2017 (8) TMI 966 - AT - Money Laundering

Attachment of orders - PMLA - legality of order passed by the Judicial Member - Held that - It is settled law if any order is without jurisdiction, the same is nullity and its validity could be set up even in the collateral proceedings. It is clear that directions have been passed by the Sikkim High Court, have not been complied with impugned order has been without jurisdiction as the impugned order has not been decided by the Judicial Member. Thus the impugned order dated 01.12.2015 is liable to be setaside on the ground that it has been passed by officers of the Authority without jurisdiction.

Summary

Issues Involved:
1. Compliance with the High Court's directions.
2. Jurisdiction and composition of the Adjudicating Authority.
3. Principles of natural justice.
4. Validity of the provisional attachment order.
5. Interpretation of the Prevention of Money Laundering Act (PMLA), 2002.

Issue-wise Detailed Analysis:

1. Compliance with the High Court's Directions:
The appellants argued that the directions passed by the Hon'ble High Court of Sikkim in the judgment dated 22nd September 2015 were not complied with by the Adjudicating Authority. The High Court had directed the appointment of a Judicial Member to the Adjudicating Authority within three months. The impugned order dated 01.12.2015 was passed without a Judicial Member, which was contrary to the High Court's directions.

2. Jurisdiction and Composition of the Adjudicating Authority:
The appeals challenged the jurisdiction of the Adjudicating Authority, arguing that the impugned orders were passed by a single Member who was not a Judicial Member. According to Section 6 of the PMLA, the Adjudicating Authority should consist of a Chairperson and two other Members, including one with legal experience. The High Court emphasized the necessity of having a Judicial Member due to the judicial nature of the functions conferred on the Adjudicating Authority.

3. Principles of Natural Justice:
The appellants contended that the Adjudicating Authority violated principles of natural justice by not granting reasonable time to file replies and by rushing to pass orders. The procedure adopted was contrary to the provisions of the PMLA and the Regulation of 2013. The High Court noted that orders were passed ex parte in the absence of the appellants, which necessitated the presence of a Judicial Member to ensure compliance with legal principles.

4. Validity of the Provisional Attachment Order:
The provisional attachment order dated 09.01.2015 was confirmed by the Adjudicating Authority on 15.06.2015. The appellants argued that the attachment was without jurisdiction and contrary to the Act and Rules. The High Court's judgment indicated that the attachment order was passed without a Judicial Member, rendering it without jurisdiction and a nullity.

5. Interpretation of the Prevention of Money Laundering Act (PMLA), 2002:
The judgment discussed the interpretation of Section 6 of the PMLA, particularly the requirement of a Judicial Member in the Adjudicating Authority. The High Court's judgment highlighted that serious questions of law and fact in such cases necessitate the presence of a Judicial Member to ensure proper adjudication. The tribunal observed that the Member (legal) appointed did not meet the qualifications of a Judicial Member as per Section 6(3)(a).

Conclusion:
The impugned orders dated 01.12.2015 and 03.03.2015 were set aside as they were passed without jurisdiction, lacking a Judicial Member as mandated by the High Court's directions. The appeals were remanded back to the Adjudicating Authority to be decided on merit after the appointment of a Judicial Member. The provisional attachment order shall continue until the matters are decided as per the High Court's directions. The tribunal did not express any opinion on the merits of the case, focusing solely on compliance with the High Court's judgment.