Power of Remand of PMLA-Appellate Tribunal: Legislative Intent, Judicial Interpretation and Operational Challenges

The exercise of powers by the PMLA-AT, particularly its authority to remand matters to the lower authorities under PMLA, is fraught with complexity, giving rise to interpretational and operational issues.

The legislative intent behind the extensivity of the procedural framework for attachment of property under the Prevention of Money-Laundering Act, 2002 (PMLA) is to ensure a systematic mechanism of checks and balances over the wide amplitude of powers of attachment granted to the Enforcement Directorate (ED).

However, instances of procedural irregularities in attachment proceedings often results in challenges to such attachment orders before the Appellate Tribunal constituted under PMLA (PMLA-AT).

Notably, the exercise of powers by the PMLA-AT, particularly its authority to remand matters to the lower authorities under PMLA, is fraught with complexity, giving rise to interpretational and operational issues with respect to the following:

1. Scope of power of the PMLA-AT to remand the matter back to the adjudicating authority (AA)/the ED.

2. The interplay of such power of remand with the statutory framework of PMLA.

3. Practical implications of exercise of such power upon the attachment proceedings.

Scheme of PMLA and scope of powers of the PMLA-AT

The ED is empowered to provisionally attach a property, if it reasonably believes the property to be proceeds of crime.¹ Upon such attachment, the said ED Officer shall, within 30 days, file a complaint before the AA seeking confirmation of the provisional attachment. Upon receipt of such complaint, the AA may initiate adjudication proceedings to determine whether any/all properties provisionally attached are involved in money laundering and pass an order within 180 days from the date of the provisional attachment, either confirming or rejecting such attachment.² An appeal against the order of the AA shall lie before the PMLA-AT.³

The PMLA-AT is empowered⁴ to pass such orders as it thinks fit, confirming, modifying or setting aside the order of the AA. Notably, the legislature does not explicitly provide any authority to the PMLA-AT to remand a matter to any lower authorities, i.e. the AA or the ED.

Accordingly, the issue that often arises is whether the power to remand a matter to the lower authorities may be inferred or implied solely through interpretation, especially when the legislature has not expressly conferred any such authority.

In this regard, the Supreme Court in Union of India v. Umosh Dhaimode⁵ has commented upon the existence of such power to remand on the basis of purposive interpretation of the provisions of the Customs Act, 1962 (Customs Act). Notably, Section 128-A, Customs Act empowered the appellate authority under the legislation to confirm, modify or annul the impugned order. However, the said provision did not confer an express power of remand upon such appellate authority. Nonetheless, the Supreme Court adopted a liberal approach and held that an order of remand necessarily annuls the decision which is under appeal before the appellate authority and, therefore, the appellate authority cannot be said to have been divested of power to remand a matter.

However, a contrary view was taken by the Supreme Court in MIL India Ltd. v. CCE⁶ wherein the Court asserted the necessity of identifying the legislative intent behind the powers accorded to the appellate authority under Section 35-A, Central Excise Act, 1944. The Court stated that once the power of remand stood withdrawn from the appellate authority by way of an amendment to the legislation, such a power cannot be read into the statute. Thus, an appellate authority cannot exercise such power, and remand matters to lower authorities.

In the specific context of PMLA, the following judgments have been rendered on the instant issue:

1. The Karnataka High Court in Enforcement Directorate v. Devas Multimedia (P) Ltd.⁷ emphasised the absence of a specific power of remand under Section 26(4) while placing reliance upon the judgment of MIL India case. The Court held that the PMLA-AT, while setting aside an order passed by the AA, does not have any jurisdiction to remand the matter back to the AA for reconsideration. However, it is worth mentioning that the Court distinguished the judgment of Umosh Dhaimode case upon an erroneous premise that Section 128-A, Customs Act had an express provision for remand of matters.

2. However, the Calcutta High Court in Partha Chakraborti v. Enforcement Directorate⁸ took a contrary view by placing reliance upon the judgment of Umosh Dhaimode case to rationalise the existence of the PMLA-AT’s jurisdiction to remand matters to lower authorities. The Court relied upon the wide amplitude of the expressions “such orders as it deems fit” and “setting aside” as mentioned under Section 26(4) PMLA, observing that an order of remand would imply setting aside the order appealed against.

3. Further, referring to the aforesaid Calcutta High Court judgment, the Jammu & Kashmir High Court in Sarwa Zahoor v. Enforcement Directorate⁹ held that Section 26(4) PMLA clearly confers jurisdiction with the PMLA-AT to remand the matter because an order of remand necessarily annuls and sets aside the order appealed against. The Court also expressed its dissent against the literal interpretation of Section 26(4) taken by the Karnataka High Court in Devas Multimedia case¹⁰, stating that such an interpretation would give rise to a paradoxical situation where the PMLA-AT, after setting aside an order on the ground of procedural errors, would be rendered powerless to remand and direct fresh consideration on merits.

