Administration & Adjudication under PMLA 2002
The following provisions provide further procedure under the PMLA:
• Section 43 :
Special Courts
• Section 44 :
Offences triable by Special Courts
• Section 45 :
Offences to be cognizable and non-bailable
• Section 46 :
Application of Code of Criminal Procedure, 1973 to proceedings before Special
Court
• Section 65 :
Code of Criminal Procedure, 1973 to apply
• Section 71 : Act
to have overriding effect
Adjudicating
Authority[Section 6,7,8]
Section 2 of PMLA
defines Adjudicating Authority (AA) as an authority appointed under Section
6(1) of the said Act.
The
Adjudicating Authority is a body appointed by the central government under the
Prevention of Money Laundering Act (PMLA) of 2002 to exercise the powers and
authority granted by the Act. The Authority is responsible for confirming the attachment of
properties under the PMLA, and deciding whether any attached or seized property
is involved in money laundering.
The Authority must confirm the
attachment of a property within 180 days of a provisional attachment
order. If the Authority does not confirm the attachment, the property is
automatically released. However, the accused can continue to use the
property until the Authority confirms the attachment, after which the
Enforcement Directorate (ED) can claim possession.
Under the PMLA, the Central Government has the power to appoint an adjudicating authority to exercise powers and authority conferred under this Act. An adjudicating authority must consist of a bench of:
·
A chairperson
·
Two other members, out of which
one individual must have experience in law, administration, finance or
accountancy field.
An individual in the field of law can be a member of the
adjudicating authority if he/she:
·
Has qualifications to be appointed
as a judge of any district, or
·
Has been a representative
member of the Indian Legal Service and has held a post in Grade I of that
service.
The bench of the adjudicating authority will operate in New Delhi
and other locations as specified by the Central Government and the
chairperson.
Powers of the Adjudicating Authority
The Adjudicating authority will issue a notice to the person against whom it has received a complaint of money laundering offence under the PMLA. It can issue notice such a person calling him to indicate the sources of his/her income, earnings or assets, out of which he/she has acquired the property attached, seized or frozen by the Director appointed under this Act and to show why such properties should not be declared as properties involved in money-laundering and confiscated by the Central Government.
The Adjudicating Authority will record a finding whether all or any of the properties referred in the complaint are involved in money laundering after considering a reply from the person accused of the offence, hearing the aggrieved person and the Director and taking all evidence into account.
When the Adjudicating Authority decides that a property is
involved in money laundering, the person accused of the offence will confirm in
writing the attachment, seizure or freezing of the property. Such property will
be released to the person entitled to receive it.
Process of Adjudication
Section 8 of PMLA,
2002 deals with the process of adjudication. On receipt of a complaint from the
Director or any other officer who provisionally attaches any property or an
application made by such officer for retention of seized record or property, the
Adjudicating Authority may, on reason to believe that any person has committed
an offence of money laundering or is in possession of proceeds of crime, serve
a notice of not less than thirty days
on such person calling upon him to indicate the sources of his income, earning
or assets, out of which or by means of which he has acquired the property
attached or frozen, the evidence on which he relies and other relevant
information and particulars and show cause why all or any of such property
should not be declared to be the properties involved in money laundering and
confiscated by the Central Government. Where a notice specifies any property as
being held by a person on behalf of any other person, a copy of such notice
shall also be served upon such other person. Similar notice is required to be
served on all persons when more than one person holds such property jointly.
Where on conclusion of a trial of an offence, the Special Court finds that the
offence of money-laundering has been committed, it shall order that such
property involved in the money-laundering or which has been used for commission
of the offence of money-laundering shall stand confiscated to the Central
Government. Where on conclusion of a trial under this Act, the Special Court
finds that the offence of money-laundering has not taken place or the property
is not involved in money-laundering, it shall order release of such property to
the person entitled to receive it.
Where the trial
under the PML Act cannot be conducted by reason of the death of the accused or
the accused being declared a proclaimed offender or for any other reason or
having commenced but could not be concluded, the Special Court shall, on an
application moved by the Director or a person claiming to be entitled to
possession of a property in respect of which an order has been passed, pass
appropriate orders regarding confiscation or release of the property, as the
case may be, involved in the offence of money-laundering after having regard to
the material before it.
The petitioner in the case had filed a writ petition under
Article 32 of the Indian Constitution before the Hon’ble Apex Court
seeking a declaration of several provisions of the PMLA 2002, including
Section 6 that dealt with Adjudicating Authority and claimed it to be
unconstitutional, submitting that the provisions of the Act are so provided
that there may not be independent Judiciary for deciding the cases under the
Act, since the Chairperson and the Members are to be selected by the
selection committee presided by the Revenue Secretary.
The petitioner further contended that the statutory
provisions of the Act and the rules, particularly the one related to the
constitution of the Adjudicating Authority and Appellate Tribunal, are in
violation to the basic constitutional guarantee of a free and independent
Judiciary, beyond the legislative competence of the Parliament.
It was ultimately pleaded by the petitioner that the
provisions brought forward by her must be quashed on the ground of them being
unconstitutional, inconsistent with the separation of power and interfering
with the judicial functioning of the Tribunal as ultra vires of the Indian
Constitution.
