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2024 Supreme(Online)(ATFP) 807
APPELLATE TRIBUNAL UNDER SAFEMA AT NEW DELHI MP-PMLA-4621/DLI/2024 MP-PMLA-4620/DLI/2024 FPA-PMLA-2000/DLI/2024 MayankGoyal MP-PMLA-4623/DLI/2024 MP-PMLA-4622/DLI/2024 FPA-PMLA-2001/DLI/2024 Rajesh Goyal … Appellants Versus Directorate of Enforcement, New Delhi … Respondents Advocates / Authorized Representatives who appeared For the Appellant(s) : Mr. Sidhharth Aggarwal, Sr.
Advocate Mr. Aditya Mishra, Advocate For the Respondent(s) : Ms. AnkitaGautam, Advocate for ED CORAM JUSTICE MUNISHWAR NATH BHANDARI : CHAIRMAN SHRI RAJESH MALHOTRA : MEMBER
Based on the provided legal document, the key points are as follows:
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The appeal challenges the order of the Adjudicating Authority that denied the appellant's request for a copy of the "reason to believe" recorded by the Enforcement Directorate (ED) under Section 17 of the Prevention of Money-Laundering Act, 2002 (PMLA) (!) (!) .
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The appellant contends that the order disregards the mandates of Sections 17(1) and 8(1) of the PMLA, which require the supply of all relied upon documents, including the "reasons to believe" (!) (!) .
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It is argued that the procedure outlined in the relevant rules and regulations, particularly Rule 8 of the Rules 2005 and Regulation 13 of the Adjudicating Authority (Procedure) Regulations, 2013, obligates the ED to transmit all materials in its possession related to the case, in sealed cover, along with the application under Section 17(4) (!) (!) (!) .
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The appellant relies on the legal principle that the Adjudicating Authority must independently satisfy itself of the grounds to believe, separate from the reasons recorded by the ED, and must be provided with all relied upon documents to ensure a fair opportunity for defense (!) (!) (!) .
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The appellate court notes that the order under challenge has been passed in the context of the appellant's request for the "reasons to believe" and that the Adjudicating Authority has, in its order, stated that all relied upon documents and reasons recorded under Section 8(1) have been supplied (!) .
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The court observes that the issue of whether the ED is duty-bound to provide the "reason to believe" recorded under Section 17(1) is pending before the Supreme Court and that the current proceedings do not mandate the supply of this specific document (!) (!) .
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The court emphasizes that the process involves a two-tier satisfaction: first by the ED, and subsequently by the Adjudicating Authority, which must independently form its own reasons to believe before issuing a show cause notice (!) (!) .
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It is clarified that the "reason to believe" recorded by the ED is transmitted in a sealed cover and is not to be opened or examined unless directed, and that this does not imply withholding of relied upon documents necessary for the proceedings (!) .
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The court concludes that the appellant's efforts to delay the proceedings by insisting on the production of the "reason to believe" recorded under Section 17(1) are unfounded, and that the proceedings should be concluded within the statutory timeframe (!) .
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The appeal is accordingly dismissed, reaffirming that the current legal framework and procedural rules do not mandate the supply of the "reason to believe" recorded under Section 17(1) in the manner requested by the appellant, and that the Adjudicating Authority has acted within its powers (!) .
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ORDER
05.12.2024
By these appeals, a challenge has been made to the order dated 25.09.2024 passed by the Adjudicating Authority whereby the Misc. Application filed by the appellant to seek the copy of the “reason to believe” recorded by the Enforcement Directorate (in short “ED”) under Section 17 of the Prevention of Money-Laundering Act, 2002 ( in short “the Act of 2002”) has been dismissed
The Ld. Counsel for the appellant submitted that by ignoring the mandate of Section 17(1) read with Section 8(1) of the Act of 2002, the application filed by the appellant has been dismissed.
For challenge to the impugned order, heavy reliance was placed on the judgment of the Delhi High Court in the case of J.K. Tyre and Industries Ltd. vs. Directorate of Enforcement reported in 2021 SCC OnLine Del 4836. It is submitted that as per the provision of Section 17(1) read with Section 8(1) and the rules made therein,it was obligated on the part of the Adjudicating Authority to supply all the relied upon documents, which includes “reasons to believe” recorded by the EDfor invoking Section 17 of the Act of 2002 for search and seizure. Reference to para 29, 80 to 87 of the judgment (supra) was given to substantiate the arguments.
It was submitted that the Delhi High Court in the case (supra) formulated many issues for its answer and out of which certain questions were pertaining to the procedure to be adopted by the ED while invoking section 17 of the Act of 2002 and the procedure to be adopted by the Adjudicating Authority while issuing show cause notice under Section 8(1) of the Act of 2002. It is to be served with the material relied upon to form basis for “reason to believe” under section 8(1). In the instant case, reasons to believe recorded under Section 17 of the Act of 2002 has been relied upon by the Adjudicating Authority for recording its reasons to believe under Section 8(1) of the Act of 2002, yet copy of reasons of believe recorded by the ED under Section 17(1) of the Act of 2002 was not supplied despite the judgment of Delhi High Court in the case (supra) and otherwise as per the mandate of Act of 2002. The impugned order thus deserves to be set-aside with a direction to the Adjudicating Authority to supply all relied upon documents which includes the “reasons to believe” recorded under Section 17 of the Act of 2002.
We have considered the submissions made by the Counsel for the appellant and perused the records carefully.
The present appeal has been filed against the interim order passed by the Adjudicating Authority on a Misc. Application filed by the appellant. The Adjudicating Authority has denied copy of the “reasons to believe” recorded under Section 17(1) of the Act of 2002. The Counsel for the appellant did not pray for any other copy of the documents than the “reasons to believe” recorded by the ED under Section 17 of the Act of 2002.
A reference of the judgment of Delhi High Court in the case of J.K. Tyre and Industries (supra) has been given. It is along with the reference of the conclusion drawn by the Adjudicating Authority while dismissing the application.
It would be relevant to quote the paras of the judgment in the case of J.K. Tyre and Industries (supra)relied by the appellant to substantiate his arguments. Para 29 and paras 82 to 87 and para 104 of the judgment (supra) is quoted hereunder for ready reference-
29. Thus, there are various questions that arise in this matter, in respect of the procedure followed by the ED as also the AA. These are:
i) What is the procedure to be followed by the ED when letters of request are received under Section 60 of the Act from a contracting state?
ii) Whether the ED is duty bound to provide the „reasons to believe‟ while passing orders under Section 17 of the PMLA, to the concerned parties?
iii) What is the procedure to be followed by the ED while forwarding the „reasons to believe‟ and the application under Section 17(4) of the PMLA to the Adjudicating Authority seeking continuation of t
