Case Title: Gold Croft Properties Pvt Ltd vs. Directorate of Enforcement
Date of Decision: 19th September 2023
Case Number: LPA 167/2023
Coram: Hon’ble Chief Justice and Hon’ble Mr. Justice Subramonium Prasad
This case involves an appeal against a judgment passed by a Single Judge in a writ petition. The appellant, Gold Croft Properties Pvt Ltd, challenged an order by the Adjudicating Authority under the Prevention of Money Laundering Act, 2002 (PMLA), which denied their application for deferment of proceedings. The appellant contended that the Adjudicating Authority was not properly constituted at the time. This appeal aims to contest the Single Judge’s decision upholding the Adjudicating Authority’s order.
The case arose when the State Bank of India filed a complaint in August 2020 alleging the diversion of funds by the accused for purposes other than those the funds were availed for. An FIR was subsequently registered by the Central Bureau of Investigation (CBI) in February 2022 for various offenses. The appellant was not initially named as an accused in this FIR. The Enforcement Directorate (ED) registered an ECIR against the appellant and others, followed by a Provisional Attachment Order in September 2022. The ED filed a complaint before the Adjudicating Authority in October 2022 for the confirmation of the Provisional Attachment Order.
The appellant also mentioned that a chargesheet related to the predicate offense had been filed by the CBI. The appellant then filed an application before the Adjudicating Authority, which is the subject of this appeal, arguing that the Adjudicating Authority lacked a proper quorum as required under the PMLA and that they had not been supplied with a copy of ‘Reasons to Believe’ by the ED, which led to the Provisional Attachment Order.
- Whether the Adjudicating Authority had the required quorum under the PMLA.
- Whether the appellant should have approached the Appellate Tribunal instead of filing a writ petition.
- Whether the application for deferment of proceedings was maintainable.
- Whether the Provisional Attachment Order was justified under the PMLA.
- Appellant’s Argument: The appellant argued that the Adjudicating Authority lacked the required quorum as specified under the PMLA. They also contended that their application should not have been rejected without a proper hearing, and a single-member bench was not in accordance with the PMLA.
- Respondent’s Argument: The ED argued that the application was not maintainable, as the Appellate Tribunal provided an alternative remedy. They also defended the validity of the Provisional Attachment Order and the composition of the Adjudicating Authority.
Observation and Analysis
The court reviewed the Provisional Attachment Order and the complaint, finding that the Order was based on a detailed analysis of various documents and materials. It concluded that the Adjudicating Authority had sufficient grounds to believe that the appellant possessed proceeds of crime.
The court also clarified that the PMLA allows for the formation of single-member benches, citing precedent from an earlier case (J Sekar vs. Union of India & Ors). The application filed by the appellant requesting a two-member bench was deemed not maintainable.
Decision of the Court
The court dismissed the appeal, upholding the judgment of the Single Judge, and found that the writ petition filed by the appellant was not maintainable. It held that the appellant should have pursued the statutory remedies provided by the PMLA, including the option to appeal before the Appellate Tribunal.
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Written by – Ananya Chaudhary