Writ Court should not intervene where Adjudicating Authority under Prevention of Money Laundering Act #indianlaws

High Courts to avoid stating that the writ jurisdiction being discretionary, should not ordinarily be exercised by quashing a show cause notice.

Directorate of Enforcement vide its order under Section 5(1) of the Prevention of Money Laundering Act, 2002 (Act) provisionally attached property held in the name of Appellant. Another complaint under Section 5(5) of the Act was filed against the Appellants before the Adjudicating Authority under the Act, which issued notices to the Appellants calling upon them to show cause as to why the property provisionally attached should not be declared to be the property involved in money laundering and confiscated by the Central Government and the Appellants were directed to appear before the Adjudicating Authority.In a reply filed by the Appellants before the Adjudicating Authority and applications under Section 11 of the Act read with Regulation 18 of the Adjudicating Authority Regulations, 2006, sought permission for cross-examination of witnesses on whose statements, the complaints against them were based. However, no speaking order was passed and the Adjudicating Authority posted the complaints for final disposal.

The writ petitions filed against the above proceedings were dismissed on the ground that when the Adjudicating Authority under PMLA has seized of the matter, no interference was called for in the writ petition. Liberty however was given to raise this grievance in the event of Appellants being aggrieved by the final order to be passed by Adjudicating Authority under PMLA.

In the further appeal preferred against the dismissal order passed by the Writ Court, to an enquiry posed to the Appellant that even if the Appellants are right in their contention of having a right to cross-examine the persons whose oral testimony is intended to be used against them and even if the Adjudicating Authority is wrongly depriving them of the said right, is it not open to them to, if at all aggrieved by the orders of the Adjudicating Authority, to take up the said aspect in appeal under Section 26 of the Act, it was replied that if the Appellants have a right in law to cross-examine the witnesses, why should a Court not interfere at this stage itself instead of allowing the Adjudicating Authority to proceed on a futile exercise.

The Court said no, holding that the Adjudicating Authority since was seized of the complaints and it was not known as to which way the order of the Adjudicating Authority would go and also whether the authority would rely upon the material before it qua which the Appellants claim a right of cross-examination. However in the event of there being any order by the Adjudicating Authority against which Appellants become aggrieved, there is a statutory remedy available to them. Any interference at this stage in the proceedings of which the Adjudicating Authority is seized would result in a situation which the Supreme Court has warned the High Courts to avoid stating that the writ jurisdiction being discretionary, should not ordinarily be exercised by quashing a show cause notice. Accordingly, it was held that the Single Judge rightly refused to interfere, while at the same time protecting the rights of the Appellants.

[Arun Kumar Mishra vs. Union of India & Anr.]
(Delhi HC, 31.01.2014)