Deciding upon this matter the Apex Court held the following –
“The
‘Adjudicating Authority’ is a body of experts from different fields to
adjudicate on the issue of confirmation of Provisional attachment of property involved
in money laundering. The functions of adjudicating authority are civil in
nature to the extent that it does not decide on the criminality of the offence
nor does it have power to levy penalties or impose punishment. Adjudication is
a function which is performed by Executives under many statutes.”
The above-mentioned extract from the judgement can help in providing a clarity on the definition of an Adjudicating Authority under PMLA
Jurisdiction
The provisions regarding the
jurisdiction of the adjudicating Authority are discussed below.
- The jurisdiction of the
Adjudicating Authority can be exercised by Benches
- The Chairperson of the
Adjudicating Authority under PMLA shall constitute a Bench having 1 or 2
Member as deemed fit by the Chairperson.
- The Adjudicating Authority’s Benches shall ordinarily be seated at New Delhi and at other places as the Central Govt. may specify through a notification upon consulting with the Chairperson
- The Central Government shall also specify, through a notification, the areas relating to which each Bench of the Adjudicating Authority may exercise jurisdiction.
The Chairperson is empowered to
transfer a Member from one Bench to another Bench.
In case, at any stage of the
hearing of any matter or case, if it seems to the Chairperson or Member
depending on the nature of the case should be heard by a Bench consisting of
two Members, the Chairperson can transfer the same or, it can be referred to
him for transfer, to such Bench as deemed fit by the Chairperson.
Adjudicating Authority Under PMLA:
Term Of Office
- The term of holding the office
for the Chairperson and the Members would be 5 years from the date of
entry in the office or post the attainment of 62 years of age.
- The member’s salary, allowance
payable or any other terms or conditions with regard to his services shall
be complied with in the manner as prescribed.
- It must be noted that the
salary and allowances or the other terms and conditions of service of the
Member shall not be varied to his disadvantage post appointment.
- In the event of the occurrence
of a vacancy in the office of the Member or Chairperson due to any reason
other than temporary absence, Central Government shall appoint another
person according to the provisions of this Act to fill the vacancy, and
the proceedings may be resumed before the AA from the stage at which the
vacancy is filled.
- The Chairperson or any other
Member can opt for resignation from the office upon giving written notice
under his hand addressed to the Central Govt.
- The Chairperson or any other
Member must continue to hold the office until the expiration of 3 months
from the date of the receipt of the notice of resignation to the Central
Govt. or until a person
duly appointed as his successor makes an entry in his office or until the
expiration of his term of office, except in cases where he has been
permitted to relinquish his office sooner by the Central Govt.
- The removal of the Chairperson or
any other Member from his office shall not take place except by order of
the Central Govt. after giving the necessary opportunity of hearing.
- If a vacancy in the office of
the Chairperson has occurred due to his resignation, death, or
otherwise, the senior-most Member will act as the Chairperson of the
Adjudicating Authority till a new Chairperson has filled such
vacancy and enters upon his office pursuant to his appointment as per the
provisions of this Act.
- In the event of the Chairperson’s inability towards discharging his functions due to illness, absence or any other cause, the senior-most Member would be discharging the same till the date of the resumption of the duties of such Chairperson.
Powers
The powers of the Adjudicating Authority shall not be bound
by the procedure prescribed in the Code of Civil Procedure, 1908, but would be
as per the principles of natural justice and, with regard to the provisions of
this Act, the Adjudicating Authority shall be empowered for regulating its own
procedure.
After the
Adjudicating Authority confirms the attachment, the accused can take the
following actions:
- Right to appeal: The accused can challenge the confirmation order at
the PMLA’s Appellate Tribunal within 45 days
- Appellate tribunal: If the Appellate Tribunal confirms the order, the
accused can appeal to the High Court.
- Status of property: The owner cannot access the property until the
trial is completed unless it’s released.
- Final confirmation: Once confirmed, for residential property, the ED
takes possession after the owner vacates.
- Conviction outcome: If convicted, the trial court may order
confiscation and transfer ownership to the central government.
Example of Action by Adjudicating Authority
The Prevention of Money Laundering
Act (PMLA) Adjudicating Authority has upheld the attachment of over Rs 751
crore linked to Congress's Associated Journal Limited (AJL) and Young Indian,
affecting party leaders Sonia Gandhi and Rahul Gandhi. The case involvesalleged financial improprieties and misuse of assets, posing a significant
challenge ahead of the Lok Sabha elections 2024
The confirmation of the PMLA Adjudicating Authority came a day ago following detailed hearings on the property attachment order issued in November 2023 by the Directorate of Enforcement (ED), which is probing the case under the provisions of the Prevention of Money Laundering Act, 2002, considering a complaint, filed by Subramanian Swamy, against individuals including Congress leaders Sonia Gandhi, her son Rahul Gandhi, Motilal Vohra, Oscar Fernandes, Suman Dubey, Sam Pitroda, and Young Indian
The complaint was
duly acknowledged and acted upon by the learned metropolitan magistrate,
Patiala House Court, as per an order dated June 26, 2014
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