 8 to demonstrate the difference between administrative and judicial functions and the manner in which the State is expected to discharge the judicial functions. Further relying upon paragraph No.33 of the Judgment, he would contend that the functions discharged if are inherently judicial functions, then the authority is deemed to be a Tribunal. 5.6 Adverting the Judgments relied upon by the respondents, Mr.S.R. Raghunathan, would submit that the Judgment of the three Judge Bench in Pareena Swarup Vs Union of India [(2008) 14 SCC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hould be filed before the Adjudicating Authority and on receipt of the same, the Adjudicating Authority would pass orders confirming the order of attachment if it is satisfied that the property is involved in money laundering. If it is not satisfied, it will order release of the property. The Adjudicating Authority constituted under Section 6 of the Act is neither judicial nor quasi judicial Tribunal, but is an authority which is created for the purpose of having checks and balances within the system so as to review and confirm the orders of the provisional attachment made by the Officers of Enforcement Directorate. 5.9 The nature of power is as the original authority and the lis / adjudicatory function starts only at the appellate stage. The Appellate Tribunal is constituted by having a Judicial Member and the same is in consonance with the dictum of the Judgment of the Hon'ble Supreme Court in the Madras Bar Association Case (cited supra). As far as the Adjudicating Authority is concerned, it is neither a Tribunal nor any power of the Court which is vested in the said authority. There are such original authorities / Adjudicating Authorities under various enactments such as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he customs authority exercising power under Customs Act, though exercise the functions such as confiscation, determination of duty, imposition of penalty, etc and pass orders adversely affecting the rights of the parties, that by itself would not make them a Tribunal. 5.13 The learned ASGI would submit that a reading of the Judgment by the Constitution Bench in Shayara Bano Vs. Union of India and Ors., [(2017) 9 SCC 1] would make it clear that the plenary legislation can be challenged only on the grounds of legislative incompetence, violation of fundamental rights or manifest arbitrariness. He would submit that no such grounds are made out in the present challenge. The learned ASGI would also place reliance on the Judgment of the Hon'ble Supreme Court of India in Union of India Vs. Namit Sharma [(2013) 10 SCC 359] to contend that in the wake of presumption of constitutionality, the provisions of an enactment cannot also be read down which would amount to re-writing the law. For all the above reasons, he would submit that the challenge to Section 6 should fail. F. The Points for Consideration: 6. We have considered the rival submissions made on either side and peruse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r from one Bench to another Bench. (7) If at any stage of the hearing of any case or matter it appears to the Chairperson or a Member that the case or matter is of such a nature that it ought to be heard by a Bench consisting of two Members, the case or matter may be transferred by the Chairperson or, as the case may be, referred to him for transfer, to such Bench as the Chairperson may deem fit. (8) The Chairperson and every Member shall hold office as such for a term of five years from the date on which he enters upon his office: Provided that no Chairperson or other Member shall hold office as such after he has attained the age of 2 [sixty-five] years. (9) The salary and allowances payable to and the other terms and conditions of service of the Member shall be such as may be prescribed: Provided that neither the salary and allowances nor the other terms and conditions of service of the Member shall be varied to his disadvantage after appointment. (10) If, for reasons other than temporary absence, any vacancy occurs in the office of the Chairperson or any other Member, then the Central Government shall appoint another person in accordance with the provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... extracted hereunder:- 8. Adjudication. (1) On receipt of a complaint under sub-section (5) of section 5, or applications made under sub-section (4) of section 17 or under subsection (10) of section 18, if the Adjudicating Authority has reason to believe that any person has committed an 1 [offence under section 3 or is in possession of proceeds of crime], he may serve a notice of not less than thirty days on such person calling upon him to indicate the sources of his income, earning or assets, out of which or by means of which he has acquired the property attached under sub-section (1) of section 5, or, seized 2 [or frozen] under section 17 or section 18, the evidence on which he relies and other relevant information and particulars, and to show cause why all or any of such properties should not be declared to be the properties involved in money-laundering and confiscated by the Central Government: Provided that where a notice under this sub-section specifies any property as being held by a person on behalf of any other person, a copy of such notice shall also be served upon such other person: Provided further that where such property is held jointly by more than one person, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of money-laundering has been committed, it shall order that such property involved in the money-laundering or which has been used for commission of the offence of money-laundering shall stand confiscated to the Central Government.] [(6) Where on conclusion of a trial under this Act, the Special Court finds that the offence of money-laundering has not taken place or the property is not involved in money-laundering, it shall order release of such property to the person entitled to receive it.] [(7) Where the trial under this Act cannot be conducted by reason of the death of the accused or the accused being declared a proclaimed offender or for any other reason or having commenced but could not be concluded, the Special Court shall, on an application moved by the Director or a person claiming to be entitled to possession of a property in respect of which an order has been passed under sub-section (3) of section 8, pass appropriate orders regarding confiscation or release of the property, as the case may be, involved in the offence of money laundering after having regard to the material before it.] [(8) Where a property stands confiscated to the Central Government ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , then such authority should be manned only by a person who is or has been holding a judicial office or of a person possessing qualification in law and has the requisite qualification to be appointed as a Judge of the High Court or as a District Judge. Even the presence of the Appellate Tribunal would not obviate such a need. 7.5 The Hon'ble