2023 (11) TMI 1295 - AT - Money Laundering

Challenge an interim order passed by Adjudicating Authority - denial of extension of time for filing reply after Inspection Of Record - seeking stay of the proceedings till Adjudication Authority is constituted with required coram - Seeking cross examination of the persons - Supply of the copy of reasons to believe. Denial of extension of time for filing reply after Inspection Of Record - HELD THAT - If the record was required to be inspected before filing reply prayer for it should have been made at the earliest so that a reply is filed after inspection of record. However in the instant case the reply to the show cause notice was filed by the appellant and it is only thereafter that he sought inspection of record with extension of time to file reply. The inspection was permitted but there was no question of extension of time for filing reply when reply had already been filed. It is to be noted that the proceedings before the Adjudicating Authority has to be completed within 180 days of the issuance of provisional attachment order and that too after serving a Show Cause Notice after recording of reasons to believe as envisaged under section 8 (1) of the Act of 2002. The proceedings by the Adjudicating Authority has to be completed within time frame and at times there may be effort of the person receiving show cause notice to delay the proceedings so that the attachment may lapse with the expiry of 180 days. The person may even seek additional time to file the reply - In the instant case 180 days are going to expire on 30.11.2023 as informed to us. Hence the Adjudicating Authority is required to pass the order within time frame and accordingly to regulate its schedule and thereby once the reply to the show cause notice had been filed there was no reason to extend the period for filing reply thereupon - the issue raised by the appellant is decided against them and accordingly the order of the Adjudicating Authority is confirmed on the issue. Seeking stay of the proceedings till Adjudication Authority is constituted with required coram - HELD THAT - The Delhi High Court in the case of Aprajita Kumari and Another Vs. Joint Director Enforcement Directorate and Another 2018 (1) TMI 551 - DELHI HIGH COURT decided the same issue. It was even in the case of K. Rethinam Versus Union of India and Ors. 2018 (1) TMI 535 - DELHI HIGH COURT . It was held that Single Member can pass an order and it is not necessary that said member should be from the Judicial side. It can be an Administrative Member as well - thus there are no illegality in the impugned order to deny stay of the proceedings till the Adjudicating Authority is constitute with the coram. In fact one member of the Adjudicating Authority constitute the corum of the Authority. Seeking cross examination of the persons - HELD THAT - The Adjudicating Authority has already passed the final order on 8th November 2023 and a copy of it has been supplied to the Tribunal. The order was passed before giving written arguments by the appellant for which liberty was sought and granted by the Tribunal. The written arguments were given on 10th November 2023. In any case we do not find that denial of opportunity of cross examination has caused any prejudice to the appellant. It is for the reason that statements of the persons sought to be cross examined were not recorded so as to rely their testimony - It is apart from the fact that the Regulation does not provide for cross examination of a person whose statement or the testimony was not recorded at any time and specifically during the course of investigation - there was no reason to allow cross examination of the persons who can otherwise be cross examined by the appellant in the Criminal Trial if prosecution produced them as witness and their statement are recorded in the Court - there are no illegality in the order of the Adjudicating Authority to deny cross examination of the persons named by the appellant. Supply of the copy of reasons to believe - HELD THAT - The appellant was given reasons to believe while recorded by the Adjudicating Authority what has been prayed is the copy of reasons to believe recorded at the time of search under section 17 of the Act of 2002 and thereby the appellant has asked for two sets of reasons to believe one recorded while issuing show cause notice under section 8 (1) of the Act of 2002 and another under section 17 of the Act - if the pending appeal before the Apex Court in the case of J. Sekar is decided adverse to the appellant holding that there is no necessity to supply a copy of reasons to believe recorded under section 17 which is otherwise to be kept in sealed envelope the matter would be decided accordingly. Appeals disposed off.

Summary

Issues Involved:
1. Extension of time for filing a reply after inspection of records.
2. Stay of proceedings due to the constitution of the Adjudicating Authority.
3. Request for cross-examination of witnesses.
4. Supply of the copy of reasons to believe recorded under section 17 of the Act of 2002.

Issue-wise Detailed Analysis:

1. Extension of Time for Filing Reply After Inspection of Records
The appellant's counsel argued that although the Adjudicating Authority permitted inspection of records under Regulations 16 to 18 of the Adjudicating Authority (Procedure) Regulation, 2013, it did not extend the time for filing the reply. The Tribunal found no error in the Adjudicating Authority's decision, stating that the request for inspection was made after the reply to the show cause notice had already been filed. The Tribunal emphasized that the proceedings must be completed within 180 days from the issuance of the provisional attachment order. The Tribunal concluded that there was no reason to extend the period for filing a reply once it had already been submitted. Therefore, the first issue was decided against the appellant, confirming the Adjudicating Authority's order.

2. Stay of Proceedings Due to Constitution of the Adjudicating Authority
The appellant challenged the coram of the Adjudicating Authority, arguing that it should consist of a Chairman and two other Members as per Section 6 of the Act of 2002. The Tribunal referred to several judgments, including those from the Delhi High Court and Karnataka High Court, which held that even one Member is competent to pass orders. The Tribunal found no illegality in the Adjudicating Authority's order to deny the stay of proceedings, concluding that one member constitutes the coram of the Authority.

3. Request for Cross-Examination of Witnesses
The appellant sought to cross-examine several officials and witnesses. The Tribunal noted that the proceedings under Section 8 of the Act of 2002 are summary in nature and must be completed within 180 days. The Tribunal highlighted that cross-examination is generally sought to delay proceedings and that it is part of the principle of natural justice only when the testimony of the witness is relied upon. Since no statements of the persons named for cross-examination were recorded, the Tribunal concluded that the request for cross-examination was made to gain time and was not warranted. The Tribunal cited various judgments, including those from the Supreme Court and Delhi High Court, to support its decision. The Tribunal found no illegality in the Adjudicating Authority's order to deny cross-examination.

4. Supply of the Copy of Reasons to Believe Recorded Under Section 17 of the Act of 2002
The appellant requested a copy of the reasons to believe recorded under Section 17 of the Act of 2002. The Tribunal noted that the appellant was already served with reasons to believe while issuing the show cause notice under Section 8 (1) of the Act of 2002. The Tribunal decided to keep this issue open for the appellant to raise in an appeal against the final order of the Adjudicating Authority. The Tribunal acknowledged that the issue is pending consideration before the Supreme Court and that the final decision would be in conformity with the Supreme Court's ruling. The Tribunal concluded that the interim orders merge into the final order and disposed of all the appeals accordingly.