In view of the foregoing and given the pre-existing statutory constraints under PMLA practical challenges may arise in implementing directions of the PMLA-AT upon remand of a matter especially in the absence of express framework for enforcement of such directions.

Implementation challenges of the PMLA-AT’s directions

When the PMLA-AT exercises the power of remand, it sets aside the confirmation order and the matter is restored back to the AA at the stage of the original complaint to allow the AA to determine whether any/all properties provisionally attached are involved in money laundering and pass a fresh order either confirming or rejecting the provisional attachment order.

As stated above, PMLA prescribes a period of 180 days for confirmation of a provisional attachment order and if the confirmation is not granted within this period, then the provisional attachment ceases to exist. Although such provisional attachment may initially be confirmed within the stipulated period, the practical likelihood of the 180-day period continuing to survive at the subsequent remand of the matter to the AA is negligible. Thus, at the time of remand, the provisional attachment order may cease to have effect due to efflux of time, thereby not allowing the AA to continue the adjudication proceedings. Interestingly, even if the PMLA-AT is said to have inherent power to remand, there is still no power to extend the time-limit for provisional attachment.

Further, PMLA does not provide any limitation period within which the AA would be required to pass an order confirming/rejecting the provisional attachment. Thus, in absence of any such limitation/procedure provide under PMLA, is the AA vested with unlimited time to conduct the adjudication, and will the properties provisionally attached will remain under attachment indefinitely till an order is passed by the AA, are questions which are contentious.

In this regard, reference may be made to the following judgments:

1. The Supreme Court in Kaushalya Infrastructure Development Corpn. Ltd. v. Union of India¹¹, wherein it has been observed that adjudication proceedings before the AA under PMLA can operate independent of the provisional attachment order. In this case, the Court was ascertaining the validity of the adjudication proceedings under PMLA after the provisional attachment order had been set aside by the High Court.

2. Relying on the aforesaid judgment, the Calcutta High Court in the Partha Chakraborti case¹² and the Jammu & Kashmir High Court in the Sarwa Zahoor case¹³ have held that when the PMLA-AT has set aside the order of the AA without quashing the entire adjudication proceedings before the AA, and the order originally passed by the AA was not time-barred, then on remand, the AA would be put in the same position in which it stood at the time of passing the original order. Accordingly, the High Court in this case held that on remand, the AA can conduct adjudication proceedings under Section 8 and pass fresh order.

The courts have taken a view that provisional attachment and adjudication proceedings are independent proceedings and that the adjudication can continue even if provisional attachment is set aside. Thus, it can be argued that mere restoration of the case back to adjudication stage does not ipso facto have the effect of provisional attachment if such attachment has otherwise seized to have effect due to efflux of time.

Moreover, since PMLA does not prescribe any timeline for completion of remanded adjudication proceedings by the AA, the PMLA-AT must prescribe the same while passing the remand order. In absence of any such directions regarding the period for disposal of such matter, the same may result in prolonged adjudication proceedings.

Alternatively, in such cases, the aggrieved person may take a position that the AA should pass the order within a reasonable period. In case, the AA does not complete the adjudication within the time-bound manner, the same may be challenged before the High Court in writ.

Conclusion

The question of whether the PMLA-AT possesses the authority to remand matters to the AA or the ED underscores a significant interpretational and operational challenge within the statutory framework of PMLA. While Section 26(4) PMLA does not expressly confer such power, judicial pronouncements have, through purposive interpretation, expanded its scope to include remand as an implied authority. This approach, though pragmatic, raises concerns about legislative intent and consistency in enforcement.

Further, the practical implications of remand are inherently complex. The statutory scheme prescribes a 180-day period for confirmation of provisional attachment orders under Section 5. However, when a matter is remanded after appellate intervention, the original attachment order often lapses due to efflux of time, creating uncertainty regarding the continuation of adjudication proceedings. Although, the Supreme Court in the case of Kaushalya Infrastructure¹⁴ recognised the independence of adjudication under Section 8 from provisional attachment under Section 5, the absence of explicit statutory guidance on this interplay leaves room for procedural ambiguity.

Further, PMLA does not stipulate any timeline for completion of remanded proceedings by the AA. This lacuna risks prolonged adjudication, undermining the legislative intent of expeditious disposal and limited duration of provisional attachments. In effect, while judicial interpretation has sought to fill the gaps regarding remand powers, the operational framework remains vulnerable to inconsistencies, necessitating legislative and procedural reforms.