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Confidentiality of ' ' Under : Refers Conflicting Views to Larger Bench
The , through Hon’ble Mr. Justice Manish Choudhury, has sparked a significant legal debate regarding the internal procedural fairness of the (ED). Faced with conflicting interpretations on whether the " "—a prerequisite for attaching property under the —should remain a confidential internal document or be disclosed, the Court has referred the matter to a larger bench.
The Backdrop of the Dispute The petitioner, Mrig Mrinal Dhawan, challenged a (PAO) issued by the . The ED had attached three plots of land belonging to the petitioner, alleging that he was part of a chain involving the fraudulent generation and utilization of Input Tax Credit (ITC). The petitioner’s core grievance was that the ED failed to observe , arguing that the " ," which grant the authorities the extraordinary power to freeze assets, should not only be kept confidential but also that their inclusion within the PAO itself was a .
The Conflict of Jurisprudence Justice Manish Choudhury noted a distinct friction between coordinate bench rulings. While the decision in held that " " are strictly confidential and need not be furnished to the affected party, the current Court expressed deep skepticism toward this "revenue-centric, secret administrative" approach.
Drawing a parallel to the evolution of Income Tax jurisprudence—where the process moved from internal administrative secrecy to transparent, taxpayer-centric scrutiny—Justice Choudhury suggested that the current interpretation of PMLA may need a modern reset toward the .
Key Observations The Court underscored that the right to hold property, while not a fundamental right in the same sphere as personal liberty, is still a that cannot be violated without authority of law. The observations include:
-
On Transparency:
"If the reason to believe is made part of the PAO, the same would be in alignment with the constitutional
and fair play; and the same would lessen the possibility of subjective fishing expeditions."
-
On
:
"Existence and validity of the ‘
’ goes to the root of the power to arrest [and attach]. On the reading of the ‘
’, the court must form the ‘
’ on the validity of the exercise."
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On
:
"The Court cannot read into a restriction which the legislature itself has not incorporated. From the above analysis, this Court does not reach a conclusion that if the reason to believe... is made part of the PAO, the PAO would suffer from any kind of illegality."
Implications of the Reference By referring the questions—
(i) whether the " " are confidential in character, and
(ii) whether including them in a PAO constitutes a —to a larger bench, the has signaled that the current "sealed envelope" culture regarding PMLA attachments may be overdue for a judicial overhaul.
For now, the legal community awaits a definitive ruling. If the larger bench tilts toward the view expressed by Justice Choudhury, it could mandate a shift toward greater transparency in how the ED initiates asset seizures, ensuring that noticees are not left in the dark when their financial assets are jeopardized by the state.
Final Decision Language Directing the Registry to place the matter before the Chief Justice, the order concluded:
"This Court is, therefore, also of the considered view that from the standpoint of judicial consistency, the issue requires to be referred to a larger bench for a resolution... The matter is to be placed before the Hon'ble Chief Justice on the administrative side for constitution of a larger bench for the reference."
This reference marks a critical juncture in the interpretation of , promising to bridge the gap between administrative expediency and the constitutional right to a transparent .
