Legal principle

Because the Adjudicating Authority under the PMLA conducts only an internal review of provisional attachment orders and does not exercise powers otherwise vested in a High Court, single-member benches of the AA and the Appellate Tribunal are valid and need not be presided over by a Judicial Member, and the second proviso to Section 5(1) PMLA is constitutionally valid.

Court decision

The Division Bench held that the second proviso to Section 5(1) PMLA is not violative of Article 14 and negatived that challenge, in favour of the Union of India. It held that single-member benches of the AA and the Appellate Tribunal (AT) under the PMLA are permissible and need not mandatorily be composed of Judicial Members—Administrative Members can also serve. It further laid down that 'reasons to believe' under Sections 5(1) and 8(1) PMLA must satisfy the second proviso's safeguards, must be communicated to the noticee at every stage, and that the noticee is entitled to access the underlying materials subject to redaction for reasons recorded in writing; violation renders the provisional attachment illegal. Prayer (a)(i) in W.P.(C) 8118/2017 was dismissed, with all remaining issues (including maintainability, the ECIRs, OCs, SCNs and attachment orders) left to the learned Single Judge.

Facts

The petitioners, a batch of individuals and companies including J. Sekar, faced proceedings under the Prevention of Money-laundering Act, 2002 (PMLA) initiated by the Enforcement Directorate. ECIRs were registered under Sections 3 and 4 PMLA, original complaints were filed under Section 5(5) PMLA, and provisional attachment orders were issued under Section 5(1) PMLA, followed by show cause notices under Section 8 PMLA from the Adjudicating Authority. The extract does not specify any goods or property particulars. Interim orders stayed further attachment-confirmation proceedings while the attachments themselves continued. The petitions challenged, among other things, the constitutional validity of the second proviso to Section 5(1) PMLA as violative of Article 14.

Key provisions

• Section 132, Customs Act, 1962 —  False declaration, false documents,etc