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2023 (1) TMI 595 - HC - Money LaunderingMoney Laundering - provisional attachment order - Seeking permission to cross-examine the three person - As per the Petitioner, an order passed in an application seeking cross-examination is merely a procedural order, and not one under either of the provisions specified in Section 26 - HELD THAT - The powers of the Adjudicating Authority, under Section 8 of PMLA, are quite vast. The said provision stipulates the various steps to be taken, prior to the passing of the final order by the Adjudicating Authority. The Adjudicating Authority has to consider the show cause notice, the reply of the notice/s, hear the aggrieved person, as also, the Director or any officer authorised on his behalf, take into account all relevant materials placed before it, and thereafter, by an order record a finding whether any or all of the property is involved in money laundering under Section 8(2) of the Act. After arriving at a conclusion under Section 8(2), the Adjudicating Authority is to decide the question as to whether the attachment has to be confirmed or modified or detached under Section 8(3) of the PMLA. The entire process has to be concluded within 180 days from the date of issuance of the show cause notice, provisional attachment order under Section 5 of the PMLA. Thus, the proceedings before the Adjudicating Authority have to proceed in a speedy manner and go through the various steps provided under Section 8 of PMLA - An application for cross-examination filed before the Adjudicating Authority would be an integral part of the process of adjudication and would not be alien to Section 8 proceedings, when considered in this above statutory scheme and context. In view of the scheme of the PMLA and the provisions of Section 26 of the Act as also the decision of the ld. Division Bench in ARUN KUMAR MISHRA AND M/S AJANTA MERCHANTS PVT LTD VERSUS UNION OF INDIA ANR AND THE DIRECTORATE OF ENFORCEMENT 2014 (3) TMI 137 - DELHI HIGH COURT , this Court is of the opinion that the Petitioner ought to be relegated to the Appellate Tribunal for assailing the impugned order dated 13th December 2022. Cross-examination under PMLA - HELD THAT - The right to cross-examination may be invoked by any person who wishes to cross-examine a witness. There has to be a reasonable basis for seeking the said right which would have to be seriously considered by the Adjudicating Authority and not merely in a routine or an indignant manner. 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. - while the Adjudicating Authority has all the powers of a civil court, it is free to regulate its own procedure. 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 language used by the Adjudicating Authority, in the impugned order, leaves a lot to be desired. The Petitioner is relegated to the Appellate Tribunal under PMLA for agitating the challenge to the impugned order. Since the entire process of adjudication is to be concluded within 180 days, the present writ petition is directed to be transmitted by the Registry to the Appellate Tribunal, so that the same can be taken up in an expeditious manner. Considering that it is a short application seeking permission to cross examine, the Appellate Tribunal shall decide the challenge to the said order or the application for cross-examination, within a period of two weeks from the date of first listing - In the present case, though not spelt out, during the course of hearing before this Court, one of the reasons for seeking cross examination is due to the alleged retraction by one particular witness of the statements made by him to the Income Tax Department. This submission shall be considered by the Tribunal. Petition disposed off.
Issues Involved:
1. Maintainability of the writ petition. 2. Right to cross-examination under the Prevention of Money Laundering Act (PMLA). Maintainability: The primary issue addressed was whether the writ petition challenging the Adjudicating Authority's order denying cross-examination was maintainable. The petitioner argued that the impugned order was procedural and not appealable under Section 26 of the PMLA. The petitioner cited the Prevention of Money-Laundering (Appeal) Rules, 2005, which define an appealable "order" as one passed under Section 13(2) or Section 8 of the PMLA. The petitioner contended that the writ remedy could be availed in cases of violation of principles of natural justice, as supported by the Supreme Court's judgment in Whirlpool Corporation v. Registrar of Trademarks. Conversely, the respondent argued that the order was appealable as it was part of the adjudication process under Section 8 of the PMLA. The respondent pointed to the powers of the Adjudicating Authority, which include considering show cause notices, replies, and relevant materials before passing a final order. The respondent also cited precedents where appeals against procedural orders, including those denying cross-examination, were entertained by the Appellate Tribunal. The Court concluded that the writ petition was not maintainable, emphasizing that the Appellate Tribunal is equipped to handle such appeals. The Court noted that entertaining writ petitions for procedural orders could lead to parallel proceedings and inconsistent judgments. The petitioner was directed to approach the Appellate Tribunal, and the writ petition was transmitted to the Tribunal for expedited handling. Right to Cross-Examination under PMLA: The petitioner sought the right to cross-examine witnesses, arguing that it is an integral part of fair play in judicial or quasi-judicial proceedings. The petitioner cited the Supreme Court's judgment in K.L. Tripathi v. State Bank of India, which underscores the importance of cross-examination in ensuring fair play. The respondent countered that the Adjudicating Authority is not strictly bound by the Code of Civil Procedure and can regulate its own procedures, as per Section 6(15) and Section 11 of the PMLA. The respondent also cited a Division Bench judgment in Arun Kumar Mishra v. Union of India, which held that the right to cross-examine could be addressed in an appeal against the final order of the Adjudicating Authority. The Court acknowledged the importance of cross-examination as part of due process but emphasized that it need not be permitted in every case. The Court criticized the Adjudicating Authority's language in the impugned order, which dismissed the request for cross-examination as "noise being caused." The Court stressed that requests for cross-examination should be seriously considered and not dismissed routinely. The Court directed the Appellate Tribunal to consider the petitioner's request for cross-examination, including the specific reason of a witness's retraction of statements made to the Income Tax Department. The Court also excluded the period during which the writ petition was pending from the 180-day adjudication timeline under the PMLA. Conclusion: The writ petition was disposed of, with the petitioner directed to approach the Appellate Tribunal. The Tribunal was instructed to expedite the hearing and decide the matter within two weeks of the first listing. The Court's observations were not to bind the Tribunal, which was to decide the appeal on its own merits.
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