S. 6 PMLA | Adjudicating Authority Is Not Judicial Or Quasi-Judicial Tribunal Merely Because Procedure Followed Has Judicial Colour: Madras High Court

“We do not find that the Adjudicating Authority is a judicial or quasi judicial Tribunal deciding the rights of the parties or that it has the trappings of a Court / Tribunal. In the absence of the same, we are of the view that the principles enunciated by the Hon'ble Supreme Court of India that the Tribunal / authority exercising judicial functions should be manned by Judicial Officers, cannot be extrapolated to the Adjudicating Authority under PMLA. Just because more and more 'judicial colour' is given to the procedure to be followed, that by itself will not alter the nature of power exercised by the Adjudicating Authority,” the court observed.

The bench of Chief Justice SV Gangapurwala and Justice Bharatha Chakravarthy was hearing a plea challenging the constitutionality of Section 6(2), 6(3)(a)(ii), and 6(5)(b) of the Prevention of Money Laundering Act 2002. It was argued that the adjudicating authority acts as a tribunal and decides the rights of the parties. Thus, it was contended that the adjudicating authority could not be without a judicial member, and a constitution of adjudicating authority without a judicial member would be illegal.

The court observed that the adjudicating authority was not a tribunal constituted under Article 323A or 323B of the constitution and hence it could not be said that the power being exercised by a court was transferred to the adjudicating authority. The court added that as per the PML Act, the primary function of the Adjudicating Authority was only to form an initial opinion on whether there was a reason to believe that the property was involved in an offence of money laundering and to make an order of attachment absolute till the disposal of the case by the Special Court.

Thus, the court observed that the adjudicating authority was an original authority exercising the administrative function under the Act. The court thus opined that the adjudicating authority was in place as a check and balance to ensure that the power was not solely exercised by the investigating officer.

The court also observed that even in administrative actions, principles of natural justice had to be followed. The court noted that the powers of discovery and inspection, enforcement of attendance, compelling production of records, receiving evidence etc, were conferred on the adjudicating authority only to aid in the formation of a prima facie opinion. Such powers, in the court's opinion, would not alter the administrative nature of the adjudicating authority.

The court also did not agree with the petitioner's contention that Section 6(5) which gave powers to the chairman to constitute benches with one or two members was contradictory to Section 6(2) which mandated that the adjudicating authority consist of Chairperson and two other members.

The court observed that the provisions had to be harmonious. The court noted that the provisions gave discretion to the Chairperson to decide whether in a given case, the authority should make a decision with full quorum or in benches including a single member. This discretion, in the court's opinion, would not make the provisions incongruous or self-contradictory.

Counsel for the Petitioner: Mr.S.R.Raghunathan for Mr.Manjunath Karthikeyan

Counsel for the Respondents: Mr.A.R.L.Sundaresan Additional Solicitor General of India Assisted by Mr.N.Ramesh Special Public Prosecutor

Citation: 2024 LiveLaw (Mad) 53

Case Title: Pay Perform India Private Limited v The Union of India and Another

Case No: Writ Petition No.12925 of 2023

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