Madras HC upholds PMLA provisional attachment orders

1
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
Reserved on: 04.10.2018 Delivered on: 03 .01.2019
CORAM:
THE HONOURABLE MR.JUSTICE V.PARTHIBAN
W.P.(MD) Nos.11454, 14860 and 14894 to 14899 of 2018

and
W.M.P(MD)Nos.13450 to 13455, 10442, 10443 & 13399 of 2018
W.P.(MD) No.11454 of 2018:

G.Gopalakrishnan ... Petitioner
vs.
1. The Deputy Director,
Directorate of Enforcement,
Chennai Zonal Office,
3rd Block, Murugesa Naicker Complex,
84, Greams Road,
Chennai-600 006.
2. The Adjudicating Authority (PMLA),

Room No.26, 4th Floor,
Jeevan Deep Building,
Parliament Street,
New Delhi-110 001. ... Respondents
http://www.judis.nic.in
2
PRAYER: Writ Petition filed under Article 226 of the Constitution of
India for issuance of Writ of Certiorari, to call for the records of the
impugned Provisional Attachment Order No.06/2018 dated
23.3.2018 in File No.ECIR/CEZO/04/PMLA/2014 passed by the 1st
respondent and the consequential complaint in OC No.930/2018
dated 12.04.2018 filed by the 1st respondent before the 2nd
respondent in respect of the petitioner's properties schedule III and
the consequential show cause notice dated 10.5.2018 issued by the
2nd respondent and quash the same as illegal.
For Petitioner : Mr.P.Wilson, SC for

Mr.C.Arul Vadivel @ Sekar
For Respondents : Mr.G.Rajagopalan

Additional Solicitor General of India
assisted by Mr.K.K.Senthilvelan
******
3
COMMON ORDER
All these Writ Petitions raise common issues and grounds and
therefore, they are taken up together for final disposal and being
disposed of vide this common order.
2. These Writ Petitions are challenging the action initiated by
the first respondent in passing the respective orders of provisional
attachment of properties under Section 5(1) of the Prevention of
Money Laundering Act, 2002 (hereinafter referred to ‘PMLA’) and
subsequent filing of complaints under Section 5(5) of PMLA by the
first respondent and consequential show cause notices issued by
the Adjudicating Authority, namely, the second respondent herein
in W.P.No.11454 of 2017, under Section 8(1) of PMLA.
3. The preliminary issues that were sought to be raised in
respect of these Writ Petitions on behalf of the petitioners, are as
under:
4
i) The first respondent has not recorded reasons to believe
while ordering provisional attachment under Section 5
(1) of PMLA. In the absence of reasons to be recorded in
writing as per the said action, whether the provisional
attachment order is sustainable as the same being
contrary to PMLA?
ii) The Adjudicating Authority while issuing show cause
notice under Section 8(1) of PMLA, must have reason to
believe that a person has committed offence under
PMLA. Whether in the absence of reasons, the show
cause notices issued under Section 8(1) of PMLA are
sustainable as being contrary to the provisions of PMLA?
iii) Whether non-record of reasons and non-communication
of reasons can be held to be violation of the established
principles of natural justice?
iv) The Adjudicating Authority shall consist of Chair-Person
and two other Members under Section 6(2) of PMLA.
Presently, the Adjudicating Authority has only one
5
Member and therefore, whether the action initiated by
the Adjudicating Authority suffers from coram non
judice?
v) Whether the Writ Petitions are maintainable on the
ground of availability of alternative remedies provided
under PMLA?
vi) Whether the action initiated by the Authorities under
PMLA, on the face of it, suffers from non-application of
mind and requires to be interfered with even at the stage
of show cause notice?
vii) When the Writ Petitions are admitted, Rule Nisi is issued
by the Writ Court, while so, in the absence of production
of relevant documents, whether the Court would have
any option except to draw adverse inference against the
respondents?
viii) Whether offence of illegal quarrying is one of the
scheduled offences under PMLA, warranting action under
PMLA?
6
ix) Whether the Adjudicating Authority, being non-
conversant with the vernacular language of the state, is
able to appreciate transactions of various properties
which are documented in vernacular language (Tamil)?
4. On behalf of the Writ Petitioners, the above preliminary
objections were raised in order to invite this Court to intervene the
action initiated by the respondents under PMLA at the stage of
provisional attachment and issuance of show cause notice by the
respondents.
Issues Nos.(i) to (iii):
(i) The first respondent has not recorded

reasons to believe while ordering provisional
attachment under Section 5 (1) of PMLA. In
the absence of reasons to be recorded in
writing as per the said action, whether the
provisional attachment order is sustainable
as the same being contrary to PMLA?
(ii) The Adjudicating Authority while
issuing show cause notice under Section 8(1)
of PMLA, must have reason to believe that a
7
person has committed offence under PMLA.

Whether in the absence of reasons, the show
cause notices issued under Section 8(1) of
PMLA are sustainable as being contrary to
the provisions of PMLA?
(iii) Whether non-record of reasons and
non-communication of reasons can be held
to be violation of the established principles
of natural justice?
5. Shri P.Wilson, learned Senior Counsel appearing for the
petitioners in all the Writ Petitions would draw the attention of this
Court to Section 5(1) of PMLA wherein, it is stipulated that the
Officer concerned while taking action for provisional attachment of
property involved in money laundering, ought to have reason to
believe and the same ought to be recorded in writing. The same
requirement is incorporated under Section 8(1) of PMLA, where the
Adjudicating Authority acts on the complaint initiated under
Section 5 of the Act.
8
6. For the sake of appreciation of the preliminary objection
raised by the learned Senior Counsel, Sections 5 and 8(1) of PMLA
are extracted hereunder:
“5. Attachment of property involved in

money-Laundering.- (1) Where the Director or
any other officer not below the rank of Deputy
Director authorised by the Director for the
purposes of this section, has reason to believe (the
reason for such belief to be recorded in writing),
on the basis of material in his possession, that-
(a) any person is in possession of any
proceeds of crime; and
(b) such proceeds of crime are likely to be
concealed, transferred or dealt with in any manner
which may result in frustrating any proceedings
relating to confiscation of such proceeds of crime
under this Chapter, he may, by order in writing,
provisionally attach such property for a period not
exceeding one hundred and eighty days from the
date of the order, in such manner as may be
prescribed:
Provided that no such order of attachment
shall be made unless, in relation to the scheduled
offence, a report has been forwarded to a
Magistrate under section 173 of the Code of
Criminal Procedure, 1973 (2 of 1974), or a
complaint has been filed by a person authorised to
investigate the offence mentioned in that
Schedule, before a Magistrate or court for taking
cognizance of the scheduled offence, as the case
may be, or a similar report or complaint has been
made or filed under the corresponding law of any
other country:.
9
Provided further that, notwithstanding

anything contained in clause (b), any property of
any person may be attached under this section if
the Director or any other officer not below the
rank of Deputy Director authorised by him for the
purposes of this section has reason to believe (the
reasons for such belief to be recorded in writing),
on the basis of material in his possession, that if
such property involved in money-laundering is not
attached immediately under this Chapter, the
non-attachment of the property is likely to
frustrate any proceeding under this Act.
(2) The Director, or any other officer not
below the rank of Deputy Director, shall,
immediately after attachment under sub-section
(1), forward a copy of the order, along with the
material in his possession, referred to in that sub-
section, to the Adjudicating Authority, in a sealed
envelope, in the manner as may be prescribed and
such Adjudicating Authority shall keep such order
and material for such period as may be
prescribed.
(3) Every order of attachment made under
sub-section (1) shall cease to have effect after the
expiry of the period specified in that sub-section or
on the date of an order made under sub-section
(2) of section 8, whichever is earlier.
(4) Nothing in this section shall prevent the
person interested in the enjoyment of the
immovable property attached under sub-section
(1) from such enjoyment Explanation.- For the
purposes of this sub-section “person interested”,
in relation to any immovable property, includes all
persons claiming or entitled to claim any interest
in the property.
(5) The Director or any other officer who
provisionally attaches any property under sub-
section (1) shall, within a period of thirty days
10
from such attachment, file a complaint stating the

facts of such attachment before the Adjudicating
Authority.”
"8. Adjudication.- (1) On receipt of a
complaint under sub-section (5) of section 5, or
applications made under sub-section (4) of section
17 or under subsection (10) of section 18, if the
Adjudicating Authority has reason to believe that
any person has committed an offence under
section 3 or is in possession of proceeds of crime,
he may 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 under sub-section (1) of section
5, or, seized or frozen under section 17 or section
18, the evidence on which he relies and other
relevant information and particulars, and to show
cause why all or any of such properties should not
be declared to be the properties involved in
money-laundering and confiscated by the Central
Government: Provided that where a notice under
this sub-section 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: Provided further that where such
property is held jointly by more than one person,
such notice shall be served to all persons holding
such property."
7. According to the learned Senior Counsel, 'recording of
reasons' is the very heart beat of the above Section, namely, that
while ordering provisional attachment, the Authority must be
satisfied the requirement of Section 5(1)(b) of PMLA, in which, it is
11
stated that “proceeds of crime are likely to be concealed,
transferred or dealt with in any manner which may result in
frustrating any proceedings relating to confiscation of such
proceeds of crime under this Chapter”. According to the learned
Senior Counsel, the first respondent while ordering provisional
attachment under Section 5(1) of PMLA, has nowhere in the order
dated 23.3.2018, has given any finding in regard to Section 5(1)(b)
of PMLA. In the absence of such reasons, the order of provisional
attachment by the respondents cannot be countenanced both in
law and on facts. And so is the Adjudicating Authority who issued
impugned show cause notice under Section 8(1) of PMLA. In the
show cause notice, record of reasons to believe is not reflected,
either.
8. In support of his above contentions, the learned
Senior Counsel would rely on the following decisions of the Hon’ble
Supreme Court and various other High Courts, contending that
recording of reasons is mandatory and ought to be meaningful and
purposeful and not merely in expression by the official concerned
12
that he has reason to belief for such action being initiated against
the alleged offenders, viz.,
i) Order passed by the Delhi High Court, reported in “2018
SCC OnLine Del 6523 (J.Sekar versus Union of India & others,
etc.)”. The learned Senior Counsel placed reliance of the judgment
in extenso and he would take this Court to various findings of the
Delhi High Court in respect of same subject matter under PMLA,
which is under consideration before this Court, as found in
paragraphs 59, 60, 62, 69 to 78 and 87, which are extracted
hereunder:
“59. The fact that the Director will, therefore, have

to first apply his mind to the materials on record before
recording in writing his reasons to believe is certainly a
sufficient safeguard to the impulsive invocation of the
powers under the second proviso to Section 5(1) PMLA.
60. The word -immediately? also imports a sense of

urgency into the situation that warrants exercise of the
powers. The reasons to believe, as recorded by the officer
must reflect this sense of immediacy which impels the
officer to invoke the power. The Court is in agreement that
the second proviso to Section 5(1) has to be certainly read
with the main provision itself. As pointed out by learned
counsel for the Petitioners, a proviso cannot be interpreted
in a manner to render redundant the main provision itself.
13
As explained in Dwarka Prasad v. Dwarka Das Saraf (1976) 1

SCC 128:
“18. We may mention fairness to counsel

that the following, among other decisions,
were cited at the bar bearing on the uses of
provisos in statutes: Commissioner of Income-tax
v. Indo-Mercantile Bank Ltd. AIR 1959 SC 713;
M/s. Ram Narain Sons Ltd. v. Asst. Commissioner
of Sales Tax AIR 1955 SC 765(2); Thompson v.
Dibdin (1912) AC 533; Rex v. Dibdin 1910 Pro
Div 57 (4) and Tahsildar Singh v. State of U.P AIR
1959 SC 1012. The law is trite. A proviso
must be limited to the subject matter of the
enacting clause. It is a settled rule of
construction that a proviso must prima facie
be read and considered in relation to the
principal matter to which it is a proviso. It is
not a separate or independent enactment.
'Words are dependent on the principal
enacting words, to which they are tacked as a
proviso. They cannot be read as divorced from
their context?. (Thompson v. Dibdin). If the
rule of construction is that prima facie a
proviso should be limited in its operation to
the subject matter of the enacting clause, the
stand we have taken is sound. To expand the`
enacting clause, inflated by the proviso, sins
against the fundamental rule of construction
that a proviso must be considered in relation
to the principal matter to which it stands as a
proviso. A proviso ordinarily is but a proviso,
although the golden rule is to read the whole
section, inclusive of the proviso, in such
manner that they mutually throw light on
14
each other and result in a harmonious

construction.?
61. … ….. …..
62. The further safeguards are that the order of

attachment by the Director or the Deputy Director, as the
case maybe, is only for a period of 180 days to begin with.
Further, within a period of 30 days after the passing of
such order, the AA takes over under Section 8(1) PMLA.
Even under Section 8(1)PMLA, the AA is not supposed to
mechanically issue an SCN. The AA has to apply its mind
and again record the its reasons to believe that any person
has committed an offence under Section 3 PMLA or is in
possession of proceeds of crime. Here again, two kinds of
persons are envisaged: (i) a person who has committed an
offence under Section 3 PMLA; and (ii) A person who
happens to be in possession of proceeds of crime.”
63. to 68. ….. …. ….
69. What should constitute the ?reasons to believe'

that are to be recorded? In this context, it must be seen
that even for the exercise of power under Section 5(1), the
Director/Deputy Director/Authorized Officer has to record
his reasons to believe in writing. That is the expression
that is used in the second proviso to Section 5(1) PMLA as
well. It is the same expression that is used even as far as
the powers exercised by the AA under Section 8(1) PMLA
are concerned.
70. The expression reasons to believe' under Section

26 IPC is understood in the sense of ?sufficient cause to
believe that thing but not otherwise'. In Phool Chand
Bajrang Lal v. ITO [1993] 203 ITR 456 (SC), the Supreme
Court in the context of the Income Tax Act, 1961 explained
the expression as under:
“Since, the belief is that of the Income-tax

Officer, the sufficiency of reasons for forming the
belief, is not for the Court to judge but it is open to
15
an assessee to establish that there in fact existed

no belief or that the belief was not at all a bona fide
one or was based on vague, irrelevant and non-
specific information. To that limited extent, the
Court may look into the conclusion arrived at by
the Income-tax Officer and examine whether there
was any material available on the record from
which the requisite belief could be formed by the
Income-tax Officer and further whether that
material had any rational connection or a live link
for the formation of the requisite belief”.?
71. In Income Tax Officer v. Lakhmani Mewaldas 1976 (3)

SCR 956, the Supreme Court held that there should be a
-live link or close nexus? between the material before the
ITO and the formation of his belief that income had
escaped assessment. More recently, in Aslam Mohd
Merchant v. Competent Authority (2008) 14 SCC 186, the
entire legal position has been explained elaborately by the
Supreme Court as under:
“28. It is, however, beyond any doubt or

dispute that a proper application of mind on the
part of the competent authority is imperative
before a show cause notice is issued. Section 68-H
of the Act provides for two statutory requirements
on the part of the authority viz: (i) he has to form
an opinion in regard to his `reason to believe'; and
(ii) he must record reasons therefor. Both the
statutory elements, namely, `reason to believe'
and `recording of reasons' must be premised on
the materials produced before him. Such
materials must have been gathered during the
investigation carried out in terms of Section 68-E or
otherwise. Indisputably therefore, he must have
some materials before him. If no such material
had been placed before him, he cannot initiate a
proceeding. He cannot issue a show cause notice
on his own ipse dixit. A roving enquiry is not
contemplated under the said Act as properties
16
sought to be forfeited must have a direct nexus

with the properties illegally acquired.
29. It is now a trite law that whenever a
statute provides for `reason to believe', either the
reasons should appear on the face of the notice or
they must be available on the materials which had
been placed before him. We have noticed herein
before that when the authority was called upon to
disclose the reasons, it was stated that all the
reasons were contained in the show cause notices
themselves. They, however, in our opinion, do not
contain any reason so as to satisfy the
requirements of sub-section (1) of Section 68H of
the Act.?
72. Reasons to believe cannot be a rubber stamping of

the opinion already formed by someone else. The officer
who is supposed to write down his reasons to believe has
to independently apply his mind. Further, and more
importantly, it cannot be a mechanical reproduction of the
words in the statute. When an authority judicially
reviewing such a decision peruses such reasons to believe,
it must be apparent to the reviewing authority that the
officer penning the reasons has applied his mind to the
materials available on record and has, on that basis,
arrived at his reasons to believe. The process of thinking of
the officer must be discernible. The reasons have to be
made explicit. It is only the reasons that can enable the
reviewing authority to discern how the officer formed his
reasons to believe. As explained in Oriental Insurance
Company v. Commissioner of Income Tax [2015] 378 ITR 421
(Delhi), -the prima facie formation of belief should be
rational, coherent and not ex facie incorrect and contrary
to what is on record?. A rubber stamp reason can never
take the character of ?reasons to believe', as explained by
the Supreme Court in Union of India v. Mohan Lal Kapoor
(1973) 2 SCC 836. In Dilip N Shroff v. CIT (2007) 6 SCC 329,
the Supreme Court decried the practice of issuing notices
in a standard pro forma manner -without material
17
particulars and without deleting inappropriate words or

paragraphs?.
73. In Kranti Associates v. Masood Ahmed Khan (2010) 9

SCC 496, the legal position was summarized as under:
“51. Summarizing the above discussion, this

Court holds:
a. In India the judicial trend has always been
to record reasons, even in administrative decisions,
if such decisions affect anyone prejudicially.
b. A quasi-judicial authority must record
reasons in support of its conclusions.
c. Insistence on recording of reasons is meant
to serve the wider principle of justice that justice
must not only be done it must also appear to be
done as well.
d. Recording of reasons also operates as a
valid restraint on any possible arbitrary exercise of
judicial and quasi-judicial or even administrative
power.
e. Reasons reassure that discretion has been
exercised by the decision maker on relevant
grounds and by disregarding extraneous
considerations.
f. Reasons have virtually become as
indispensable a component of a decision making
process as observing principles of natural justice
by judicial, quasi-judicial and even by
administrative bodies.
g. Reasons facilitate the process of judicial
review by superior Courts.
h. The ongoing judicial trend in all countries
committed to rule of law and constitutional
governance is in favour of reasoned decisions
18
based on relevant facts. This is virtually the life

blood of judicial decision making justifying the
principle that reason is the soul of justice. i.
Judicial or even quasi-judicial opinions these days
can be as different as the judges and authorities
who deliver them. All these decisions serve one
common purpose which is to demonstrate by
reason that the relevant factors have been
objectively considered. This is important for
sustaining the litigants' faith in the justice delivery
system.
j. Insistence on reason is a requirement for
both judicial accountability and transparency.
k. If a Judge or a quasi-judicial authority is
not candid enough about his/her decision making
process then it is impossible to know whether the
person deciding is faithful to the doctrine of
precedent or to principles of incrementalism.
l. Reasons in support of decisions must be
cogent, clear and succinct. A pretence of reasons
or `rubber-stamp reasons' is not to be equated with
a valid decision making process.
m. It cannot be doubted that transparency is
the sine qua non of restraint on abuse of judicial
powers. Transparency in decision making not only
makes the judges and decision makers less prone
to errors but also makes them subject to broader
scrutiny. (See David Shapiro in Defence of Judicial
Candor (1987) 100 Harvard Law Review 731-737).
n. Since the requirement to record reasons
emanates from the broad doctrine of fairness in
decision making, the said requirement is now
virtually a component of human rights and was
considered part of Strasbourg Jurisprudence. See
(1994) 19 EHRR 553, at 562 para 29 and Anya vs.
University of Oxford, 2001 EWCA Civ 405, wherein
the Court referred to Article 6 of European
19
Convention of Human Rights which requires,

"adequate and intelligent reasons must be given for
judicial decisions".
o. In all common law jurisdictions judgments
play a vital role in setting up precedents for the
future. Therefore, for development of law,
requirement of giving reasons for the decision is of
the essence and is virtually a part of "Due Process".
74. The Court, therefore, holds as under as regards

the submissions of the learned counsel for the Petitioners
with regard to the constitutionality of the second proviso to
Section 5 (1) PMLA:
(i) Although the second proviso to Section

5(1) states that the property has to be ?involved
in money-laundering' and Section 5(1) states that
mere possession of proceeds of crime is
sufficient, the Court does not see any conflict in
these expressions. When the definition in Section
3 PMLA is read with Section 2(1)(v) and the
Explanation thereto, it becomes clear that the
property which constitutes ?proceeds of crime' is
the property involved in money-laundering.
(ii) The reasons to believe at every stage

must be noted down by the officer in the file.
(iii) While the reasons to believe recorded at

the stage of passing the order of provisional
attachment under Section 5(1) PMLA may not be
forthwith at that stage communicated to the
person adversely affected thereby, the reasons as
recorded in the file have to accompany the
complaint filed by such officer within 30 days
before the AA under Section 5(5) PMLA.
(iv) A copy of such complaint accompanied

by the reasons, as found in the file, must be
served by the AA upon the person affected by
20
such attachment after the AA adds its own

reasons why he prima facie thinks that the
provisional attachment should continue.
75. There are two reasons to believe. One recorded by

the officer passing the order under Section 5(1)PMLA and
the other recorded by the AA under Section 8(1) PMLA. Both
these reasons to believe should be made available to the
person to whom notice is issued by the AA under Section
8(1) PMLA.
The failure to disclose, right at the beginning, the

aforementioned reasons to believe to the noticee under
Section 8(1) PMLA would not be a mere irregularity but an
illegality. A violation thereof would vitiate the entire
proceedings and cause the order of provisional attachment
to be rendered illegal.
76. The Court disagrees with the learned counsel for

the Union of India that there is no mandatory requirement,
under Section 8(1) PMLA, to communicate to the noticee the
reasons to believe. On a collective reading of Section 5(1)
PMLA and Section 8(1) PMLA, such an interpretation is
contraindicated and cannot satisfy the requirement of
what the AA is supposed to do under Section 8(2) PMLA,
viz. to consider the reply of the noticee, give them and the
Director a hearing and ?take into account' all relevant
materials placed on record.
77. Although at the stage of issuance of notice under

Section 8(1) PMLA all the relevant material on record which
constituted the basis for reasons to believe may not be
made available, if the noticee demands to see those
materials on record, the AA is bound to make available all
those materials on record to them. It is most likely that
without such access to such material on record, the
noticee will be unable to file an effective reply. Therefore,
there cannot be any denial of access to the noticee of the
materials on record. If there is any sensitive material, it
can probably be redacted before issuing copies thereof,
after noting the reasons for such redaction in writing in the
21
file. But even such redacted material will have to be

nevertheless shown to the noticee.
78. Whether, in an individual case, the reasons to

believe, as recorded by the authorities, satisfies the above
requirement of law will now be examined by the learned
Single Judge before whom these writ petitions will be
placed for further consideration. It is, therefore, not
necessary for this Division Bench to examine the individual
orders of either the Director/Deputy Director under Section
5(1) PMLA or the AA under Section 8 PMLA.
79. to 86. …. ….. ….
87. This Court summarizes its conclusions as under:
(i) The second proviso to Section 5(1) PMLA is

not violative of Article 14 of the Constitution of
India; the challenge in that regard in these
petitions is hereby negatived.
(ii) The expression ?reasons to believe' has to

meet the safeguards inbuilt in the second proviso
to Section 5(1) PMLA read with Section 5(1) PMLA.
(iii) The expression ?reasons to believe' in

Section 8(1) PMLA again has to satisfy the
requirement of law as explained in this decision.
(iv) There has to be a communication of the ?

reasons to believe' at every stage to the noticee
under Section 8(1) PMLA.
(v) The noticee under Section 8(1) PMLA is

entitled access to the materials on record that
constituted the basis for ?reasons to believe'
subject to redaction in the manner explained
herein before, for reasons to be recorded in
writing.
22
(vi) If there is a violation of the legal

requirements outlined herein before, the order of
the provisional attachment would be rendered
illegal.
(vii) There can be single-member benches of

the AA and the AT under the PMLA. Such single-
member benches need not mandatorily have to be
JMs and can be AMs as well.”
According to the learned Senior Counsel, the Delhi High Court has
said that the ‘expression ‘reason to belief’ has to meet the
safeguards inbuilt in the second proviso to Section 5(1) of PMLA.
The learned Senior Counsel would submit that the Delhi High
Court has categorically held that the ‘expression ‘reason to believe’
in Section 8(1) of PMLA again has to satisfy the requirement of law
as explained in its decision. He would point out that the Delhi High
Court has given extensive reasons as to why such requirement is
mandatory in view of the Scheme of PMLA. In fact, the Court has
said that the expression ‘reason to belief’ cannot be a rubber
stamp of the opinion already formed by someone else and the
Officer in whose obligation to record reasons, must independently
apply his mind.
23
ii) “(1976) 1 SCC 1001 (M/s.Ajantha Industries and others
versus Central Board of Direct Taxes, New Delhi and others)”,
wherein, the learned Senior Counsel would draw the attention of
this Court to paragraphs 10 and 11 which are extracted hereunder:
“10. The reason for recording of reasons in the order and

making these reasons known to the assessee is to enable an
opportunity to the assessee to approach the High Court under
its writ jurisdiction under Article 226 of the Constitution or
even this Court under Article 136 of the Constitution in an
appropriate case for challenging the order, inter alia, either on
the ground that it is based on irrelevant and extraneous
condonations Whether such a writ or special leave application
ultimately fails is not relevant for a decision of the question.
“11. We are clearly of opinion that the requirement of

recording reasons under Section 127(1) is a mandatory
direction under the law and non-communication thereof is not
saved by showing that the reasons exist in the file although not
communicated to the assessee”
According to the learned Senior Counsel, the reasons to be
recorded is a mandatory requirement and the same has to be
communicated as well.
iii) “(1972) 3 SCC 234 (Sheo Nath Singh versus Appellate
Assistant Commissioner of Income Tax, Calcutta)”, wherein, the
24
learned Senior Counsel would draw reference to paragraphs 7 to 10
of the judgment, which are extracted as under:
“Section 34 (1-A) to the extent it is necessary, may be

reproduced.
"34 (1-A). if, in the- case of any assessee, the

income-tax officer has reason to believe-
(i) that income, profits or gains chargeable to
income-tax have escaped assessment for any year
in respect of which the relevant previous year falls
and
(ii)that the income, profits or gains which have
so escaped assessment for any such year or years
amount or are likely to amount to one lakh of
rupees or more; he may serve on the assessee a
notice containing and may proceed to assess or
reassess the income, profits or gains of the
assessee ;
Provided that the Income-tax Officer shall not

issue a notice under this sub-section unless he has
recorded his reasons for doing so and the Central
Board of Revenue is satisfied on such reasons
recorded that it is a fit case for the issue of such
notice".
8. Since nothing had been disclosed which was

relevant for the purpose of finding out whether the Income
Tax Officer had any reason to believe that the income,
profits or gains of the assessee chargeable to income-tax
had escaped assessment, we gave an opportunity to the
Revenue to have been found in the records are reports in
Form 'B' made in connection with starting of proceedings
under S. 34(1-A), each report relating to a different
assessment year. Items (7) and (8) of this form relate to
brief reasons for starting proceedings and whether the
Central Board of Revenue was satisfied that it was a fit
25
case for issue of notice. Against item (7) it is stated

