HYDERABAD: A division bench of the Telangana High Court has overturned the orders of a single judge dated 13 March 2023, in response to a plea filed by M/s Karvy Stock Broking Ltd, Karvy Realty and Hygro Chemicals, among others.
The single judge had previously ruled that matters about the Prevention of Money Laundering Act (PMLA) cannot be adjudicated by a single-member tribunal without a judicial member. This decision was challenged by the Directorate of Enforcement (ED) before the division bench.
The case stemmed from two FIRs registered against Karvy Stock Broking Limited (KSBL) and its directors, based on a complaint by the Housing Development Finance Corporation Bank, alleging offences under Section 420. Subsequently, a provisional order of attachment dated 18 July 2022 was issued under Section 5(1) of the PMLA by the deputy director of the ED, followed by a show-cause notice by the Union of India.
The validity of these actions was contested because a single member cannot pass an order of attachment under Section 6 of the PMLA.
The additional solicitor general of India, representing the ED, contended that the statutory provision itself was not challenged and thus could not be altered by the single judge. It was further argued that the adjudicating authority under the PMLA does not function as a judicial tribunal and does not fall under the purview of constitutional provisions relating to tribunals.
Senior counsel for the Karvy entities argued that the adjudicating authority indeed functions quasi-judicially and must include a member with legal expertise.
After careful consideration of the arguments and relevant legal precedents, the division bench comprising Chief Justice Alok Aaradhe and Justice Anil Kumar Jukanti ruled in favour of the ED, setting aside the single judge’s order.