2026 Supreme(Online)(Tel) 9070

IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD
P. Sam Koshy, Suddala Chalapathi Rao, JJ
Sanjay Agarwal – Appellant
Versus
Union of India – Respondent
WRIT PETITION Nos.45761, 31957 & 31958 of 2022

The composition of an Adjudicating Authority under the PMLA allows for single-member Benches under discretionary powers to ensure administrative efficiency. Procedural irregularities in bench composition or limitation computation do not vitiate orders absent demonstrated prejudice or miscarriage of justice, especially when reverse burden of proof is invoked.

Headnote:(A) Prevention of Money Laundering Act, 2002 - Sections 2(1)(u), 3, 5(1), 6(2), 6(5)(b) - Money laundering - Provisional attachment - Retention of seized materials - Adjudicating Authority composition - Validity of single-member Bench - Interpretation of 'shall' in Section 6(2) vs. Section 6(5)(b) - Statute provides functional flexibility enabling constitution of single-member, two-member or three-member Benches depending on complexity - Procedural irregularity in composition does not vitiate proceedings unless prejudice is demonstrated - Adjudicating Authority is a quasi-judicial body and not a tribunal under Articles 323A or 323B of Constitution - Orders of Authority are subject to challenge before Appellate Tribunal, ensuring sufficient checks and balances. (Paras 14, 19, 23, 25-28)

(B) Limitation and COVID-19 pandemic - Computation of 180-day limitation period - Exclusion of period during pandemic as per Supreme Court directions - Procedural irregularity in limitation computation does not invalidate order absent miscarriage of justice or demonstrable prejudice. (Paras 34-35)

(C) Evidence and Standard of Proof - Prima facie satisfaction requirement - Money laundering - Proceeds of crime - Reverse burden of proof under Section 24 - Requirement to explain source of funds for high-value assets - Failure to provide credible documentary evidence regarding legitimate source of income invites adverse inference. (Paras 38, 41-42)

Facts of the case:
Petitioners challenged orders of the Adjudicating Authority permitting retention of seized materials and confirming provisional attachment of properties alleged to be proceeds of crime generated through smuggling gold. Petitioners contended that the Adjudicating Authority was improperly constituted, violating mandatory composition requirements, and that the orders suffered from limitation issues.

Findings of Court:
The Court held that the provisions for the composition of the Adjudicating Authority are directory, allowing for single-member Benches. The allegations regarding limitation were unsubstantiated, and the period of the pandemic was correctly excluded. The materials on record, including call records and the unexplained source of funds for high-value property acquisitions, provided a sufficient prima facie basis for the attachment.

Issues: (1) Whether the composition of a single-member Bench of the Adjudicating Authority rendered the proceedings coram non judice. (2) Whether the attachment order was barred by limitation under Section 5(1). (3) Whether there existed prima facie evidence that the attached properties represented proceeds of crime.

Ratio Decidendi: The court clarified that statutory provisions providing for the constitution of Benches by the Chairperson must be read harmoniously, and the power to form a single-member Bench for procedural flexibility is valid. Furthermore, the burden of proof regarding the legitimacy of assets in money laundering cases shifts to the possessor once a prima facie case is established, meaning unexplained assets are validly considered proceeds of crime.

Result: Writ petitions dismissed. Impugned orders confirmed.