Research › Search › Judgment

Telangana High Court · body

2026 DIGILAW 53 (TS)

B. Sreenivasa Gandhi, S/o. Sh. B. Narasimha Rao v. Adjudicating Authority, Represented By Registrar/Administrative Officer

2026-01-08

P.SAM KOSHY, SUDDALA CHALAPATHI RAO

body2026
ORDER : P.Sam Koshy, J. 1. Heard Mr. Syed Ahmed Saud, learned counsel representing Mr. Mir Mukaram Ali, learned counsel for the petitioners; Mr. B.Mukherjee, learned counsel representing Mr. N.Bhujanga Rao, learned Deputy Solicitor General of India for respondent No.1, and Mr. Dominic Fernandes, learned Standing Counsel for Enforcement Directorate, appearing for respondent No.2. 2. The present writ petition has been filed by the petitioners under Article 226 of the Constitution of India seeking quashment of the show-cause notice dated 12.09.2025, issued by respondent No.1, under Section 8 of the Prevention of Money Laundering Act, 2002 (for short ‘PMLA Act’). 3. The brief facts of the case relevant for adjudication of the present dispute are that petitioner No.1 is a government employee and has been implicated in an First Information Report registered by CBI, ACB, Hyderabad Branch, vide RC.No.10(A)/2019- CBI/ACB/Hyderabad, dated 08.07.2019, under Section 13(2) read with 13(1)(b) of the Prevention of Corruption Act, 1988 (as amended in the year 2018) and under Section 109 of the Indian Penal Code, 1860. Subsequent to the lodging of the aforementioned First Information Report and charge-sheet being issued, the Enforcement Directorate registered an ECIR under the provisions of the PMLA Act vide ECIR No.ECIR/HYZO/19/2019, and invoking Section 5(1) of the PMLA Act issued Provisional Attachment Order (PAO) No.30/2025, dated 06.08.2025, attaching various movable and immovable properties standing in the name of petitioner No.1 and his family members. Thereafter, the impugned show-cause notice was issued on 12.09.2025 under Section 8 of the PMLA Act. 4. The impugned show-cause notice was assailed primarily on the ground of Coram non judice. 5. The contention of the learned counsel for the petitioners or the primary ground of challenge was that the impugned show- cause notice is not issued by the proper adjudicating authority under the statute. Another ground raised by the learned counsel for the petitioners was that the authority who had issued the impugned show-cause notice is not a judicial member. 6. According to the learned counsel for the petitioners, the adjudicating authority mandatorily requires three persons i.e. the Chairperson and two other members. Whereas in the present case, show-cause notice has been issued by only one person. Therefore, the impugned show-cause notice is attracted by doctrine of Coram non judice. 6. According to the learned counsel for the petitioners, the adjudicating authority mandatorily requires three persons i.e. the Chairperson and two other members. Whereas in the present case, show-cause notice has been issued by only one person. Therefore, the impugned show-cause notice is attracted by doctrine of Coram non judice. He further contended that since the show-cause notice has been issued not by the adjudicating authority as defined under the statute, inasmuch as the show-cause notice having not been issued under the seal and signature of the three member adjudicating authority as is defined under Section 6(2) of the PMLA Act, the entire show-cause notice and the proceedings drawn thereon would get vitiated. 7. Per contra, the learned Standing Counsel for Enforcement Directorate referring to the provisions of Section 6 of the PMLA Act contended that Section 6(2) is not to be read in isolation so as to reach to a conclusion or give an impression that the term ‘adjudicating authority’ has to consist of a Chairman along with two members and in the absence of which the adjudicating agency cannot be treated as an adjudicating authority and it would amount to Coram non judice. Whereas, according to the learned Standing Counsel for Enforcement Directorate, entire Section 6 has to be read as a whole and on reading entire Section 6 by itself would give a clear indication that the provisions of Section 6(2) does not mean that every proceedings initiated by the adjudicating authority has to be rooted through three member Bench. Rather, it could also be initiated by a single Bench committee which is also permissible under Section 6. 8. In the course of his contentions, the learned Standing Counsel for Enforcement Directorate also took the Bench through the entire provisions of Section 6 and the provisos attached to the said Section. 