PMLA Tribunal Can Remand Cases to Adjudicating Authority, Power is Inherent in Setting Aside Orders: J&K and Ladakh High Court

Srinagar, J&K – The High Court of Jammu & Kashmir and Ladakh, in a significant ruling, has affirmed that the Appellate Tribunal under the Prevention of Money Laundering Act (PMLA), 2002, possesses the power to remand a matter back to the Adjudicating Authority. The court held that this power is a necessary and inherent component of its authority to set aside an order under Section 26(4) of the Act.

A division bench comprising Justice Sanjeev Kumar and Justice Sanjay Parihar dismissed a batch of appeals challenging a remand order by the PMLA Appellate Tribunal. The court reasoned that denying this power would lead to a "paradoxical situation" where procedural errors could nullify proceedings entirely, allowing parties to benefit from mere technicalities.

Case Background

The case originated from a provisional attachment order issued by the Directorate of Enforcement (ED) against a property in Gurgaon, Haryana, owned by Sarwa Zahoor. The action was linked to an NIA investigation against her husband, Zahoor Ahmad Shah, who was accused of channeling illicit funds from Pakistan for separatist activities in Kashmir.

The Adjudicating Authority confirmed the attachment under Section 8 of the PMLA. However, the appellants successfully challenged this confirmation before the Appellate Tribunal. The Tribunal found a crucial procedural flaw: the Adjudicating Authority had failed to provide the "reasons to believe" along with the show-cause notice, violating the principles of natural justice.

Consequently, the Tribunal set aside the confirmation order but remanded the case back to the Adjudicating Authority for a fresh hearing ( de novo proceedings) after issuing a proper notice. The appellants challenged this remand order in the High Court, raising a key legal question about the Tribunal's jurisdiction.

Clash of Arguments: Statutory Limits vs. Effective Justice

The core of the legal battle was the interpretation of Section 26(4) of the PMLA, which states the Tribunal may "pass such orders thereon as it thinks fit, confirming, modifying or setting aside the order appealed against."

Appellants' Contentions: Senior Advocate Mr. R.A. Jan, representing the appellants, argued that the Tribunal, as a creature of statute, has limited powers. He contended that Section 26(4) explicitly lists only three possible actions—confirm, modify, or set aside—and does not grant the power to remand. He further argued that since the 180-day validity of the provisional attachment order had lapsed, the Adjudicating Authority could not confirm it in any event.

Respondents' Contentions: Mr. T.M. Shamsi, Deputy Solicitor General of India, countered that the phrase "pass such orders thereon as it thinks fit" is of the "widest amplitude." He submitted that the power to remand is a necessary concomitant of the power to set aside an order, especially when the decision is based on a technical or procedural ground, to ensure complete justice.

High Court's Analysis and Legal Precedents

The High Court sided with the respondents, providing a detailed analysis grounded in Supreme Court and other High Court precedents. The bench emphasized that the power to remand is essential for an appellate body to function effectively.

The court heavily relied on the Supreme Court's decision in Union of India vs Umesh Dhaimode , which held that an order of remand "necessarily annuls the decision which is under appeal" and is therefore implied within the power to set aside.

The bench also endorsed a recent Calcutta High Court judgment in Partha Chakraborti v. Directorate of Enforcement , which applied the same logic directly to Section 26(4) of the PMLA. The court quoted the Calcutta High Court's reasoning:

> "Any other interpretation would give rise to a paradoxical situation where the Tribunal after setting aside an order on the ground of procedural error (i.e. breach of natural justice) as in the present case, would be rendered powerless to remand and direct fresh consideration on merits."

Addressing the argument about the lapsed provisional attachment, the court cited the Supreme Court's ruling in Kaushalya Infrastructure Development Corporation Ltd vs Union of India , which clarified that adjudication proceedings can continue even after a provisional attachment order expires. The High Court noted that the remand merely restored the proceedings to the stage before the flawed confirmation order was passed.

The Final Verdict

Concluding that the power of remand is an "important postulate" of appellate jurisdiction, the High Court found no merit in the appeals. It upheld the Appellate Tribunal's order, stating:

> "The power to set aside or annul an order appealed against would necessarily carry with it the power to pass such ancillary and concomitant orders as may be necessary to give effect to the order of annulment or setting aside of the order appealed against."

The appeals were dismissed, and the matter will now proceed for a fresh hearing before the Adjudicating Authority as directed by the Appellate Tribunal.