"reasons as per separate sheet attached". Against item (8),
the Secretary of the Central Board of Revenue signed after
writing "Yes, satisfied". The reasons for starting the
proceedings given in the separate sheet may be fully
reproduced.
"For the reasons hereinafter recorded I believe

that income, profits and gains earned by the
assessee in his personal capacity and in
conjunction with others and chargeable to income-
tax have escaped assessment and that the amount
of such concealed income relating to the
Accounting years covering the period beginning on
the 1st day of September, 1939 and ending on the
31st day of March, 1949, amount to or is likely to
amount to Rs. 1,00,000/-. The reason for such
belief, inter alia, is as follows :-
(1) The assessee who is or was at the relevant
time a Managing Director in about a dozen limited
companies, along with "Oberois" is believed to have
made some secret profits which were not offered
for assessment. (2) The assessee is believed to have
received a sum of Rs. 22 lakhs from "Oberois",and
this sum or at least part of which represents
income has escaped assessment.
Sd/- (A. K. BHOWMIK)
Income-tax Officer,
Distt. 11 (2), Calcutta".
9. It is abundantly clear that the two reasons which

have been given for the belief which was formed by the
Income Tax Officer hopelessly fail to satisfy the
requirements of the statute. In a recent case-Chhugamal
Rajpal 18 2 v. S. P. Chaliha and Others ')which came up
before this Court, a similar situation had arisen and under
the directions of the Court, the Department produced the
records to show that the Income Tax Officer had complied
with the conditions laid down in the statute for issuing a
notice relating to escapement of income. There also, the
26
report submitted by the Officer to the Commissioner and

the latter's orders thereon were produced. In his report,
the Income Tax Officer referred to some communications
received by him from the Commissioner of Income-tax ,
Bihar and Orissa from which it appeared that certain
creditors of the assessee were mere name-lenders and the
loan transactions were bogus and, therefore, proper
investigation regarding the loans was necessary. It was
observed that the Income Tax Officer had not set out any
reason for coming to the conclusion that it was a fit case
for issuing a notice under S. 148 of the Income Tax Act,
1961. The material that ,he had before him for issuing
notice had not been mentioned. The facts contained in the
communications which had been received were only
referred to vaguely and all that had been said was that
from those communications it appeared that the alleged
creditors were name-lenders and the transactions were
bogus. It was held that from the report submitted by the
Income Tax Officer to the Commissioner it was clear that
he could not have had reasons to believe that on account
of assessee's omission to disclose fully and truly all
material facts, income chargeable to tax had escaped
assessment.
10. In our judgment, the law laid down by this Court

in the above case is fully applicable to the facts of the
present case. There can be no manner of doubt that the
words "reason to believe" suggest that the belief must be
that of an honest and reasonable person based upon
reasonable grounds and that the Income Tax Officer may
act on direct or circumstantial evidence but not on mere
suspicion, gossip or rumour. The Income Tax Officer would
be acting without jurisdiction if the reason for his belief
that the conditions are satisfied does not exist or is not
material or relevant to the , belief required by the section.
The court can always examine this aspect though the
declaration or sufficiency of the reasons for the belief
cannot be investigated by the court.”
27
The learned Senior Counsel would submit that though the above
decision was rendered in the context of Income Tax Act, but the
provision as contained therein, is pari materia to the present
provision of PMLA and therefore, the requirement of recording
reasons is mandatory as repeatedly held by the Courts.
iv) “(1978) 1 SCC 405 (Mohinder Sigh Gill and another
versus The Chief Election Commissioner, New Delhi and
others)”, wherein, the learned Senior Counsel would rely on
paragraph 8 which is extracted hereunder:
“8. The second equally relevant matter is that

when a statutory functionary makes an order based on
certain grounds, its validity must be judged by the
reasons so mentioned and cannot be supplemented by
fresh reasons in the shape of affidavit or otherwise.
Otherwise, an order bad in the beginning may, by the
time it comes to court on account of a challenge, get
validated by additional grounds later brought ,out. We
may here draw attention to the observations of Bose J.
in Gordhandas Bhanji (1) "Public orders, publicly
made, in exercise of a statutory authority cannot be
construed in the light of explanations subsequently
given by the officer making the order of what he
meant, or of what was in Ms mind, or what he
intended to, do. Public orders made by public
authorities are meant to have public effect and are
intended to effect the actings and conduct of those to
whom they are addressed and must be construed
objectively with reference to the language used in the
28
order itself. Orders are not like old wine becoming

better as they grow older.”
Therefore, the learned Senior Counsel would submit that the
Hon'ble Supreme Court has held that the reasons must be
communicated in the orders and in the present impugned orders,
no reasons have been assigned.
v) “(1993) 4 SCC 77 (M/s.Phool Chand Bajrang Lal and
Another versus Income Tax Officer and another)”, wherein, the
learned Senior Counsel would draw the attention of this Court to
paragraph 25, which is extracted as under:
“25. From a combined review of the judgments of

this Court, it follows that an Income-tax Officer
acquires jurisdiction to reopen assessment under
Section 147(a) read with Section 148 of the Income Tax
1961 only if on the basis of specific, reliable and
relevant information coming to his possession
subsequently, he has reasons which he must record,
to believe that by reason of omission or failure on the
part of the assessee to make a true and full
disclosure of all material facts necessary for his
assessment during the concluded assessment
proceedings, any part of his income, profit or gains
chargeable to income tax has escaped assessment. He
may start reassessment proceedings either because
some fresh facts come to light which where not
previously disclosed or some information with regard
to the facts previously disclosed comes into his
possession which tends to expose the untruthfulness
29
of those facts. In such situations, it is not a case of

mere change of opinion or the drawing of a different
inference from the same facts as were earlier available
but acting on fresh information. Since, the belief is
that of the Income-tax Officer, the sufficiency of
reasons for forming the belief, is not for the Court to
judge but it is open to an assessee to establish that
there in fact existed no belief or that the belief was not
at all a bona fide one or was based on vague,
irrelevant and non-specific information. To that
limited extent, the Court may look into the conclusion
arrived at by the Income-tax Officer and examine
whether there was any material available on the
record from which the requisite belief could be formed
by the Income-tax Officer and further whether that
material had any rational connection or a live link for
the formation of the requisite belief. It would be
immaterial whether the Income-tax Officer at the time
of making the original assessment could or, could not
have found by further enquiry or investigation,
whether the transaction was genuine or not, if one the
basis of subsequent information, the Income-tax
Officer arrives at a conclusion, after satisfying the
twin conditions prescribed in Section 147(a) of the Act,
that the assessee had not made a full and true
disclosure of the material facts at the time of original
assessment and therefore income chargeable to tax
had escaped assessment. The High Courts which have
interpreted Burlop Dealer's case (Supra) as laying
down law to the contrary fell in error and did not
appreciate the import of that judgment correctly.”
vi) “(2010) 9 SCC 496 (Kranti Associates Private Limited
and another versus Masood Ahmed Khan and others)”,
30
wherein, it has been held by the Hon’ble Supreme Court in
pargraphs 47 and 48, as under:
“47. Summarizing the above discussion, this

Court holds:
a. In India the judicial trend has always been to

record reasons, even in administrative decisions, if
such decisions affect anyone prejudicially.
b. A quasi-judicial authority must record reasons in
support of its conclusions.
c. Insistence on recording of reasons is meant to
serve the wider principle of justice that justice must
not only be done it must also appear to be done as
well.
d. Recording of reasons also operates as a valid
restraint on any possible arbitrary exercise of judicial
and quasi-judicial or even administrative power.
e. Reasons reassure that discretion has been
exercised by the decision maker on relevant grounds
and by disregarding extraneous considerations.
f. Reasons have virtually become as indispensable a

component of a decision making process as observing
principles of natural justice by judicial, quasi-judicial
and even by administrative bodies.
g. Reasons facilitate the process of judicial review by

superior Courts.
h. The ongoing judicial trend in all countries

committed to rule of law and constitutional
governance is in favour of reasoned decisions based
on relevant facts. This is virtually the life blood of
judicial decision making justifying the principle that
reason is the soul of justice. i. Judicial or even quasi-
judicial opinions these days can be as different as
31
the judges and authorities who deliver them. All

these decisions serve one common purpose which is
to demonstrate by reason that the relevant factors
have been objectively considered. This is important
for sustaining the litigants' faith in the justice
delivery system.
j. Insistence on reason is a requirement for both

judicial accountability and transparency. k. If a
Judge or a quasi-judicial authority is not candid
enough about his/her decision making process then
it is impossible to know whether the person deciding
is faithful to the doctrine of precedent or to principles
of incrementalism. l. Reasons in support of decisions
must be cogent, clear and succinct. A pretence of
reasons or `rubber-stamp reasons' is not to be
equated with a valid decision making process.
m. It cannot be doubted that transparency is the sine

qua non of restraint on abuse of judicial powers.
Transparency in decision making not only makes the
judges and decision makers less prone to errors but
also makes them subject to broader scrutiny. (See
David Shapiro in Defence of Judicial Candor (1987)
100 Harward Law Review 731-737). n. Since the
requirement to record reasons emanates from the
broad doctrine of fairness in decision making, the
said requirement is now virtually a component of
human rights and was considered part of Strasbourg
Jurisprudence. See (1994) 19 EHRR 553, at 562 para
29 and Anya vs. University of Oxford, 2001 EWCA
Civ 405, wherein the Court referred to Article 6 of
European Convention of Human Rights which
requires, "adequate and intelligent reasons must be
given for judicial decisions".
o. In all common law jurisdictions judgments play a

vital role in setting up precedents for the future.
Therefore, for development of law, requirement of
giving reasons for the decision is of the essence and
is virtually a part of "Due Process".
32
“48. For the reasons aforesaid, we set aside the order

of the National Consumer Disputes Redressal
Commission and remand the matter to the said
forum for deciding the matter by passing a reasoned
order in the light of the observations made above.
Since some time has elapsed, this Court requests the
forum to decide the matter as early as possible,
preferably within a period of six weeks from the date
of service of this order upon it.”
According to the learned Senior Counsel, reasons must be made
known even in the administrative decisions.
vii) “(2016) 1 High Court Cases (Del) 265 (Mahanivesh Oils
& Foods Private Limited versus Directorate of Enforcement)”,
wherein, the Delhi High Court has held in paragraphs 47 to 55 as
under:
“47. The next aspect that is to be examined is whether

the necessary conditions for passing the impugned order
under Section 5(1) had been met. As discussed
hereinbefore, a concerned officer (a Director or any other
officer not below the rank of Deputy Director, so
authorised by the Director) may order for provisional
attachment of property only where the twin conditions as
specified in Section 5(1)are satisfied, namely, the concerned
officer has reason to believe, on the basis of material in his
possession, that (i) any person is in possession of any
proceeds of crime; and (ii) such proceeds of crime are likely
to be concealed, transferred or dealt with in any manner
which may result in frustrating any proceedings relating to
confiscation of such proceeds of crime under Chapter III of
33
the Act. In addition, the concerned officer records the

reasons in writing.
48. In the present case, the respondent could not

point out any material to counter the petitioner's
contention that there was no material on record, which
could possibly lead to a belief that the petitioner is likely to
transfer or conceal the property in any manner. As
indicated earlier, the concerned officer must have a reason
to believe on the basis of material in his possession that
the property sought to be attached is likely to be
concealed, transferred or dealt with in a manner which
may result in frustrating any proceedings for confiscation
of their property under the Act.
49. The expression 'reason to believe' has been

defined under Section 26 of the Indian Penal Code as
under:-
"26. "Reason to believe".-A person is said to

have "reason to believe" a thing, if he has sufficient
cause to believe that thing but not otherwise."
50. Thus, on a plain reading of the aforesaid

definition, the Deputy Director, Directorate of Enforcement
- the concerned officer who passed the impugned order -
would require to have sufficient cause to believe that the
property sought to be attached would be transferred or
dealt with in a manner which would frustrate proceedings
relating to confiscation of such property. Further, the
officer was also required to record the reasons for such
belief. However, there is nothing in the impugned order,
which indicates that the concerned officer had any cause
to so believe.
51. The expression 'reason to believe' has also been

the subject matter of several decisions of the Supreme
Court albeit in the context of other laws. In the case of
Aslam Mohd. Merchant v. Competent Authority & Ors: (2008)
14 SCC 186, the Supreme Court considered the meaning
of the expression 'reason to believe' in the context of
34
Narcotic Drugs and Psychotropic Substances Act, 1985. The

Supreme Court referred to its earlier decisions rendered in
the context of Section 147 of the Income Tax Act, 1961
where a similar expression has been used to clothe an
Assessing Officer with the power to reopen income tax
assessments. In Phool Chand Bajrang Lal v. ITO: (1993) 203
ITR 456 (SC), the Supreme Court held as under:
"Since the belief is that of the Income- tax

Officer, the sufficiency of reasons for forming this
belief is not for the court to judge but it is open
to an assessee to establish that there in fact
existed no belief or that the belief was not at all a
bona fide one or was based on vague, irrelevant
and non- specific information. To that limited
extent, the court may look into the conclusion
arrived at by the Income-tax Officer and examine
whether there was any material available on the
record from which the requisite belief could be
formed by the Income-tax Officer and further
whether that material had any rational
connection or a live link for the formation of the
requisite belief."
52. In Income Tax Officer v. Lakhmani Mewal Das: 1976

SCR (3) 956, the Supreme Court explained that powers of
Income Tax Officer to reopen an assessment, though wide,
are not plenary as the words used are 'reason to believe'
and not 'reason to suspect'. The Court held that there
should be a "live link or close nexus" between the material
before the Income Tax Officer and the formation of his
belief that the income had escaped assessment.
53. In the present case, there is no material that

could suggest that the property sought to be attached was
likely to be dealt with in a manner which would frustrate
the confiscation of the property under the Act.
54. In Calcutta Discount Company v. Income Tax

Officer: 1961 SCR (2) 241, the Supreme Court held as
under:-
35
"The expression "reason to believe"

postulates belief and the existence of reasons for
that belief. The belief must be held in good faith:
it cannot be merely a pretence. The expression
does not mean a purely subjective satisfaction of
the Income Tax Officer: the forum of decision as
to the existence of reasons and the belief is not
in the mind of the Income Tax Officer. If it be
asserted that the Income Tax Officer had reason
to believe that income had been under assessed
by reason of failure to disclose fully and truly the
facts material for assessment, the existence of
the belief and the reasons for the belief, but not
the sufficiency of the reasons, will be justiciable.
The expression therefore predicates that the
Income Tax Officer holds the belief induced by
the existence of reasons for holding such belief.
It contemplates existence of reasons on which
the belief is founded, and not merely a belief in
the existence of reasons inducing the belief; in
other words, the Income Tax Officer must on
information at his disposal believe that income
has been under assessed by reason of failure
fully and truly to disclose all material facts
necessary for assessment. Such a belief, be it
said, may not be based on mere suspicion: it
must be founded upon information"
55. Although, the impugned order records that the

concerned officer has reason to believe that the property in
question is likely to be concealed, transferred or dealt with
in a manner, which may result in frustrating the
proceedings relating to confiscation of the said proceeds of
crime, there is no reference to any fact or material in the
impugned order which could lead to this inference. A mere
mechanical recording that the property is likely to be
concealed, transferred or dealt with would not meet the
requirements of Section 5(1) of the Act. Consequently, the
impugned order is likely to be set aside.”
36
The above case dealt with the same Act wherein, the High Court
has held that the Authority must record reason to believe that the
property in question is likely to be concealed, transferred or dealt
with in the manner, which may result in frustrating the proceedings
relating to confiscation of such property. There must be existence
of fact that the property is likely to be transferred, only then the
Authority could initiate proceedings under Section 5(1) of PMLA.
The High Court has also held that mere mechanical recording that
'the property is likely to be concealed, transferred or dealt with'
would not meet the requirements of Section 5(1) of PMLA. In the
said circumstances, the impugned orders before the High Court
came to be set aside. Therefore, for the same reasoning, the
learned Senior Counsel would submit that the impugned
proceedings before this Court, are liable to be set aside.
viii) “An unreported judgment of this Court in Crl.O.P.Nos.
10497 & 10500 of 2017, dated 13.7.2017 (Shri Ajay Kumar
Gupta versus Adjudicating Authority (PMLA), New Delhi and
others), wherein, a learned Judge of this Court has held that the
37
attachment under Section 5(1) of PMLA is not maintainable in view
of non recording of reasons. The relevant portion of the order of the
learned single Judge as found in paragraph 12 of the order is
extracted as under:
“12. From the above judgments and also the fact that
the offences allegedly committed by the first and second
petitioners prior to 1.7.2005, the Prevention of Money
Laundering Act was not in force. Even after 1.7.2005, the
offences were not included in the scheduled offences till
1.6.2009. Since the charge sheet dated 13.1.2009, even on
that date, Prevention of Corruption Act has not included in
the scheduled list of offences. Therefore, this court is of
the view that if retrospective effect is given to any statute
of any penal nature, it will be directly in conflict with the
fundamental rights of the citizen enshrined in Article 20(1)
of the Constitution of India. Admittedly, 2nd respondent
filed the case only based on the charge sheet of the CBI,
who have not conducted any enquiry on their own. In fact,
all the documents are original documents of the alleged
proceeds of crime, which are in the custody of the CBI
Court. When the entire documents are in the custody of
the Court, there cannot be any reason to believe that the
properties will be dealt with in any other manner. The
impugned order was as if 1st petitioner not able to offer
any satisfactory explanation during examination.
Therefore, the attachment officer has passed an order
without a reason to believe that the proceeds of crime are
likely to be transferred or disposal. In the absence of any
sufficient reason, arriving to such conclusion by mere
reproducing the words reason to believeµ it cannot be
stated that the order has been passed after considering the
entire gamut of materials. Admittedly, in this case, entire
documents are available and the properties are in the
custody of the court. Therefore, the order of attachment is
not maintainable.”
38
(ix) “(2008) 14 SCC 186 (Aslam Mohammad Merchant
versus Competent Authority and others)”, wherein, the learned
Senior Counsel would draw reference to paragraphs 39 to 41 and
46, 47 and 50 to 62, which are extracted hereunder:
“39. Section 68-H of the Act provides for two

statutory requirements on the part of the authority viz:
(i) he has to form an opinion in regard to his `reason to
believe'; and (ii) he must record reasons therefor.
40. Both the statutory elements, namely, `reason

to believe' and `recording of reasons' must be premised
on the materials produced before him. Such materials
must have been gathered during the investigation
carried out in terms of Section 68-E or otherwise.
Indisputably therefore, he must have some materials
before him. If no such material had been placed before
him, he cannot initiate a proceeding. He cannot issue a
show cause notice on his own ipse dixit. A roving enquiry
is not contemplated under the said Act as properties
sought to be forfeited must have a direct nexus with the
properties illegally acquired.
41. It is now a trite law that whenever a statute

provides for `reason to believe', either the reasons should
appear on the face of the notice or they must be
available on the materials which had been placed before
him.
42. to 45. …. … …
46. Fatima Mohd. Amin (supra) was followed by a

Bench of this Court in P.P. Abdulla Vs. Competent
Authority [(2007) 2 SCC 510], wherein it was observed :
"7. Learned counsel submitted that it has been

expressly stated in Section 6(1) that the reason
39
to believe of the competent authority must be

recorded in writing. In the counter-affidavit it
has also been stated in para 8 that the reasons
in the notice under Section 6(1)were recorded in
writing. In our opinion this is not sufficient.
Whenever the statute requires reasons to be
recorded in writing, then in our opinion it is
incumbent on the respondents to produce the
said reasons before the court so that the same
can be scrutinised in order to verify whether
they are relevant and germane or not. This can
be done either by annexing the copy of the
reasons along with the counter-affidavit or by
quoting the reasons somewhere in the counter-
affidavit. Alternatively, if the notice itself
contains the reason of belief, that notice can
be annexed to the counter-affidavit or quoted
in it. However, all that has not been done in
this case.
8. It must be stated that an order of
confiscation is a very stringent order and
hence a provision for confiscation has to be
construed strictly, and the statute must be
strictly complied with, otherwise the order
becomes illegal."
It was also observed:-
10. In the present case, in the notice dated
15-3-1988 issued to the appellant under
Section 6(1) of the Act (copy of which is annexed
as Annexure P-1 to this appeal), it has not
been alleged therein that there is any such link
or nexus between the property sought to be
forfeited and the alleged illegally acquired
money of the appellant."
47. In the final order, the rule of evidence as

envisaged under Section 68-I read with Section 68-J of the
Act must be applied. A person affected would be called
upon to discharge his burden provided a link or nexus is
40
traced between the holder of the property proceeded

against and an illegal activity of the detenu. Such a
formation of belief is essential.
“48. And 49. …. …. …
REASON TO BELIEVE
50. This brings us to the next question as to what

does the term "reason to believe" mean. We may in this
behalf notice some precedents operating in the field.
51. In the context of the provisions of Section 147

of the Income Tax Act, this Court in Phool Chand
Bajrang Lal Vs. ITO : [1993] 203 ITR 456] held:-
"From a combined review of the judgments of

this court, it follows that an Income-tax Officer
acquires jurisdiction to reopen an assessment
under section 147(a) read with section 148 of the
Income-tax Act, 1961, only if on the basis of
specific, reliable and relevant information
coming to his possession subsequently, he has
reasons, which he must record, to believe that,
by reason of omission or failure on the part of
the assessee to make a true and full disclosure
of all material facts necessary for his
assessment during the concluded assessment
proceedings, any part of his income, profits or
gains chargeable to income-tax has escaped
assessment. He may start reassessment
proceedings either because some fresh facts
had come to light which were not previously
disclosed or some information with regard to
the facts previously disclosed comes into his
possession which tends to expose the
untruthfulness of those facts. In such
situations, it is not a case of mere change of
opinion or the drawing of a different inference
from the same facts as were earlier available
but acting on fresh information. Since the
41
belief is that of the Income- tax Officer, the

sufficiency of reasons for forming this belief is
not for the court to judge but it is open to an
assessee to establish that there in fact existed
no belief or that the belief was not at all a bona
fide one or was based on vague, irrelevant and
non- specific information. To that limited
extent, the court may look into the conclusion
arrived at by the Income-tax Officer and
examine whether there was any material
available on the record from which the
requisite belief could be formed by the Income-
tax Officer and further whether that material
had any rational connection or a live link for
the formation of the requisite belief."
See also Income Tax Officer Vs. Lakshmani Mewal Das

[(1976) 103 ITR 437].
52. In Assistant Commissioner of Income Tax v. Rajesh

Jhaveri Stock Brokers Pvt. Ltd. [2007 (8) SCALE 396],
interpreting the term `reason to believe' as used under
Section 247 (a) of the Income Tax Act, 1961, it was
opined :
"To confer jurisdiction under Section 247(a) two

conditions were required to be satisfied firstly
the AO must have reason to believe that
income profits or gains chargeable to income
tax have escaped assessment, and secondly he
must also have reason to believe that such
escapement has occurred by reason of either (i)
omission or failure on the part of the assessee
to disclose fully or truly all material facts
necessary for his assessment of that year.
Both these conditions were conditions
precedent to be satisfied before the AO could
have jurisdiction to issue notice under Section
148 read with Section 147(a). But under the
substituted Section 147 existence of only the
first condition suffices. In other words, if the
42
assessing officer for whatever reason has

reason to believe that income has escaped
assessment, it confers jurisdiction to reopen
the assessment."
NON APPLICATION OF MIND
53. Applying these tests, it is evident that the

statutory requirements have not been fulfilled in the
present case.
54. Non- application of mind on the part of the

competent officer would also be evident from the fact
that a property named `Rose Villa' which was the subject
matter of the decision of this Court in Fatima Amin
(supra), was also included herein.
Once the show cause notice is found to be illegal, the

same would vitiate all subsequent proceedings.
55. In Dilip N. Shroff Vs. Joint Commissioner of

Income Tax, Mumbai and Another [(2007) 6 SCC 329],
this Court held:
"86. It is of some significance that in the

standard pro forma used by the assessing
officer in issuing a notice despite the fact that
the same postulates that inappropriate words
and paragraphs were to be deleted, but the
same had not been done. Thus, the assessing
officer himself was not sure as to whether he
had proceeded on the basis that the assessee
had concealed his income or he had furnished
inaccurate particulars. Even before us, the
learned Additional Solicitor General while
placing the order of assessment laid emphasis
that he had dealt with both the situations. The
impugned order, therefore, suffers from non-
application of mind. It was also bound to
comply with the principles of natural justice.
(See Malabar Industrial Co. Ltd. Vs. CIT)"
43
RECORDING OF REASONS
56. Submission of Mr. Singh that the appellants

have not been able to discharge the burden of proof
which was on them from the impugned orders, it would
appear that they have utterly failed to prove their own
independent income; they being close relative of the
detune as in terms of the statutory requirements , it was
for them to show that they had sufficient income from
those properties.
57.. Had the show cause notice been valid, Mr.

B.B. Singh, might have been right, but if the proceedings
themselves were not initiated validly, the competent
authority did not derive any jurisdiction to enter into the
merit of the matter.
58. Legality and/or validity of the notice had been

questioned at several stages of the proceedings. Despite
their asking, no reason was disclosed by the authority to
the appellants. They had asked for additional reasons, if
any, which were not reflected in the show cause notices.
None was disclosed.
59. It is also relevant to notice that the High Court

opined that there had been a proper application of mind
on the part of the Competent Authority and Appellate
Tribunal as they had released some items of properties.
Application of mind on the part of the Competent
Authority and the Appellate Tribunal at the subsequent
stage was not in question; what was in question was non
application of mind on the part of the authority prior to
issuance of the notice.
CONCLUSION
60.. We are not unmindful of the purport and

object of the Act. Dealing in narcotics is a social evil that
must be curtailed or prohibited at any cost. Chapter VA
seeks to achieve a salutary purpose. But, it must also be
borne in mind that right to hold property although no
44
longer a fundamental right is still a constitutional right.

It is a human right.
61. The provisions of the Act must be interpreted

in a manner so that its constitutionality is upheld. The
validity of the provisions might have received
constitutional protection, but when stringent laws
become applicable as a result whereof some persons are
to be deprived of his/her right in a property, scrupulous
compliance of the statutory requirements is imperative.
62. For the reasons aforementioned, the impugned

judgments cannot be sustained. They are set aside
accordingly. The appeals are allowed. However, it would
be open to the respondents to initiate fresh proceeding(s)
in accordance with law, if they are so advised. In the
facts and circumstances of the case, we make no order
as to costs.
The above judgment was rendered in the context of Narcotic Drugs
and Psychotropic Substance Act, 1985, wherein a similar provision
is existing. The Hon’ble Supreme Court has interfered with the
action initiated under PMLA that the statutory requirements have
not been fulfilled, namely, non-recording of the reasons and non-
application of mind, etc.
(x) “AIR 1967 SC 1269 (State of Orissa versus Dr.(Miss)
Binapani Dei and Others)”, wherein, reference is drawn to
paragraph 12 which is extracted as under:
45
“12. It is true that some preliminary enquiry

was made by Dr. S, Mitra. But the report of that Enquiry
Officer was never disclosed to the first respondent. 'The
rafter the first respondent was required to show cause why
April 16, 1907, should not be accept das the date of birth
and without recording any evidence the order was passed.
We think that such an enquiry and decision were contrary
to the basic concept of justice and cannot have any value.
It is true that the order is administrative in character, but
even an administrative order which involves civil
consequences as already stated must be made consistently
with the rules of natural justice after informing the first
respondent of the case of the State, the evidence in
support thereof and after giving an opportunity to the first
respondent of being heard and meeting or explaining the
evidence. No such steps were admittedly taken; the High
Court was, in our judgment, right in setting aside the order
of the State.”
In the above decision, the Hon’ble Supreme Court has held
that even in the administrative matters involving civil
consequences, the reasons must be stated.
(xi) “(1993) 4 SCC 10 (Rattan Lal Sharma versus Managing
Committee, Dr.Hari Ram (Co-Education) Higher Secondary
School and others)”, wherein, it has been held in paragraphs 9
and 10 as under:
“9.In Administrative Law, Rules of natural justice

are foundational and fundamental concepts and law is
now well settled that the principles of natural justice are
part of the legal and judicial procedures. On the
46
question whether the principles of natural justice are

also applicable to the administrative bodies, formerly,
the law courts in En-land and India had taken a
different view. It was held in Franklin v. Minister of
Town and Country Planning [1947] 2 All ER 289 that
the duty imposed on the minister was merely
administrative and not being judicial or quasi judicial,
the principle of natural justice as applicable to the
judicial or quasi judicial authorities was not applicable
and the only question which was required to be
considered was whether the Minister had complied with
the direction or not. Such view was also taken by the
Indian courts and reference may be made to the
decision of this Court inKishan Chand Arora v.
Commissioner of police, Calcutta [1961] 3 SCR 135. It
was held that the compulsion of hearing before passing
the order implied in the maxim audi alteram pertem
applied only to judicial or quasi-judicial proceedings.
Later on, the law courts in England and also in India
including this Court have specifically held that the
principle of natural justice is applicable also in
administrative proceedings. In Breen v. Amal ganaled
Engineering Union [1971] 1 All ER 1148 Lord Denning
emphasized that Statutory body is required to act fairly
in function whether administrative or judicial or quasi
judical Lord morris observed (as noted by this Court in
Maneka Gandhi's decision [1978] 2 SCR 625 that.
"We can think, take pride in what has been

done in recent periods and particularly in the
field of administrative law by invoking and by
applying these principles which we broadly
classify under the designation of natural
justice. Many testing problems as to their
application yet remain to be solved. But I
affirm that the area of administrative action
is but one area in which the principles are to
be deployed."
47
It may be indicated herein that the aforesaid

observation was quoted with approval by this Court in
the decision in Maneka Gandhi v. Union of India [1978] 2
SCR 62 1. In State of Orissa v. BinapaniDei [1967] 2
SCR 625, this Court also accepted the application of the
principle of natural justice in the order which is
administrative in character. It was observed by
Shah,J. :
"It is true that the order is administrative in

character, but even an administrative order
which involves civil consequences... must be
made consistently with the rules of natural
justice."
Similar view was also taken in A.K. Kraipak v. Union of

India & Ors. [1970] 1 SCR 457 and the observation of
Justice Hedge may be referred to
"Till very recently it was the opinion of the

courts that unless the authority concerned
was required by the law under which it
functioned to act judicially. there was no
room for the application of the rules of
natural justice. The validity of that limitation
is now questioned. If the purpose of the rules
of natural justice is to prevent miscarriage of
justice, one fails to see why those rules
should be made inapplicable to
administrative enquiries."
There are number of decisions where application of

principle of natural justice in the decision making
process of the administrative body having civil
consequence has been upheld by this Court but it is not
necessary to refer to all such decisions. Prof Wade in his
Administrative Law, (1988) at page 503, has very aptly
observed that the principles of natural justice are
applicable to almost the whole range of administrative
powers.
48
10. Since the rules of natural justice were not

emodied rules it is not possible and practicable to
precisely define the parameter of natural justice. In
Russel v. Duke of Norfold 19491 1 All ER 109 Tucker,
L.J. observed:
"There are, in my view no words which are of

universal application to every kind of inquiry
and the every kind of domestic tribunal. The
requirements of natural justice must depend
on the circumstances of the case, the nature
of the inquiry, the rules under which the
tribunal is acting, the subject-matter that is
being dealt with, and so forth."
It has been observed by this Court in Union of India v.

