2023 (5) TMI 658 - HC - Money Laundering

Violation of principles of natural justice - Petitioner s application for right to cross examine witnesses has been rejected - Appealable order or not - Provisional Attachment Order - HELD THAT - It is now the settled position that the order under challenge being an order passed by the Adjudicating Authority, PMLA is appealable under Section 26 of the PLMA - This provision has been considered by this Court in DR. U.S. AWASTHI VERSUS ADJUDICATING AUTHORITY PMLA ANR. 2023 (1) TMI 595 - DELHI HIGH COURT wherein the Court under similar circumstances interpreted the order rejecting application for cross examination passed by the Adjudicating Authority, PMLA as appealable under Section 26 of the PMLA. The Appellate Tribunal, PMLA is currently constituted and is functioning. The impugned order would be appealable to the Appellate Tribunal. Thus, this Court is not inclined to entertain the present writ petition. The Petitioner is relegated to avail of its Appellate remedy in accordance with law. However, this Court would like to specifically note that it appears that the Respondent No. 1 has failed to take into consideration the observations of this Court in the U.S. Awasthi case where the use of such disconcerting language as contained in paragraph 8 of the impugned order, has been frowned upon by this Court. Repeated use of templated paragraphs, as though the principles of Natural Justice are mere rhetoric, is not permissible. The present order shall be treated as a warning to the concerned authority to not use such language, failing which the Court would be constrained to direct action to be taken. The Appellate Tribunal, PMLA shall ensure that the Respondent No. 1. shall abide by the principles of natural justice as also the observations of this Court given in Dr. U.S. Awasthi - The Petitioner is permitted to approach the Appellate Tribunal, PMLA within a period of one month. The period during which the present writ petition was pending shall be deductible from the period of limitation for filing of the appeal - the observations of this Court qua the language of the impugned order used would not have a bearing on the merits of the case. Petition disposed off.

Summary

Issues Involved:
1. Rejection of the application for cross-examination of witnesses.
2. Compliance with principles of natural justice.
3. Appealability of the order under Section 26 of the PMLA.

Summary:

1. Rejection of the application for cross-examination of witnesses:
The petitioner challenged the impugned order dated 6th March 2023, passed by the Adjudicating Authority under the Prevention of Money Laundering Act, 2002 (PMLA), which rejected the petitioner's application for the right to cross-examine witnesses. The Adjudicating Authority held that the petitioner had been given the opportunity to rebut and explain the evidence and documents relied upon by the Directorate of Enforcement (ED), thereby complying substantially with the principles of natural justice. The Authority concluded that there was no prejudice caused to the petitioner by the refusal to permit cross-examination.

2. Compliance with principles of natural justice:
The court observed that the principles of natural justice must be tested on the touchstone of prejudice. The Adjudicating Authority cited the case of G. Gopalakrishnan v. Deputy Director, Directorate of Enforcement, Chennai, emphasizing that natural justice should not be expanded unnaturally without considering administrative realities. The court noted that the petitioner, charged with serious offenses of money laundering, could not claim a violation of natural justice based on self-serving perceptions. The Authority also referred to the case of Abbeys Realcon LLP v. Directorate of Enforcement, which held that cross-examination is not a rule but an exception in attachment proceedings under PMLA.

3. Appealability of the order under Section 26 of the PMLA:
The court reiterated that orders passed by the Adjudicating Authority under Section 8 of PMLA are appealable under Section 26 of the Act. The court referenced the case of Dr. U.S. Awasthi v. Adjudicating Authority PMLA & Anr., which interpreted that orders rejecting applications for cross-examination are integral to the adjudication process and thus appealable. The court emphasized that procedural orders by the Adjudicating Authority should be challenged before the Appellate Tribunal, PMLA, rather than through writ petitions.

Conclusion:
The court declined to entertain the writ petition, directing the petitioner to approach the Appellate Tribunal, PMLA, within one month. The period during which the writ petition was pending would be deductible from the limitation period for filing the appeal. The Appellate Tribunal was instructed to ensure compliance with principles of natural justice and to consider whether the cross-examination was rightly rejected on factual grounds. The petitioner was also permitted to challenge the confirmation order dated 29th March 2023 before the Appellate Tribunal. The petition was disposed of with these observations.