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Telangana HC Backs Single-Member PMLA Benches: Prima Facie Proof Enough to Lock Down Suspect Assets
In a significant boost for anti-money laundering enforcement, the dismissed three writ petitions challenging orders under the . A division bench of Justice P. Sam Koshy and Justice Suddala Chalapathi Rao upheld the 's confirmation of a provisional attachment order (PAO) dated and permission to retain seized materials, ruling that a is competent and on record suffices at this stage.
The case stemmed from alleged gold smuggling by Sanjay Agarwal and family, with petitioners Mahesh Agarwal, Mayur Agarwal, Pranita Agarwal, Lateef Rahman Sharfan, and others linked through properties and transactions.
From Airport Bust to Money Trail
The saga began on when the , Kolkata , intercepted Preet Kumar Agarwal at Kolkata's airport carrying 54 kg of gold cleared for export but diverted domestically via IndiGo cargo to Hyderabad. Investigations uncovered a pattern: habitual smuggling of ~2,500 kg gold, laundered through family accounts like M/s. P.H. Jewelers (Radhika Agarwal, Sanjay's wife), showing ₹1,184 crore transactions over 2.5 years.
Searches on and yielded incriminating documents and properties. The issued PAO on , confirmed on , and allowed retention on . Petitioners challenged these in WP Nos. 45761, 31957, and 31958 of 2022, claiming procedural lapses and lack of proof.
Petitioners' Triple Assault: Composition, Timeline, and Tainted Funds?
Sanjay Agarwal (party-in-person) and counsels for others argued:
- Bench Composition Flaw : Under , the Authority must include a judicial member; single Chairperson (non-judicial) rendered orders .
- Limitation Breach : Retention order post-180 days from PAO, ignoring Supreme Court COVID extensions ( ).
- No Proceeds Link : Properties bought legitimately; no cogent evidence tying villas at Shanta Sriram Constructions to smuggling proceeds. Sources unexplained but genuine; adverse findings arbitrary.
ED's Counter: Web of Collusion and Suspicious Silence
for ED fired back:
- Sections 6(2)/(5)(b) directory; single-member benches valid for efficiency, no prejudice shown.
- Limitation computed correctly excluding COVID period; procedural hiccups don't vitiate.
- Strong : Property shift from Radhika Agarwal to petitioners post-bust; frequent calls (Mayur to Sanjay on Bangladesh SIM); no site visits or funding proofs despite requests; employer statements confirming no negotiations. Non-cooperation under seals inference of layering proceeds from smuggling ( ).
Unraveling PMLA's Framework: Precedents Light the Way
The court dissected , holding "may constitute" benches of one/two members as directory, aligning with administrative efficiency. It cited:
- Naresh Bansal v. (2025 SCC OnLine Del 8672): Single-member valid; no ; flexible configurations per .
- J. Sekar v. Union of India (2018 SCC OnLine Del 6523): Benches can be single-member; "bench" doesn't imply plurality.
- B. Sreenivasa Gandhi v. (WP 40454/2025, ): Single bench competent.
- Vijay Madanlal Choudhary v. Union of India ((2023) 12 SCC 1): Proceeds include indirectly derived property; reverse burden; no proof beyond doubt needed pre-trial.
On limitation, Supreme Court's suo motu COVID order excluded periods, with detailed computation unchallenged. For merits, circumstantial web—diverted registrations, CDRs, funding gaps—established prima facie laundering, invoking PMLA's reverse burden ethos (Section 24 analogue).
As noted in contemporary reports, this reinforces that PMLA stages demand only " ," not final proof.
Bench's Sharp Insights
"A plain reading... makes it clear that while theas an institution consists of a Chairperson and two Members, the actual adjudication can be done by a Bench... consisting of one or two Members. The use of the words 'may constitute'... indicates that the provision is directory and not mandatory."
"What is required isbased on material on record that the property in question is likely to be involved in money laundering."
"The petitioners have miserably failed to discharge even the initial burden of establishing the legitimacy of the source of funds."
Writs Dismissed: ED's Net Holds Firm
"All the three writ petitions are hereby dismissed. The impugned orders... are upheld and confirmed."
This ruling fortifies ED's arsenal, clarifying single-member efficacy and low-threshold confirmations, potentially streamlining PMLA probes. Petitioners face ongoing proceedings; economic offenders get a stark reminder: silence on sources invites adverse calls. Future cases may see fewer technical escapes, prioritizing substantive probes into laundering webs.
