Appellate Authority under PMLA 2002
An adjudicating authority is an
entity that has the power to make decisions or orders under a specific
act. The role of an adjudicating authority can vary depending on the act,
and may include:
Money laundering
The Adjudicating
Authority has the power to confirm the attachment of property, or the retention
of property or records, if it determines that the property is involved in money
laundering.
Insolvency
The Debt
Recovery Tribunal is the adjudicating authority for insolvency matters
involving individuals and firms. The National Company Law Tribunal is the
adjudicating authority for insolvency matters involving corporate persons.
GST
The Adjudicating
Authority is any authority that has the power to make decisions or orders under
the GST Act.
Department of Revenue
The Adjudicating
Authority is a body within the Department of Revenue of the Central
Government's Ministry of Finance. It is made up of three members, one each
from the fields of law, administration, and finance or accountancy.
The Prevention of Money Laundering Act, 2002 (PMLA)
The PMLA envisages a two-fold measure against the offence of money laundering. First, is the attachment proceedings, wherein properties suspected to be proceeds of crime are attached in terms of Section 5 and 8 of the PMLA, and second, the prosecution of the accused through a special court, with the intended goal of punishment.
Section 5(3) provides that a provisional attachment order shall cease to have effect after the expiry of 180 days from the date of the order unless otherwise confirmed in terms of Section 8(3). Under Section 5(5), the Director or officer who provisionally attached the property is required, within a period of 30 days of the provisional attachment order, to file a complaint stating the facts of such attachment before the Adjudicating Authority.
However, an anomaly occurs when the Adjudicating
Authority, which is seized of the original complaint seeking confirmation of
the provisional attachment order, fails to adjudicate within the period of 180
days. Resultantly, the proceedings before the Adjudicating Authority become
infructuous, since the very basis of proceeding i.e., provisional attachment
order, ceased to exist.
Because the initial attachment is provisional, the accused can continue
to enjoy the property until the adjudicating authority confirms the attachment, after which the ED
has the power to claim possession
In such a situation, the accused has two options either (i) to file an application before
the Adjudicating Authority itself on the ground that proceedings have become
infructuous, and any order passed therein would be subject to appeal before the
Appellate Tribunal u/s 26 and thereafter before the High Court u/s 42 of PMLA,
or (ii) to file a
petition under Article 226 read with 227 of Constitution.
Section 6 of the PMLA before the 2009 amendment stated that the Central government shall appoint one or more Adjudicating Authorities to exercise jurisdiction, powers and authority conferred by or under the Act. Through the 2009 amendment, the words and phrases “one or more Adjudicating Authorities” were substituted by “an Adjudicating Authority”. Hence, the Adjudicating Authority at New Delhi exercises pan-India jurisdiction.
The Prevention of Money Laundering Act, 2002 (PMLA) establishes the PMLA Appellate Tribunal in section 25, which functions under the Ministry of Finance's Department of Revenue. The Tribunal's purpose is to hear appeals against orders made by the PMLA's Adjudicating Authority.
Constitution of Appellate Authority
The Tribunal is made up of a Chairperson and at least two members, who are appointed by the Central Government. Members are usually retired High Court judges or people with expertise in law or finance.
The Appellate Tribunal under the
Prevention of Money Laundering Act, 2002 (PMLA) was brought into force w.e.f.
1st July, 2005. The Tribunal comprises a Chairman (who is or has been a Judge
of the High Court or Supreme Court) and two members. One of the Members is an
Accountant Member, who has been in the practice of accountancy as a Chartered
Accountant for at least ten years and the other Member is a person who is or
has been a judge of a High Court or who is a member of India Revenue Service
and has held the post of Commissioner/Joint Secretary or equivalent post in
Indian Legal Service, Income Tax, Indian Economic Service, Indian Customs and
Central Excise Service or Indian Audit and Accounts Service in that service for
at least three years.
They are appointed for
a term of five years or till the
age of 65 years, whichever is earlier.
The Delhi High Court has directed the Union Government (28
Feb 2023) to take expeditious steps for appointing Chairperson and other
members of the Appellate Authority under Prevention of Money Laundering Act,
2002 (PMLA) within eight weeks. Taking judicial notice of the fact that there
are a “large volume of cases” pending under PMLA
The Tribunal adjudicates appeals and
allied petitions filed against the attachment/forfeiture orders passed by the
Adjudicating Authority for attachment/forfeiture of properties involved in
money laundering under PMLA. It also adjudicates appeals filed against the
orders imposing fine passed by the Director- Financial Intelligence Unit India
(FIU India). The Benches of the Appellate Tribunal sit at New Delhi without any
benches elsewhere in the country.
The appeals and allied petitions are disposed off by the Benches as constituted by the Chairperson with one or two Members as the Chairperson may deem fit.
The Tribunal must deal with appeals as quickly as possible (Section 26) and aim to dispose of them within six months of filing. It sends copies of all orders to the parties involved in the appeal and to the relevant Adjudicating Authority or Director
The Delhi High court noted (25 March 23) that the Authority, at least in relation to portions relevant to compliance under Sections 5(1) and 8(1) of PMLA, 2002, was using identical paragraphs in a number of orders. Use of identical templated paragraphs could reflect as non-application of mind by the Authority concerned, said the court
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