2025 (4) TMI 511 - HC - Money Laundering

Money Laundering - dismissal of LR petition and the appeal on the ground of delay in filing the LR petition - absence of any specific limitation prescribed under Section 72 of PMLA - applicability of provisions of CPC to Section 35 of the PMLA - proper opportunity not provided to the appellant to defend her case - violation of principles of natural justice - HELD THAT - The Order 22 of C.P.C. deals with death marriage and insolvency of parties and Order 22 Rule 2 contemplates the procedure where one of the several plaintiffs or defendants dies and right to sue survives. The said provisions which are the basis for the orders under challenge cannot be made applicable to the PMLA which is a special enactment. In fact the Code of Civil Procedure had limited application to the Appellate Tribunal in respect of the matters as set out in Section 35. From a plain reading of the said provision it is clear that the Appellate Tribunal is not bound by the procedure laid down by the Code of Civil Procedure but it should be guided by the principles of natural justice and it shall have the powers to regulate its own procedure. When the provision i.e. Section 35 contemplates the application of Code of Civil Procedure to the extent indicated therein and that the Appellate Tribunal is not bound by the procedure laid down by the Code of Civil Procedure provisions of Order 22 C.P.C. though there is no absolute bar in the opinion of this Court cannot be pressed into service in the absence of any regulations / rules formulating the procedure or making it applicable to the matters before the Appellate Tribunal more particularly in view of the Section 72 of the Act which enables continuation of proceedings in the event of death or insolvency. A close reading of Section 72 is indicative of the intention of the legislature of continuation of proceedings in the event of death or insolvency and it shall be lawful for the legal representative of an appellant who dies during the pendency of an appeal to continue the same before the Appellate Tribunal in the place of the deceased-appellant. No time limit was prescribed for making of an application for continuation of proceedings/appeal by the legal representatives of the appellant. In M.P. Steel Corporation s case 1998 (6) TMI 322 - CEGAT MUMBAI the appellant before the Hon ble Supreme Court was challenging the order of Customs Excise Service Tax Appellate Tribunal (CESTAT). The Commissioner of Customs (Appeals) dismissed the appeal on the ground of delay stating that the same was filed beyond the period of 60 days 30 days provided for in Section 128 of the Customs Act. On Appeal CESTAT dismissed the appeal stating that the Commissioner of Customs (Appeals) had no power to condone the delay beyond the period specified in Section 128 of the Act. The Hon ble Supreme Court inter alia examined the point as to whether the Limitation Act applies to only Courts and not to Tribunals with reference to a series of decisions wherein it was laid down that the Limitation Act applies only to Courts and does not apply to quasi judicial bodies. The order of the Tribunal pressing into service the provisions of C.P.C. i.e. Order 22 and thereby dismissing the appeal as abated is also not tenable. Even if the appeal is abated the right conferred under statute viz. Section 72 cannot be taken away on the ground that no formal application to condone the delay was filed. Section 35 provides for limited application of the provisions of the C.P.C. and no regulations have been framed formulating the procedure / applicability of provisions of C.P.C. under Order 22 etc. - Further in the present case the legal heir of the deceased / appellant filed the application to record her as legal representative while the appeal is pending. The Appellate Tribunal in such circumstances in the considered opinion of this Court should have allowed the same and decided the matter on merits taking a liberal view rather than rejecting it on technicalities. Conclusion - i) The dismissal of the LR petition and the appeal on the grounds of delay is not legally sustainable. ii) The Tribunal s use of CPC provisions to abate the appeal is not tenable. iii) The Tribunal s decision violated principles of natural justice by not allowing the legal representative a proper opportunity to be heard. The impugned order is set aside - appeal allowed.

Summary

ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

A) Whether the dismissal of the Legal Representative (LR) petition and the appeal by the Appellate Tribunal due to the delay in filing the LR petition is legal and correct, given the absence of a specific limitation period prescribed under Section 72 of the Prevention of Money Laundering Act (PMLA).

B) Whether the Appellate Tribunal erred in applying the provisions of the Civil Procedure Code (CPC) to proceedings under the PMLA, given that Section 35 of the PMLA stipulates that the CPC provisions are not applicable in the absence of any regulations.

C) Whether the dismissal of the LR petition and the appeal as abated by the Appellate Tribunal without providing proper opportunity to the appellant to defend her case violates principles of natural justice.

ISSUE-WISE DETAILED ANALYSIS

Issue A: Legality of Dismissal Due to Delay

Relevant legal framework and precedents: Section 72 of the PMLA allows for the continuation of proceedings in the event of death or insolvency. The Limitation Act's Article 120 prescribes a 90-day limit for filing an application to substitute a deceased party, but its applicability to quasi-judicial bodies like the Appellate Tribunal is debated.

Court's interpretation and reasoning: The Court found that Section 72 does not prescribe a limitation period for filing an LR application. The Tribunal's reliance on Article 120 of the Limitation Act was misplaced as the PMLA is a special enactment, and the Limitation Act generally applies to courts, not tribunals.

Application of law to facts: The Court concluded that the Tribunal erred in dismissing the LR application based on a 90-day limitation period, as this was not applicable under the PMLA.

Treatment of competing arguments: The respondent's argument that the 45-day appeal period under Section 26 of the PMLA should apply to LR applications was rejected as unfounded and not intended by the Legislature.

Conclusions: The Tribunal's dismissal of the LR application was incorrect, and the Court set aside the order, allowing the continuation of the appeal.

Issue B: Applicability of CPC Provisions

Relevant legal framework and precedents: Section 35 of the PMLA states that the Appellate Tribunal is not bound by the CPC but should be guided by principles of natural justice and can regulate its own procedure.

Court's interpretation and reasoning: The Court emphasized that the Tribunal's application of CPC provisions, specifically Order 22, was inappropriate as the PMLA does not mandate such application, and no regulations were framed to incorporate CPC provisions.

Application of law to facts: The Court noted that the Tribunal's decision to apply CPC provisions was not supported by the PMLA's framework, which allows for procedural flexibility.

Conclusions: The Tribunal's reliance on CPC provisions to dismiss the appeal as abated was unjustified, and the order was set aside.

Issue C: Principles of Natural Justice

Relevant legal framework and precedents: The principles of natural justice require that parties be given a fair opportunity to present their case.

Court's interpretation and reasoning: Although the Tribunal heard the counsel for the legal representative, the Court found that the dismissal of the appeal on technical grounds without considering the merits violated natural justice principles.

Conclusions: The Tribunal's decision was contrary to natural justice, and the Court remanded the matter for a merits-based decision.

SIGNIFICANT HOLDINGS

The Court held that the Appellate Tribunal erred in dismissing the LR application and the appeal as abated based on an incorrect application of the Limitation Act and CPC provisions. The PMLA, being a special enactment, does not prescribe a limitation period for LR applications, and its procedural flexibility was not adequately considered by the Tribunal. The Court emphasized the need for a liberal approach in such cases to ensure justice is served. The appeal was allowed, and the matter was remanded for a decision on merits, ensuring the legal representative of the deceased appellant is given a fair opportunity to present the case.