P.K. Roy. [1968] 2 SCR 186 that
"The extent and application of the doctrine of

natural justice cannot be imprisoned within
the strait-jacket of a rigid formula. The
application of the doctrine depends upon the
nature of the jurisdiction conferred on the
administrative authority, upon the character
of the rights of the persons affected, the
scheme and policy of the statute and other
relevant circumstances disclosed in the
particular case."
Similar view was also expressed in A.K Kraidak's case

(ibid). This Court observed:
"What particular rule of natural justice

should apply to a given case must depend to
a great extent on the facts and circumstances
of that case, the framework of the law under
which the enquiry is held and the
constitution of the Tribunal or body of
persons appointed for that purpose.
49
Whenever a complaint is made before a court

that some principle of natural justice had
been contravened, the court has to decide
whether the observance of that rule was
necessary for a just decision on the facts of
that case."
Prof. Wade in his Administrative Law has succinctly

summarised the principle of natural justice to the
following effect:
"It is not possible to lay down rigid rules as to

when the principles of natural justice are to
apply: not as to their scope and extent.
Everything depends on the subject matter, the
application for principles of natural justice,
resting as it does upon statutory implication,
must always be in conformity with the scheme
of the Act and with the subject- matter of the
case. In the application of the concept of fair
play there must be real flexibility. There must
also have been some real prejudice to the
complainant: there is no such thing as a
merely technical infringement of natural
justice. The requirements of natural justice
depend on the facts and the circumstances of
the case, the nature of the enquiry, the rules
under which the tribunal is acting, the
subject-matter to be dealt with, and so forth."
One of the cardinal principles of natural justice is :

Nemo debetesse judex in propria causa (No man shall
be a judge in his own cause). The deciding authority
must be impartial and without bias, It has been held by
this Court in Secretary to Government Transport
Department v. Munuswamy [1988] Suppl SCC 651 that a
predisposition to decide for or against one party without
50
proper regard to the true merits of the dispute is bias.

…”
(xii) “(2015) 8 SCC 519 (Dharampal Satyapal Limited
versus Deputy Commissioner of Central Excise, Gauhati and
others)”, wherein, the Hon’ble Supreme Court has held in
paragraphs 21 and 29 to 37 as under:
“21. In Common Law, the concept and doctrine of

natural justice, particularly which is made applicable in
the decision making by judicial and quasi- judicial
bodies, has assumed different connotation. It is
developed with this fundamental in mind that those
whose duty is to decide, must act judicially. They must
deal with the question referred both without bias and
they must given to each of the parties to adequately
present the case made. It is perceived that the practice of
aforesaid attributes in mind only would lead to doing
justice. Since these attributes are treated as natural or
fundamental, it is known as 'natural justice'. The
principles of natural justice developed over a period of
time and which is still in vogue and valid even today
were: (i) rule against bias, i.e. nemo iudex in causa sua;
and (ii) opportunity of being heard to the concerned
party, i.e. audi alteram partem. These are known as
principles of natural justice. To these principles a third
principle is added, which is of recent origin. It is duty to
give reasons in support of decision, namely, passing of a
'reasoned order'.
“ 22. to 28. …. …. ….
29. De Smith[8] captures the essence thus –
51
“Where a statute authorises interference with

properties or other rights and is silent on the
question of hearing, the courts would apply rule
of universal application and founded on
plainest principles of natural justice”.
“30. Wade[9] also emphasizes that principles of

natural justice operate as implied mandatory
requirements, non-observance of which invalidates the
exercise of power.
“31. In Cooper v. Sandworth Board of Works[10] the

Court laid down that: '...although there is no positive
word in the statute requiring that the party shall be
heard, yet justice of common law would supply the
omission of Legislature”.
“32. Exhaustive commentary explaining the varied

contours of this principle can be traced to the judgment
of this Court in Managing Director, ECIL, Hyderabad & Ors.
v. B. Karunakar & Ors.[11], wherein the Court discussed
plenty of previous case law in restating the aforesaid
principle, a glimpse whereof can be found in the following
passages:
“20. The origins of the law can also be traced to

the principles of natural justice, as developed in
the following cases: In A. K. Kraipak v. Union of
India, (1969) 2 SCC 262 : (1970) 1 SCR 457, it
was held that the rules of natural justice
operate in areas not covered by any law. They do
not supplant the law of the land but supplement
it. They are not embodied rules and their aim is
to secure justice or to prevent miscarriage of
justice. If that is their purpose, there is no
reason why they should not be made applicable
to administrative proceedings also especially
when it is not easy to draw the line that
demarcates administrative enquiries from quasi-
judicial ones. An unjust decision in an
administrative inquiry may have a more far
52
reaching effect than a decision in a quasi-

judicial inquiry. It was further observed that the
concept of natural justice has undergone a great
deal of change in recent years. What particular
rule of natural justice should apply to a given
case must depend to a great extent on the facts
and circumstances of that case, the framework
of the law under which the inquiry is held and
the constitution of the tribunal or the body of
persons appointed for that purpose. Whenever a
complaint is made before a Court that some
principle of natural justice has been
contravened, the Court has to decide whether
the observance of that rule was necessary for a
just decision on the facts of that case. The rule
that inquiry must be held in good faith and
without bias and not arbitrarily or unreasonably
is now included among the principles of natural
justice.
21. In Chairman, Board of Mining Examination v.

Ramjee, (1977) 2 SCC 256, the Court has
observed that natural justice is not an unruly
horse, no lurking landmine, nor a judicial cure-
all. If fairness is shown by the decision-maker to
the man proceeded against, the form, features
and the fundamentals of such essential
processual propriety being conditioned by the
facts and circumstances of each situation, no
breach of natural justice can be complained of.
Unnatural expansion of natural justice, without
reference to the administrative realities and
other factors of a given case, can be
exasperating. The Courts cannot look at law in
the abstract or natural justice as mere artifact.
Nor can they fit into a rigid mould the concept of
reasonable opportunity. If the totality of
circumstances satisfies the Court that the party
visited with adverse order has not suffered from
denial of reasonable opportunity, the Court will
53
decline to be punctilious or fanatical as if the

rules of natural justice were sacred scriptures.
22. In Institute of Chartered Accountants of India v.

L. K. Ratna, (1986) 4 SCC 537, Charan Lal Sahu v.
Union of India, (1990) 1 SCC 613 (Bhopal Gas
Leak Disaster Case) and C. B. Gautam v. Union
of India, (1993) 1 SCC 78, the doctrine that the
principles of natural justice must be applied in
the unoccupied interstices of the statute unless
there is a clear mandate to the contrary, is
reiterated.”
“33. In his separate opinion, concurring on this

fundamental issue, Justice K. Ramaswamy echoed the
aforesaid sentiments in the following words:
“61. It is now settled law that the proceedings

must be just, fair and reasonable and negation
thereof offends Articles 14 and 21. It is well
settled law that principles of natural justice are
integral part of Article14. No decision prejudicial
to a party should be taken without affording an
opportunity or supplying the material which is
the basis for the decision. The enquiry report
constitutes fresh material which has great
persuasive force or effect on the mind of the
disciplinary authority. The supply of the report
along with the final order is like a post mortem
certificate with putrefying odour. The failure to
supply copy thereof to the delinquent would be
unfair procedure offending not only Arts. 14, 21
and 311(2) of the Constitution, but also, the
principles of natural justice.”
“34. Likewise, in C.B. Gautam v. Union of India & Ors.

[12], this Court once again held that principle of natural
justice was applicable even though it was not statutorily
required. The Court took the view that even in the
absence of statutory provision to this effect, the authority
was liable to give notice to the affected parties while
54
purchasing their properties under Section 269-UD of the

Income Tax Act, 1961. It was further observed that
“30. …. The very fact that an imputation of

tax evasion arises where an order for
compulsory purchase is made and such an
imputation casts a slur on the parties to the
agreement to sell leads to the conclusion that
before such an imputation can be made against
the parties concerned they must be given an
opportunity to show-cause that the under
valuation in the agreement for sale was not with
a view to evade tax.
It is, therefore, all the more necessary that an

opportunity of hearing is provided.
“35. From the aforesaid discussion, it becomes clear

that the opportunity to provide hearing before making
any decision was considered to be a basic requirement in
the Court proceeding. Later on, this principle was applied
to other quasi-judicial authorities and other tribunals
and ultimately it is now clearly laid down that even in the
administrative actions, where the decision of the
authority may result in civil consequences, a hearing
before taking a decision is necessary. It was, thus,
observed in A.K. Kraipak's case (supra) that if the
purpose of rules of natural justice is to prevent
miscarriage of justice, one fails to see how these rules
should not be made available to administrative inquiries.
In the case of Maneka Gandhi v. Union of India & Anr.[13]
also the application of principle of natural justice was
extended to the administrative action of the State and its
authorities. It is, thus, clear that before taking an action,
service of notice and giving of hearing to the noticee is
required. In Maharashtra State Financial Corporation v. M/s.
Suvarna Board Mills & Anr.[14], this aspect was explained
in the following manner:
“3. It has been contended before us by the

learned counsel for the appellant that principles
55
of natural justice were satisfied before taking

action under Section 29, assuming that it was
necessary to do so. Let it be seen whether it was
so. It is well settled that natural justice cannot
be placed in a straight-jacket; its rules are not
embodied and they do vary from case to case and
from one fact-situation to another. All that has to
be seen is that no adverse civil consequences are
allowed to ensue before one is put on notice that
the consequence would follow if he would not
take care of the lapse, because of which the
action as made known is contemplated. No
particular form of notice is the demand of law:
All will depend on facts and circumstances of the
case.”
“36. In East India Commercial Company Ltd., Calcutta &

Anr. v. The Collector of Customs, Calcutta[15], this Court
held that whether the statute provides for notice or not, it
is incumbent upon the quasi-judicial authority to issue a
notice to the concerned persons disclosing the
circumstances under which proceedings are sought to be
initiated against them, failing which the conclusion would
be that principle of natural justice are violated. To the
same effect are the following judgments:
a) U.O.I. & Ors. v. Madhumilan Syntex Pvt. Ltd. &

Anr.[16]
b) Morarji Goculdas B&W Co. Ltd. & Anr. v. U.O.I. &

Ors.[17]
c) Metal Forgings & Anr. v. U.O.I. & Ors.[18]
d) U.O.I. & Ors. v. Tata Yodogawa Ltd. & Anr.[19]
"37. Therefore, we are inclined to hold that there

was a requirement of issuance of show-cause notice by
the Deputy Commissioner before passing the order of
recovery, irrespective of the fact whether Section 11A of
the Act is attracted in the instant case or not.”
56
10. Mr.P.Wilson, learned Senior Counsel being fortified by the
above decisions of Delhi High Court and the Hon’ble Supreme
Court of India, would submit that the reasons to be recorded as
provided under the provisions of PMLA, is a mandatory requirement
and the Hon’ble Supreme Court of India as well as Delhi High
Court have held that the reasons must disclose the mind of the
Authority who initiated the action and mere expression “reason to
believe” cannot be accepted as fulfillment of requirement of the
provisions of PMLA as held by the Hon’ble Supreme Court and
Delhi High Court.
11. The learned Senior Counsel would therefore submit that
from the order passed by the first respondent under Section 5(1) of
PMLA, it could be seen that nowhere, it is mentioned in the order
that proceeds of the crime are likely to be concealed or transferred
or dealt with in any manner which may result in frustrating any
proceedings relating to confiscation of such proceeds of crime
57
under this Chapter. In the absence of such reasons being found in
the provisional order, the further action initiated under Section 5(5)
and 8(1) of PMLA deemed to be without jurisdiction. He would
submit that one of the hallmark of principles of natural justice
evolved by the Courts and as held by the Hon’ble Supreme Court of
India in the above cited decisions is, to give reasons and in the
absence of reasons in the impugned order of provisional
attachment, the action initiated under Section 5(1) of PMLA is liable
to be interfered with being violative of not only the provisions of
PMLA, but also violative of the established principles of natural
justice.
Issue No.(iv)
The Adjudicating Authority shall

consist of Chair-Person and two other
Members under Section 6(2) of PMLA.
Presently, the Adjudicating Authority has
only one Member and therefore, whether
the action initiated by the Adjudicating
Authority suffers from coram non judice?
58
12. The learned Senior Counsel would draw the attention of
this Court to Section 6 of PMLA, which reads as under:
“6. Adjudicating Authorities, composition,

powers, etc.-(l) The Central Government shall, by
notification, appoint an Adjudicating Authority to
exercise jurisdiction, powers and authority conferred by
or under this Act.
(2) An Adjudicating Authority shall consist of a

Chairperson and two other Members: Provided that one
Member each shall be a person having experience in
the field of law, administration, finance or accountancy.
(3) A person shall, however, not be qualified for

appointment as Member of an Adjudicating Authority,-
(a) in the field of law, unless he-
(i) is qualified for appointment as District Judge;

or (ii) has been a member of the Indian Legal Service
and has held a post in Grade I of that service;
(b) in the field of finance, accountancy or

administration unless he possesses such qualifications,
as may be prescribed.
(4) The Central Government shall appoint a

Member to be the Chairperson of the Adjudicating
Authority.
(5) Subject to the provisions of this Act,-
(a) the jurisdiction of the Adjudicating Authority

may be exercised by Benches thereof;
(b) a Bench may be constituted by the Chairperson

of the Adjudicating Authority with one or two Members
as the Chairperson of the Adjudicating Authority may
deem fit;
59
(c) the Benches of the Adjudicating Authority shall

ordinarily sit at New Delhi and such other places as the
Central Government may, in consultation with the
Chairperson by notification, specify;
(d) the Central Government shall, by notification,

specify the areas in relation to which each Bench of the
Adjudicating Authority may exercise jurisdiction.
(6) Notwithstanding anything contained in sub-

section (5), the Chairperson may transfer a Member
from one Bench to another Bench.
(7) If at any stage of the hearing of any case or

matter it appears to the Chairperson or a Member that
the case or matter is of such a nature that it ought to
be heard by a Bench consisting of two Members, the
case or matter may be transferred by the Chairperson
or, as the case may be, referred to him for transfer, to
such Bench as the Chairperson may deem fit.
(8) The Chairperson and every Member shall hold

office as such for a term of five years from the date on
which he enters upon his office: Provided that no
Chairperson or other Member shall hold office as such
after he has attained the age of sixty-five years.
(9) The salary and allowances payable to and the

other terms and conditions of service of the Member
shall be such as may be prescribed: Provided that
neither the salary and allowances nor the other terms
and conditions of service of the Member shall be varied
to his disadvantage after appointment.
(10) If, for reasons other than temporary absence,

any vacancy occurs in the office of the Chairperson or
any other Member, then the Central Government shall
appoint another person in accordance with the
provisions of this Act to fill the vacancy and the
proceedings may be continued before the Adjudicating
Authority from the stage at which the vacancy is filled.
60
(11) The Chairperson or any other Member may, by

notice in writing under his hand addressed to the
Central Government, resign his office: Provided that the
Chairperson or any other Member shall, unless he is
permitted by the Central Government or relinquish his
office sooner, continue to hold office until the expiry of
three months from the date of receipt of such notice or
until a person duly appointed as his successor enters
upon his office or until the expiry of his term of office,
whichever is the earliest.
(12) The Chairperson or any other Members shall

not be removed from his office except by an order made
by the Central Government after giving necessary
opportunity of hearing.
(13) In the event of the occurrence of any vacancy

in the office of the Chairperson by reason of his death,
resignation or otherwise, the senior-most Member shall
act as the Chairperson of the Adjudicating Authority
until the date on which a new Chairperson appointed
in accordance with the provisions of this Act to fill such
vacancy, enters upon his office.
(14) When the Chairperson of the Adjudicating

Authority is unable to discharge his functions owing to
absence, illness or any other cause, the senior- most
Member shall discharge the functions of the
Chairperson of the Adjudicating Authority until the
date on which the Chairperson of the Adjudicating
Authority resumes his duties.
(15) The Adjudicating Authority shall not be bound

by the procedure laid down by the Code of Civil
Procedure, 1908, (5 of 1908) but shall be guided by the
principles of natural justice and, subject to the other
provisions of this Act, the Adjudicating Authority shall
have powers to regulate its own procedure,”
61
13. According to the learned Senior Counsel, Sub Clause 2 of
Section 6 provides for constitution of Adjudicating Authority which
shall consist of a Chairperson and two other Members. He would
also rely upon Sub Clause 3 of Section 6 which provide for
qualification of Members. He would also rely on Sub Clause 10 of
Section 6, that in case of any vacancy occurred, the proceedings
will have to be commenced only after the vacancies are filled up.
He would also draw the attention of this Court to various provisions
as contained in the Rules, namely, The Adjudicating Authority
(Procedure) Regulations, 2013 to emphasize the fact that it is a full-
fledged judicial enquiry and therefore, the Coram as provided under
Section 6(2) of PMLA has to be mandatorily followed and in the
absence of Coram, impugned show cause notice issued by the
second respondent is without jurisdiction.
14. While contending that the Coram as prescribed under
Section 6 of PMLA is non-negotiable and the Coram must be vital at
all times for proceeding under PMLA. The learned Senior Counsel
62
would rely on a decision of the Hon’ble Supreme Court reported in
“(2008) 14 SCC 107 (Pareena Swarup versus Union of India)”.
The learned Senior Counsel would submit that the Hon’ble
Supreme Court while dealing with the challenge to the validity of
PMLA, has suggested several changes in the original Act and on the
basis of its suggestion, the Government of India, has made several
amendments in line with the thinking of the Hon’ble Supreme
Court of India. Originally PMLA, particularly while dealing with the
appointment of Adjudicating Authority or the Tribunal, the
executive had a predominant role in selection and appointment of
members. It was, therefore, felt that judicial function cannot be
ceded to the executive. In the said circumstances, an elaborate
exercise has been done by the Hon’ble Supreme Court for the
reason that the proceedings under PMLA by the Adjudicating
Authority is a full-fledged judicial proceedings.
15. The learned Senior Counsel would draw the various
observations of the Hon’ble Supreme Court in the above said
63
decision, upholding the independent and impartiality of the
Tribunals. He would rely on the decision extensively in order to
highlight the points that made the present Act evolved and
amended at the instance of the Hon’ble Supreme Court itself. In
order to appreciate his arguments, it is necessary to understand
the history of the present legislation under consideration to extract
the reasoning and suggestions and subsequent amendments which
are found in paragraphs 2 to 12, which are extracted hereunder:
2) Brief facts in a nutshell are:

The Prevention of Money Laundering Act, 2002
(hereinafter referred to as "the Act") was introduced for
providing punishment for offence of Money Laundering.
The Act also provides measures of prevention of money
laundering. The object sought to be achieved is by
provisional attachment of the proceeds of crime, which
are likely to be concealed, transferred or dealt with in
any manner which may result in frustrating any
proceedings relating to confiscation of such proceeds
under the Act. The Act also casts obligations on banking
companies, financial institutions and intermediaries to
maintain record of the transactions and to furnish
information of such transactions within the prescribed
time.
64
3. In exercise of powers conferred by clause (s) of

sub-section (2) of Section 73 read with Section 30 of the
Prevention of Money- Laundering Act, 2002 (15 of 2003),
the Central Government framed rules regulating the
appointment and conditions of service of persons
appointed as Chairperson and Members of the Appellate
Tribunal. These rules are the Prevention of Money-
Laundering (Appointment and Conditions of Service of
Chairperson and Members of Appellate Tribunal) Rules,
2007. The Central Government has also framed rules
called the Prevention of Money Laundering (Appointment
and Conditions of Service of Chairperson and Members
of Adjudicating Authorities) Rules, 2007.
4) It is highlighted that the provisions of the Act are

so provided that there may not be independent judiciary
to decide the cases under the Act but the Members and
the Chairperson are to be selected by the Selection
Committee headed by the Revenue Secretary. It is
further pointed out that the Constitutional guarantee of
a free and independent judiciary, and the constitutional
scheme of separation of powers can be easily and
seriously undermined, if the legislatures were to divest
the regular Courts of their jurisdiction in all matters,
entrust the same to the newly created Tribunals.
5. According to the petitioner, the statutory
provisions of the Act and the Rules, more particularly,
65
relating to constitution of Adjudicating Authority and

Appellate Tribunal are violative of basic constitutional
guarantee of free and independent judiciary, therefore,
beyond the legislative competence of the Parliament. The
freedom from control and potential domination of the
executive are necessary pre- conditions for the
independence. With these and various other grounds,
the petitioner has filed this public interest litigation
seeking to issue a writ of certiorari for quashing the
abovesaid provisions which are inconsistent with the
separation of power and interference with the judicial
functioning of the Tribunal as ultra vires of the
Constitution of India.
6) The respondent-Union of India has filed counter

affidavit repudiating the claim of the petitioner. The
Department highlighted that the impugned Act has not
ousted the jurisdiction of any courts and sufficient
safeguards are provided in the appointment of officers of
the Adjudicating Authorities, Members and Chairperson
of the Appellate Tribunal.
7) We have carefully verified the provisions of the
Act and the Rules, particularly, relating to constitution
and selection of Adjudicating Authorities, Members and
Chairperson of the Appellate Tribunal. Considering the
stand taken by the petitioner with reference to those
provisions, we requested Mr. K.K. Venugopal, learned
66
senior counsel, to assist the Court. Pursuant to the

suggestion made by the Court, Mr. K.K. Venugopal and
Mr. Gopal Subramaniam, learned Additional Solicitor
General, discussed the above issues and by consensus
submitted certain proposals.
8) The petitioner has highlighted the following
defects in the Adjudicating Authority Rules, 2007 and
the Appellate Tribunal Rules, 2007:-
1 Rule 3(3) of Adjudicating Authority Rules, 2007 does not

explicitly specify the qualifications of member from the field
of finance or accountancy.
2 Rule 4 of Appellate Tribunal Rules, 2007 which provided

for Method of Appointment of Chairperson do not give
adequate control to Judiciary.
3 Rule 6(1) of Appellate Tribunal Rules, 2007 which defines

the Selection Committee for recommending appointment of
Members of the Tribunal, would undermine the
constitutional scheme of separation of powers between
judiciary and executives.
4 Rule 32(2) of PMLA which provides for removal of

Chairperson/Members of Tribunal under PMLA does not
provide adequate safety to the tenure of the
Chairperson/Members of the Tribunal.
67
5 Rule 6(2) of Appellate Tribunal Rules is vague to the extent

that it provides for recommending names after "inviting
applications thereof by advertisement or on the
recommendations of the appropriate authorities."
6 Section 28(1) of PMLA, which allows a person who "is

qualified to be a judge of the High Court" to be the
Chairperson of the Tribunal, should be either deleted or the
Rules may be amended to provide that the Chief Justice of
India shall nominate a person for appointment as
Chairperson of Appellate Tribunal under PMLA "who is or
has been a Judge of the Supreme Court or a High Court"
failing which a person who "is qualified to be a judge of the
High Court."
7 The qualifications for Legal Member of the Adjudicating

Authority should exclude "those who are qualified to be a
District Judge" and only serving or retired District Judges
should be appointed. The Chairperson of the Adjudicating
Authority should be the Legal member.
As regards the above defects in the rules, as observed

earlier, on the request of this Court, Mr.K.K. Venugopal,
learned senior counsel, Mr. Gopal Subramaniam,
learned ASG as well as Ms.Pareena Swarup who has
filed this PIL suggested certain amendments in the line
of the constitutional provisions as interpreted by this
Court in various decisions.
9) It is necessary that the Court may draw a line
which the executive may not cross in their misguided
desire to take over bit by bit and judicial functions and
powers of the State exercised by the duly constituted
68
Courts. While creating new avenue of judicial forums, it

is the duty of the Government to see that they are not in
breach of basic constitutional scheme of separation of
powers and independence of the judicial function. We
agree with the apprehension of the petitioner that the
provisions of Prevention of the Money Laundering Act are
so provided that there may not be independent judiciary
to decide the cases under the Act but the Members and
the Chairperson to be selected by the Selection
Committee headed by Revenue Secretary.
10. It is to be noted that this Court in the case of
L. Chandra Kumar vs. Union of India and Ors.,
(1997) 3 SCC 261 has laid down that power of judicial
review over legislative action vested in the High Courts
under Article 226 as well as in this Court under Article
32 of the Constitution is an integral and essential
feature of the Constitution constituting part of the its
structure. The Constitution guarantees free and
independent judiciary and the constitutional scheme of
separation of powers can be easily and seriously
undermined, if the legislatures were to divest the regular
courts of their jurisdiction in all matters, entrust the
same to the newly created Tribunals which are not
entitled to protection similar to the constitutional
protection afforded to the regular Courts. The
independence and impartiality which are to be secured
not only for the Court but also for Tribunals and their
69
members, though they do not belong to the `Judicial

Service' are entrusted with judicial powers. The
safeguards which ensure independence and impartiality
are not for promoting personal prestige of the
functionary but for preserving and protecting the rights
of the citizens and other persons who are subject to the
jurisdiction of the Tribunal and for ensuring that such
Tribunal will be able to command the confidence of the
public. Freedom from control and potential domination
of the executive are necessary pre-conditions for the
independence and impartiality of judges. To make it
clear that a judiciary free from control by the Executive
and Legislature is essential if there is a right to have
claims decided by Judges who are free from potential
domination by other branches of Government. With this
background, let us consider the defects pointed out by
the petitioner and amended/proposed provisions of the
Act and the Rules.
11) Mr. Gopal Subramaniam has informed this