9. Having heard the contentions put forth on either side and on perusal of records, it would be trite at this juncture to refer to the provisions of Section 6 of the PMLA Act. For ready reference, Section 6 of the PMLA Act is reproduced hereunder: “The Central Government shall, by notification, appoint 1[an Adjudicating Authority] to exercise jurisdiction, powers and authority conferred by or under this Act. For ready reference, Section 6 of the PMLA Act is reproduced hereunder: “The Central Government shall, by notification, appoint 1[an Adjudicating Authority] to exercise jurisdiction, powers and authority conferred by or under this Act. (2) An Adjudicating Authority shall consist of a Chairperson and two other Members: Provided that one Member each shall be a person having experience in the field of law, administration, finance or accountancy. (3) A person shall, however, not be qualified for appointment as Member of an Adjudicating Authority,-- (a) in the field of law, unless he-- (i) is qualified for appointment as District Judge; or (ii) has been a member of the Indian Legal Service and has held a post in Grade I of that service; (b) in the field of finance, accountancy or administration unless he possesses such qualifications, as may be prescribed. (4) The Central Government shall appoint a Member to be the Chairperson of the Adjudicating Authority. (5) Subject to the provisions of this Act,-- (a) the jurisdiction of the Adjudicating Authority may be exercised by Benches thereof; (b) a Bench may be constituted by the Chairperson of the Adjudicating Authority with one or two Members as the Chairperson of the Adjudicating Authority may deem fit; (c) the Benches of the Adjudicating Authority shall ordinarily sit at New Delhi and at such other places as the Central Government may, in consultation with the Chairperson, by notification, specify; (d) the Central Government shall, by notification, specify the areas in relation to which each Bench of the Adjudicating Authority may exercise jurisdiction. (6) Notwithstanding anything contained in sub-section (5), the Chairperson may transfer a Member from one Bench to another Bench. (7) If at any stage of the hearing of any case or matter it appears to the Chairperson or a Member that the case or matter is of such a nature that it ought to be heard by a Bench consisting of two Members, the case or matter may be transferred by the Chairperson or, as the case may be, referred to him for transfer, to such Bench as the Chairperson may deem fit. (8) The Chairperson and every Member shall hold office as such for a term of five years from the date on which he enters upon his office: Provided that no Chairperson or other Member shall hold office as such after he has attained the age of 2(sixty-five) years. (8) The Chairperson and every Member shall hold office as such for a term of five years from the date on which he enters upon his office: Provided that no Chairperson or other Member shall hold office as such after he has attained the age of 2(sixty-five) years. (9) The salary and allowances payable to and the other terms and conditions of service of the Member shall be such as may be prescribed: Provided that neither the salary and allowances nor the other terms and conditions of service of the Member shall be varied to his disadvantage after appointment. (10) If, for reasons other than temporary absence, any vacancy occurs in the office of the Chairperson or any other Member, then, the Central Government shall appoint another person in accordance with the provisions of this Act to fill the vacancy and the proceedings may be continued before the Adjudicating Authority from the stage at which the vacancy is filled. (11) The Chairperson or any other Member may, by notice in writing under his hand addressed to the Central Government, resign his office: Provided that the Chairperson or any other Member shall, unless he is permitted by the Central Government to relinquish his office sooner, continue to hold office until the expiry of three months from the date of receipt of such notice or until a person duly appointed as his successor enters upon his office or until theexpiry of his term of office, whichever is the earliest. (12) The Chairperson or any other Member shall not be removed from his office except by an order made by the Central Government after giving necessary opportunity of hearing. (13) In the event of the occurrence of any vacancy in the office of the Chairperson by reason of his death, resignation or otherwise, the senior-most Member shall act as the Chairperson of the Adjudicating Authority/ until the date on which a new Chairperson, appointed in accordance with the provisions of this Act to fill such vacancy, enters upon his office. (14) When the Chairperson of the Adjudicating Authority is unable to discharge his functions owing to absence, illness or any other cause, the senior-most Member shall discharge the functions of the Chairperson of the Adjudicating Authority until the date on which the Chairperson of the Adjudicating Authority resumes his duties. (14) When the Chairperson of the Adjudicating Authority is unable to discharge his functions owing to absence, illness or any other cause, the senior-most Member shall discharge the functions of the Chairperson of the Adjudicating Authority until the date on which the Chairperson of the Adjudicating Authority resumes his duties. (15) The Adjudicating Authority shall not be bound by the procedure laid down by the Code of Civil Procedure, 1908 (5 of 1908), but shall be guided by the principles of natural justice and, subject to the other provisions of this Act, the Adjudicating Authority shall have powers to regulate its own procedure.” 