Enforcement Directorate Can’t Appeal Under Section 26 of Prevention of Money Laundry Act, 2002: Calcutta High Court 

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Nillesh Parrekh Vs Assistant Director, Enforcement Directorate, Kolkata & Ors

Facts of the Case

The learned Adjudicating Board, in its order dated 9 October 2019, held inter alia that the defendant had not committed the scheduled offences, nor had the proceeds generated by the crime and that the complaint filed against him had therefore been rejected and the temporary attachment order had not been confirmed. The appeal by the Assistant Director of the Enforcement Directorate has been made by the learned Adjudicating Authority according to Section 8 of the PML Act and has been brought by the Assistant Director. The applicant claimed that the Directorate of Enforcement did not have the competence to lodge such an appeal. By presenting a further affidavit before the Tribunal by 7 September 2020 and serving copies on the respondents, the appellant will formally raise the maintainability argument and the Tribunal will consider the matter of maintainability as a preliminary question.

Arguments by Petitioner

Learned Counsel stated his arguments through section 26 of PML Act, 2002 which states that the Director or other authority who does not accept the decision of tribunal court can appeal against it. Whereas, section 48 of the PML Act, 2002 doesn’t include “Enforcement Director” in the list of authorities so the only person who can appeal was a Director. Furthermore, the learned counsel presents some cases before the court such as Amarjit Singh alias Billa, 2009 SCC Online Del 995. The case was filed under Section 54 of the Foreign Exchange Regulations Act, 1973 which was not similar to Section 26 of PML Act, 2002. In this case, the appeal was made by the Union of India through Enforcement Director. In the case of Opto Circuit India Limited vs. Axis Bank and Ors, SCC SC 55 published in 2021, reliability was put on a judgement of the Supreme Court of Hon’ble. There it was concluded that if a law provides for something to be done in a specific way, it should be done so alone, and in no other way. Under Section 26 of the PML Act, only the Director has the jurisdiction to submit an appeal, and any other authority is excluded by necessary implication. The Hon’ble Supreme Court’s ruling in Northern Plasty Ltd vs Hindustan Photo Films, Mfg Co Ltd & Ors, (1997) 4 SCC 452 also put reliance on the decision.

Arguments by Respondents

The Learned Counsel stated that the case in question allegedly involved 25 banks, five of which were private, and defalcation of Rs. 2672 crores. The Enforcement Directorate is a specialized financial investigation department within the Department of Revenue responsible for enforcing the PML Act’s provisions. In Section 2(c) of the aforementioned Act, the term “Assistant Director” is defined. Under the PML Act, it was properly authorized to do so. The Director or any other person who has been harmed by order may seek an appeal with the learned Tribunal under Section 26 (1) of the said Act. Furthermore, Section 71 confers an overriding power, stating that the provisions of this Act shall apply notwithstanding anything in any other legislation currently in force that is inconsistent with them. The Director was, without a doubt, the Enforcement Directorate’s leader. As a result, under the stated Act, the Director was the authorized officer. However, one of the powers under the Act was the Assistant Director. When an order of the learned Adjudicating Authority adversely affected the objects of the said Act, the Enforcement Directorate was likewise competent and entitled to appeal the said adjudication judgement to the learned Tribunal.

Court Analysis

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As per the court observations, The appellant’s main argument is that, under Section 26(1) of the PML Act, the Director of the Enforcement Directorate, rather than the Enforcement Directorate itself, through its Assistant Director, was entitled to file an appeal with the learned Tribunal. According to the appellant, the then-Directorate did not fall under the definition of a “person” as stated in section 2(s) of the Act, and hence could not submit an appeal as an “aggrieved person.” If the Assistant Director had filed the appeal in his name rather than on behalf of the Director, there might have been some doubt regarding whether the provisions of section 26 of the Act were followed when filing the appeal. However, if the Directorate itself files the same, whether, by the assistant director or any other authority as referred to in the Act itself, the above provision shall be substantially adhered to.

Court’s Decision

From the all heard proceedings, The Learned Court concluded that the Enforcement Directorate had no bar to appeal before the learned Appellate Tribunal under Section 26 of the PML Act via the Assistant Director.

Click here to read the full Judgement


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