Court that the suggested actions have been completed
by amending the Rules. Even other wise, according to
him, the proposed suggestions formulated by Mr. K.K.
Venugopal would be incorporated on disposal of the
above writ petition. For convenience, let us refer the
doubts raised by the petitioner and amended/proposed
70
provisions as well as the remarks of the department in

complying with the same.
S.No Issues Amended/Proposed provision Remarks

1. Rule 3(3) of Adjudicating Rule 3(3) of Adjudicating Authority Action
Authority Rules, 2007 does not Rules, 2007 have been amended to
explicitly specify the specify the ‘academic qualification’ for completed.
qualifications of member from the Member from the field of finance
Amended
the field of finance or and accounting by inserting a subclause
accountancy. (b) as follows: Rule as per
“(b) From among such persons, the annexure A
Selection Committee shall have due
regard to the academic qualifications of
chartered accountancy or a degree in
finance, economics or accountancy or
having special experience in finance or
accounts by virtue of having worked for
at least two years in the finance or
revenue department of either the
Central Government or a State
Government or being incharge of the
finance or accounting wing of a
corporation for a like period.”
2. Rule 4 of Appellate Tribunal Rule 4 of Appellate Tribunal Rules, 2007 Action
Rules, 2007 which provided for has been amended to unambiguously
Method of Appointment of provide that the appointment of completed.
Chairperson do not give Chairperson shall be made on the
Amended
adequate control to Judiciary. recommendation of the Chief Justice of
India. Rule as per
annexure B
71
3. Rule 6(1) of Appellate Tribunal Rule 6(1) of Appellate Tribunal Rules, Action
Rules, 2007 which defines the 2007 has been amended to provide that
Selection Committee for the Chairperson of Appellate Tribunal is completed.
recommending appointment of appointed on the recommendation of
Amended
Members of the Tribunal, the CJI and
would undermine the Rule as per
constitutional scheme of the composition of the Selection
separation of powers between Committee to select Members of the annexure C
judiciary and Tribunal has been amended to provide
for a Judge of the Supreme Court,
executives. nominated by the Chief Justice of India,
to be the Chairperson of the Selection
Committee.
4. Rule 32(2) of PMLA which Appropriate amendment to the Statute Draft Bill is
provides for removal of is being proposed to unambiguously
Chairperson/Members of provide that Chairperson/Members under
Tribunal under PMLA does not appointed in consultation with Chief
preparation.
Justice of India, shall not be removed
provide adequate safety to the without mandatory consultation with
tenure of the Chairperson/ Chief Justice of India.
members of the
Tribunal.
5. Rule 6(2) of Appellate Tribunal Rule 6(2) of the Appellate Tribunal May be
Rules is vague to the extent Rules, 2007 may be amended to delete
that it provides for the words “or on recommendation of deleted.
recommending names after the appropriate authorities”, a proposal
“inviting applications thereof endorsed by ASG, Shri Gopal
by advertisement or on the Subramaniam.
recommendations of the
appropriate authorities.”
72
6. Section 28(1) of PMLA, which There are several Acts under which There is no
allows a person who “is Judges and those ‘qualified to be a
qualified to be a judge of the judge’ are equally eligible for selection requirement
High Court” to be the like for Chairman under NDPS Act and
to amend
Chairperson of the Tribunal, SAFEMA; Judicial member under
should be either deleted or the Administrative Tribunal Act; Chairperson either the
Rules may be amended to under FEMA etc. The eligibility criteria,
provide that the Chief Justice for appointment as a judge of a High Statute or
Court, provided in the Constitution of
of India shall nominate a India under Article 217(2)(b), is that the the Rules.
person for appointment as person should have been “for at least 10
Chairperson or Appellate years as an advocate of a High Court…”
Tribunal under PMLA “who is or Furthermore, since appointment of
has been a Judge of the
Supreme Court or a High Chairperson of the Tribunal under PMLA
Court” failing which a person is to be made on the recommendation of
who “is qualified to be a judge CJI, it is expected that an independent
of the High Court.” person would be appointed to head the
Appellate Tribunal.
73
7. The qualifications for Legal 1. Persons ‘qualified to be a district There is no

Member of the Adjudicating Judge’ are treated at par with District
Authority should exclude Judges for the purposes of qualification requirement
“those who are qualified to be for appointment as member in ATFE
to amend
a District Judge” and only under FEMA; as President of District
serving or retired District Forum under Consumer Protection Act, either the
Judges should be appointed. 1986 etc. The eligibility criterion, for
The Chairperson of the appointment as a District Judge, Statute or
Adjudicating Authority should provided in the Constitution of India
be the Legal member. under Article 233(2), is that the person the Rules.
should have been an advocate “for not
less than seven years”.
2. PMLA is a specialized and new Act

and District Judges may not be available
with experience in related issues
whereas Advocates or officers of Indian
Legal Service, who are eligible to be
District Judges, may often have greater
knowledge of its provisions and working.
3. 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.
4. Adjudication is a function which is

performed by Executives under many
statutes. The Competent Authority
under NDPS/SAFEMA have been
conducting Adjudication proceedings
routinely since 1978
12) Inasmuch as the amended/proposed

provisions, as mentioned in para 9, are in tune with the
scheme of the Constitution as well as the principles laid
down by this Court, we approve the same and direct the
74
respondent-Union of India to implement the above

provisions, if not so far amended as suggested, as
expeditiously as possible but not later than six months
from the date of receipt of copy of this judgment. The
writ petition is disposed of accordingly. No costs. This
Court records its appreciation for the valuable
assistance rendered by Mr. K.K. Venugopal, learned
senior counsel and Mr. Gopal Subramaniam, learned
Addl. Solicitor General.”
16. The learned Senior Counsel would also rely upon a
decision reported in “(1995) 5 SCC 159 (Karnal Improvement
Trust, Karnal versus Parkash Wanti (smt) (Dead) and
another)”, wherein, he would particularly rely upon paragraph 12
of the judgment, which is extracted as under:
“12. The question thus arises whether the

function by the Tribunal as a body is mandatory or
directory? The discharge of the duties under the Act are
quasi-judicial. The power to determine compensation
and other questions involves adjudication. The
discharge of the functions by the Tribunal being quasi-
judicial cannot be regarded as ministerial. When the
statute directs the Tribunal consisting of three members
to determine compensation etc., and' designates the
award as judgment and decree of the civil court, it
cannot be held that the quasi-judicial functions of the
Tribunal would be considered as directory, defeating the
very purpose of the Act. Though inconvenience and
delay may occasion in some cases by holding the
75
provisions to be mandatory, but that is an inescapable

consequence. In the light of the aforesaid discussion, it
must be held that the adjudication by the three-member
Tribunal is imperative and mandatory. Determination of
the compensation in disregard thereof renders the
adjudication void, invalid and in operative."
The above decision is with regard to the constitution of Land
Acquisition Tribunal by the Punjab and Haryana Government,
wherein, PMLA provided for three Member Bench and in that
context, the Hon’ble Supreme Court held that the adjudication by
three Member is imperative and mandatory. The Hon’ble Supreme
Court has given several reasons for analyzing the particular act.
Drawing analogy from the above paragraph, the learned Senior
Counsel would submit that even in these cases, three Member
Adjudicating Authority is mandatory and such requirement cannot
be dispensed with under any circumstances.
17. The learned Senior Counsel would further draw the
attention of this Court to a decision of the Punjab and Haryana
High Court, reported in “MANU/PH/2012/2008 (Jalandhar
76
Improvement Trust, Jalandhar versus Improvement Trust
Tribunal, Jalandhar and others)”, wherein, it has been held that
the Tribunal constituted under the Punjab Town Improvement Act,
1922 suffered from coram non-judice and such coram is mandatory
and not directory in nature. Relevant paragraph 5 is extracted as
under:
"5. As the constitution of Tribunal suffered from

coram non-judice and the provisions of Section 60 of
the Act have been held to be mandatory and not
directory in nature, unlike the ratio of judgment in
Montreal Street Railway Company's case rendered by
Privy Council in a similar situation, the inescapable
consequence would be to set aside the impugned award
and remit all these cases to a properly constituted
Tribunal in terms of Section 60 of the Act.
18. Applying the same principle of Coram non-judice, the
learned Senior Counsel would also rely on a decision reported in
"2015 SCC OnLine Cal 6494 (Md.Tamijul Haque versus
Md.Tahammul Haque and Others)", wherein, the Calcutta High
Court has held that Wakf Tribunal constituted by two Members
suffers from Coram non-judice as statute requires three Member
Tribunal. He would further add that another High Court, namely,
77
Gujarat High Court, in an unreported order dated 9.3.2016 in "SCA
10573 of 2015 (Gujarat Enviro Protectio and Infrastructure
Ltd. & others versus Union of India and others)" under similar
circumstances, has passed interim orders as found in paragraphs 2
to 4 of the order, which are extracted hereunder:
"2. The Adjudicating Authority under the

Prevention of Money Laundering Act, 2002 is seized of
the matter of the petitioner, in the process of
adjudication under Section 8 of the Act to confirm
the order of provisional attachment passed
under Section 5 by the authority below. In
the said proceedings, petitioner wanted right to
HC-NIC Page 3 of 7 Created On Mon Mar 14 01:12:29
IST 2016 C/SCA/10573/2015 ORDER cross-
examination and further wanted copies of certain
documents. The request of cross-examination is
refused by the Adjudicating Authority on the
ground that the stage under Section 8(6) has not
reached and therefore, question of cross-
examination of the witnesses does not arise. It
has also refused the request for supply of documents
for the reasons stated in the order-cum-note on
proceedings dated 23rd June, 2015. It was submitted
that adjudication under Section 8 is a quasi judicial
proceedings. The matter is stated to be posted
next on 03rd July, 2015.
3. While the aforesaid facts emerged from

the record, considering the submission that the
Adjudicating Authority is not duly constituted
under sub-section (2) of Section 6 of the Act and
it has been functioning with only one Executive
Member, therefore suffering from infirmity of
coram non judice, further considering the fact
that similar contention about constitution of
78
Adjudicating Authority was raised in Special Civil

Application No.13949 of 2014 and entertained for
notice, let there be Notice in this matter,
returnable on 09th July, 2015.
4. Till the next date the Adjudicating

Authority is directed not to pass any orders and shall
adjourn the proceedings."
19. As a matter of fact, the learned Senior Counsel would
draw the attention of this Court to two interim orders passed by a
learned Judge of this Court in W.P.No.19432 & 20957 of 2017,
dated 28.7.2017 and W.P.No.19611 of 2017 & WMP No.21174 of
2017, dated 1.8.2017 one after the other, as under:
W.P.No.19432 & 20957 of 2017, dated 28.7.2017:
“5. In view of the submissions made by the learned

counsel on either side, prima facie, I am of the view that
the provisions of Section 6(2) 5(b) would establish that
the adjudicating authority shall consist of a Chairperson
and either one or two members. Since the proceedings
are conducted by a single Member, I am of the
considered view that further proceedings should not be
allowed to continue until further orders.
“6. In view of the above, there shall be an order of

interim injunction as prayed for until further orders. It
is made clear that the period pursuant to the interim
order shall not be taken into consideration to the
purpose of computation of the period of 180 days as
envisaged under Section 5(1) of the Act.”
79
W.P.No.21174 of 2017, dated 1.8.2017:
"Mr.N.Ramesh, learned Standing Counsel,

takes notice for the respondents and sought four
weeks time for filing counter.
2. The learned counsel appearing for the

petitioners submitted that a similar issue came up
before this Court on 28.07.2017 in W.P.No.19432 of
2017 and W.M.P.No.20957 of 207, wherein, this
Court taking into consideration the submissions
made by the learned counsel on either side, granted
an order of interim injunction as prayed for until
further orders.
3. Following the order passed in the said writ

petition, there shall be an order of interim injunction
as prayed for until further orders. It is made clear
that the period pursuant to this interim order shall
not be taken into consideration for the purpose of
computation of the period of 180 days as envisaged
under Section 5(1) of the Prevention of Money
Laundering Act, 2002.
Post after four weeks for filing counter of the

respondents."
Therefore, the learned Senior Counsel would emphatically submit
that the Hon'ble Supreme Court and other High Courts have held
in unequivocal terms that when a statute prescribes composition of
three Member Authority or Tribunal, the same is imperative and
mandatory and cannot be construed as directory, more so, in the
80
present Act, where Adjudicating Authority is empowered to deal
with the constitutional right to property of the citizens.
20. The learned Senior Counsel would reiterate that Section
6(2) of PMLA envisages that the Adjudicating Authority shall consist
of three Member and 'shall' mean mandatory and imperative.
According to the learned Senior Counsel, admittedly, at present,
the Adjudicating Authority has only one Member and therefore, in
any event, the show cause notices impugned in the Writ Petitions
are without jurisdiction and the same are liable to be struck down.
Issue No.(v): Whether the Writ Petitions are

maintainable on the ground of availability of
alternative remedy provided under PMLA?
21. The learned Senior Counsel would submit that although
appeal remedy is provided in PMLA, under Section 26, namely,
“Appeals to the Appellate Tribunal” and further appeal to the High
Court under Section 42 of PMLA, that such availability of
alternative remedies, is not a bar for invoking the extraordinary
81
jurisdiction of this Court under Article 226 of the Constitution of
India.
22. In regard to the above contention, the learned Senior
Counsel would relay on the following decisions, to draw support.
i) "(1998) 8 SCC 1 (Whirlpool Corporation versus Registrar
of Trade Marks, Mumbai and others)", wherein, paragraph 15, it
has been held as under:
"15. Under Article 226 of the Constitution, the

High Court, having regard to the facts of the case,
has a discretion to entertain or not to entertain a
writ petition. But the High Court has imposed upon
itself certain restrictions one of which is that if an
effective and efficacious remedy is available, the
High Court would not normally exercise its
jurisdiction. But the alternative remedy has been
consistently held by this Court not to operate as a
bar in atleast three contingencies, namely, where
the writ petition has been filed for the enforcement
of any of the Fundamental Rights or where there
has been a violation of the principle of natural
justice or where the order or proceedings are wholly
without jurisdiction or the vires of an Act is
challenged. There is a plethora of case-law on this
point but to cut down this circle of forensic
whirlpool, we would rely on some old decisions of
the evolutionary era of the constitutional law as
they still hold the field."
82
ii) "(1977) 2 SCC 724 (State of U.P. and others versus
M/s.Indian Hume Pipe Co.Ltd.)", wherein, in paragraph 5, the
Hon'ble Supreme Court has held as under:
"5. .....Moreover, there is no rule of law that

the High Court should not entertain. a writ petition
where an alternative remedy is available to a party.
It is always a matter of discretion with the Court
and if the discretion has been exercised by the High
Court not unreasonably, or perversely, it is the
settled practice of this Court not to interfere with
the exercise of discretion by the nigh Court. The
High Court in the present case entertained the writ
petition and decided the question of law arising in it
and in our opinion rightly...."
iii) "(1985) 3 SCC 267 (Ram and Shyam Company versus
State of Haryana and others)", wherein, the Hon'ble Supreme
Court has held in paragraph 9 as under:
"9. Before we deal with the larger issue, let me

put out of the way the contention that found favour
with the High Court in rejecting the writ petition.
The learned Single Judge as well as the Division
Bench recalling the observations of this Court in
Assistant Collector of Central Excise v. Jainson Hosiery
Industries rejected the writ petition observing that
'the petitioner who invokes the extraordinary
jurisdiction of the court under Art. 226 of the
Constitution must have exhausted the normal
statutory remedies available to him'. We remain
unimpressed. Ordinarily it is true that the court has
imposed a restraint in its own wisdom on its
83
exercise of jurisdiction under Art. 226 where the

party invoking the jurisdiction has an effective,
adequate alternative remedy. More often, it has
been expressly stated that the rule which requires
the exhaustion of alternative remedies is a rule of
convenience and discretion rather than rule of law.
At any rate it does not oust the jurisdiction of the
Court. In fact in the very decision relied upon by the
High Court in The State of Uttar Pradesh v. Mohammad
Nooh it is observed that there is no rule, with regard
to certiorari as there is with mandamus, that it will
lie only where there is no other equally effective
remedy. It should be made specifically clear that
where the order complained against is alleged to be
illegal or invalid as being contrary to law, a petition
at the in stance of person adversely affected by it,
would lie to the High Court under Art. 226 and such
a petition cannot be rejected on the ground that an
appeal lies to the higher officer or the State
Government. An appeal in all cases cannot be said
to provide in all situations an alternative effective
remedy keeping aside the nice distinction between
jurisdiction and merits. Look at the fact situation in
this case. Power was exercised formally by the
authority set up under the Rules to grant contract
but effectively and for all practical purposes by the
Chief Minister of the State. To whom do you appeal
in a State administration against the decision of the
Chief Minister ? The clutch of appeal from Ceasar to
Ceasar wife can only be bettered by appeal from
one's own order to oneself. Therefore this is a case
in which the High Court was not at all justified in
throwing out the petition on the untenable ground
that the appellant had an effective alternative
remedy. The High Court did not pose to itself the
question, who would grant relief when the
impugned order is passed at the instance of the
Chief Minister of the State. To whom did the High
Court want the appeal to be filed over the decision
of the Chief Minister. There was no answer and that
84
by itself without anything more would be sufficient

to set aside the judgment of the High Court."
iv) "(1987) 4 SCC 525 (Dr.(Smt.) Kuntesh Gupta versus
Management of Hindu Kanya Maha Vidyalaya, Sitapur (U.P),
and others)", wherein, in paragraph 12, it has been held as under:
"12. The next question that falls for our

consideration is whether the High Court was
justified in dismissing the writ petition of the
appellant on the ground of availability of an
alternative remedy. It is true that there was an
alternative remedy for challenging the impugned
order by referring the question to the Chancellor
under section 68 of the U.P. State Universities Act.
It is well established that an alternative remedy is
not an absolute bar to the maintainability of a writ
petition. When an authority has acted wholly
without jurisdiction, the High Court should not
refuse to exercise its jurisdiction under Article 226 of
the Constitution on the ground of existence of an
alternative remedy. ...."
v) "(2003) 2 SCC 107 (Harbanslal Sahnia and another
versus Indian Oil Corpn.Ltd. and others)", wherein, the Hon'ble
Supreme Court has held as under in paragraph 7:
"7. So far as the view taken by the High Court

that the remedy by way of recourse to arbitration
clause was available to the appellants and therefore
the writ petition filed by the appellants was liable to
be dismissed, suffice it to observe that the rule of
85
exclusion of writ jurisdiction by availability of an

alternative remedy is a rule of discretion and not one
of compulsion. In an appropriate case in spite of
availability of the alternative remedy, the High Court
may still exercise its writ jurisdiction in at least
three contingencies: (i) where the writ petition seeks
enforcement of any of the Fundamental Rights; (ii)
where there is failure of principles of natural justice
or, (iii) where the orders or proceedings are wholly
without jurisdiction or the vires of an Act and is
challenged [See Whirlpool Corporation v. Registrar of
Trade Marks, Mumbai and Ors., (1998) 8 SCC 11. ..."
vi) "(2005) 6 SCC 499 (State of H.P. and others versus
Gujarat Ambuja Cement Ltd. and another)", wherein, the
Hon'ble Supreme Court has held in paragraphs 17 and 18 as
under:
"17. We shall first deal with the plea regarding

alternative remedy as raised by the appellant-State.
Except for a period when Article 226 was amended
by the Constitution (42nd Amendment) Act, 1976, the
power relating to alternative remedy has been
considered to be a rule of self imposed limitation. It
is essentially a rule of policy, convenience and
discretion and never a rule of law. Despite the
existence of an alternative remedy it is within the
jurisdiction of discretion of the High Court to grant
relief under Article 226 of the Constitution. At the
same time, it cannot be lost sight of that though the
matter relating to an alternative remedy has nothing
to do with the jurisdiction of the case, normally the
High Court should not interfere if there is an
adequate efficacious alternative remedy. If
somebody approaches the High Court without
availing the alternative remedy provided the High
Court should ensure that he has made out a strong
86
case or that there exist good grounds to invoke the

extraordinary jurisdiction.
"18. The Constitution Benches of this Court in

K.S. Rashid and Sons v. Income Tax Investigation
Commissionand Ors., AIR (1954) SC 207; Sangram
Singh v. Election Tribunal, Kotah and Ors., AIR (1955) SC
425; Union of India v. T.R. Varma, AIR (1957) SC 882;
State of U.P. and Ors. v. Mohammad Nooh, AIR (1958) SC
86 and M/s K.S. Venkataraman and Co. (P) Ltd. v. State of
Madras, AIR (1966) SC 1089, held that Article 226 of
the Constitution confers on all the High Courts a
very wide power in the matter of issuing writs.
However, the remedy of writ is an absolutely
discretionary remedy and the High Court has always
the discretion to refuse to grant any writ if it is
satisfied that the aggrieved party can have an
adequate or suitable relief elsewhere. The Court, in
extraordinary circumstances, may exercise the
power if it comes to the conclusion that there has
been a breach of principles of natural justice or
procedure required for decision has not been
adopted."
23. Lastly, the learned Senior Counsel would draw the
attention of this Court to an order passed by the High Court of
Allahabad, reported in "1992 SCC OnLine All 234 (Suresh
Chandra Tewari versus District Supply Officer and another)".
The learned Senior counsel would refer the observation of the High
Court holding that once Writ Petition has been entertained and
interim order was passed, the same cannot be rejected on the
87
ground alternative remedy. Paragraph 2 of Judgment is extracted
as under:
"2. At the time of hearing of this petition, a

threshold question, as to its maintainability was
raised on the ground that the impugned order was
an appelable one and, therefore, before approaching
this Court the petitioner should have approached
the appellate authority. Though there is much
substance in the above contention, we do not feel
inclined to reject this petition on the ground of
alternative remedy having regard to the fact that the
petition has been entertained and an interim order
passed."
24. Summarizing the above orders passed by the various High
Courts and the Hon'ble Supreme Court, the learned Senior Counsel
would submit that the Courts have entertained petitions directly
without driving the parties to seek alternative remedy in case where
principles of natural justice have been violated, the action of the
State is wholly unjustified and the issue of fundamental right of the
citizens involved. In this case, he would submit that the principles
of natural justice are completely given a go bye and in the absence
of any material which could form the basis of so-called offence
against the petitioners, the action becomes wholly unjustified and
88
therefore, the Writ Petitions can be entertained by this Court
without compelling the parties to resort to alternative remedies as
available under the statute.
25. The learned Senior Counsel would also meekly submit
that in any event, this Court has entertained the Writ Petitions and
interim orders are passed and therefore, the present Writ Petitions
ought to be entertained in view of observation made by the
Allahabad High Court in the above said decision.
Issue No.(vi):
Whether the action initiated by the

Authorities under PMLA, on the face of it,
suffers from non-application of mind and
requires to be interfered with even at the
stage of show cause notice?
26. The learned Senior Counsel would submit that from the
judgments/orders, it could be seen that several properties which
were purchased prior to the petitioners coming into quarry
operations, had been subjected to attachment. According to the
89
learned Senior Counsel, commission of offence is between January
2011 and August 2012. He would draw the reference to the
impugned attachment order, wherein, it was shown of Schedule III
of the immovable property in the Annexure II 'Provisional
Attachment', dated 23.3.2018, that those properties were bought in
2010 before the quarry operations commenced by the petitioner
herein. The learned Senior Counsel would only draw the reference
to these instances to highlight the fact that there appears to be
prima facie non-application of mind on the part of the authorities
concerned. He would therefore, submit that non-application of
mind is writ large and when such action suffers from non-
application of mind infringing constitutional right of the citizens,
this Court cannot be a mute spectator to such action initiated at
the instance of the State. He would therefore submit that even on
this ground, the provisional order of attachment is liable to be
interfered with.
90
Issue No.(vii)
When the Writ Petitions are admitted,

Rule Nisi is issued by the Writ Court, while so,
in the absence of production of relevant
documents, whether the Court would have any
option except to draw adverse inference
against the respondents?
27. The learned Senior Counsel would draw the attention of
this Court to the Judgment of the Hon'ble Supreme Court reported
in "(1993) 4 SCC 119 (R.K.Jain versus Union of India)", wherein,
he would draw reference to paragraph 14, which is extracted
hereunder:
"14. When this Court was moved for an

appropriate writ under Art. 32, rule nisi would be
issued and for doing complete justice in that cause
or matter, it has been invested with power to issue
directions or orders which includes ad interim
orders appropriate to the cause. All authorities,
constitutional, civil judicial, statutory or persons in
the territory of India are enjoined to act in aid of this
court. This court while exercising its jurisdiction,
subject to any law, if any, made by Parliament
consistent with the exercise of the said power, has
been empowered by Cl. 2 of Art. 142 with all and
every power to make any order to secure attendance
of any person, to issue "discovery order nisi" for
production of any documents, or to order
91
investigation .... Exercise of this constituent power

is paramount to enforce not only the fundamental
rights guaranteed in Part III but also to do complete
justice in any matter or cause, presented or pending
adjudication. The power to issue "discovery order
nisi" is thus express as well as inherent as an
integral power of Judicial review and process in the
court to secure the attendance of any person or
discovery or production of any document or to order
investigation in that behalf. However. in an
appropriate case, depending on facts on hand, court
may adopt such other procedure as would be
warranted. The petitioner must make strong prima
facie case to order discovery order nisi, etc. and it
must not be a hunting expedition to fish out some
facts or an attempt to cause embarrassment to the
respondents nor for publicity. But on issuance of
rule nisi by this Court under Art. 32 or a discovery
order nisi the government or any authority,
constitutional, civil, judicial. statutory or otherwise
or any person, must produce the record in their
custody and disobedience thereof would be at the
pain of contempt."
28. The learned Senior Counsel also refer to the decision of
this Court reported in "2005 (5) CTC 789 (Hindustan Petroleum
Corpn. Ltd. versus Darius Shapur Chenai and others)",
wherein, he would draw reference to paragraph 17, which is
extracted hereunder:
"17. Contention of Mr. Chaudhari to the effect

that for long the additional ground relating to non-
application of mind on the part of the State had not
been raised and, thus, it might not be necessary for
92
the State to file a counter-affidavit does not appeal

to us. When a rule nisi was issued the State was
required to produce the records and file a counter-
affidavit. If it did not file any counter-affidavit, it
may, subject to just exceptions, be held to have
admitted the allegations made in the writ petition."
29. According to the learned Senior Counsel, when Rule Nisi is
issued, if counter affidavit is not filed, it should be held to have
admitted the allegations made in the writ petition.
30. The learned Senior Counsel would submit that no records
were produced on behalf of the respondents and therefore, this
Court must necessarily draw inference against the respondents and
would proceed to hold that whatever is stated in the Writ Petitions,
is un-controverted and admitted.
Issue No.(viii):
Whether offence of illegal quarrying is

one of the scheduled offences under PMLA,
warranting action under PMLA?
93
31. The learned Senior Counsel would also contend that illegal
quarrying is not one of the scheduled offences under PMLA and
therefore, the very action initiated against these petitioners is
without the authority of law. He would traverse through various
offences listed in the Schedules appended to PMLA, in which illegal
quarrying does not find a place. Hence, the offence of illegal
quarrying cannot be brought within the mischief of PMLA.
Issue No.(ix):
Whether the Adjudicating Authority,

being non-conversant with the vernacular
language of the state, is able to appreciate
transactions of various properties which are
documented in vernacular language (Tamil)?
32. The learned Senior Counsel would finally submit that
most of the documents in transaction are in vernacular language
and therefore, any representation on behalf of the writ petitioners
with supportive materials, cannot be appreciated by the
94
Adjudicating Authority who is not conversant with the language.
Therefore, there would not be proper application of mind on the
part of the authorities concerned and in such even, there will not
be any fruitful fulfillment of the requirement of the scheme of
PMLA.
33. The learned Senior Counsel would also submit that the
decisions rendered in respect of similar enactments can be taken
as precedent when the provisions are pari materia of each other. In
this regard, the learned Senior Counsel would rely upon the
decisions reported in "2003(2) SCC 577 (Masiruddin and others
versus Sita Ram Agarwal)", he would draw the reference to
paragraph 21 which is extracted hereunder:
"21. It is also a well-settled principle of law

that the decision on an interpretation of one statute
can be followed while interpreting another provided
both the statutes are in pari materia and they deal
with identical scheme."
34. According to the learned Senior Counsel, the decisions
relied upon by him in respect of similar enactments both in regard
95
to Coram non-judice and recording of reasons have to be taken as
precedent and can be applied in respect of the present Act also.
35. He would also add that by subsequent amendment in
2018, 3rd proviso has been included in Section 5(1) which reads as
under:
"Provided also that for the purposes of

computing the period of one hundred and
eighty days, the period during which the
proceedings under this section is stayed by the
High Court, shall be excluded and a further
period not exceeding thirty days from the date
of order of vacation of such stay order shall be
counted."
36. The learned Senior Counsel would submit that PMLA itself
has recognized that when such draconian power is invoked, this
Court can be approached at the preliminary stage itself and that is
precisely the reason, the proviso has been added.
96
37. Summing up his arguments, Mr.P.Wilson, learned Senior
Counsel would implore this Court to strike down the action
initiated by both the respondents. According to the learned Senior
counsel, though a detailed order has been passed by the Authority
under Section 5(1) of PMLA towards provisional attachment, the
Authority has dutifully concluded that he has reason to believe
without actually recording any reasons in terms of the scheme of
Section 5 of PMLA. Nowhere in the order, it could be even remotely
discerned that there was an attempt by the petitioners to conceal
the proceeds of the crime or transferring the properties purchased
from the proceeds of the crime and there is an attempt to frustrate
by the petitioners in respect of confiscation proceedings. Such
requirements which are mandatory under Section 5 of PMLA are
completely absent in the proceedings initiated by the first
respondent under Section 5(1) of PMLA and therefore, the very
initiation of the action under Section 5(1) of PMLA is unsustainable
and cannot be countenanced both in law and on facts.
97
38. The learned Senior Counsel would further submit that
even assuming that the action initiated under Section 5(1) of PMLA,
can be pursued further, the Adjudicating Authority while issuing
show cause notice, would suffer from want of jurisdiction as
presently the Adjudicating Authority consists of only one Member
and therefore, the same is contrary to Section 6 of PMLA. He would
submit that further the Adjudicating Authority is also required to
record reasons as per Section 8(1) of PMLA and in the show cause
notice, no reason has been spelt out and therefore, even on that
ground, show cause notice is liable to be interfered with. In any
case, the entire action initiated by the first respondent under
Section 5(1) and complaint filed under Section 5(5) and show cause
notice issued under Section 8(1) of PMLA, is contrary to the
established legal principles as laid down by High Courts and the
Hon'ble Supreme Court and the same is also contrary to explicit
provisions as contained in PMLA. In the said circumstances, the
impugned action is liable to be struck down as wholly illegal and
unjustified.
98
39. Per contra, in reply to the above contentions raised on
behalf of the petitioners, the learned Additional Solicitor General of
India would first address the issue of 'record of reasons to believe'
and the communication of the same, as according to the
petitioners, it was the very heart beat of Section 5 of PMLA.
40. According to the learned Additional Solicitor General of
India, the reasons, first of all, need not be communicated to the
petitioners and it is suffice that if the same are recorded in the
order. According to him, when the first respondent has passed an
order of provisional attachment, he has recorded sufficient reasons
for such action initiated under Section 5(1) of PMLA and it is not
open to the petitioners to contend as to what reasons would be
satisfactory to him in order to make the order valid in terms of the
provisions of PMLA. According to the Additional Solicitor General,
the language of Section 5 and 8 is different and Section 8 does not
99
contemplate issuance of notice at all and the 'reason to believe' in
Section 8 is different from Section 5 of PMLA.
41. The learned Additional Solicitor General would rely on the
following decisions as to how record of reasons was viewed in quasi
judicial and administrative orders by the Courts:
(i) "(2014) 4 SCC 392 (Biswanath Bhattacharya versus
Union of India and others)", wherein, the learned Addl.Solicitor
General would draw reference to pargraphs 13 to 16 which are
extracted hereunder:
"13. Though section 127 expressly provided for

recording of reasons it did not expressly provide
communicating the same to the assessee. Still, this
Court held that such a communication is mandatory.
“10. The reason for recording of
reasons in the order and making these
reasons known to the assessee is to enable
an opportunity to the assessee to approach
the High Court under its writ jurisdiction
under Article 226 of the Constitution or even
this Court under Article 136 of the
Constitution in an appropriate case for
challenging the order, inter alia, either on
the ground that it is mala fide or arbitrary
or that it is based on irrelevant and
extraneous considerations. Whether such a
100
writ or special leave application ultimately

fails is not relevant for a decision of the
question.
11. We are clearly of opinion that the
requirement of recording reasons under
Section 127(1) is a mandatory direction under
the law.”
14. In our view, such a conclusion must be
understood in the light of the observation of the Court
that there was no provision of appeal or revision
under the Income Tax Act against an order of transfer.
For the same reason, this Court distinguished and
declined to follow an earlier judgment in S.
Narayanappa v. The Commissioner of Income-tax AIR 1967

