Supreme Court Examines PMLA Adjudicating Authority’s Judicial Composition
The Supreme Court of India has reserved its decision on a pivotal legal question involving the Prevention of Money Laundering Act, 2002 (PMLA). The central issue at hand is whether the Enforcement Directorate (ED) can confirm provisional property attachments through a single-member PMLA adjudicating authority without the presence of a judicial member.
A bench headed by Chief Justice of India (CJI) Surya Kant, along with Justices Joymalya Bagchi and V. Mohana, heard the arguments concerning this significant matter. The court is scrutinizing the interpretation of Section 8 of the PMLA, which deals with the adjudication of provisional attachments. This section allows an adjudicating authority to decide if a property is involved in money laundering, influencing whether the attachment should be confirmed or annulled.
Key Legal Arguments Presented
In one of the petitions, M/s Karvy Realty (India) Ltd. v. Directorate of Enforcement, the petitioners contest a decision by the Telangana High Court in 2024. The high court had ruled that a single-member adjudicating authority could exercise powers under Section 8, even if the member lacks legal experience. The petitioners argue that the PMLA had been validated by the Supreme Court in Vijay Madanlal Choudhary v. Union of India with the understanding that adjudicating authorities are three-member panels led by a district judge, thereby providing a safeguard under Section 5 of the PMLA, which covers provisional property attachments by the ED.
The petitioners emphasized that forwarding such cases for adjudication is a critical function, serving as an independent check on the ED’s authority to attach properties provisionally. Justice Bagchi questioned whether the absence of a judicial officer in the PMLA adjudicating authority benches undermines the separation of powers principle, suggesting that orders with civil consequences should retain a judicial identity.
Concerns Over Adjudication Practices
The petitioners raised significant concerns regarding the adjudicating authorities’ capacity to apply judicial discretion adequately while handling numerous matters within a six-month timeframe, as stipulated by the PMLA. They argued that without proper judicial scrutiny, these proceedings risk becoming procedural formalities rather than substantive reviews.
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CJI Surya Kant responded by emphasizing the need to adhere to the statutory framework, indicating that the provisions must be interpreted according to their structured intent. Senior Advocate Gopal Sankaranarayanan supported this by citing past judgments that stress the importance of maintaining judicial independence from executive influence in adjudicatory bodies.
Defense by Enforcement Directorate
Representing the ED, Senior Advocate Zoheb Hossain contended that the PMLA itself under Section 6 provides scenarios for one or two-member adjudicatory authorities. He argued that while some cases might require a more comprehensive bench, others do not necessarily involve complex legal issues, thus not requiring a judicial member.
Furthermore, the ED’s counsel reported that approximately 400 attachments are made annually, emphasizing the practical challenges and workload involved. The Supreme Court has mandated the ED to submit an affidavit detailing the number of attachments within two days.
