PMLA Adjudicating Authority: Supreme Court reserves judgment on whether a judicial member is mandatory and whether it can function as a single-member bench.
The Supreme Court is considering whether the PMLA Adjudicating Authority can operate with a single member and whether its composition must include a judicial member.
The Supreme Court on Tuesday reserved its judgment on a significant question concerning the constitution and functioning of the Adjudicating Authority under the Prevention of Money Laundering Act (PMLA).
A Bench comprising Chief Justice of India Surya Kant, Justice Joymalya Bagchi and Justice V. Mohana was hearing a batch of petitions raising questions about the legality of proceedings before the Adjudicating Authority, including whether it can function as a single-member Bench and whether the presence of a judicial member is mandatory.
The issue assumes importance because the PMLA Adjudicating Authority plays a crucial role in proceedings involving attachment of properties by the Enforcement Directorate (ED). It examines whether an order of provisional attachment passed under the anti-money laundering law should be confirmed.
The petitions before the Court also challenge the constitutional validity of the second proviso to Section 5 of the PMLA. Separately, questions have been raised concerning alleged non-compliance with Section 5(1) and Section 8(1), particularly requirements relating to the recording and furnishing of “reasons to believe.”
Question Over Composition of Adjudicating Authority
At the heart of the proceedings is the statutory framework governing the Adjudicating Authority under Section 6 of the PMLA.
The petitioners have raised the question whether an Authority exercising such important adjudicatory functions can validly sit as a single-member Bench. A related issue is whether a judicial member must necessarily form part of the composition when the Authority determines questions affecting the rights and property of individuals.
The question has wider implications because confirmation of a provisional attachment can have significant consequences for persons whose properties have been attached during money-laundering investigations.
The controversy therefore goes beyond the technical composition of the Authority. It also concerns the safeguards that should accompany the exercise of adjudicatory powers under a stringent economic-offences legislation.
“Reasons to Believe” Under PMLA
Another important aspect before the Supreme Court concerns compliance with the statutory safeguards surrounding provisional attachment and adjudication.
Section 5 of the PMLA permits the ED to provisionally attach property in circumstances prescribed by the statute. The provision requires the authorised officer to record material forming the basis for the statutory “reason to believe.”
The petitions also concern Section 8(1), which deals with adjudication after the provisional attachment process. The petitioners have questioned whether proceedings can validly continue when the statutory requirements relating to such reasons are not properly complied with.
The dispute thus involves a balance between the enforcement powers available to agencies investigating money laundering and procedural safeguards available to persons affected by attachment proceedings.
Why the Supreme Court’s Ruling Matters
The judgment could have a direct bearing on pending and future proceedings before PMLA Adjudicating Authorities.
If the Court holds that a judicial member is essential or that a single-member Bench cannot validly exercise particular adjudicatory powers, questions may arise regarding orders passed by Authorities constituted or functioning in a manner inconsistent with that interpretation.
Similarly, the Court’s ruling on “reasons to believe” could clarify the extent to which procedural compliance is necessary before attachment and adjudication proceedings can be sustained.
The outcome may therefore provide important guidance on the relationship between PMLA enforcement powers, institutional independence and procedural fairness.
The case is also significant in the broader context of judicial scrutiny of the functioning of specialised statutory authorities. As courts increasingly examine the manner in which regulatory and enforcement powers are exercised, the composition of adjudicatory bodies remains an important element of due process.
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The Supreme Court has now reserved judgment after hearing the batch of petitions. Its forthcoming decision is expected to clarify whether the PMLA Adjudicating Authority can lawfully function as a single-member Bench and whether the statutory scheme requires the participation of a judicial member in such proceedings.
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