SC 523 where this Court on an interpretation of
Section 34 of the Income Tax Act, 1922, opined to the
contra. Section 34 provided for re-opening of the
assessment with the prior sanction of the
Commissioner, if the income tax officer has ‘reasons
to believe’ that taxable income had been under-
assessed. Dealing with the question whether the
reasons which led the Commissioner to accord
sanction for the initiation of proceedings under section
34 are required to be communicated to the assessee,
this Court held –
“4. ....There is no requirement in any of
the provisions of the Act or any section laying
down as a condition for the initiation of the
proceedings that the reasons which induced
the Commissioner to accord sanction to
101
proceed under S.34 must be communicated

to the assessee.”
15. In Ajantha Industries case, Narayanappa’s
case was distinguished on the ground –
”16. .....When an order under Section 34
is made the aggrieved assessee can agitate
the matter in appeal against the assessment
order, but an assessee against whom an
order of transfer is made has no such remedy
under the Act to question the order of
transfer. Besides, the aggrieved assessee on
receipt of the notice under Section 34may even
satisfy the Income-tax Officer that there were
no reasons for reopening the assessment.
Such an opportunity is not available to an
assessee under Section 127(1) of the Act. The
above decision is, therefore, clearly
distinguishable.”
16. We reject the submission of the appellant
for the following reasons. Firstly, there is no express
statutory requirement to communicate the reasons
which led to the issuance of notice under Section 6of
the Act. Secondly, the reasons, though not initially
supplied along with the notice dated 4.3.1977, were
subsequently supplied thereby enabling the appellant
to effectively meet the case of the respondents.
Thirdly, we are of the opinion that the case on hand
is squarely covered by the ratio of Narayanappa case.
The appellant could have effectively convinced the
respondents by producing the appropriate material
that further steps in furtherance to the notice under
Section 6 need not be taken. Apart from that, an order
102
of forfeiture is an appealable order where the

correctness of the decision under Section 7 to forfeit
the properties could be examined. We do not see
anything in the ratio of Ajantha Industries case which
lays down a universal principle that whenever a
statute requires some reasons to be recorded before
initiating action, the reasons must necessarily be
communicated."
As per the above decision, though record of reasons was provided
under particular statute which does not expressly provide to
communicate the same to the assessee. However, the
communication held to be mandatory in the case of "Ajantha
Industries case". The Hon'ble Supreme Court has held that the
conclusion reached by the Court, was on the basis that there was
no provision of appeal or revision under the Income Tax Act and
hence the decision was distinguished and held that the reasons
need not be communicated.
(ii) "(1985) 3 SCC 72 (Dr.Partap Singh and Another versus
Director of Enforcement, Foreign Exchange Regulation Act
and others)". In this case also, the Hon'ble Supreme Court
103
considered the issue whether it was mandatory to record reasons or
grounds before a search is made prior to the issuance of warrant.
The Court has finally held that the grounds which introduced
reasonable belief, need not be stated in the search warrant. the
relevant portion found in paragraphs 9 to 13, is extracted
hereunder:
"9. When an officer of the Enforcement

Department proposes to act under Sec. 37
undoubtedly, he must have reason to believe that the
documents useful for investigation or proceeding
under the Act are secreted. The material on which
the belief is grounded may be secret, may be
obtained through Intelligence or occasionally may be
conveyed orally by informants. It is not obligatory
upon the officer to disclose his material on the mere
allegation that there was no material before him on
which his reason to believe can be grounded. The
expression 'reason to believe' is to be found in
various statutes. We may take note of one such. Sec.
34 of the Income Tax Act, 192. inter alia provides that
the Income Tax officer must have 'reason to believe'
that the incomes, profits or gains chargeable to
income-tax have been under-assessed, then alone he
can take action under sec. 34. In S. Narayanappa V.
104
Commissioner of Income Tax, Bangalore(1) the assessee

challenged the action taken under sec. 34 A and
amongst others it was contended on his behalf that
the reasons which induced the Income-tax Officer to
initiate proceedings under sec. 34 were justiciable,
and therefore, these reasons should have been
communicated by the Income Tax Officer to the
assessee before the assessment can be reopened. It
was also submitted that the reasons must be
sufficient for a prudent man to come to the
conclusion that the income escaped assessment and
that the court can examine the sufficiency or
adequacy of the reasons on which the Income Tax
Officer has acted. Negativing all the limbs of the
contention, this Court held that
'if there are in fact some reasonable

grounds for the Income Tax Officer to
believe that there had been any non-
disclosure as regards any fact, which could
have a material bearing on the question of
under-assessment, that would be sufficient
to give jurisdiction to the Income Tax Officer
to issue notice under sec. 34.
The Court in terms held that whether these grounds

are adequate or not is not a matter for the court to
investigate.'
10. The expression 'reason to believe' is not

synonymous with subjective satisfaction of the
Officer. The belief must be held in good faith; it
105
cannot be merely be a pretense. In the same case, it

was held that it is open to the court to examine the
question whether the reasons for the belief have a
rational connection or a relevant bearing to the
formation of the belief and are not extraneous or
irrelevant to the purpose of the section. To this
limited extent the action of the Income Tax Officer in
starting proceedings under Sec. 34 is open to
challenge in a court of law. (See Calcutta Discount Co.
Ltd. v. Income Tax Officer Companies District1, Calcutta
& Anr.(2) In R. S. Seth Gopikrishan Agarwal v. R. N. Sen,
Assistant Collector of Customs & Ors.,(3) this Court
repelled the challenge to the validity 1 of the search
of the premises of the appellant and the seizure of
the documents found there in. The search was
carried out under the authority of an authorisation
issued under Sec. 126 (L) (2) of the Defence of India
(Amendment) Rules, 1963 (Gold Control Rules) for
search of the premises of the appellant. The validity
of the authorisation was challenged on the ground of
mala fides as also on the ground that the
authorisation did not expressly employ the phrase
reason to believe' occurring in Sec. 105 of the
Customs Act. Negativing both the contentions, Subba
Rao, C. J. speaking for the court observed that the
subject underlying Sec. 105 of the Customs Act which
confers power for issuing authorisation for search of
106
the premises and seizure of incriminating articles

was to search for goods liable to be confiscated or
documents secreted in any place, which are relevant
to any proceeding under the Act. The legislative
policy reflected in the section is that the search must
be in regard to the two categories mentioned in the
section. The court further observed that though
under the section, the officer concerned need not give
reasons if the existence of belief is questioned in any
collateral proceedings he has to produce relevant
evidence to sustain his belief. A shield against the
abuse of power was found in the provision that the
officer authorised to search has to send forthwith to
the Collector of customs a copy of any record made
by him. Sub-sec. (2) of Sec. 37 of the Act takes care
for this position inasmuch as that where an officer
below the rank of the Director of Enforcement carried
out the search, he must send a report to the Director
of Enforcement. The last part of the submission do. s
not commend to us because the file was produced
before us and as stated earlier, the Officer issuing
the search warrant had material which he rightly
claimed to be adequate for forming the reasonable
belief to issue the search warrant.
11. It was however contended that when sub-

sec. (2) of Sec. 37 is read in juxtaposition with sub
sec. (l), the legislative mandate clearly manifests itself
107
that before issuing a search warrant in exercise of

the power conferred by Sec. 37 (1), it is obligatory
upon the officer issuing the search warrant to record
in writing the grounds of his belief and specifying in
such writing, so far as possible, the thing for which
search is to be made because Sec. 37 (2) provides
that the provisions of the Code of Criminal
Procedure, 1898 (now 1973) relating to searches,
shall, so far as may be, apply to searches under this
section subject to the modification that sub-sec. (5) of
Sec. 165 of the said Code shall have effect as if for
the word 'Magistrate', wherever it occurs, the words
"Director of Enforcement or other officer exercising
his power" is substituted. It was submitted that if the
power to search premises is conferred on the officer
therein mentioned, it is hedged in with a condition
that in exercise of the power he is bound by the
requirements of Sec. 165 of the Code. In other words,
it was said that by sub-sec. (2) of Sec. 37, Sec. 165 of
the Code is incorporated in pen and ink in Sec. 37. It
was urged that the section should be re-read as Sec.
37 (1) as it is and Sec. 165 A (I) of the Code be read
as Sec. 37 (2). Continuing along this line, it was
submitted that read thus, the necessary intendment
of the Legislature becomes revealed in that such
drastic power of search and seizure without notice to
the person affected, can be exercised, if the officer
108
has reason to believe which must have its foundation

on some material or grounds which must be stated in
the search warrant itself or in a record anterior to the
issuance of the search warrant so that when
questioned the contemporaneous record would be
available to the court to examine the contention
whether there was material for taking such a drastic
action or that the action was taken for extraneous
and irrelevant reasons. In support of this submission,
reliance was placed on a decision of the Punjab and
Haryana High Court in H.L. Sibal v. Commissioner of
Income Tax, Punjab & Ors.(l) The court was examining
the expression 'in con. sequence of information in his

possession, has reason to believe' in Sec. 132 of the
Income Tax Act, 1961. The Court after referring to the
decision of this Court in Commissioner of Commercial
Taxes v. Ramkishan Shrikishan Jhaver(2) held that the
obligation to record in writing, the grounds of the
belief as enjoined by Sec. 165 (1), if not complied with
would vitiate the issuance of search warrant and the
seizure of the articles'. It was then submitted that if
the search is illegal, anything seized during such an
illegal search has to be returned as held by a learned
Single Judge of the Calcutta High Court in New Central
Jute Mills Co. Ltd. v. T. N. Kaul & Ors.
12. Sec. 37 (2) provides that 'the provisions of
the Code relating to searches, shall so far as may be,
109
apply to searches directed under Sec. 37 (1). Reading

the two sections together it merely means that the
methodology prescribed for carrying out the search
provided in Sec. 165 has to be generally followed. The
expression 'so far as may be' has always been
construed to mean that those provisions may be
generally followed to the extent possible. The
submission that Sec, 165 (1) has been incorporated
by pen and ink in Sec. 37 (2) has to be negatived in
view of the positive language employed in the section
that the provisions relating to searches shall so far as
may be apply to searches under Sec. 37 (1). If Sec.
165 (1) was to be incorporated by pen and ink as
sub-sec. (2) of Sec. 37, the legislative draftsmanship
will leave no room for doubt by providing that the
provisions of the Code of Criminal Procedure relating
to searches shall apply to the searches directed or
ordered under Sec. 37 (1) except that the power will
be exercised by the Director of Enforcement or other
officer exercising his power and he will be substituted
in place y f the Magistrate. The provisions of sub-sec.
(2) of Sec. 37 has not been cast in any such
language. It merely provides that the search may he
carried out according to the method prescribed in
Sec. 165 (1). If the duty to record reasons which
furnish grounds for entertaining a reasonable belief
were to be recorded in advance, the same could have
110
been incorporated in Sec. 37 (1), otherwise a simple

one line section would have been sufficient that all
searches as required for the purpose of this Act shall
be carried out in the manner prescribed in Sec. 165
of the Code by the officer to be set out in the section.
In order to give full meaning to the expression 'so far
as may be', sub-sec. (2) of Sec. 37 should be
interpreted to mean that broadly the procedure
relating to search as enacted in Sec. 165 shall be
followed. But if a deviation becomes necessary to
carry out the purposes of the Act in which Sec. 37 (1)
is incorporated, it would be permissible except that
when challenged before a court of law, justification
will have to be offered for the deviation. This view will
give full play to the expression 'so far as may be'.
13. The view which we are taking is in accord
with the view taken in Gopikrishan Agarwal's case.
The grounds which induced reason able belief
therefore need not be stated in the search warrant."
(iii) "AIR 1967 SC 523 (S.Narayanappa and others versus
The Commissioner of Income Tax, Bangalore)", wherein, the
Hon'ble Supreme Court has held in paragraphs 4 and 5 as under:
"4. It was also contended for the appellant that

the Income-tax Officer should have communicated to
111
him the reasons which led him to initiate the

proceedings under s. 34 of the Act. It was stated that
a request to this effect was made by the appellant to
the Income-tax Officer, but the Income-tax Officer
declined to disclose the reasons. In our opinion, the
argument of the appellant on this point is
misconceived. The proceedings for assessment or
reassessment under s. 34(1) (a) of the Income-tax Act
start with the issue of a notice and it is only after the
service of the notice that the assessee, whose income
is sought to be assessed or re- assessed, becomes a
party to those proceedings. The earlier stage of the
proceeding for recording the reasons of the Income-
tax Officer and for obtaining the sanction of the
Commissioner are administrative in character and
are not quasi-judicial. The scheme of s. 34 of the Act
is that, if the conditions of the main section are
satisfied a notice has to be issued to the assessee
containing all or any of the requirements which may
be included in a notice under s sub-section (2) of
section 22. But before issuing the notice, the proviso
requires that the officer should record his reasons for
initiating action under section 34 and obtain the-
sanction of the Commissioner who must be satisfied
that the action under s. 34 was justified. There is no
requirement in any of the provisions of the Act or any
section laying down as a condition for the initiation of
112
the proceedings that the reasons which induced the

Commissioner to accord sanction to proceed under
section 34 must also be communicated to the
assessee.
"5. In The Presidency Talkies Ltd. v. First Additional
Income- tax Officer, City Circle II, Madras, the Madras
High Court has expressed a similar view and we
consider that that view is correct. We accordingly
reject the argument of the appellant on this aspect of
the case."
(iv) "MANU/MH/0845/2014 (Brizo Reality Company Pvt.Ltd
versus Aditya Birla Finance Ltd.)", wherein, the Bombay High
Court has held that the order clearly contained the reasons that
satisfied all the ingredients of Section 5 and therefore, upheld the
order and the Court has also refused to exercise its extraordinary
jurisdiction at the stage of provisional attachment of the property.
Relevant portion as found in paragraphs 7 to 11 is extracted as
under:
"7. The contention that the show cause notice

does not state that the Adjudicating Authority has
reason to believe that the petitioner has committed an
offence under section 3 of the Act or is in possession
113
of proceeds of crime is not well founded. The notice

has, for all practical purposes, adopted, incorporated
the complaint in toto. The notice, fairly read, indicates
that the Adjudicating Authority, on the basis of the
material in the complaint had reason to believe that
the ingredients necessary for the attachment order
existed. So read, it follows that the Adjudicating
Authority stated in the show cause notice that he had
reason to believe that there existed the factors
necessary to serve the notice. The reasons, in turn,
stand incorporated in the notice from the complaint.
It is apparent that the notice has been issued based
on the reasons to be found in the complaint and the
documents which have been expressly referred to in
the contention. The complaint itself expressly sets out
the reason to believe. If, on the basis of the facts
disclosed in the enclosures, the Adjudicating
Authority had formed the opinion that there was no
reason to believe the existence of the factors
mentioned in section 8, he would not have issued the
show cause notice. That he did indicates that he had
reason to believe the existence of the said factors. In
the facts and circumstances of the case this is
sufficient compliance.
8. Assuming that it was necessary for the

Adjudicating Authority to reproduce the contents of
the complaint and the ingredients of section 8 in the
114
notice, we would have permitted the Adjudicating

Authority to issue a fresh notice and continued the
order of attachment for a period of time to enable him
to do so. In the circumstances, we are not inclined to
exercise our extraordinary jurisdiction in any event.
9. The learned counsel relied upon the
judgment of the Supreme Court in Aslam Mohammad
Merchant Vs. Competent Authority and Others (2008)
14 SCC 186 and in particular paragraphs 50 to 59
thereof. The judgment refers to a case relating to
reopening under section 147 and 148 of the Income
Tax Act. The judgment does not hold that the reason
to believe cannot be incorporated in the notice by
reference to another document. The judgment is not
an authority for the proposition that the reasons
cannot be incorporated in a notice under section 147
in any manner whatsoever. Paragraph 58 indicates
that in that case no reason was disclosed by the
authority to the appellant. In the present case we
have come to the conclusion that the show cause
notice contains the reasons. The same have been
incorporated in the show cause notice by reference to
the enclosures / annexures thereto.
10. The learned counsel then relied upon the
judgment of a Division Bench of this court in a case of
Shashank Vyankatesh Manohar Vs. Union of India
115
and Anr. 2013 (5) All MR 551. The case is clearly

distinguishable.
In the case before us, the reasons were not merely
kept on file and not communicated to the Petitioner.
In fact, the show cause notice enclosed copies of the
complaint and annexures.
11. As far as the petitioner is concerned, we are
not inclined to set aside the order of attachment
under section 5 passed by the Deputy Director on the
ground that he has not recorded in writing, his
reason to believe the existence of the factors
mentioned in section 5. The said order dated
31.01.2014, was addressed to Aastha and the said
Mohit Agarwal. That order clearly contained the
reasons that satisfied all the ingredients of section 5.
The attachment over the property, therefore, was
levied in accordance with the provisions of the Act."
(v) "2015 Supreme (Del) 165 (Gautam Khaitan & another
versus Union of India and another)", wherein, the Delhi High
Court has held as under:
"13. In my view, having regard to the material

accompanying the impugned order and the
discussion therein, one cannot but come to the
conclusion that the designated/authorised officer
116
had reason to believe that the properties in issue

were involved in money-laundering, and that, if they
were not attached, immediately, it could lead to the
proceedings under the PMLA, being frustrated.
13.1 As indicated above, this could only be a

tentative view based on the material presently
available with the designated/authorised officer. The
petitioners would have a full opportunity to present
their version of events and demonstrate with the help
of material and evidence in their possession, that the
properties which stand provisionally attached, are
not, involved in money-laundering. Therefore, the
submission made on behalf of the petitioners that
there was no material available for existence of such
a belief, is in my view, untenable.
14. The last issue, which requires consideration
is : whether there has been breach of principles of
natural justice. The scheme of the Act as discussed
above by me would show that, implicitly, the
legislature, has excluded the requirement to issue
notice or having to hear the person whose, property
is sought to be provisionally attached as this power is
vested in the designated/authorised officer to avoid
and/or prevent a situation, which would result in,
any proceeding, under PMLA, being frustrated. The
PMLA provides for issuance of notice and hearing at
the stage of section 8 proceedings before the
117
adjudicating authority, after a complaint under

Section 5(5) is filed, having regard to the nature of
power vested in the designated/authorised officer. It

is an emergent power, invested in a senior officer of
the DOE to deal with a situation at hand, in the facts
and circumstances of a particular case. The fact that
a post facto hearing is provided under Section 8 of the
PMLA, in my view, rules out, by necessary
implication, the requirement to issue notice and of
hearing at the stage of provisional attachment, under
Section 5(1) of the Act. Therefore, complete opportunity
was given to the petitioner to agitate and advance its
case. As a matter of fact under PMLA, the decision of
the adjudicating authority can be assailed by way of
an appeal before the Appellate Tribunal. The appeal
is maintainable under Section 26 of the PMLA. There
is, in addition, a right available to an aggrieved party
to prefer a second appeal to this court under Section
42 of the PMLA. These provisions clearly indicate that
the legislature did not intend to provide for a hearing
and notice at the stage of provisional attachment.
[See Maneka Gandhi Vs. UOI, (1978) 2 SCR 621 and
Swadeshi Cotton Mills Vs. UOI, (1981) 2 SCR 533].
14.1 The other question, which requires
consideration, is: whether the writ petition is
maintainable for laying a challenge to the order of
provisional attachment. It is trite to say that a
118
remedy under Article 226 of the Constitution can be

availed of by an aggrieved party, even where, a
statutory remedy is provided, in two broad situations.
First, when it is a case of lack of jurisdiction. Second,
where there is a breach of principles of natural
justice.
14.2 As discussed above, at the stage of
issuance of an order of provisional attachment, no
recourse could have been taken to a writ petition
under Article 226, merely, on the ground that no
notice was issued or, no opportunity of hearing was
given before passing the order of provisional
attachment. The reason for the same, as indicated
above, is, that a post facto hearing is provided in the
aftermath of a provisional attachment being ordered.
Section 8 of the PMLA, provides for a full dress hearing
and for grant of complete opportunity to the
aggrieved party in that behalf. The legislature's
intention, in the manner in which, Sections 5 and 8 of
the PMLA are structured, makes that amply clear.
14.3 In so far as the first situation is
concerned, there is a very narrow leeway available to
the petitioners to come by way of a writ petition. The
court ordinarily would be circumspect in entertaining
a writ petition at the stage of provisional attachment,
that is, at the Section 5, stage. The aggrieved
petitioners will have to demonstrate, and the burden
119
in that behalf would be heavy, that there is, an

absence of jurisdiction in the designated/authorised
officer directing provisional attachment of his/her
properties. Therefore, while not shutting out
completely access to a remedy under Article 226 of the
Constitution, the aggrieved party will have to
demonstrate that it is a case of complete lack of
jurisdiction. As to whether, this case would fulfil, that
criteria, my answer is, in the negative. The issues
raised in the writ petition could have been well nigh
dealt with by the adjudicating authority. The
adjudicating authority is free to ascertain as to
whether in a given action filed before it, the
necessary jurisdictional facts are present.
15. In these circumstances, I find no merit in
the writ petition. The writ petition and the pending
applications are accordingly dismissed. Consequently
the interim order dated 22.12.2014 stands vacated.
Costs will follow the result in the petition."
In the above case, the Delhi High Court has dealt with similar
challenge and the learned Judge has observed that under the
provisions of the PMLA, there were safeguards built in PMLA and
absence of any notice of hearing at the stage of provisional
attachment, need not vitiate the action of the authority concerned.
120
42. The learned Additional Solicitor General would submit
that as per Section 5, nowhere it is stated that the reasons must be
communicated, but it only provides for recording of reasons to
believe in writing. In fact, in Section 5, it is provided that the
reasons to believe is duly recorded in writing whereas such
requirement is absent in Section 8(1). In the absence of any
provision that the reasons to be communicated, the only
requirement that is envisaged under PMLA is, to record reasons
and in this case, the reasons have been recorded and to what
extent the reasons have to be recorded is not for the petitioners to
complain since it is only a matter of provisional attachment for a
period of 180 days under Sub Clause (b) of Section 5(1) and such
provisional attachment is subject to confirmation by the
Adjudicating Authority which initiated action by issuing a show
cause notice under Section 8(1) of PMLA and in fact, in the show
cause notice, it is mentioned that the requirement of Section 8(1) of
PMLA has been complied with and it is open to the petitioner to
121
download the reasons set forth by the Adjudicating Authority from
the Website concerned.
that the reasons to believe must be read in the context of the entire
scheme of PMLA, but not in isolation. According to the learned
Additional Solicitor General, the attachment is only for a period of
180 days and therefore, the Adjudicating Authority proceeds with
the complaint by giving adequate opportunity to the person
concerned and in case, the order is adverse, an appeal is provided
under Section 26 of PMLA to the Appellate Tribunal and a further
appeal is provided to the High Court under Section 42 of PMLA. In
such scenario, the writ petitioners need not feel that they were
affected by the action initiated by the first respondent under
Section 5(1) for provisionally attaching the property and also by
mere issuing show cause notice issued by the Adjudicating
Authority, as the proceedings initiated against the writ petitioners
are at the very initial stage.
122
44. As regards the contention of the petitioner regarding
coram non-judice, the learned Addl.Solicitor General would draw
the attention of this Court to a decision rendered by the Delhi High
Court in "W.P.(C) 5320 of 2017 dated 11.1.2018 (J.Sekar versus
Union of India and others)", which was also extensively referred
to by the learned Senior Counsel appearing for the petitioners. He
would draw the attention of this Court to paragraphs 79 to 81 and
87(7), which are extracted under:
"79. The Court next takes up the question of the

composition of the AA on which extensive arguments
were advanced by the learned counsel for the
Petitioners. In this context, it must be noticed that
under Section 6 PMLA, the AA is supposed to consist of
the Chairperson and two other members - one of whom
shall be a person having experience in the field of law.
Section 6(3) further sets out what the qualifications for
appointment as a member of an AA should be. One of
those qualifications is that the person has to be
qualified for appointment as a District Judge or a
person in the field of law or a member of an Indian
Legal Service. The other qualification is possession of a
qualification in the field of finance, accountancy or
123
administration as may be prescribed. It is, therefore,

not the case that all the members of the AA should be
judicial members.
80. It is seen that under Section 5 PMLA, the

jurisdiction of the AA -may be exercised by the
Benches thereof?. Under Section 6(5)(b) PMLA, a Bench
may be constituted by the Chairperson of the AA -with
one or two members? as the Chairperson may deem fit.
Therefore, it is possible to have single-member
benches. The word ?bench' therefore does not connote
plurality. There could, even under Section 6(5)(b) PMLA,
be a ?single member bench'. When Section 6(6) PMLA
states that a Chairperson can transfer a member from
one bench to another bench, it has to be understood in
the above context of there also being single-member
benches.
81. The Court is unable to agree with the submission
that since the Adjudicating Authority (Procedure)
Regulations 2013 requires every order- sheet to have
the signatures of the Chairperson and members
constituting the bench, it necessarily means that every
matter has to be heard by a bench comprising the
Chairperson and members. This would be an
erroneous interpretation which is contrary to the main
provision of the PMLA itself, viz., Section 6(5)(b) PMLA.
Likewise, under Rule 3 of the Prevention of Money-
laundering (Appointment and Conditions of Service of
124
Chairperson and Members of the Adjudicating

