Application For Cross Examination Before Adjudicating Authority Integral Part Of Adjudication Process, Not Alien To PMLA Proceedings: Delhi HC

The Delhi High Court has observed that an application for cross-examination filed before the Adjudicating Authority under Prevention of Money Laundering Act, 2002 is an integral part of the adjudication process and not alien to the proceedings under Section 8 of the enactment. The court also said cross-examination need not be permitted in every case.

Justice Prathiba M Singh said that any interim or procedural orders passed as part of the adjudication process would be “orders under this Act” as stipulated under Section 26. The provision states that the Director or any person aggrieved by an order made by the Adjudicating Authority under PMLA may prefer an appeal to the Appellate Tribunal.

The court, however, said that not every appeal against such order would be liable to be entertained and that it is for the Appellate Tribunal to decide as to whether an appeal ought to be entertained at all.

“Construing Rule 2 of the Prevention of Money-Laundering (Appeal) Rules, 2005 to the contrary would, in fact, mean that parallel proceedings would continue in writ petitions against procedural orders and before the Appellate Tribunal, once the final order is passed. This could lead to conflicting orders and lack of uniformity and consistency in dealing with the procedures to be followed by the Adjudicating Authority and other authorities under the PMLA,” the court said.

The court was hearing a plea challenging the order passed by the Adjudicating Authority (PMLA) dismissing the petitioner’s application seeking permission to cross-examine three persons. The application seeking right to cross-examine the witnesses was filed during the process of adjudication of an attachment order passed by Enforcement Directorate.

The adjudicating authority observed that it is always open to the accused “to make more noise about the so-called violation of principles of natural justice” and “such noise can be heard quite often” with a view to drag the proceedings and scuttle the efforts of the authorities concerned.

Justice Singh took note of the “disconcerting language” used in the impugned order while rejecting the application for cross-examination and specially the expression “noise being caused.”

Emphasizing that cross-examination is an integral feature of due process and reasonable opportunity, the court took note of the observations of the Supreme Court in K.L. Tripathi v. State Bank of India wherein it was held:

“When on the question of facts there was no dispute, no real prejudice has been caused to a party aggrieved by an order, by absence of any formal opportunity of cross-examination per se does not invalidate or vitiate the decision arrived at fairly.”

The court thus said that the right to cross-examination may be invoked by any person who wishes to cross-examine a witness and that there has to be a reasonable basis for seeking the right. The request has to be seriously considered by the Adjudicating Authority and “not merely in a routine or an indignant manner”, it added

“The powers of the Adjudicating Authority are spelt out in Section 11 of PMLA, which are the ‘same powers’ as those of a civil court trying a suit, in respect of certain aspects such as discovery and inspection, enforcing attendance of persons, directing production of records, receiving evidence on affidavits, etc. For the purposes specified in Section 11, the proceedings are deemed to be ‘judicial proceedings’,” the court added.

However, the court said that while the Adjudicating Authority has all the powers of a civil court, it is free to regulate its own procedure, adding that cross-examination need not be permitted in every case. 

“At the stage of Section 8 proceedings, if cross examination is permitted in every case, it may result in delay and defeat the purpose of the said adjudication However, whenever deemed necessary, the opportunity of cross-examination ought to be afforded. It cannot be presumed that the said request is to delay or scuttle. The request for cross examination must be examined seriously and not in a routine manner,” the court observed.

Observing that while there can be no doubt that in case of violation of principles of natural justice or jurisdictional errors, a writ petition can be entertained, the court said the entertaining of a writ petition while an Appellate Tribunal is fully functional, "in the opinion of this Court ought not to be done in each and every case." 

The court thus relegated the petitioner to the Appellate Tribunal for agitating the challenge to the impugned order and directed that the same shall be decided within a period of two weeks from the date of first listing.

“It is clarified that the period during which the present writ petition remained pending before this Court as also the period of two weeks granted to the Appellate Tribunal to adjudicate the appeal shall also stand excluded from the 180 days period to be computed under the Proviso to Section 5 of the PMLA,” the court said while listing the matter before the Appellate Tribunal on January 18.

Senior Advocate Dayan Krishnan along with Advocates Alok Kumar, Garima Soni, Rohil Pandit and Abhinav Shukla appeared for the petitioner.

Zoheb Hossain along with Advocates Vivek Gurnani and Sejal Aneja appeared for the Adjudicating Authority.

Title: DR. U.S. AWASTHI v. ADJUDICATING AUTHORITY PMLA & ANR.

Citation: 2023 LiveLaw (Del) 39

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