Supreme Court of India in Associated Cement Company's case (cited supra) had explained the meaning of judicial powers and functions and the distinction between administrative and judicial functions. It is essential to extract the relevant portion of paragraph Nos.7 and 8 which are hereunder:- 7. ...................... A sovereign State discharges legislative, executive and judicial functions and can legitimately claim corresponding powers which are described as legislative, executive and judicial powers. Under our Constitution, the judicial functions and powers of the State are primarily conferred on the ordinary courts which have been constituted under its relevant provisions. The Constitution recognised a hierarchy of courts and to their adjudication are normally entrusted all disputes between citizens and citizens as well as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Property Appellate Board constituted under the Trademarks Act, 1999 in Shamnad Basheer Vs. Union of India [(2015) 2 LW 941 (Mad) (DB)] 7.8 Thus, upon consideration of the above decisions, it would be clear that any law providing for the constitution of any authority would be legal if only it is manned by Judges/Judicial Officers or persons who were or eligible to be appointed as Judicial Officers (i) if it is a Judicial Tribunal created under Article 323A or 323B of the Constitution of India; (ii) if it transfers any adjudicatory functions hitherto exercises by the Courts in India; (iii) if it adjudicates the rights of parties has the trappings of a Court/Tribunal. 7.9 In the instant case, the Adjudicating Authority is constituted under Section 6 of the PMLA. Admittedly, the said authority is not a Tribunal, constituted under Article 323-A or 323-B of the Constitution of India. It cannot also be said that any power which was being hitherto exercised by the Courts are transferred to the authority. The submission made on behalf of the petitioner is that since a complaint is filed and the authority hears the aggrieved person whose properties are attached, decides the lis and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of reason to believe that an offence that whether the property is involved in the offence of moneylaundering and thereafter to make the order of attachment absolute, until the disposal of the case by the Special Court. Similar function is exercised in respect of retention/freezing of any property if the Investigating Authority, viz., the Director or any other Officer under the Act, after seizure and search under Section 17 of the Act, forward any record or property or when they freeze any record or property. Further, upon search of persons under Section 18, if any record or property are seized shall be forwarded to the Adjudicating Authority, within a period of 30 days, with a prayer requesting for retention of such record or property. Upon receipt of the above requests, the Adjudicating Authority again if it has reason to believe that the same are related to the commission of offence of money-laundering or proceeds of crime, will pass similar orders extending the retention until the Trial. 7.12 Thus, on a closer scrutiny, it can be seen that the function of the Adjudicatory Authority is that of the original authority exercising the administrative function under the Act, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issuing commissions for examination of witnesses and documents; and (f) any other matter which may be prescribed. (2) All the persons so summoned shall be bound to attend in person or through authorised agents, as the Adjudicating Authority may direct, and shall be bound to state the truth upon any subject respecting which they are examined or make statements, and produce such documents as may be required. (3) Every proceeding under this section shall be deemed to be a judicial proceeding within the meaning of section 193 and section 228 of the Indian Penal Code (45 of 1860). 7.16 It can be seen that in order to aid the Adjudicating Authority in the process of its formation of its opinion and of making an ad-interim attachment, the powers of discovery and inspection, enforcement of attendance of any person, compelling the production of records, receiving evidence on affidavits, issuing commission for examination of witnesses and documents, are granted. Ultimately it is for the purpose of dealing with the 'administrative case' and that by itself will not in any manner alter the Adjudicating Authority as 'the Tribunal or the Court'. As a matter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich makes the decision1 . Accordingly, we answer the Question No. [1] , that constitution of Adjudicating Authority as such by Section 6 is not illegal for want of Judicial Officers/persons qualified to be appointed as Judicial Officers or who were Judicial Officers. H. Question No.2: 8. After the amendment to Section 6, vide Act 21 of 2009, now only a single Adjudicating Authority is envisaged. We have already held that the functions of the Adjudicating Authority is that of the original authority making an ad-interim order of attachment and the conduct of hearing is to ensure fairness. In this context, if the parties are heard by a quorum less than all the three Members of the Authority, including Single Member Bench, who can be a non law member, it will not run offensive or in any manner affect the functioning of the Authority. Such a provision cannot be termed as manifestly arbitrary. The second limb of the argument made in this regard is that when Section 6 (1) creates a single Adjudicating Authority, Section 6 (2) mandates that it shall consists of Chairperson and two other members and of the three persons, one should be from the field of law, the second member should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or Full Bench, by keeping in mind the purpose of Section 6(2) and depending on the questions or intricacies involved in the particular case. The Chairman or the Member/Members of the Bench hearing the matter can refer the matter to the Bench of Two/Three Members. Therefore, we do not find any Constitutional infirmity on this score also. 8.3 Further, as rightly contended by the learned ASGI, the constitutional validity of Section 6 was specifically considered by the Delhi High Court in J.Sekar's case (cited supra). The matter was also argued in detail and considered by the Hon'ble Supreme Court of India in Pareena Swarup's case (cited supra). However, considering the fact that the amendment has been brought after the Judgment in Pareena Swarup's case and that the grounds raised herein required to be specifically dealt with, we considered the matter on merits. This apart, the object and scope of PMLA has been considered in detail by the Hon'ble Supreme Court of India in Vijay Madanlal Choudhary and Ors Vs. Union of India and Ors. [2022 SCC OnLine SC 929]. Sections 5 and 8 of PMLA were considered in detail and it is categorically held that confiscation takes pl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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