Authorities) Rules 2007, although it states that the AA
should have three members, that has to be read along
with Section 6(5)(b) that there can be single-member
benches. A contrary interpretation would actually
frustrate the working of the AA. The Court, therefore,
rejects the contention of the Petitioners that there
cannot be any single-member benches of the AA."
"82 to 86. ..... .... ....
"87 (i) to (vi). .... ..... ....
(vii) There can be single-member benches of the AA
and the AT under the PMLA. Such single-member
benches need not mandatorily have to be JMs and can
be AMs as well."
45. The learned Addl.Solicitor General would also rely on a
decision in "2008 (14) SC 107 (cited supra) which was also relied
on by the learned Senior Counsel in extenso as to how PMLA had
been changed and amended on the basis of several suggestions
given by the Hon'ble Supreme Court and those amendments have
been extensively incorporated in the order itself, which was also
extracted supra.
125
that the scheme of PMLA itself provides for constitution of
Adjudicating Authority. He would also draw the attention of this
Court to Section 6(5), 6(6), 6(7) and also 6(14) of PMLA, which read
as under:
"6. Adjudicating Authorities, composition, powers, etc.-

(1) to (4) ..... ...... .....
(5) Subject to the provisions of this Act,- (a) the
jurisdiction of the Adjudicating Authority may be
exercised by Benches thereof; (b) a Bench may be
constituted by the Chairperson of the Adjudicating
Authority with one or two Members as the
Chairperson of the Adjudicating Authority may deem
fit; (c) the Benches of the Adjudicating Authority
shall ordinarily sit at New Delhi and such other
places as the Central Government may, in
consultation with the Chairperson by notification,
specify; (d) the Central Government shall, by
notification, specify the areas in relation to which
each Bench of the Adjudicating Authority may
exercise jurisdiction.
(6) Notwithstanding anything contained in sub-
section (5), the Chairperson may transfer a Member
from one Bench to another Bench.
126
(7) If at any stage of the hearing of any case or

matter it appears to the Chairperson or a Member
that the case or matter is of such a nature that it
ought to be heard by a Bench consisting of two
Members, the case or matter may be transferred by
the Chairperson or, as the case may be, referred to
him for transfer, to such Bench as the Chairperson
may deem fit.
(8) to (13) ..... ..... .....
(14) When the Chairperson of the Adjudicating
Authority is unable to discharge his functions owing
to absence, illness or any other cause, the senior-
most Member shall discharge the functions of the
Chairperson of the Adjudicating Authority until the
date on which the Chairperson of the Adjudicating
Authority resumes his duties."
47. From the above provisions, it is possible to have less than
three Members to act as Adjudicating Authority and precisely, after
appreciating the said provisions, the Delhi High Court has
discountenanced the plea of coram non-judice. He would therefore,
submit that the composition as provided under Section 6 of PMLA
should be construed to mean that full complement of Adjudicating
Authority is three Members, but it is still legally possible with less
127
than three Members, which can act as Adjudicating Authority and
in such situation, it is not affected by coram non-judice. He would
therefore request the Court to reject such contentions made on
behalf of the petitioners as devoid of merits.
48. As regards the availability of alternative remedy is
concerned, the learned Additional Solicitor General would place the
following decisions for consideration, viz.,
(i) "2010 (4) SCC 772 (Raj Kumar Shivhare versus
Assistant Director, Directorate of Enforcement and another)",
wherein, it has been held as under in paragraphs 31 and 32:
"31. When a statutory forum is created by law

for redressal of grievance and that too in a fiscal
Statute, a writ petition should not be entertained
ignoring the statutory dispensation. In this case High
Court is a statutory forum of appeal on a question of
law. That should not be abdicated and given a go bye
by a litigant for invoking the forum of judicial review
of the High Court under writ jurisdiction. The High
Court, with great respect, fell into a manifest error by
not appreciating the aspect of the matter. It has
128
however dismissed the writ petition on the ground of

lack of territorial jurisdiction.
32. No reason could be assigned by the
appellant's counsel to demonstrate why the appellate
jurisdiction of the High Court under Section 35 of
FEMA does not provide an efficacious remedy. In fact
there could hardly be any reason since High Court
itself is the appellate forum."
(ii) MANU SC/541/2010 (United Bank of India versus
Satyawati Tandon and others)", wherein, it has been held by the
Hon'ble Supreme Court as under in paragraphs 25 and 26:
"25. In Raj Kumar Shivhare v. Assistant Director,

Directorate of Enforcement and another(2010) 4 SCC 772,
the Court was dealing with the issue whether the
alternative statutory remedy available under the
Foreign Exchange Management Act, 1999 can be
bypassed and jurisdiction under Article 226 of the
Constitution could be invoked. After examining the
scheme of the Act, the Court observed:
"31. When a statutory forum is created by
law for redressal of grievance and that too in
a fiscal statute, a writ petition should not be
entertained ignoring the statutory
dispensation. In this case the High Court is a
statutory forum of appeal on a question of
law. That should not be abdicated and given
a go-by by a litigant for invoking the forum of
129
judicial review of the High Court under writ

jurisdiction. The High Court, with great
respect, fell into a manifest error by not
appreciating this aspect of the matter. It has
however dismissed the writ petition on the
ground of lack of territorial jurisdiction.
32. No reason could be assigned by the

appellant's counsel to demonstrate why the
appellate jurisdiction of the High Court
under Section 35 of FEMA does not provide an
efficacious remedy. In fact there could hardly
be any reason since the High Court itself is
the appellate forum."
"26. In Modern Industries v. Steel Authority of India

Limited (2010) 5 SCC 44, the Court held that where
the remedy was available under the Interest on
Delayed Payments to Small Scale and Ancillary
Industrial Undertakings Act, 1993, the High Court
was not justified in entertaining a petition under
Article 226 of the Constitution."
(iii) "MANU SC/116/2013 (Rajasthan State Industrial
Development and Investment Corporate & Others vs. Diamond
and Gem Development Corporation Ltd. & others)", wherein,
paragraph 31 is relevant and it is extracted as under:
"31. The cancellation of allotment was made by

appellant- RIICO in exercise of its power under Rule
24 of the Rules 1979 read with the terms of the lease
agreement. Such an order of cancellation could have
130
been challenged by filing a review application before

the competent authority under Rule 24 (aa) and, in
the alternative, the respondent- company could have
preferred an appeal under Rule 24(bb)(ii) before
Infrastructure Development Committee of the Board.
The respondent- company ought to have resorted to
the arbitration clause provided in the lease deed in
the event of a dispute, and the District Collector,
Jaipur would have then, decided the case. However,
the respondent- company did not resort to either of
the statutory remedy, rather preferred a writ petition
which could not have been entertained by the High
Court. It is a settled law that writ does not lie merely
because it is lawful to do so. A person may be asked
to exhaust the statutory/alternative remedy
available to him in law."
(iv) "MANU/TN/2008/2011 ( Order in W.P.NO.19171 OF
2006, dated 7.6.2011 of this Court) (The Management of Alpha
Instruments, rep. by its Partner G.Nagarajan versus The
Enforcement Officer, EPFO), wherein, this Court has held as
under in paragraphs 9 to 11:
“9.Ultimately if an order is passed under Section

7A and the petitioner is still aggrieved, he has a right
of review under Section 7B followed by an appeal
under Section 7-I before the EPF Appellate Tribunal.
The advice given by the first respondent Enforcement
Officer is not a final order.
10.Since the Act provides for determination by
quasi judicial authority with power of review and also
an appeal before a judicial appellate Tribunal, the
petitioners will have to necessarily avail the remedies
131
under the Act. In this context, it is necessary to refer

to a judgment of the Supreme Court in Raj Kumar
Shivhare v. Directorate of Enforcement reported in (2010) 4
SCC 772, wherein the Supreme Court while dealing
with an alternative remedy available under the FEMA
Act held that the Act cannot be bypassed and the
jurisdiction under Article 226 of the Constitution of
India cannot be invoked. In the following passages
found in paragraphs 31 and 32, the Supreme Court
had observed as follows:
"31.When a statutory forum is created by law
for redressal of grievance and that too in a
fiscal statute, a writ petition should not be
statutory forum of appeal on a question of
law. That should not be abdicated and given
a go-by by a litigant for invoking the forum of
32.No reason could be assigned by the
appellants counsel to demonstrate why the
appellate jurisdiction of the High Court under
Section 35 of FEMA does not provide an
be any reason since the High Court itself is
the appellate forum."
11.The Supreme Court in United Bank of India v.
Satyawati Tondon reported in (2010) 8 SCC 110 dealt
with SARFAESI Act and DRT Act and in paragraphs 55
and 56, it had held as follows:
"55.It is a matter of serious concern
that despite repeated pronouncement of this
Court, the High Courts continue to ignore the
availability of statutory remedies under the
132
DRT Act and the SARFAESI Actand exercise

jurisdiction under Article 226 for passing
orders which have serious adverse impact on
the right of banks and other financial
institutions to recover their dues. We hope
and trust that in future the High Courts will
exercise their discretion in such matters with
greater caution, care and circumspection."
(v) "2012 (1) MLJ 418 (G.Srinivasan versus Chairperson,
Adjudicating Authority under PMLA 2002 and others)",
wherein, this Court held in paragraphs 15 to 17 as under:
"15.In the present case, by attachment of

property made by the second respondent, the
petitioner is not bound to lose anything and he
cannot be said to be prejudiced. On the other hand,
by virtue of Section 5(3), every order of attachment
made under Section 5(1) of the POMLA will lose its
efficacy either after 150 days or after an order
passed under Section 8(2) of the POMLA. Therefore,
it is only the petitioner instead of approaching the
first respondent Adjudicating Authority who had
initiated proceedings under Section 8(1), had rushed
to this court. Even if the attachment is made final,
under Section 26, an appeal lies to the Appellate
Tribunal. Therefore, the petitioner must submit his
explanation to the Adjudicating Authority and
convince it that the amount sought to be attached
was not obtained due to any money laundering and
that it was the legally earned income. Even if he fails
before the first respondent, there is time enough for
challenging the same before the judicial appellate
Tribunal constituted under Section 26 of the POMA.
When the Act itself provides for an inbuilt remedy, it is
not open to the petitioner to rush to this Court at the
133
stage of provisional attachment, which is yet to be

confirmed by the Adjudicating Authority.
16.In this context, it is necessary to refer to a
judgment of the Supreme Court in Raj Kumar Shivhare
v. Directorate of Enforcement reported in (2010) 4 SCC
772, wherein the Supreme Court while dealing with
an alternative remedy available under the FEMA Act
held that the Act cannot be bypassed and the
jurisdiction under Article 226 of the Constitution of
India cannot be invoked. In the following passages
found in paragraphs 31 and 32, the Supreme Court
had observed as follows:
"34.When a statutory forum is created by
law for redressal of grievance and that too in a
fiscal statute, a writ petition should not be
statutory forum of appeal on a question of law.
That should not be abdicated and given a go-
by by a litigant for invoking the forum of
35.No reason could be assigned by the
appellants counsel to demonstrate why the
appellate jurisdiction of the High Court under
Section 35 of FEMA does not provide an
be any reason since the High Court itself is the
appellate forum."
17.Very recently, the Supreme Court in United
Bank of India v. Satyawati Tondon reported in (2010) 8
SCC 110 dealt with SARFAESI Act and DRT Act and in
paragraphs 55 and 56, it had held as follows:
"27.It is a matter of serious concern that
despite repeated pronouncement of this Court,
134
the High Courts continue to ignore the

availability of statutory remedies under the
DRT Act and the SARFAESI Act and exercise
jurisdiction under Article 226 for passing orders
which have serious adverse impact on the
right of banks and other financial institutions
to recover their dues. We hope and trust that
in future the High Courts will exercise their
discretion in such matters with greater
caution, care and circumspection. ...."
(vi) "2011 (2) SCC 782 (Kanalyalal Lalchand Sachdev
versus State of Maharashtra)" wherein, the Hon'ble Supreme
Court has held in paragraphs 23 to 25 as under:
"23. In our opinion, therefore, the High

Court rightly dismissed the petition on the ground
that an efficacious remedy was available to the
appellants under Section 17 of the Act. It is well-
settled that ordinarily relief under Articles
226/227 of the Constitution of India is not
available if an efficacious alternative remedy is
available to any aggrieved person. (See:Sadhana
Lodh Vs. National Insurance Co. Ltd. & Anr.5;
Surya Dev Rai Vs. Ram Chander Rai & Ors.6;
State Bank of India Vs. Allied Chemical
Laboratories & Anr.7).
"24. In City and Industrial Development
Corporation Vs. Dosu Aardeshir Bhiwandiwala &
Ors.8, this Court had observed that:
"30. The Court while exercising its
jurisdiction under Article 226 is duty-
bound to consider whether:
135
(a) adjudication of writ petition involves

any complex and disputed questions of
facts and whether they can be
satisfactorily resolved;
(b) the petition reveals all material facts;
(c) the petitioner has any alternative or

effective remedy for the resolution of the
dispute;
5 (2003) 3 SCC 524; 6 (2003) 6 SCC 675;

7 (2006) 9 SCC 252; 8 (2009) 1 SCC 168
(d) person invoking the jurisdiction is
guilty of unexplained delay and laches;
(e) ex facie barred by any laws of
limitation;
(f) grant of relief is against public policy or
barred by any valid law; and host of other
factors."
25.In the instant case, apart from the fact
that admittedly certain disputed questions of fact
viz. non-receipt of notice under Section 13(2) of the
Act, non-communication of the order of the Chief
Judicial Magistrate etc. are involved, an
efficacious statutory remedy of appeal under
Section 17 of the Act was available to the
appellants, who ultimately availed of the same.
Therefore, having regard to the facts obtaining in
the case, the High Court was fully justified in
declining to exercise its jurisdiction under Articles
226 and 227 of the Constitution."
(vii) "Order of this Court in W.P.No.4194 of 2018, dated
26.02.2018 (M/s.VGN Property Developers Pvt.Ltd. rep. by
136
Managing Director versus The Deputy Director, Chennai)",
wherein, this Court has observed in paragraph 6 as under:
"6. It is not in dispute that the impugned

order is only provisional attachment order. It is
also not in dispute that the petitioner herein is
having a right to agitate the matter before the
adjudicating Authority by raising all the points
raised before this Court and seek for raising the
attachment. When such statutory remedy is
available to the petitioner before the
Adjudicating Authority, who is a fact finding
authority as well, this Court is not inclined
to entertain the writ petition that too,
challenging the provisional order of attachment.
It is further seen that the petitioner's attempt to
quash the FIR also failed, as this Court
dismissed the said Crl.O.P. by specifically
holding that unless the investigation gets
completed, this Court cannot jump into a
conclusion that the petitioner is innocent
bonafide purchaser and not privy to the alleged
crime. Therefore, without expressing any view on
the merits of the claim made in this writ petition,
the writ petition is disposed of, by granting
liberty to the petitioner to approach the
adjudicating authority and file appropriate
application and seek appropriate relief, as
provided under law. No costs. The connected
miscellaneous petition is closed."
137
(viii) "Judgment of this Court in W.A.No.1009 of 2018, dated
27.4.2018 (M/s.VGN Property Developers Pvt.Ltd. rep. by
Managing Director versus The Deputy Director, Chennai)",
wherein, a Division Bench of this Court, held in paragraphs 5 and 6
as under:
"5. In the above scenario, the learned Single

Judge has held in para 6 of the order as under:-
"It is not in dispute that the impugned
order is only provisional attachment order.
It is also not in dispute that the petitioner
herein is having a right to agitate the matter
before the adjudicating authority by raising
all the points raised before this court and
seek for raising the attachment. When such
statutory remedy is available to the
petitioner before the Adjudicating Authority,
who is a fact finding authority as well, this
court is not inclined to entertain the writ
petition that too, challenging the provisional
order of attachment. It is further seen that
the petitioner's attempt to quash the FIR also
failed, as this Court dismissed the said
Crl.O.P. by specifically holding that unless
the investigation gets completed, this court
cannot jump into a conclusion that the
petitioner is innocent bona fide purchaser
and not privy to the alleged crime.
Therefore, without expressing any view on
the merits of the claim made in this writ
petition, the writ petition is disposed of, by
granting liberty to the petitioner to approach
the adjudicating authority and file
appropriate application and seek appropriate
relief, as provided under law..."
138
6. Having heard the learned counsel appearing

for the parties and perused the order passed by the
learned Single Judge, we find that the learned Single
Judge has thoroughly appreciated the facts and
circumstances of the case and declined to interfere
with the impugned order of provisional attachment,
however, granted liberty to the appellant to approach
the adjudicating authority, who is the fact finding
authority. We do not find any illegality or irregularity
in the order passed by the learned Single Judge,
warranting interference with the same, except to
direct the adjudicating authority to expedite the
matter and pass order on merits and in accordance
with law after hearing both the parties. It is for the
adjudicating authority as a fact finding authority to
look into the grievance of the appellant with regard to
raising of provisional attachment or whether they are
genuine party are whether there is any camouflage
activity. The appellant is at liberty to raise all their
contentions even with regard to interim relief if any
and any other reliefs before the adjudicating
authority."
(ix) "Order of this Court in W.P.No.34172 to 34175 of 2017
dated 6.2.2018 (R.Kasaniya Begum versus The Deputy Director,
Directorate of Enforcement, Chennai and another)", wherein, a
Division Bench of this Court has held in paragraphs 2to 4 as
under:
"2.Heard the learned counsel for the

petitioners. For convenience, provisions relevant to
decide the petition is extracted below:-
139
Section 2(u) :-''Proceeds of crime'' means

any property derived or obtained, directly or
indirectly, by any person as a result of criminal
activity relating to a scheduled offence or the
value of any such property''
Section 3 :- Offences of Money-launderingµ

Whosoever directly or indirectly attempts
to indulge or knowingly assists or knowingly is
a party or is actually involved in any process or
activity connected with the proceeds of crime
and projecting it as untainted property shall be
guilty of offence of money-laundering
Section 5 (5) :-
5. The Director or any other officer who
provisionally attaches any property under sub-
section (1) shall, within a period of thirty days
from such attachment, file a complaint stating
the facts of such attachment before the
Adjudicating Authority.
(i) Paragraph 1 of Part A and Part B of the
Schedule, a report has been forwarded to a
Magistrate under section 173 of the Code of
Criminal Procedure, 1973 (2 of 1974); or
(ii) Paragraph 2 of Part A of the Schedule, a
police report or a complaint has been filed for
taking cognizance of an offence by the Special
Court constituted under sub-section (1) of
section 36 of the Narcotic Drugs and
Psychotropic Substances Act, 1985 (61 of
1985).µ
3. Insofar as this case is concerned, after

affording an opportunity to the petitioners under
Section 50 and being satisfied that prima facie
material against them and reason to believe that the
petitioners are in possession of proceeds of crime,
the complaint has been registered and it is under
investigation besides adjudication for attachment.
140
4. Under these circumstances, it cannot be

construed that the Authorities have no power under
Section 3 or 5 to proceed against the petitioners or
the complaint itself is bereft of material and liable to
be quashed. It is for the petitioners to participate in
the enquiry/investigation. On completion of
investigation, it is always open to the petitioner to
approach the appropriate Court under the
appropriate provision of law, for redressal of his
grievance, if any. Therefore, both on merits as well as
on the facts of the case, these petitions are not
maintainable and liable to be dismissed. Accordingly
dismissed. No costs. Consequently connected
miscellaneous petitions are closed."
(x) "Order of this Court dated 06.02.2018 in W.P.No.29821 &
29822 of 2017 (R.Yaser Arabath versus The Deputy Director,
Division Bench of this Court has held as under:
"The learned counsel appearing for the

petitioners submitted that the petitioners herein
sons of C.Rabeek Raja, against whom FIR has been
registered under the scheduled offence and now, the
Directorate of Enforcement has found that proceeds
of crime is in possession of these writ petitioners.
Therefore, notice has been served on them to show
cause why the provisional attachment shall not be
made. Based on the voluntary statement and other
materials collected during the enquiry, the
Competent Authority believe that the properties
found in the impugned orders are likely to be the
proceeds of crime and if it is not provisionally
attached before the adjudication, there is a
141
possibility of concealing those properties. Hence the

impugned order No.21/2017 dated 30.10.2017 has
been passed against the petitioners.
3.It is contended by the learned counsel
appearing for the petitioners that before passing the
order of provisional attachment, another opportunity
of hearing should have been given to them. Denial of
opportunity amounts to violation of natural justice.
4. On perusal of the impugned order, this
court could unable to find any violation. Before
passing the order of provisional attachment the
petitioners were given opportunity and only
thereafter being satisfied that there are materials to
believe the properties in the possession of the
petitioners are likely to be proceeds of crime, the
provisional attachment order has been passed to
avoid transfer or concealment. The order of
provisional attachment is strictly in confirmity to
Section 5 of the PMLA. The action of provisional
attachment has been initiated by the competent
authority only after registration of complaint of
schedule offences namely Sections 120 B, 420, 467
and 471 of IPC r/w Sections 3 and 4 of the Explosive
Substances Act. Further, it is only a provisional
attachment order and if at all the petitioners have
any merit to canvass, they can very well participate
in the adjudication proceedings and prove that the
properties in their possession are not proceeds of
crime. Since the matter has been seized by the
adjudication authority, we are restraining ourselves
from expressing any view on the merit of this case
except dismissing the writ petition as devoid of
merits."
(xi) "Order of this Court dated 27.02.2018 in W.P.Nos.34206
to 34221 of 2017 (Heeralal Versus The Deputy Director,
142
Division Bench of this Court has held as under:
"4.Under these circumstances, it cannot be

construed that the Authorities have no power under
Section 3 or 5 to proceed against the petitioners or
the complaint itself is bereft of material and liable to
be quashed. It is for the petitioners to participate in
the enquiry/investigation. On completion of
investigation, it is always open to the petitioner to
approach the appropriate Court under the
appropriate provision of law, for redressal of his
grievance, if any. Therefore, both on merits as well as
on the facts of the case, these petitions are not
maintainable and liable to be dismissed. Accordingly
dismissed."
49. All the above decisions, according to the learned
Additional Solicitor General would point to the fact that when
alternative remedy is provided under the statute, the same has to
be exhausted before invoking the power of this Court under Article
226 of the Constitution of India. According to the learned
Additional Solicitor General, only in exceptional cases where the
fundamental rights of the citizens are violated or action of the State
is wholly unjustified or where basic principles of natural justice are
violated, the Writ Court can step in and entertain the petitions. As
143
far as the cases on hand are concerned, they arose under PMLA
which Act admittedly provides initial action under Section 5(1) then
appeal to the Adjudicating Authority under Section 8(1) and further
appeal to the Tribunal under Section 26 and second appeal to the
High Court under Section 42 of PMLA. When such alternative
remedies are provided which are effective and purposive in terms of
the scheme of PMLA, it not open to these writ petitioners to
completely give a go bye to these remedies and approach this Court
by stalling the entire decision making process by the authorities
under PMLA.
50. The learned Additional Solicitor General would also
submit that the reasons as set forth by the first respondent in the
order passed under Section 5(1) of PMLA are on the basis of factual
finding in regard to several transactions of the petitioners during
the relevant period and how those properties have been acquired by
proceeds of crime as defined under Section 2(u) of PMLA, which
reads as under:
144
"2(u) "proceeds of crime" means any property

derived or obtained, directly or indirectly, by any person
as a result of criminal activity relating to a scheduled
offence or the value of any such property;
51. Therefore, this Court, exercising its extraordinary
jurisdiction under Article 226 of the Constitution of India, cannot
adjudicate factual matters and it must be left to the Adjudicating
Authority, the Appellate Tribunal and this Court to deal with the
merits and de-merits of the petitions and the action taken by the
Authority under the PMLA unless the action which is initiated is
blatantly prejudicial to the fundamental rights of the citizen, the
same cannot be questioned before this Court at the preliminary
stage by preventing the authorities under PMLA from applying their
mind and passing final orders of attachment.
52. According to the learned Additional Solicitor General,
'right to property' is circumscribed by certain limitations and
restrictions and in any event, the initial attachment, namely,
145
provisional attachment is only for a period of 180 days and without
awaiting the process of adjudication by the Adjudicating Authority
and without allowing due process to reach its logical end in terms
of the provisions of the PMLA, these petitioners have rushed to this
Court deliberately to avoid further action to be initiated under the
PMLA.
53. The learned Additional Solicitor General would also draw
the attention of this Court to a decision reported in "2010 Supreme
(Jhk) 588 (Hari Narayan Rai versus Union of India & Others)",
wherein, the learned Judge of the High Court of Jharkhand at
Ranchi, has observed as under in paragraph:
"9. In the circumstances, I am of the view that

the petitioner is not being prosecuted merely for any
act which was not a scheduled offence on the date
when it was committed. Therefore, the fundamental
right of the petitioner guaranteed by Article 20 (1) is
not being violated. "
146
54. In any event, the learned Additional Solicitor General
would submit that in the absence of fundamental rights being
violated, the right or the liabilities of the petitioners can be decided
only within the framework of PMLA and therefore, the present Writ
Petitions are completely misconceived and liable to be rejected.
55. According to the learned Additional Solicitor General, the
order passed under Section 5(1) of the PMLA is only an
administrative order and only thereafter, quasi judicial function
begins and therefore, since the subject orders are administrative in
nature, substantive compliance of provisions of the PMLA would
suffice.
56. As regards the contention of the learned Senior Counsel
appearing for the petitioners that illegal quarry is not a scheduled
offence, the learned Additional Solicitor General would submit that
while operating the quarry, the petitioners have committed various
offences punishable under various provisions of Indian Penal Code
147
and also violated certain provisions of Explosives Substance Act.
Therefore, such contention is absolutely devoid of merits and the
same is misconceived. The learned Additional Solicitor General
would submit that such submission is a result of desperation
shown on behalf of the petitioners.
57. In all, the learned Additional Solicitor General would sum
up that,
(i) these writ petitions are liable to be rejected on the ground
that the provisional attachment which is one of the impugned
orders in the Writ Petitions, containing sufficient reasons as
provided under Section 5(1) of the PMLA;
(ii) Show cause notice issued by the Adjudicating Authority
under Section 8(1) of PMLA is in terms of said Section satisfying the
requirement and further in the show cause notice, it is mentioned
that the requirement of the said section has been complied with,
namely, recording of reasons and such order can be obtained by
148
making necessary application to the Registry. Once the initial
orders issued under Section 5 and 8 of PMLA are in terms of the
provisions of PMLA, the question of intervention by the Court, is
not at all called for. More so, when the contentions of the
petitioners require adjudication of factual matters which
adjudication is not possible under the extraordinary jurisdiction of
this Court under Article 226 of the Constitution of India. In any
event, he would further submit that enough and more safeguards
are provided under PMLA by providing multiple appeal remedies
and therefore, the petitioners are not prejudiced at all and they are
not denied fair and reasonable opportunity. He would further
submit that the principles of natural justice cannot be applied
blindly and the same have to be applied in a given case with
reference to the scheme of PMLA.
(iii) These petitioners are charged with money laundering and
proceeded against under the provisions of PMLA and they cannot
be heard to complain about the violation of constitutional rights,
149
calling for this Court's intervention at the very preliminary stage
itself. The Court cannot come to the rescue of these persons at the
preliminary stage in the teeth of serious allegations of money
laundering and acquisition of wealth on the basis of proceeds of
crime allegedly committed by the petitioners. He would lastly
submit that the action initiated under PMLA does not affect the
fundamental rights of the petitioners. The impugned action cannot
be termed at this stage as wholly unjustified. Further, in view of
sufficient safeguards provided in the scheme of PMLA, the
petitioners cannot complain of violation of principles of natural
justice. Therefore, he would submit that the Writ Petitions have to
be rejected as not maintainable.
58. Heard the learned Senior Counsel, appearing for the writ
petitioners and the learned Addl.Solicitor General, appearing for the
respondents and perused the entire materials placed on record.
150
59. After the conclusion of the arguments, ultimately, this
Court has been entrusted with the task of deciding important and
serious legal issues which arise on behalf of the parties with
reference to the scope, import and adherence to the provisions of
PMLA and the exercise of power by the authorities in initiating the
action against the writ petitioners under the said enactment.
60. One of the initiatives undertaken by the Central
Government, on realizing that world over money-laundering poses
serious threat not only to financial systems of countries, but also to
their integrity and sovereignty and in order to obviate such threat,
PMLA was enacted in 2002 on the basis of political declaration
adopted by the United Nations General Assembly held in June,
1998 in which, India was a Member State. The Act was brought
into force with various provisions from 1.7.2005. The intention
behind the Act was to check the money-laundering as defined
under Section 3 of PMLA, which reads as under:
151
"3. Offence of money-Laundering.-Whosoever

