2026 Supreme(Online)(Tel) 14167

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 Adjudicating Authority may function through single or multi-member benches as per statutory discretion. Proceedings require prima facie satisfaction regarding the existence of proceeds of crime, and the burden of proving that assets are untainted lies upon those in possession of wealth linked to criminal activity.

Headnote:(A) Prevention of Money Laundering Act, 2002 - Sections 2(1)(u), 3, 5(1), 6, 8(3), 17(4), 50 - Money Laundering - Adjudicating Authority composition - Validity of proceedings - Attachment of property - Proceeds of crime - Burden of proof - The Adjudicating Authority, as per the statute, can function in different configurations, and the Chairperson has the discretion to constitute a Bench with one or two members; such provisions are directory and not mandatory for the legitimacy of orders passed. (Para 25, 26, 27)

(B) Limitation - COVID Pandemic - Statutory interpretation - The extension of the limitation period by the Supreme Court applicable to any law for the time being in force must be accounted for in the computation of timelines under the Act. (Para 34)

(C) Proceeds of Crime - Definition and scope - Property derived or obtained, directly or indirectly, through criminal activity relating to a scheduled offence constitutes proceeds of crime. The definition includes property not only derived from the scheduled offence but also any property directly or indirectly derived or obtained as a result of any criminal activity relatable to the scheduled offence. (Para 37, 40)

(D) Burden of Proof - Reverse burden - In money laundering cases, persons in possession of disproportionate assets are required to explain the source thereof, and failure to provide credible evidence justifies adverse inferences. (Para 41, 42)

Facts of the case:
Petitioners challenged the orders passed by the Adjudicating Authority confirming provisional attachment of properties and permitting the retention of material seized during search operations. Petitioners alleged that the adjudication was conducted by a single-member bench in violation of statutory composition requirements and that the orders were barred by limitation. The authorities contended the properties were linked to money laundering arising from the smuggling of gold, evidenced by financial layering, lack of credible income sources, and close coordination between the concerned individuals.

Findings of Court:
The court found that the Adjudicating Authority was validly constituted, as the law permits single-member benches. It held that the orders were within the limitation period considering the judicial extension for the pandemic. It further concluded that the investigation provided a prima facie case linking the attached properties to proceeds of crime, supported by the failure of the petitioners to establish legitimate sources of funds.

Issues: (1) Whether the composition of the Adjudicating Authority comprising of a sole member violates the statutory requirement of a multi-member bench and renders the order void. (2) Whether the attachment order was time-barred under the relevant provisions. (3) Whether the properties in question constitute proceeds of crime based on the material on record.

Ratio Decidendi: The court ruled that the provisions governing the composition of the Adjudicating Authority are directory, enabling functional flexibility. It affirmed that, at the stage of attachment, the law requires only prima facie satisfaction based on material on record, not proof beyond reasonable doubt, and underscored the legislative intent to place the burden on the possessor of assets to demonstrate legality when confronted with evidence of money laundering.

Result: All writ petitions dismissed; impugned orders upheld.