Appellate Tribunal Under PMLA Has Inherent Power To Remand Matters To Adjudicating Authority: Jammu & Kashmir High Court
Deekshitha Sharmile
The High Court of Jammu & Kashmir and Ladakh Division Bench of Justice Sanjeev Kumar and Justice Sanjay Parihar held that the Appellate Tribunal under the Prevention of Money Laundering Act, 2002 possesses an inherent power to remit matters to the Adjudicating Authority after setting aside a confirmation of provisional attachment, this authority arising as a necessary incident of its appellate jurisdiction. The Bench observed that the ability to remand is an essential attribute of any appellate forum, and that without such power, setting aside orders on technical or procedural grounds would render the appellate jurisdiction ineffective. Upholding the Tribunal’s order, which annulled the confirmation for non-disclosure of “reasons to believe” yet sent the case back for fresh proceedings, the Court dismissed the appeals and sustained continuation of adjudication under the PMLA.
M/S Trison Farms and Construction, a private limited company promoted by the appellants, came under investigation after allegations that funds were transferred from Pakistan and the Pakistan High Commission in Delhi to persons in Kashmir. The National Investigating Agency seized documents indicating that one of the appellants had received Rs.1,64,10,000/- during 2015–16 from illegitimate sources and distributed it to individuals engaged in separatist activities.
Following this, the Deputy Director of the Directorate of Enforcement issued a provisional attachment order in March 2019 against property in Gurgaon registered in the name of one appellant. The Adjudicating Authority later confirmed the attachment in August 2019 after issuing a show-cause notice. The appellants challenged the confirmation before the Appellate Tribunal, which set aside the order on grounds of non-communication of “reasons to believe” and remanded the matter for fresh proceedings.
The appellants then approached the High Court, contending that the Tribunal lacked jurisdiction to remand and that the provisional attachment had lapsed by efflux of time under Section 5 of the Prevention of Money Laundering Act, 2002. The respondents argued that the Tribunal’s powers under Section 26(4) included remand as a consequential order and that adjudication proceedings could continue despite expiry of provisional attachment.
The Court recorded: “From a plain reading of Section 26, in particular subsection (4) thereto, it is abundantly clear that the words ‘may pass such orders thereon as it thinks fit’ are of the widest amplitude and would vest in the Appellate Tribunal powers of remand as consequential to the power to set aside the order appealed against.”
It further stated: “An order of remand necessarily annuls the decision which is under appeal before the appellate authority. The appellate authority is also invested with the power to pass such order as it deems fit. Both these portions of the aforesaid provision, read together, necessarily imply that the appellate authority has the power to set aside the decision which is under appeal before it and to remand the matter to the authority below for fresh decision.”
The Court observed: “Section 26(4) of the PMLA empowers the Appellate Tribunal to pass such orders as it thinks fit including confirming, modifying or setting aside the order appealed against. The wide amplitude of the expression ‘such orders as it deems fit’ and the word ‘setting aside’ clearly confers jurisdiction in the Tribunal to remand the matter as an order of remand would imply setting aside the order appealed against.”
It recorded: “If we were to concede that the appellate Tribunal can only confirm, modify or set aside the order of Adjudicating Authority appealed against and cannot remand the matter, it would present a paradoxical situation where the Tribunal, after setting aside an order on the ground of procedural error or a technicality, would be left helpless and allow the appellants to reap the fruits of procedural error or of a mere technicality.”
The Court stated: “The power to remand is an important postulate of any authority exercising appellate jurisdiction and such a power is a necessary concomitant of the powers of the Appellate Authority to do complete justice between the parties in the absence of which the power to be exercised by the Appellate Authority would become illusory and ineffective.”
On the issue of lapse of provisional attachment, the Court recorded: “The fact that the petitioner has succeeded before the High Court, does not per se result in nullifying the adjudication proceedings, which, nevertheless, can proceed and need to be taken to its logical end by the Adjudicating Authority in accordance with law.”
It further observed: “The Appellate Tribunal has only set aside the confirmation order, not the proceedings before the Adjudicating Authority under Section 8 of the Act of 2002. The Appellate Tribunal, by setting aside the confirmation order and remanding the matter back to the Adjudicating Authority, has merely restored the proceedings to the stage at which the Adjudicating Authority had passed the confirmation order.”
The Court directed: “Viewed thus, we find no merit in these appeals and the same are, accordingly, dismissed. Interim orders, if any, shall stand vacated. Consequently, the order of Appellate Tribunal is upheld.”
“The judgment rendered in RFA (OS) 1/2025 shall govern the disposal of these appeals, as the issue involved herein is identical to the one decided in the said appeal. Accordingly, both these appeals are also dismissed, and the orders of the Appellate Tribunal upheld.”
Advocates Representing the Parties
For the Petitioners: Mr. R.A. Jan, Senior Advocate with Mr. Shahid Habib, Advocate
For the Respondents: Mr. T.M. Shamsi, DSGI with Mr. Faizan Ahmad, CGC
Case Title: Sarwa Zahoor & Another vs Deputy Director, Directorate of Enforcement & Another
Case Number: RFA (OS) No.1/2025 c/w RFA (OS) No.2/2025 & RFA (OS) No.3/2025
Bench: Justice Sanjeev Kumar, Justice Sanjay Parihar