directly or indirectly attempts to indulge or
knowingly assists or knowingly is a party or is
actually involved in any process or activity connected
proceeds of crime including its concealment,
possession, acquisition or use and projecting or
claiming it as untainted property shall be guilty of
offence of money-laundering."
61. Section 4 of PMLA deals with punishment for money-
laundering. Section 5 deals with provisional attachment of property
involved in money-laundering. Sections 6 to 11 deal with
constitution of Adjudicating Authorities and adjudication process.
62. The present challenge in these Writ Petitions is to the
action initiated by the respondents under Sections 5 and 8 of PMLA
on the aforementioned grounds. These writ petitioners questioned
the impugned action of the respondents on the ground that the
action is not as per the requirement of mandate of Sections 5, 6
and 8 of PMLA. In such circumstances, the provisional attachment
and the subsequent complaint and the show cause notice have to
152
be interfered with, as being wholly in discord with the relevant
provisions of PMLA. A singular emphasize has been made by the
learned Senior Counsel appearing for the writ petitioners that while
ordering provisional attachment by the first respondent, the
authority has not recorded the reasons to believe which is
mandatory under Section 5(1) of PMLA. In the absence of reasons
of such belief, the very initiation of provisional attachment is liable
to be rendered as null and void and further action pursued in
furtherance of provisional attachment becomes illegal and cannot
be maintained in law. The learned Senior Counsel appearing for the
petitioners would labour to point out in great detail as to how the
record of reasons is imperative and mandatory in terms of the
provisions of PMLA since constitutional right to property of the
citizens, cannot be infringed upon lightly and casually at the
instance of the Authority under PMLA, wherein, an explicit
provision as contained particularly in Section 5(1)(b) which provides
that the conduct of the property must impel the authority to initiate
action, which according to the learned Senior Counsel, is
153
completely absent in the initial order of provisional attachment
which is impugned in these Writ Petitions. Several judgments have
been relied upon as extracted supra to support his contentions that
unless the reasons recorded and communicated to the party
concerned, such action cannot be upheld, on the other hand, it is
liable to be interfered with. The learned Senior Counsel would
point out particularly a decision of the Delhi High Court in this
regard, in the matter of "J.Sekar versus Union of India & others,
etc." (2018 SCC OnLine Del 6523), wherein, several paragraphs of
the High Court's observation and reasoning had been extracted in
extenso. Apart from the decision of the Delhi High Court, the
learned Senior Counsel also relied on several decisions of the
Hon'ble Supreme Court in support of his contention that the record
of reasons must be real and meaningful and the same has to be
communicated to the persons concerned in order to fulfill the lofty
objectives of the principles of natural justice. Fulfillment of natural
justice being central to the fairness both queasi-judicial and
administrative actions and non-adherence to the same, will render
154
the action vulnerable to intervention by this Court while exercising
its extraordinary jurisdiction under Article 226 of the Constitution
of India. The learned Senior Counsel has made elaborate
submissions and the central theme of his submissions is that the
reasons as defined under Section 5(1) of PMLA is the very heart-
beat of the provisions which has to be strictly and scrupulously
followed without even slightest deviation, since it deals with
provisional attachment of the properties of a person before
adjudication akin to attachment before judgment.
63. According to the learned Senior Counsel, provisional
attachment order does not specifically record reasons that these
writ petitioners are likely to conceal, transfer or deal with the
properties in order to frustrate the proceedings to be initiated under
PMLA. In the absence of such reasons being recorded, the learned
Senior Counsel would submit that the very initiation of action
under Section 5(1) of PMLA rendered itself illegal and there cannot
be any further action on the basis of provisional attachment. The
155
decisions apart from the Delhi High Court, relied upon by the
learned Senior Counsel would deal with similar enactments, viz.,
Income Tax Act, 1961 and Narcotics, Drugs and Psychotropic
Substances Act, 1985, etc., wherein, similar provisions came up for
consideration before the Hon'ble Supreme Court, and the Hon'ble
Supreme Court has ruled that the Rules of natural justice are
foundational and fundamental concepts and the law is well settled
that the principles of natural justice are part of the legal and
judicial procedures. Although the Rules of natural justice are not
embodied in any particular enactment or regulation, but fulfillment
of the same must be found in every quasi and even in
administrative action by the State authorities. The learned Senior
Counsel would therefore submit that this Court is called upon to
render a finding as to whether the action as proposed by the
respondents herein, meets the standards as prescribed in the
provisions of PMLA under which the action was initiated and
pursued and as to the correctness of action in terms of law laid
down by the various High Courts and the Hon'ble Supreme Court of
156
India on the aspect, which is under consideration before this Court.
After all, the constitutional right to property cannot be trifled with
by the State authorities merely for the asking in the guise of
implementing the provisions of PMLA and if such action is upheld,
it would tantamount to approving the trampling upon the
constitutional right of the citizens by the State Authority with the
shield of PMLA.
64. Upon consideration of scholarly submissions of the
learned Senior Counsels who appeared for the parties, this Court
mindful of the paramount fact that the country being governed by
written constitution, this Court has to find a fine balance between
protecting the interest of the State as against the offenders of
money-laundering on one hand and on the other hand,
safeguarding the interest of the citizens of the State from being
proceeded unfairly, unreasonably in the guise of implementing the
provisions of PMLA. This Court, therefore, has to ultimately take
a call that any action by the State has to stand the test on the
157
touchstone of prejudice that is likely to be caused to the citizens
when the power vested in the authority is invoked under PMLA. No
doubt, this Court has to fairly accept the emphatic submission
made by the learned Senior Counsel appearing for the petitioners in
regard to record of reasons to believe and communication of the
same and requirement of adherence of foundational and
fundamental principles of natural justice to every State action, be it
either administrative or quasi-judicial, at the same time, this Court
is also duty bound to ensure that menace of money-laundering
cannot go uncurbed by protecting the offenders on the basis of over
dependence of application of principles of natural justice even in
extraordinary situations where State's interest ought to prevail over
individuals' interest. In such situation, this Court has to
necessarily draw its inspiration with reference to the objectives of
the legislation and the safeguards which are inbuilt in the
enactments and the opportunity that is envisaged in PMLA and
constitutional right of fair hearing being complied with.
158
65. In the above carved out scenario, this Court has to
proceed cautiously at the grave risk of faltering on either side of the
scales of justice in order to ensure that the purpose and object for
which, PMLA was enacted and introduced, ought not to be
defeated. At the same time, the action in giving force to the
provisions of PMLA by the authorities concerned, cannot be a seal
of approval by blindly brushing aside the concerns of the persons
who are affected by such action.
66. In the back drop of the above, this Court has to consider
important provisions of PMLA in order to come to a just and
reasonable conclusion and to set at rest the controversy as between
the parties. Chapter III of PMLA deals with Sections 5 to 11 which
Chapter provides for attachment, adjudication and confiscation.
Section 5(1)(b) provides for provisional attachment only for a period
of not exceeding 180 days. No doubt, the provision provides for
reasons to belief to be recorded in writing when an action is
initiated under Section 5(1), that provision is made more explicit in
159
Sub Section (b) wherein, it provides that the proceeds of crime are
likely to be concealed, transferred or dealt with in any manner
which may result in frustrating any proceedings relating to
confiscation of such crime. If the said provision is to be applied in
isolation, what follows is that it is incumbent upon the authorities
who initiated the action, has to necessarily record reasons to
believe in the aforesaid manner and in the absence of such reasons
being recorded, the action amounts to breach of the provision and
would render itself being declared as illegal. In fact, according to
the learned Senior Counsel appearing for the petitioners, the
reasons as provided in Clause (1) of Sub Section (b) of Section 5 is
the very heart-beat of the initial action to be initiated under PMLA
and if such action does not satisfy the requirement, the
consequential action thereafter, cannot be legally maintainable. No
doubt, the argument appears to be quite attractive, yet this Court
has to necessarily take into account the entire scheme of the said
Chapter III in order to inject larger purpose and object behind
enacting the PMLA.
160
67. Right to property is a constitutional right which, no Court
can have any quarrel with. At the same time, whether such right is
being infringed upon when the provisional attachment is ordered
under Section 5(1) of PMLA is what this Court has to eventually see
as provided under Section 5 (1)(b) wherein, provisional attachment
if ordered is only for a limited period of 180 days and such
attachment shall cease to have effect after the expiry of the period
or on the date of an order made under Sub Section (2) of Section 8,
whichever is earlier. The purport of the Act is to restrict the
maximum period of provisional attachment as 180 days. It is
possible that the provisional attachment will cease to have effect
even earlier than 180 days in case an order is passed to that effect
by the Adjudicating Authority under Section 8 of PMLA. Once the
attachment is characterized as provisional, it does not permanently
take away the right to property of the citizen after all such
provisional attachment is immediately followed by a complaint
under Sub Clause (5) of Section 5 of PMLA, which complaint has to
161
be preferred within thirty days from the date of attachment and
further action by the Adjudicating Authority under Sections 6 and 8
of PMLA. When the Adjudicating Authority takes upon the process
of adjudication, a person who faced with provisional attachment
order, is given an opportunity to participate in the adjudication and
under Section 8 of PMLA, an elaborate procedure has been
designed for conduct of the adjudication by the Adjudicating
Authority. In fact, as contended by the learned Senior Counsels on
behalf of the petitioners as well as the respondents that the Hon'ble
Supreme Court of India has suggested several amendments to the
original Act vide in the decision “Pareena Swarup versus Union
of India” (2008) 14 SCC 107), wherein, the Hon'ble Supreme Court
has suggested the qualification of the Chairperson to be appointed
as Adjudicating Authority and also person to be nominated to the
Tribunal, etc. On the basis of suggestions, the Adjudicating
Authority has to be constituted with the Body of Experts from
different fields. This was necessitated in order to ensure that the
power of quasi-judicial function need not be vested in the Executive
162
in order to ensure fairness of action. In fact, the learned Senior
Counsel appearing for the petitioners would submit that it was a
quasi-judicial function and a full-fledged judicial enquiry is to be
held by the Adjudicating Authority by drawing reference to various
provisions of the Adjudicating Authority (Procedure) Regulations,
2013.
68. From the above, it is very clear that the Adjudicating
Authority under the PMLA is called upon to conduct a full-fledged
enquiry and trial and only thereafter, the provisional attachment is
confirmed or rescinded. In the circumstances, this Court has to
see whether the absence of reasons to be recorded in terms of
Clause (b) of Sub Section (1) of Section 5, any irrepairable legal
injury is caused to the petitioners assuming for a moment that no
reasons have been spelt out in the provisional attachment order.
When a statute has provided a detailed enquiry to be conducted by
the Adjudicating Authority consisting of Experts, till the conclusion
of the enquiry, the attachment order can be in force only for a
163
limited period of 180 days and such provisional attachment cannot
said to be an infringement of constitutional right to property, since
constitutional right to property is always circumscribed by
operation of law. When a provisional attachment is made and such
attachment is liable to be overturned by any decision of the
Adjudicating Authority, can it be said that infraction of provision,
which gave rise to provisional attachment, can vitiate the action in
its entirety, the answer is 'No', for the simple reason that the
attachment itself is a provisional one and that too only for a period
of 180 days and thereafter, it ceases to operate and therefore, this
Court is of the considered view that till that time, there cannot be
any complaint by the person who is affected by the provisional
attachment order that his constitutional right to property has been
offended. Ultimately, application of principles of natural justice
have to be tested on the touchstone of higher principle, namely,
'prejudice' and in the scheme of PMLA, this Court can safely come
to a conclusion that no prejudice is caused to these writ petitioners
by ordering provisional attachment as it is always open to these
164
writ petitioners to complain to the Adjudicating Authority about the
manner in which, the provisional attachment is ordered. The
balance of convenience in regard to the provisional attachment
appears to be in favour of the State since ultimately, the citizen is
affected and suffers of provisional attachment only for a limited
period of 180 days and such provisional attachment is always
subject to the final outcome of the decision of the Adjudicating
Authority which Authority under the scheme of PMLA has to take a
decision before the expiry of period of provisional attachment in
terms of Sub Clause (3) of Section 5, which reads as under:
5. Attachment of property involved in money-

laundering:
(1) ..... ....
(2) ..... ....
(3) Every order of attachment made under sub-
section (1) shall cease to have effect after the expiry of
the period specified in that sub-section or on the date of
an order made under sub-section (2) of section 8,
whichever is earlier.
(4) ..... .....
(5) ..... .....
165
69. In the above circumstances, the framers of the law, have
in fact, intended to protect the right of citizens, namely, the
constitutional right to property' and such intention is well defined
in the entire scheme of PMLA. While so, this Court does not think
that the preliminary provision invoked by the Authority concerned,
was constitutionally detrimental to the interest of the writ
petitioners as they imagine to be so. Even otherwise, if the
provisional attachment order is not in the line with the spirit of
Clause (b) of Sub Section 1 of Section 5, the same can always be
raised before the Adjudicating Authority, as the Adjudicating
Authority is the competent and proper to understand the extent of
reasons to be recorded in writing on the basis of appreciation of
factual materials.
70. Although heavy reliance was placed by the learned Senior
Counsel appearing for the writ petitioners on the decision of the
Delhi High Court in "J.Sekar versus Union of India & others,
166
etc." (cited supra), but also other decisions of other High Courts,
including our High Court which held that the action initiated under
Section 5 of PMLA is only a preliminary action and the Courts need
not to interfere with such action at the threshold. In fact, the Delhi
High Court in "Gautam Khaitan & another versus Union of
India and another" reported in 2015 Supreme (Del) 165, recently
held that there are enough safeguards in PMLA itself which will
take care of rights of the citizens. In the words of the Delhi High
Court, which reads as under:
"14. The last issue, which requires consideration

is : whether there has been breach of principles of
natural justice. The scheme of the Act as discussed
above by me would show that, implicitly, the
legislature, has excluded the requirement to issue
notice or having to hear the person whose, property is
sought to be provisionally attached as this power is
vested in the designated / authorised officer to avoid
and / or prevent a situation, which would result in,
any proceeding, under PMLA, being frustrated. The
PMLA provides for issuance of notice and hearing at
the stage of section 8 proceedings before the
adjudicating authority, after a complaint under Section
5(5) is filed, having regard to the nature of power vested
167
in the designated / authorised officer. It is an emergent

power, invested in a senior officer of the DOE to deal
with a situation at hand, in the facts and
circumstances of a particular case. The fact that a post
facto hearing is provided under Section 8 of the PMLA,
in my view, rules out, by necessary implication, the
requirement to issue notice and of hearing at the stage
of provisional attachment, under Section 5(1) of the Act.
Therefore, complete opportunity was given to the
petitioner to agitate and advance its case. As a matter
of fact under PMLA, the decision of the adjudicating
authority can be assailed by way of an appeal before
the Appellate Tribunal. The appeal is maintainable
under Section 26 of the PMLA. There is, in addition, a
right available to an aggrieved party to prefer a second
appeal to this court under Section 42 of the PMLA. These
provisions clearly indicate that the legislature did not
intend to provide for a hearing and notice at the stage
of provisional attachment. [See Maneka Gandhi Vs.
UOI, (1978) 2 SCR 621 and Swadeshi Cotton Mills Vs.
UOI, (1981) 2 SCR 533].
14.1 The other question, which requires consideration,
is: whether the writ petition is maintainable for laying a
challenge to the order of provisional attachment. It is
trite to say that a remedy under Article 226 of the
Constitution can be availed of by an aggrieved party,
even where, a statutory remedy is provided, in two
168
broad situations. First, when it is a case of lack of

jurisdiction. Second, where there is a breach of
principles of natural justice.
14.2 As discussed above, at the stage of issuance of an
order of provisional attachment, no recourse could
have been taken to a writ petition under Article 226,
merely, on the ground that no notice was issued or, no
opportunity of hearing was given before passing the
order of provisional attachment. The reason for the
same, as indicated above, is, that a post facto hearing
is provided in the aftermath of a provisional
attachment being ordered. Section 8 of the PMLA,
provides for a full dress hearing and for grant of
complete opportunity to the aggrieved party in that
behalf. The legislature's intention, in the manner in
which, Sections 5 and 8 of the PMLA are structured,
makes that amply clear.
14.3 In so far as the first situation is concerned, there
is a very narrow leeway available to the petitioners to
come by way of a writ petition. The court ordinarily
would be circumspect in entertaining a writ petition at
the stage of provisional attachment, that is, at the
Section 5, stage. The aggrieved petitioners will have to
demonstrate, and the burden in that behalf would be
heavy, that there is, an absence of jurisdiction in the
designated / authorised officer directing provisional
attachment of his / her properties. Therefore, while not
169
shutting out completely access to a remedy under

Article 226 of the Constitution, the aggrieved party will
have to demonstrate that it is a case of complete lack

of jurisdiction. As to whether, this case would fulfil,
that criteria, my answer is, in the negative. The issues
raised in the writ petition could have been well nigh
dealt with by the adjudicating authority. The
adjudicating authority is free to ascertain as to whether
in a given action filed before it, the necessary
jurisdictional facts are present.
15. In these circumstances, I find no merit in the writ
petition. The writ petition and the pending applications
are accordingly dismissed. Consequently the interim
order dated 22.12.2014 stands vacated. Costs will
follow the result in the petition."
71. In fact, our High Court in "G.Srinivasan versus
Chairperson, Adjudicating Authority under PMLA 2002 and
others", reported in 2012 (1) MLJ 418, has held that against
provisional attachment, a Writ Petition cannot be entertained. In
fact, in series of orders passed by this Court both by learned single
Judge and Division Bench of our High Court, has consistently held
that in such matters, Writ Court's jurisdiction need not be
170
exercised. In fact, these orders were relied upon by the learned
Addl.Solicitor General of India, which decisions are in fact,
extracted supra.
72. Be that as it may, so much so is said about the absence of
record of reasons to believe by the first respondent while passing
the order under Section 5(1) of PMLA. A perusal of the order
passed under Section 5(1) of PMLA, which is dated 23.3.2018,
would show that elaborate details have been incorporated in the
order itself running to more than hundred pages. In fact, the
Authority has given extensive details in regard to contents of the
charge sheet and FIR as found in paragraphs 4 and 5 of the order.
Number of property transactions had been brought forth in the
final police report which was relied upon by the Authority and the
details of transactions are minutely incorporated in the order in
respect of each transaction in relation to several properties which
according to the Authority, are acquired from the proceeds of the
crime. This is not an order which could be construed as one of non-
171
speaking order bereft of any detail. Prima facie, it appears that the
Authority has applied his mind thoroughly and extensively on the
basis of various reports. In fact, the Authority has finally
concluded after incorporating every relevant detail of transactions
of the properties, that non-attachment of the properties would
likely to frustrate further proceedings under PMLA. Although the
learned Senior Counsel for the petitioners took much pains to
emphasize the fact that there cannot be a rubber stamp reasoning
and mere expression 'reason to believe' cannot be acceptable as it
must be reflected in the order in real sense. This Court is of the
view that such contention in the face of detailed order passed by
the Authority, cannot be countenanced on facts. When the
Authority who passed the order under Section 5(1) provides the
reasons for provisional attachment of the property. It is not for the
petitioners to question the reasons stating that the reasons were
not enough for provisional attachment in order to invoke the
extraordinary jurisdiction of this Court under Article 226 of the
Constitution of India. If the reasons are not sufficient enough and
172
falling short of requirement of Section 5(1)(b) of PMLA, according to
the perception of the writ petitioners, it is always open to them to
canvass those points and issues before the Adjudicating Authority
before whom, investigation, enquiry and trial will take place as a
full-fledged quasi-judicial function. The constitutional right to
property of the petitioners, whether it is affected or not can be
decided only if the decision is arrived at by the Adjudicating
Authority and not by the provisional decision taken by the first
respondent by invoking transitory power vested in him under
Section 5 (1) of PMLA. The constitutionality or otherwise of the
decision can be known only when a final order is passed attaching
the property and confiscating of the same to the Government and
not when a provisional order is passed.
73. As stated earlier, when provisional attachment is only for a
limited period of maximum 180 days, this Court does not see how
the constitutional right to property of the citizens can said to be
affected, when due process of law is set in motion. The decisions
173
as relied upon by the learned Senior Counsel appearing for the
petitioners in relation to other enactments which are pari materia
to PMLA are rendered in the context of those enactments and such
decisions cannot be mechanically imported and applied to the
factual matrix of the present case for more than one reason. Firstly,
there is full-fledged enquiry as guaranteed by the adjudication
process by the Adjudicating Authority under Section 6 and 8 of
PMLA which consists of body of experts. There upon a further
appeal is provided under Section 26 of PMLA to the Tribunal,
called Appellate Tribunal. In fact, Section 35 of PMLA itself would
provide for the Appellate Tribunal being guided by principles of
natural justice. The Appellate Tribunal is also vested with the
power of a Civil Court under the Code of Civil Procedure. Moreover,
a further appeal is provided to High Court under Section 42 of
PMLA against the decision of the Appellate Tribunal and in regard
to confiscation of property, the Special Courts are established
under Section 43 of PMLA. In all these provisions unequivocally
demonstrate that the petitioners are no way prejudiced by the
174
action proposed by the first respondent under Section 5(1) of PMLA.
Ultimately what comes to the judicial scrutiny is about the
prejudice suffered by the citizens concerned when any adverse
action initiated against them by the State. In view of the
safeguards as provided in the scheme of PMLA itself, this Court
does not understand as to how these writ petitioners can
legitimately complain their right being violated at the very
preliminary stage, action initiated against them by the respondents.
In fact, under Section 24 of PMLA, there is presumption in favour of
the prosecution, unless the contrary is proved by the person
charged with. Section 24 of PMLA reads as under:
"24. Burden of Proof.-In any proceeding

relating to proceeds of crime under this Act,- (a) in
the case of a person charged with the offence of
money-laundering under section 3, the Authority or
Court shall, unless the contrary is proved, presume
that such proceeds of crime are involved in money-
laundering; and (b) in the case of any other person the
Authority or Court, may presume that such proceeds
of crime are involved in money-laundering."
175
74. When this Court looks into the entire scheme of PMLA, it
does not find anything amiss or wrong in the action initiated by the
first respondent under Section 5(1) of PMLA for this Court to
interfere with at the present stage by derailing the further process
of adjudication by the authorities. When a full-fledged enquiry is
being initiated, this Court cannot obstruct the flow of judicial
process from reaching its logical end merely at the instance of these
writ petitioners who claim themselves to be unduly wronged, at the
initial stage itself. Even assuming that they have legitimate
grievance in support of their claim, it is nevertheless not open to
them to knock the doors of this Court at a very preliminary stage
itself when PMLA provides for complete solution in itself for
adjudicating by a body of experts, appeal to the Appellate Tribunal
and further appeal to this Court. The grievances if there are any,
can always be redressed before either Adjudicating Authority or
before the Appellate Authority or by way of further appeal before
this Court.
176
75. If every complain of violation of principles of natural
justice as projected by these Writ Petitioners in these writ petitions
is to be accepted and entertained by the writ Courts at the
preliminary stage itself, then the very spirit of the object of PMLA
stands defeated and the persons who are charged with the offence
of money-laundering, would be benefitted unjustly as they could
afford the luxury of these type of litigations with a sole purpose of
stalling further investigation of their cases. When the framers of law
have provided enough and more safeguards in PMLA itself, the writ
petitioners have to necessarily work out their remedies within the
framework of PMLA and they cannot be allowed to side step and
approach this Court at every stage of legal proceedings initiated
under PMLA as it would only lead to crippling of the effective
mechanism provided under PMLA.
76. Principles of natural justice are, no doubt, lofty and noble
which need to be scrupulously followed in all administrative and
177
quasi-judicial functions, but at the same time, the Court cannot
stretch the application of such principles to every stage of action
when sufficient safeguards are provided in the statute. Only in the
absence of property opportunity being envisaged in any enactment,
which ought to be afforded to the aggrieved party, then the
principles of natural justice can be pressed into service as the same
being foundational and fundamental concept of rule of law. When
the statute itself provides extensive safeguards in real terms and
the provisions of the statute envisages application of the principles
of natural justice, this Court is unable to appreciate as to how
these writ petitioners can premise their grievance on any legitimate
ground in regard to non-application of principles of natural justice.
This Court is of the considered view that the plea of non-application
of principles of natural justice in the given cases, is a self-serving
plea and has to be necessarily rejected as being without any
substance in reality.
178
77. As regards the legal contention of not providing reasons
recorded by the Adjudicating Authority under Section 8(1) of PMLA,
show cause notice issued by the Adjudicating Authority which is
one of the impugned orders in the Writ Petitions, can be referred to.
In the show cause notice itself, it is clearly mentioned that the
Adjudicating Authority recorded satisfaction in terms of Section 8(1)
of PMLA and a copy of the order can be applied by making an
application to the Registry. Once it is clearly mentioned in the
show cause notice itself that the Authority is satisfied about the
complaint and the reasons were also set forth which can be
obtained by approaching the Registry, this Court does not see as to
how these writ petitioners are prejudiced by such action of the
Adjudicating Authority. In fact, the learned Addl.Solicitor General
has submitted that the expression as found in Section 5 and
Section 8 are different since Section 5 requires reasons to be
recorded in writing, which requirement is absent in Section 8 of
PMLA. This position has to be appreciated when the Authority who
passes the order under Section 5(1), has given plethora of reasons
179
to the provisional attachment of the properties and if such reasons
are appealing to the Adjudicating Authority to its satisfaction, a
further action of issuing show cause notice on the basis of such
satisfaction, cannot be legitimately faulted with. In any case, it is
only a show cause notice issued against the writ petitioners and the
reasons for show cause notice either can be obtained by making an
application to the Registry or such reasons are self-explanatory as
found in the complaint as well as in the provisional order of
attachment which preceded the show cause notice. Therefore, this
Court does not find any merit in such contention that the action
initiated by the Adjudicating Authority is flawed and contrary to the
provisions of PMLA. The citation relied upon by the learned Senior
Counsel that at every stage, reasons need to be recorded as held by
the Delhi High Court in the earlier decision, may not fit in to the
factual matrix of the present case, particularly, for two reasons,
firstly, that the initial provisional order of attachment itself has
extensively dealt with several property transactions which acquired
from the proceeds of the crime and secondly, that the show cause
180
itself has advised that Section 8(1) has been satisfied by the
Adjudicating Authority vide the copy of satisfaction recorded by the
Adjudicating Authority can be obtained by applying to the Registry.
In such view of the matter, this Court does not find that the
objection raised on behalf of the writ petitioners in this regard, is
tenable. In any event, even now these writ petitioners can
approach the Adjudicating Authority and seek for any further
opportunity in case they are advised to do so. Therefore, this Court
is of the view that these Writ Petitioners are raising these objections
only with a motive to frustrate the proceedings initiated under
PMLA by stalling due process of law which was duly set in motion.
78.As regards the issue of Coram-non-judice is concerned, the
learned Senior Counsel appearing for the petitioners has drawn the
attention of this Court to various provisions of PMLA starting from
Section 6(2), wherein, it is provided for composition of Adjudicating
Authority which shall consist of Chairperson and two other
Members. Apart from the above, the learned Senior Counsel would
also draw the attention of this Court to the scheme of the
181
Adjudicating Authority (Procedure) Regulations, 2013, wherein, he
would submit that all these regulations and cumulative reading of
Section 6 would point to the fact that the Adjudicating Authority
shall consist of Chairperson and two Members and in the absence
of said coram, the Adjudicating Authority cannot initiate any
action. In fact, the learned Senior Counsel would rely on a decision
of the Hon'ble Supreme Court of India, reported in “(2008) 14 SCC
107 (Pareena Swarup versus Union of India)”, in which, the
original PMLA came to be amended on the basis of the suggestions
given by the Hon'ble Supreme Court, inter alia, suggesting the
qualification of the Members to be appointed as Adjudicating
Authority. The suggestions emanated from the Hon'ble Supreme
Court of India only on the basis that the Adjudicating Authority
being entrusted with the quasi-judicial function, has to be
necessarily equipped with Experts in the respective fields to deal
with serious charge of money-laundering. When such importance
has been given to the Adjudicating Authority which is entrusted
with the task of dealing with the constitutional right of the citizens,
182
the coram of the Adjudicating Authority has to be in place all the
time and in the instant case, admittedly, there is only one Member
instead of three Members. In such circumstances, the show cause
notice which is impugned in these writ petitions issued by the
Adjudicating Authority suffers from jurisdictional error and on this
ground alone, the impugned action needs to be interfered with. The
learned Senior Counsel would also submit that the decision of the
Hon'ble Supreme Court reported in “(1995) 5 SCC 159 (Karnal
Improvement Trust, Karnal versus Parkash Wanti (smt) (Dead)
and another)”, which pertains to the constitution of Land
Acquisition Tribunal by the Punjab and Haryana Government,
wherein, PMLA provided for three Member Bench and in that
context, the Hon’ble Supreme Court held that the adjudication by
three Member is mandatory. Likewise, in "Jalandhar
Improvement Trust, Jalandhar versus Improvement Trust
Tribunal, Jalandhar and others” (cited supra), the Punjab and
Haryana High Court has held that the Tribunal constituted under
the Punjab Town Improvement Act, 1922 suffered from coram non-
183
judice and the prescribed coram is mandatory. The Calcutta High
Court also in "Md.Tamijul Haque versus Md.Tahammul Haque
and Others" (cited supra), wherein, the Calcutta High Court has
held that Wakf Tribunal constituted by two Members suffers from
Coram non-judice as statute requires three Member Tribunal.
Same is the case in "Gujarat Enviro Protection and
Infrastructure Ltd. & others versus Union of India and others"
(cited supra), wherein, the Gujarat High Court has held that the
coram is mandatory. The learned Senior Counsel would submit
that this Court has granted two interim orders in view of the
absence of three Member Adjudicating Authority under the very
PMLA.
79. But looking at the entire scheme of PMLA, Section 6 and
other connected provisions of PMLA and regulations as referred to
by the learned Senior Counsel, this Court can infer that it is
possible to have less than three Member to act as Adjudicating
Authority. This inference is not without any definite reasons as the
184
language of Sub Section 7 of Section 6 provides for constitution of
Bench even by two Members. Sub Section 7 of Section 6 reads as
under:
"(7) If at any stage of the hearing of any case or

matter it appears to the Chairperson or a Member
that the case or matter is of such a nature that it
ought to be heard by a Bench consisting of two
Members, the case or matter may be transferred by
the Chairperson or, as the case may be, referred to
him for transfer, to such Bench as the Chairperson
may deem fit."
80. From the above, it could be seen that not only two Member
Adjudicating Authority can be constituted, but it can be even less
than Two. Likewise, Sub Section 14 of Section 6 of PMLA also
provides for functioning of Adjudicating Authority in the absence of
Chairperson, which reads as under:
"6(14) When the Chairperson of the

