Safiya Malik

The High Court of Jammu and Kashmir and Ladakh Division Bench of Justice Sanjeev Kumar and Justice Sanjay Parihar has dismissed appeals challenging an Appellate Tribunal order passed in proceedings under the Prevention of Money Laundering Act, 2002, and has upheld the Tribunal’s direction sending the matter back for fresh consideration. The dispute arose after a provisional attachment was confirmed by the Adjudicating Authority in relation to alleged movement of funds said to be linked to unlawful activities, and the Tribunal later set aside that confirmation for want of adequate disclosure to the noticees, ordering a fresh process. The Bench held that the Tribunal’s appellate authority under Section 26(4) is broad and includes remand as an ancillary consequence of setting aside an order, especially where the decision is affected by procedural unfairness.

The appeals arose from proceedings under the Prevention of Money Laundering Act, 2002, concerning provisional attachment of immovable property by the Directorate of Enforcement. The appellants were promoters and family members associated with a private company alleged to have received funds from illegitimate sources. One of the appellants was arrested by a central investigating agency on allegations of acting as a conduit for transferring funds linked to unlawful activities, while another appellant was not named in any FIR, ECIR, or criminal complaint.

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A provisional attachment order was passed attaching property standing in the name of one appellant. Thereafter, a complaint was filed before the Adjudicating Authority, show cause notices were issued, and the attachment was confirmed under Section 8 of the Act. Appeals were preferred before the Appellate Tribunal, which set aside the confirmation order on the ground that “reasons to believe” had not been furnished to the appellants, thereby violating principles of natural justice, and remanded the matter for fresh adjudication. The appellants challenged the remand, contending that the Tribunal lacked such power and that the provisional attachment had lapsed by efflux of time.

The Division Bench examined the scope of appellate powers under Section 26 of the Prevention of Money Laundering Act, 2002. The Court observed that “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.”

Referring to settled precedent, the Bench stated that “an order of remand necessarily annuls the decision which is under appeal before the appellate authority.” The Court recorded those appellate powers to confirm, modify, or set aside an order inherently include ancillary and consequential powers required to give effect to such setting aside.

Addressing the contention that statutory tribunals lack inherent powers, the Court observed that “the power to remand being a concomitant power of an Appellate Authority vested with the power to annul or set aside an order appealed against, has neither been taken away nor excluded by the statute.”

On the argument relating to lapse of provisional attachment, the Court stated that “the Appellate Tribunal has only set aside the confirmation order and not quashed the proceedings before the Adjudicating Authority.” It further observed that adjudication proceedings could continue notwithstanding expiry of the provisional attachment period.

The Bench noted that denying remand power would result in a situation where “the Tribunal, after setting aside an order on the ground of procedural error or a technicality, would be left helpless.” It recorded that such an interpretation would render appellate jurisdiction ineffective and illusory.

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The Court directed that “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.”

In relation to the connected matters, the Court directed that “the judgment rendered in RFA (OS) No.1/2025 shall govern the disposal of these appeals, as the issue involved herein is identical to the one decided in the said appeal. 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, Deputy Solicitor General of India, with Mr. Faizan Ahmad, CGC

Case Title: Sarwa Zahoor & Ors. v. Deputy Director, Directorate of Enforcement & Anr.
Case Numbers: RFA (OS) No.1/2025 c/w RFA (OS) Nos.2 & 3 of 2025
Bench:  Justice Sanjeev Kumar, Justice Sanjay Parihar