10. Now if we dissect the said Section, what is clearly reflected is, what is meant by Sub-Section (2) of Section 6 is that the adjudicating authority shall consist of a Chairperson and two other members. Further reading of Section 6, particularly Sub-Section (5) goes to show that the adjudicating authority can function in Benches as well and a Bench has always to be constituted by the Chairperson. Sub-Section (5) also shows that a Bench can consist of one or two members as the Chairperson deems fit. Sub-Section (6) also empowers the Chairperson to transfer a member from one Bench to another. Likewise, Sub-Section (7) also empowers the Chairperson for allotting a matter to a Bench of one or to a Bench consisting of two members. 11. In addition, if we read Sub-Section (13) and Sub-Section (14), it further clarifies the fact that the statute also mandates that when the post of Chairperson is lying vacant on account of death, resignation or otherwise, the senior-most member shall act as the Chairperson until a new Chairperson is appointed. In addition, the senior-most member shall discharge the functions of the Chairperson and is also empowered to discharge all the duties that are otherwise to be discharged by a duly appointed Chairperson which includes taking up of matters and hearing the same. 12. It would be relevant at this juncture to refer to a recent decision of the Division Bench of this High Court in Directorate of Enforcement vs. M/ s. Karvy I ndia Realty Limited and Ors. Writ Appeal No.611 of 2023, dated 12.02.2024. 12. It would be relevant at this juncture to refer to a recent decision of the Division Bench of this High Court in Directorate of Enforcement vs. M/ s. Karvy I ndia Realty Limited and Ors. Writ Appeal No.611 of 2023, dated 12.02.2024. wherein the appeal was preferred against the order of the learned Single Bench in I.A.No.1 of 2022 in W.P.No.41133 of 2022, which was allowed on the ground of Coram non judice and also on the ground of the adjudicating authority not being a judicial member. The Division Bench in the said case, in paragraph Nos.23 to 25, while setting aside the order of the learned Single Bench has held as under: “23. Thus, powers under Section 6 can be exercised by an Adjudicating Authority comprising single member. Therefore, the proposition that powers under Section 8 of PMLA can be exercised by the Adjudicating Authority comprising only from member in the field of law does not deserve acceptance as the same would render provisions of Section 6(5) and 6(7) of PMLA nugatory and ineffective. 24. Insofar as decision in Utility Users’ Welfare Association (supra), on which reliance has been placed, it is noteworthy that the Supreme Court in aforesaid decision dealt with Section 86(1)(f) of the Electricity Act, 2013 and held that Commission has the option of adjudicating the disputes between the licensees and generating companies or refer the same to arbitration. In the aforesaid context, the Supreme Court dealt with the issue whether the State Regulatory Commission constituted under Electricity Act which necessarily performs the function of adjudication is required to have one member who was or is holding a judicial office or is a person possessing professional qualification with substantial experience in the practice of law. The aforesaid decision is of no assistance to the respondents. 25. It is also pertinent to note that the validity of Sections 6(2), 6(3)(a)(ii) and 6(5)(b) of PMLA was challenged before the Madras High Court. A Division Bench of Madras High Court in Pay Perform India Private Limited vs. the Union of India (judgment dated 31.01.2024 passed in W.P.No.12925 of 2023 and batch) has upheld the validity of the aforesaid provisions and has held that composition of Adjudicating Authority in the absence of judicial officer is not bad in law. A Division Bench of Madras High Court in Pay Perform India Private Limited vs. the Union of India (judgment dated 31.01.2024 passed in W.P.No.12925 of 2023 and batch) has upheld the validity of the aforesaid provisions and has held that composition of Adjudicating Authority in the absence of judicial officer is not bad in law. A Division Bench of Calcutta High Court in R.P.Infosystems Limited (supra) has also held that Adjudicating Authority can comprise of a single member bench. We are in agreement with the view taken by the Division Benches of Madras High Court and Calcutta High Court.” 13. In another case of the Delhi High Court in Naresh Bansal and Ors vs. Adjudicating Authority and Anr. /b> , W.P. (C) 11361/2015 and connected matters , in paragraph Nos.45 to 49, it was held as under: “ D. Section 6 of the PMLA: Whether the AA was coram non judice? 