Adjudicating Authority is unable to discharge his
functions owing to absence, illness or any other
cause, the senior- most Member shall discharge the
185
functions of the Chairperson of the Adjudicating

Authority until the date on which the Chairperson of
the Adjudicating Authority resumes his duties."
81. In fact, Clauses (a) to (d) of Sub Section 5 of Section are
more explicit on this aspect, which are extracted as under:
(5) Subject to the provisions of this Act,-

(a) the jurisdiction of the Adjudicating
Authority may be exercised by Benches thereof;
(b) a Bench may be constituted by the
Chairperson of the Adjudicating Authority with one
or two Members as the Chairperson of the
Adjudicating Authority may deem fit;
(c) the Benches of the Adjudicating Authority
shall ordinarily sit at New Delhi and such other
places as the Central Government may, in
consultation with the Chairperson by notification,
specify;
(d) the Central Government shall, by
notification, specify the areas in relation to which
each Bench of the Adjudicating Authority may
exercise jurisdiction."
186
82. The above provisions make it very clear that it is possible
to have less than Three Members to constitute as Adjudicating
Authority.
83. In fact, in the decision of the Delhi High Court in "J.Sekar
versus Union of India & others, etc." (cited supra) relied upon
by both learned Senior Counsel for the petitioners and learned
Addl.Solicitor General for respondents, it was held that less than
three Member Adjudicating Authority is permissible under PMLA.
The Delhi High Court held that there can be a single Member of
Adjudicating Authority and appellate Tribunal under PMLA and
such single Member Bench need not mandatorily have judicial
members and can be administrative members as well. This case
was relied upon by the learned Addl.Solicitor General for the
purpose of contending that the issue of coram non-judice is not a
valid argument in the teeth of various provisions which explicitly
provide for formation of single Member Bench. This Court is in
agreement with the submission made by the learned Addl.Solicitor
187
General that it is not mandatory to have three Member Bench all
the time for all adjudication purposes. It is up to the Chairperson
of the Adjudicating Authority to form Bench containing one or two
Members as it deems fit in order to adjudicate the cases which are
placed for consideration before the Authority.
84. Be that as it may, after the oral arguments over long back
and also after submission of written arguments by the respective
parties, before the present order could be pronounced, on behalf of
the respondents, a Memo, dated 7.12.2018 was filed, wherein, it is
stated that pending pronouncement of the orders in these writ
petitions, in addition to the existing single Member Bench, second
Member was appointed on 17.07.2017 by Notification issued by the
Government of India and by further Notification dated 26.10.2018,
third Member was also appointed. According to the learned
instructing counsel for the respondents, the following Members are
now available as Adjudicating Authority as on date:
1. Dr.Devendra Singhai -Member Administration as Charmian

2. Shri Tusha V.Sha -Member Law
188
3. Shri Vinodanad Jha -Member
85. Therefore, the entire argument in regard to coram non-
judice is no more available for the petitioners and the impugned
show cause notice cannot be assailed on that ground. In any
event, this Court, before the submission of Memo, had gone into
the issue and found the arguments in regard to coram non-judice is
not valid with reference to Section 6 and other related provisions of
PMLA. Therefore, the arguments on that aspect advanced on behalf
of the petitioners has to necessarily fail de horse the subsequent
development as indicated above.
86. As regards the above issue of alternative remedy is
concerned, number of decisions have been relied on both the
learned Senior Counsel for the petitioners and the learned
Addl.Solicitor General for th respondents and this Court finds that
there are decisions either way in support of the petitioners and also
against them. Ultimately, this Court has to take a call whether the
availability of alternative remedies as provided under PMLA is a bar
189
to the institution of these writ petitions under Article 226 of the
Constitution of India. No doubt, there cannot be any quarrel with
the legal proposition as laid down by the High Courts as well as the
Hon'ble Supreme Court that existence of alternative remedy cannot
be a bar to entertain Writ Petition under Article 226 of the
Constitution of India if need arises. But in what context, the
Courts can entertain the Writ Petition in the face of availability of
alternative remedy has to be seen with reference to the statute
under which the dispute arises for consideration before this Court.
87. The Courts have repeatedly held that wherever there is a
complaint of violation of fundamental rights and wherever the
action of the State is wholly unjustified and wherever there is
violation of basic principles of natural justice, the Courts cannot be
a mute spectator and drive the parties to seek alternative remedies.
In such circumstances, the Courts have become alive in redressing
the grievances of the concerned citizens instead relegating them to
seek relief under alternative remedies available under a particular
190
statute. No doubt that any restriction placed in Writ Court while
entertaining the Writ Petition when alternative remedy is available,
is a self imposed limitation since it is always rule of discretion and
convenience and not rule of law. Therefore, this Court has to
necessarily see in the given context whether rule of convenience or
discretion or policy can be relaxed in favour of these writ petitioners
by entertaining these writ petitions when obviously multiple
remedies are provided under PMLA. First of all no fundamental
right of the petitioners being infringed in these cases as any such
complaint on that score is far fetching and untenable. Further, the
action per se by the respondents cannot be termed as wholly
unjustified nor can it be said that the impugned action being
violative of the basic principles of natural justice for the Writ Court
to extend its arm and entertain the Writ Petitions at a very
preliminary stage.
88.The argument regarding violation of principles of natural
justice and that the jurisdiction of Writ Court can be invoked, this
191
Court is of the view that such sweeping argument cannot be put in
a straight jacket formula and the same cannot be taken out of
context and apply to all situations. Any complaint of violation of
principle of natural justice has to be contextualized with reference
to the statute which gave rise to the action by the authorities
concerned. In the instant case, a full-fledged adjudication is to
unfold after issuance of show cause notice by the Adjudicating
Authority under Section 8 of PMLA. Thereafter, if the persons are
aggrieved, an appellate Tribunal consisting of Experts is being
available under Section 25 and an appeal could be filed under
Section 26. In case, the decision of the Tribunal is not to the
satisfaction of the person concerned, a further appeal is provided
under Section 42 to this Court. In fact, in the scheme of PMLA, a
further appeal to the High Court, which is more effective appeal
provided to the affected parties since the High Court can adjudicate
both factual and legal matters that arise for consideration unlike
the Writ Courts which cannot embark upon adjudication of factual
disputes. When the statute itself provides for multiple remedies
192
which are effective and fool proof in consonance with the
established principles of natural justice, this Court does not think
that the arguments advanced on behalf of the petitioners that
principles of natural justice had been violated even at the very
initiation of action against these writ petitioners and therefore,
filing of the Writ Petitions is only a remedy.
89. As stated earlier that the plea of principles of natural
justice, cannot be invoked at every considerable stage in order to
render any further action by the authority ineffective and void.
When the persons who are affected by any preliminary decision of
the authority, are provided with multiple effective remedies within
the statutory frame work, the plea of violation of natural justice
ought not to be entertained at preliminary stage even assuming
there was any violation as such. When a person is charged with
serious offences of money-laundering affecting the financial status
of the nation, cannot be heard to complain about violation of
principles of natural justice on the basis of own self-serving
193
perception that he/she being victimized by State action. If such
complaint is to be taken note of at every stage of action taken by
the authorities concerned, it will not sub serve the due process of
law set in motion against the alleged offenders under the statute. It
is always open the accused of the alleged offenders to make more
noise about the so-called violation of principles of natural justice
and such noise can be heard quite often in these type of matters
with a view to drag the proceedings and scuttle the efforts of the
authorities concerned to pin down the offenders to the crime in
furtherance of the provisions of the Act. Ultimately it boils down to
the fact that interference by this Court on the ground of violation of
principles of natural justice at every stage for the asking, would
ultimately end in stifling the efforts of the authorities in
implementing the provisions of the PMLA for which it is enacted.
Eventually, this Court has to balance between upholding the
principles of natural justice to the extent required and larger public
good. This Court is of the considered view that there exist no
tenable reasons or grounds to entertain these writ petitions as
194
PMLA itself provides for multiple effective remedies and these Writ
Petitions can have recourse to such remedies. In view of the same,
this Court is more inclined to accept the line of decisions cited on
behalf of the respondents than the decisions cited on behalf of the
petitioners that existence of alternative remedies under PMLA is an
effective bar to entertain the writ petitions.
90. As regards the issue of non-application of mind by the
Adjudicating Authority while initiating the action under PMLA is
concerned, the learned Senior Counsel for the petitioners would
submit that in the order passed by the first respondent towards
provisional attachment, some of the properties which are shown,
having been bought from the proceeds of the crime, which
properties were purchased before commencement of quarry
operation and therefore, there appears to be non-application of
mind on the part of the authority concerned. He would also submit
that the initial report which was relied upon by the first respondent
for charging the writ petitioners for money-laundering, was
195
discredited by the Government itself and therefore, there is clear of
lack of application of mind while issuing the notice under Section
5(1) of PMLA.
91. As regards the above contention is concerned, such
submissions can always be made before the Adjudicating Authority
by these writ petitioners since the Adjudicating Authority can
always go into the issue as to whether there was proper application
of mind by the initial authority who issued orders under Section
5(1) of PMLA. From the lengthy order passed by the first respondent
under Section 5(1), it could be seen that the appreciation of
detailed order would require adjudication of factual disputes with
reference to date of purchase of properties and dates of
transactions and various other allied factors which cannot be
undertaken by this Court, exercising its extraordinary jurisdiction
under Article 226 of the Constitution. Therefore, any complaint of
recording non-application of mind by the authority can always be
pursued with the alternative remedies that are made available
196
under PMLA. It is certainly not open to these writ petitioners to
highlight the said issue at the very initial stage itself in order to
obstruct further flow of judicial process under PMLA. Every
imagined infraction on the part of the concerned is sought to be
highlighted by these writ petitioners in order to seek this Court's
intervention at the formative stage of action initiated against them
under PMLA. Therefore, the submissions made by the learned
Senior Counsel on the aspect of non-application of mind is best to
be left to the Adjudicating Authority to decide and certainly it is not
for this Court to take note of such submissions at this stage.
92. As regards the issue of Rule Nisi is concerned, the learned
Senior Counsel would rely upon two decisions (cited supra) with
regard to non-production of documents and materials when Rule
Nisi is issued by this Court in these Writ Petitions. He would
submit that in the absence of production of materials, the entire
averments contained in the affidavit filed in support of the writ
petition became uncontroverted and admitted and inference has to
197
be necessarily drawn by this Court against the respondents. This
Court is unable to appreciate such arguments for the simple reason
that the main thrust of the arguments advanced on behalf of both
sides, is with regard to maintainability of the writ petitions, since
these writ petitions were filed at the stage of provisional attachment
and show cause notice issued by the respondents. In such view of
the matter, the question of production of any materials and
documents does not arise since battle front was open only for legal
submissions on the issue of maintainability or otherwise of the writ
petitions before this Court. Hence, this Court does not think much
merit in the submissions made by the learned Senior Counsel in
the context in which these Writ Petitions are being heard and
disposed of. In any event, the decisions cited by the learned Senior
Counsel pertain to a general proposition of law and the same
cannot be blindly applied in all factual situations regardless of the
context in which, the writ petitions are being heard and disposed
of. Ultimately, a consistent and sustained practice and the
procedure adopted by this Court is also to be taken into
198
consideration which practice and procedure can also have the
character of law. Therefore, the arguments of Rule Nisi does not
merit serious consideration and hence, the same is rejected.
93. As regards the contention that illegal quarrying is not one
of the scheduled offence under PMLA, the said contention raised by
learned Senior Counsel for the petitioners appears to be a
desperate argument advanced on behalf of the writ petitioners.
From the final report submitted by the police concerned, it could
seen that the petitioners have been charged with several offences
under the provisions of IPC and the Explosives Substance Act,
1908 and such offences with the result of illegal quarrying run by
these writ petitioners. The word 'illegal quarrying' per se may not
find place in the schedule of offence, nevertheless illegal quarrying
can give rise to several offences under various enactments
including IPC and this Court is unable to appreciate as to how such
a fragile argument could not advance on behalf of these writ
petitioners or warranting attention of this Court to such
199
submissions and to say the least such submission need to be
rejected out right as being quibbles and not really worth of this
Court's attention even for a second.
94. As regards the issue of non-conversant with the
vernacular language of the State by the Adjudicating Authority is
concerned, according to the learned Senior Counsel appearing for
the petitioners, since the Adjudicating Authority is not conversant
with vernacular language, there would not be proper application of
mind in regard to appreciation of various transactions which are
documented in Tamil. According to the learned Senior Counsel,
almost all the transactions like sale deeds, etc., are in Tamil and it
would be impossible for the Adjudicating Authority to appreciate all
the recitals in the documents to understand the nature and type of
transactions. Unless the Authority is conversant with the language
of Tamil, it would be next to impossible to appreciate any
explanation to be submitted by the persons charged with money-
laundering with supportive materials. Therefore, he would submit
200
that familiarity with vernacular language is a must in order to
effectively deal with adjudicatory process of this nature.
95. This Court is more perplexed than impressed by such
arguments advanced on behalf of the petitioners. There are
hundreds of languages/dialects being spoken to in this country in
various regions and it is impossible for Directorate officials and the
Adjudicating Authority to be conversant with every kind of
language/dialect they deal with when they come across offences
under PMLA. The documents which are in vernacular language can
always be translated in the language in which adjudication takes
place and on that ground, this Court is unable to appreciate that
the Adjudicating Authority suffers from any disability. It is the
usual practice in the Courts that wherever a Judge is not
conversant with any particular language, the documents always get
translated for the Judge to understand the import of the contents of
the documents. Therefore, lack of familiarity to the language
cannot be the reason for complaining by these writ petitioners that
201
the action cannot ipso facto result in transmission of non-
application of mind on the part of the authority concerned. Such
argument is too naive and puerile meriting not even a modicum of
consideration by this Court.
96. On conclusion of the arguments, the learned Senior
Counsels appearing for the petitioners would submit that 3rd
proviso has been inserted in Section 5 of PMLA recognizing the fact
that Writ Courts have been repeatedly approached by questioning
the very initiation of action by the authorities concerned under
Section 5 of PMLA. Therefore, the maximum period of 180 days
stood excluded from the time it is consumed in the pending
litigation before the Courts. Therefore, he would submit that the
Courts have started reviewing and deciding the correctness and the
validity of the orders passed by the authorities under Section 5(1)
since it deals with the constitutional right of the citizens.
202
97. The above arguments may appear to be quite attractive,
but looking at the entire scenario pragmatically, such proviso
became necessary ostensibly in view of large scale incidence of the
alleged money-laundering offenders approaching the Courts during
initial stage of action under PMLA. Such insertion is definitely
cannot be construed to be a recognition of right of persons like
these writ petitioners who approached this Court at the very initial
stage, but it is only a recognition of the ground reality by the
Parliament. Therefore, these Writ Petitioners cannot take advantage
of insertion of 3rd proviso to Section 5 of PMLA in order to bolster
the case for intervention of this Court at the stage of initiating
action under Section 5 of PMLA.
98. In the conspectus of above discussion, this Court would
sum up the following, viz.,
i) That the absence of recording of reasons to believe under
Section 5(1) of PMLA, does not result in violation of constitutional
203
right to property of the citizens since it was only a provisional
attachment which would be valid only for a maximum period of 180
days or less. Although the Section provides for record of reasons to
believe by the authority, failure to record at worst is only a
statutory infraction and the same can be pleaded before the
Adjudicating Authority. In such circumstances, non-recording of
reasons by the Authority initiating action under Section 5 of PMLA
becomes curable while initiating action under Section 8 of PMLA by
the Adjudicating Authority. It is not in doubt that under PMLA, a
full-fledged trial is envisaged before the Adjudicating Authority and
any initial infraction could always be rectified. Ultimately, it is the
Adjudicating Authority which will confirm the attachment and also
will recommend for confiscation of the property when such
opportunity is available before the Adjudicating Authority
consisting of experts, it cannot be gainsaid by these writ petitioners
that their interest is irrepairably prejudiced and their constitutional
right is violated.
204
ii) Further, nowhere in the Section itself, it has been
stipulated that the reasons must be communicated to the persons.
In the absence of such stipulation, these writ petitioners have no
right to claim that there should be communication of reasons in the
form of show cause notice before ordering provisional attachment.
The validity period of provisional attachment is only for a period of
180 days before confirmation by Adjudicating Authority and
therefore, the initial order has all the characteristics of show cause
notice and no further requirement is contemplated in the statute.
As far as the present case on hand is concerned, de horse the above
legal finding, this Court finds that the Authority has given reasons
in terms of the scheme of Section 5 and to what extent such
reasons could ultimately end up in confirmation or not, is for the
Adjudicating Authority to decide after a detailed enquiry to be
conducted under Section 8 of PMLA. Therefore, on merits, this
Court finds that submission that the Authority has not recorded
reasons is contrary to records and the same is liable to be rejected.
205
iii) The language used in Section 8(1) of PMLA is different from
what it is used in Section 5(1) of PMLA. Both the expressions are
different and distinct and the Adjudicating Authority is not required
under Section 8(1) to record reasons as in the case of the Authority
exercising under Section 5(1) of PMLA which means that the
Adjudicating Authority, on the basis of the complaint filed by the
initial authority under Sub Section 5 of Section 5 of PMLA, can
proceed with the adjudication process on the basis of subjective
satisfaction. In any event, the Adjudicating Authority has to follow
procedure provided under Section 8 as well as the procedure
contemplated under the Adjudicating Authority (Procedure)
Regulations 2013. Therefore, the writ petitioners are provided with
sufficient opportunities to put forth their plea before the
Adjudicating Authority. Moreover, even in the show cause notice
issued, it is mentioned that there is compliance of Section 8(1) of
PMLA which compliance can be verified by obtaining a copy of the
order by making necessary application to the Registry. Therefore,
these writ petitioners cannot successfully maintain their complaint
206
before this Court. Hence, this Court is of the considered view that
there appears to be no legitimate cause for complaining on this
aspect.
iv) The plea of violation of principles of natural justice can be
tested on the golden touchstone of prejudice and in this case, no
prejudice is occasioned or caused to the writ petitioners since they
have multiple alternative remedies as provided under PMLA before
the Adjudicating Authority under Section 8; and before the
appellate Authority under Section 26; and further appeal before
this Court under Section 42 of PMLA. Once multi-layered remedies
are provided for effective adjudication of disputes, the plea of
violation of principles of natural justice is baseless and unfounded.
v) The contention regarding coram non-judice, that the
Adjudicating Authority is manned only by a single Member also
cannot be countenanced with reference to explicit provision
contained in Section 6 of PMLA and allied provisions, wherein it is
207
provided for formation of Bench by less than three Members.
Therefore, the issue of coram non-judice is answered against the
writ petitioners, notwithstanding the fact that at the time of
pronouncement of this order, the Adjudicating Authority is
consisting of three Members.
vi) The plea of alternative remedy is not a bar for entertaining
the Writ Petition, can it best be a general proposition of law, but the
same cannot be applied to these writ petitions where the statute
itself provide for multi layered alternative appellate remedies, one
before the Adjudicating Authority, other before the Appellate
Tribunal and another before this Court. Moreover, in these cases,
there is no violation of any fundamental right nor action by the first
respondent can be termed to be wholly unjustified nor there was a
wholesale violation of principles of natural justice. In such
scenario, this Court is not inclined to transgress beyond its self-
imposed limitation not to entertain these writ petitions on the
ground of availability of multiple appellate remedies under PMLA.
208
vii) The contention as regards Rule Nisi is concerned, this
Court has dealt with the preliminary objection as to the
maintainability of the writ petitions since these writ petitions are
challenging the initial action of provisional attachment and show
cause notice and in such event, non-production of documents is
not material to the adjudication of a purely legal dispute as to the
maintainability of the writ petitions.
viii) The plea of non-application of mind must be tested with
reference to the factual aspects and the findings as found in the
order passed by the initial authority under Section 5(1) of PMLA. It
is certainly not open to this Court to render any finding on such
factual dispute by interjecting its opinion with the findings of the
authority who passed the order under Section 5(1), as such opinion
on factual matters does not fall within the domain of judicial review
exercised by this Court under Article 226 of the Constitution of
India.
209
ix) The submission regarding illegal quarrying per se may not
be one of the scheduled offence, but by such operation it gave rise
to several offences which are punishable under the provisions of
IPC and other enactments, like Explosive Substances Act, 1908 etc.
In the provisional attachment order various offences are
enumerated on the basis of final report by the police. Since this
argument is being canvassed in all its seriousness, the same may
be addressed by the Central Government by initiating appropriate
action to have illegal quarrying included in the schedule offences.
Illegal quarrying per se is a affront on the rule of law, as it involves
systematic plundering of national wealth and resources
endangering natural and salubrious human habitat. Such activity
will ultimately put the humanity as a whole to the precipice of
irredeemable disaster.
x) The submission of non-familiarity of local language by the
Adjudicating Authority cannot be a valid ground for this Court to
210
interfere with the impugned action initiated by the authorities
concerned as such argument is misconceived and the same is
without substance.
97. In the light of the above, this Court finds that these Writ
Petitions are not maintainable and therefore, all the Writ Petitions
are dismissed. All the miscellaneous petitions filed on behalf of the
petitioners shall consequently be dismissed. No costs.
Suk 03-01-2019
Index: Yes/No
Internet: Yes/No
211
V.PARTHIBAN, J.
Suk
PRE DELIVERY COMMON ORDER

IN W.P.(MD) NOS.11454, 14860 &
14894 TO 14899 OF 2018 and
W.M.P(MD)Nos.13450 to 13455,
10442, 10443 & 13399 of 2018
212
03-01-2019

Madras HC upholds PMLA provisional attachment orders

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Madras HC upholds PMLA provisional attachment orders

Uploaded by

Copyright:

Available Formats

1

BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT

Reserved on: 04.10.2018 Delivered on: 03 .01.2019

THE HONOURABLE MR.JUSTICE V.PARTHIBAN

W.P.(MD) Nos.11454, 14860 and 14894 to 14899 of 2018

W.P.(MD) No.11454 of 2018:

2. The Adjudicating Authority (PMLA),

PRAYER: Writ Petition filed under Article 226 of the Constitution of

impugned Provisional Attachment Order No.06/2018 dated

23.3.2018 in File No.ECIR/CEZO/04/PMLA/2014 passed by the 1st

respondent and the consequential complaint in OC No.930/2018

dated 12.04.2018 filed by the 1st respondent before the 2nd

respondent in respect of the petitioner's properties schedule III and

the consequential show cause notice dated 10.5.2018 issued by the

2nd respondent and quash the same as illegal.

For Petitioner : Mr.P.Wilson, SC for

For Respondents : Mr.G.Rajagopalan

disposed of vide this common order.

2. These Writ Petitions are challenging the action initiated by

the first respondent in passing the respective orders of provisional

attachment of properties under Section 5(1) of the Prevention of

Money Laundering Act, 2002 (hereinafter referred to ‘PMLA’) and

subsequent filing of complaints under Section 5(5) of PMLA by the

first respondent and consequential show cause notices issued by

the Adjudicating Authority, namely, the second respondent herein

in W.P.No.11454 of 2017, under Section 8(1) of PMLA.

3. The preliminary issues that were sought to be raised in

respect of these Writ Petitions on behalf of the petitioners, are as

i) The first respondent has not recorded reasons to believe

while ordering provisional attachment under Section 5

(1) of PMLA. In the absence of reasons to be recorded in

writing as per the said action, whether the provisional

attachment order is sustainable as the same being

ii) The Adjudicating Authority while issuing show cause

notice under Section 8(1) of PMLA, must have reason to

believe that a person has committed offence under

PMLA. Whether in the absence of reasons, the show

cause notices issued under Section 8(1) of PMLA are

sustainable as being contrary to the provisions of PMLA?

iii) Whether non-record of reasons and non-communication

of reasons can be held to be violation of the established

principles of natural justice?

iv) The Adjudicating Authority shall consist of Chair-Person

and two other Members under Section 6(2) of PMLA.

Presently, the Adjudicating Authority has only one

Member and therefore, whether the action initiated by

the Adjudicating Authority suffers from coram non

v) Whether the Writ Petitions are maintainable on the

ground of availability of alternative remedies provided

vi) Whether the action initiated by the Authorities under

PMLA, on the face of it, suffers from non-application of

mind and requires to be interfered with even at the stage

of show cause notice?

by the Writ Court, while so, in the absence of production

of relevant documents, whether the Court would have

any option except to draw adverse inference against the

viii) Whether offence of illegal quarrying is one of the

scheduled offences under PMLA, warranting action under

ix) Whether the Adjudicating Authority, being non-

conversant with the vernacular language of the state, is

able to appreciate transactions of various properties

which are documented in vernacular language (Tamil)?

4. On behalf of the Writ Petitioners, the above preliminary