‘Judicial member must to adjudicate PMLA cases’

In all five cases, the court stayed the proceedings before the adjudicating body after ruling that the panel hearing their cases was improperly constituted.
Telangana High Court
Telangana High Court

HYDERABAD: Justice K Lakshman of the Telangana High Court has ruled that a tribunal comprising only technical members, and without a judicial member, cannot adjudicate a case under the Prevention of Money Laundering Act (PMLA).

The tribunal can operate with just one member, even though by law it must be a three-person body with a chairman and two members, one from the judicial and one from the technical sectors. Nonetheless, that one person must be judicial and cannot be a technical member, Justice Lakshman ruled.

The judge was hearing arguments from Karvy Stock Broking Ltd, Karvy Realty, Hygro Chemicals, and two other distinct entities challenging the adjudicating authority’s procedures because it was acting as a single-member tribunal.

“Even this one member, who confirms the asset attachments made by the ED personnel on the ground level, is a technical member and not a judicial member. He issues show-cause notices. Within 180 days after the attachments, the adjudicating authority must confirm or disclose such attachments,” senior attorney T Niranjan Reddy told the court.

In all five cases, the court stayed the proceedings before the adjudicating body after ruling that the panel hearing their cases was improperly constituted. Niranjan Reddy discussed different aspects of PMLA Section 6 that deal with member appointments and said that the existing adjudicating authority was not set up in compliance with these requirements.

Before this PMLA adjudicating authority, two instances involving attachments of the Karvy Group totalling Rs 2,000 crore were being adjudicated. According to the ruling, because a show cause notice under Section 8(1) of the PMLA and an order confirming the provisional attachment of properties under Section 8(3) of the PMLA are quasi-judicial functions; neither can be issued by an adjudicating authority made up of a single member without legal experience.

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