45. Since the present issue concerning the validity of the SCN has been argued on two distinct limbs, this Court deems it appropriate to bifurcate the contentions under distinct heads and deal with them separately, the issues are as follows: i. Whether the SCN issued by AA is valid in view of the AA allegedly acting coram non judice under Section 6 of the PMLA; and ii. Whether an SCN can be issued even in the absence of prior attachment of properties by the Directorate. (i) Whether the SCN issued by AA is valid in view of the AA allegedly acting coram non judice under Section 6 of the PMLA? 46. Section 6 (2) of the PMLA provides that AA shall comprise of a Chairperson and two other members; whereas, Section 6(5)(b) authorizes the Chairperson to constitute Benches with either one or two members, as deemed necessary, thereby enabling functional flexibility of the AA. Section 6(7) of the PMLA, also enables the Chairperson to formulate a two-member Bench, wherein she/he is of a view that the matter is of such a nature which needs to be heard by a Bench consisting of two members. Section 6(7) of the PMLA, also enables the Chairperson to formulate a two-member Bench, wherein she/he is of a view that the matter is of such a nature which needs to be heard by a Bench consisting of two members. These three provisions when read W.P.(C) 11361/2015 and connected matters Page 33 of 36 in harmony, reveal that although the statute provides a prescription for the composition of AA, nevertheless, the usage of word ‘shall’ under Section 6(2) cannot be considered in isolation so as to suggest that a three-member composition is a compulsory and only acceptable composition, enabling the AA to exercise the power vested in it by the statute. It further reveals that the statute provides a threefold legislative design, permitting the AA to function in three distinct configurations, either as a three-member authority or for purposes of functional expediency, as a two-member Bench or even as a single-member Bench, depending on the nature of the matter before it. 47. The aforesaid interpretation of the provision also aligns with the fundamental principle of statutory interpretation, ut res magis valeat quam pereat, which mandates that every statutory provision must be given effect and shall not be rendered as ineffectual, inoperative or redundant. In view of the aforesaid, if the argument advanced by the learned counsel for the Petitioner is accepted and the provisions of Section 6 of the PMLA are interpreted in a manner that it prohibits the existence or constitution of AA as a single- member Bench, such interpretation would nullify the effects and intention behind adding Section 6(5)(b) and Section 6(7) of the PMLA, which is impermissible under the recognised principles of statutory provisions. A similar view has also been taken by the Division of Bench of Telangana High Court in Enforcement Directorate v. Karvy India Reality Limited and Others , 2024 SCC OnLine TS 18 48. The Court in Karvy India (supra) further clarified that although AA performs quasi-judicial functions, it is neither a tribunal within the meaning of Articles 323A or 323B of the COI, nor has it been vested with any adjudicatory function transferred from traditional courts. Additionally, it was also noted that the powers under Section 8 of the PMLA may validly be exercised by a single-member bench, even in absence of a judicial officer. Additionally, it was also noted that the powers under Section 8 of the PMLA may validly be exercised by a single-member bench, even in absence of a judicial officer. While elaborating further, it was observed by the Court that under PMLA there exist sufficient checks and balances, since the order of the AA is subject to challenge before the AT under Section 26 of the PMLA, which is presided over by a retired Chief Justice. 49. To conclude, applying the aforesaid principles to the present case, this Court is of the view that the SCN issued by a Bench, comprising of a technical member, was valid. Consequently, the contention that the AA was acting coram non judice is founded on a misinterpretation or ignorance of the statutory framework. Thus, in the view of this Court, the issuance of the SCN is well within the contours of the PMLA, and as such, the first limb of argument advanced by the Petitioners, in furtherance of validity of SCN, is devoid of merit.” 14. As regards the ground of the show-cause notice being bad on the ground that it has been issued by non-judicial member, it is relevant to take note of an another decision of the Delhi High Court in J.Sekar vs. Union of I ndia & Ors. , 2018 SCC OnLine Del 6523 , wherein in paragraph Nos.79 and 80, it has been held as under: “ Composition of the AA and AT 79. The Court next takes up the question of the composition of the AA on which extensive arguments were advanced by the learned counsel for the Petitioners. In this context, it must be noticed that under Section 6 PMLA, the AA is supposed to consist of the Chairperson and two other members - one of whom shall be a person having experience in the field of law. Section 6(3) further sets out what the qualifications for appointment as a member of an AA should be. One of those qualifications is that the person has to be qualified for appointment as a District Judge or a person in the field of law or a member of an Indian Legal Service. The other qualification is possession of a qualification in the field of finance, accountancy or administration as may be prescribed. It is, therefore, not the case that all the members of the AA should be judicial members. 80. The other qualification is possession of a qualification in the field of finance, accountancy or administration as may be prescribed. It is, therefore, not the case that all the members of the AA should be judicial members. 80. It is seen that under Section 5 PMLA, the jurisdiction of the AA “may be exercised by the Benches thereof”. Under Section 6(5)(b) PMLA, a Bench may be constituted by the Chairperson of the AA “with one or two members” as the Chairperson may deem fit. Therefore, it is possible to have single-member benches. The word ‘bench’ therefore does not connote plurality. There could, even under Section 6(5)(b) PMLA, be a ‘single member bench’. When Section 6(6) PMLA states that a Chairperson can transfer a member from one bench to another bench, it has to be understood in the above context of there also being single-member benches.” 15. Another reason which compels this Bench not to entertain the present writ petition is that an alternative statutory remedy is available to the petitioner under the PMLA Act itself, rather than seeking quashment under Article 226 of the Constitution of India. Recently, the Hon’ble Supreme Court in PHR I nvent Educational Society vs. UCO Bank and Ors. , AIR 2024 SC 1894 , in paragraph Nos.15, 29, 30, 32 and 33, has held as under: “ 15. It could thus be seen that, this Court has clearly held that the High Court will ordinarily not entertain a petition under Article 226 of the Constitution if an effective remedy is available to the aggrieved person. It has been held that this rule applies with greater rigour in matters involving recovery of taxes, cess, fees, other types of public money and the dues of banks and other financial institutions. The Court clearly observed that, while dealing with the petitions involving challenge to the action taken for recovery of the public dues, etc., the High Court must keep in mind that the legislations enacted by Parliament and State Legislatures for recovery of such dues are a code unto themselves inasmuch as they not only contain comprehensive procedure for recovery of the dues but also envisage constitution of quasi- judicial bodies for redressal of the grievance of any aggrieved person. It has been held that, though the powers of the High Court under Article 226 of the Constitution are of widest amplitude, still the Courts cannot be oblivious of the rules of self-imposed restraint evolved by this Court. The Court further held that though the rule of exhaustion of alternative remedy is a rule of discretion and not one of compulsion, still it is difficult to fathom any reason why the High Court should entertain a petition filed under Article 226 of the Constitution. 29. It could thus clearly be seen that the Court has carved out certain exceptions when a petition under Article 226 of the Constitution could be entertained in spite of availability of an alternative remedy. Some of them are thus: (i) where the statutory authority has not acted in accordance with the provisions of the enactment in question; (ii) it has acted in defiance of the fundamental principles of judicial procedure; (iii) it has resorted to invoke the provisions which are repealed; and (iv) when an order has been passed in total violation of the principles of natural justice. 30. It has however been clarified that the High Court will not entertain a petition under Article 226 of the Constitution if an effective alternative remedy is available to the aggrieved person or the statute under which the action complained of has been taken itself contains a mechanism for redressal of grievance. 32. We are therefore of the considered view that the High Court has grossly erred in entertaining and allowing the petition under Article 226 of the Constitution. 33. While dismissing the writ petition, we will have to remind the High Courts of the following words of this Court in the case of Satyawati Tondon (supra) since we have come across various matters wherein the High Courts have been entertaining petitions arising out of the DRT Act and the SARFAESI Act in spite of availability of an effective alternative remedy: “55. It is a matter of serious concern that despite repeated pronouncement of this Court, the High Courts continue to ignore the availability of statutory remedies under the DRT Act and the SARFAESI Act and exercise jurisdiction under Article 226 for passing orders which have serious adverse impact on the right of banks and other financial institutions to recover their dues. It is a matter of serious concern that despite repeated pronouncement of this Court, the High Courts continue to ignore the availability of statutory remedies under the DRT Act and the SARFAESI Act and exercise jurisdiction under Article 226 for passing orders which have serious adverse impact on the right of banks and other financial institutions to recover their dues. We hope and trust that in future the High Courts will exercise their discretion in such matters with greater caution, care and circumspection.”” 16. A similar view was also taken by the High Court at Hyderabad in Sri P.Trivikrama Prasad vs. Enforcement Directorate , 2014 SCC OnLine Hyd 819 wherein in paragraph Nos.33, 34, 37 and 38, it has been held as under: “33. Thus, there is no merit in the contention urged by the petitioners that they have no effective or efficacious remedy under the Act necessitating institution of the writ petition by invoking extraordinary jurisdiction of this Court. Entertainment of writ petition at this stage would amount to scuttling the statutorily engrafted mechanism on attachment of properties. 34. Article 226 of the Constitution vests wide discretion in the Writ Court to entertain the writ petition on any grievance and to grant appropriate relief. It is an extraordinary jurisdiction vested in the writ Court. The Writ Courts observe self-imposed restraint in exercising the jurisdiction under Article 226. Availability of alternative remedy is not a bar to entertain a writ petition. Ordinarily the writ petition is not entertained under Article 226 if the aggrieved person has an efficacious and effective remedy provided by concerned statute where under an adverse decision is taken against the person, which he seeks to assail in the writ petition. Notwithstanding availability of alternative remedy in a case of exceptional nature or a case of glaring injustice writ Court can entertain a writ petition. Constitutional Courts have laid down parameters for exercising of such discretion. 37. The petitioners have effective and efficacious statutory remedies to prove the nature of acquisition of assets and to ventilate their grievances. Furthermore, at the stage of provisional attachment the person concerned is not dispossessed of the property, but is only prevented from dealing with the property till orders are passed by the adjudicating authority under Section 8(2). 37. The petitioners have effective and efficacious statutory remedies to prove the nature of acquisition of assets and to ventilate their grievances. Furthermore, at the stage of provisional attachment the person concerned is not dispossessed of the property, but is only prevented from dealing with the property till orders are passed by the adjudicating authority under Section 8(2). Against order of the adjudicating authority under Section 8(2), appeal shall lie to the Appellate Tribunal under Section 26 and further appeal to the High Court under Section 42. The statute has provided enough safeguards and layers of redress mechanism. The writ Court cannot go into the merits of the issue at this stage even before the attachment order has become final, investigation is completed and trial concluded and issue of attachment is considered by Adjudicating Authority, first Appellate Authority and second Appellate Authority. It is premature to go into the validity of attachment order at the threshold and even before the Adjudicating Authority considers the issue. It is also to be born in mind that any observations made by the Court would have bearing on the pending investigation and trial. 38. The Joint Director is competent to pass orders of attachment. It is not a case of lack of jurisdiction to Enforcement Directorate. Violation of principles of natural justice at the provisional attachment stage does not arise as statute has not made provision of opportunity of hearing prior to provisional attachment. Decision to attach is based on the assessment by Enforcement Directorate as per material in its possession. It is a tentative decision. Such decision is to be placed before the Adjudicating Authority. Right of hearing is provided before adjudicating authority. Sections 5(1) and 8 are in the statute book and have stood the test of judicial scrutiny. It is not a case of exceptional nature warranting interference by writ Court at the threshold. Not a case of glaring injustice demanding affirmative action notwithstanding an effective statutorily engrafted layers of remedies.” 17. For all the aforesaid reasons and the judicial precedents referred to in the preceding paragraphs, it is hard to accept the contentions put forth by the learned counsel for the petitioner of the impugned show-cause notice being hit by Coram non judice. The writ petition thus being devoid of merit, deserves to be and is accordingly, dismissed. 18. As a sequel, miscellaneous petitions pending if any, shall stand closed. The writ petition thus being devoid of merit, deserves to be and is accordingly, dismissed. 18. As a sequel, miscellaneous petitions pending if any, shall stand closed. However, there shall be no order as to costs.