The Supreme Court of India has reserved judgment on an important question concerning the constitution and functioning of the Adjudicating Authority under the Prevention of Money Laundering Act, 2002 (PMLA).
The central issue before the Court is whether an Adjudicating Authority can confirm a provisional attachment of property made by the Enforcement Directorate (ED) when the Authority is functioning through a single member without a judicial member. The threejudge Bench comprising Chief Justice Surya Kant, Justice Joymalya Bagchi and Justice V. Mohana heard the matter and reserved its verdict on 15 September 2026.
WHAT IS THE LEGAL ISSUE?
Under Section 5 of the PMLA, the ED may provisionally attach property believed to constitute “proceeds of crime”, subject to statutory conditions.
The matter subsequently comes before the Adjudicating Authority under Section 6, which determines whether the property involved in the proceedings is liable to remain attached.
Section 6(2) provides that the Adjudicating Authority consists of a Chairperson and two other Members, with members having experience in law, administration, finance or accountancy.
The controversy arises because Section 6(5) permits the Authority to exercise jurisdiction through benches consisting of one or two members. The question is whether such a provision permits a single-member bench without a judicial member to undertake the substantive adjudication contemplated under Section 8.
WHY DOES IT MATTER?
The Supreme Court focused particularly on the civil consequences of attachment proceedings.
Although provisional attachment does not by itself finally determine criminal guilt, it can substantially restrict a person’s ability to deal with property. The Court therefore questioned whether such proceedings can be treated as a routine administrative exercise.
During the hearing, the Bench also raised concerns about whether meaningful “application of mind” is possible when a very large number of attachment matters must be decided within the statutory period.
The Court sought data from the ED concerning the number of attachment proceedings and their disposal, particularly in the context of the 180-day statutory period.
THE SCALE OF THE ISSUE
During the proceedings, petitioners referred to ED data and submitted that 8,851 cases had been initiated during the relevant period, while only 60 had proceeded to trial. The figure was disputed by the ED.
The submissions were used to highlight a broader concern: property may remain subject to the consequences of PMLA proceedings even where the underlying prosecution does not ultimately reach trial.
PETITIONERS’ ARGUMENT
The petitioners argued that the Adjudicating Authority performs a quasi-judicial function, particularly because it has to determine whether attached property is connected with money laundering and whether the attachment should be confirmed.
They relied, among other things, on the Supreme Court’s earlier decision in Vijay Madanlal Choudhary v. Union of India, concerning the statutory framework and functioning of PMLA authorities.
Their argument essentially raises the question of whether the institutional composition contemplated by the PMLA requires meaningful judicial participation when determining matters having significant consequences for property rights.
ED’S POSITION
The ED, on the other hand, relied upon the statutory scheme permitting the Authority to function through one- or two-member benches.
The agency’s position was that the statutory framework should be read harmoniously and that every attachment proceeding does not necessarily require the presence of a judicial member.
KEY LEGAL PROVISIONS
Section 5, PMLA
Deals with provisional attachment of property involved in money laundering.
Section 6, PMLA
Provides for the constitution, composition and functioning of the Adjudicating Authority.
Section 8, PMLA
Provides the mechanism through which the Adjudicating Authority adjudicates the provisional attachment and determines whether the property is involved in money laundering.
Section 26, PMLA
Provides the appellate mechanism against orders of the Adjudicating Authority.
PRACTICAL SIGNIFICANCE
The Supreme Court’s eventual ruling may have implications for:
• Validity of attachment confirmation orders passed by single-member benches;
• Requirement, if any, of a judicial member in particular PMLA proceedings;
• Interpretation of Sections 5, 6 and 8 of the PMLA;
• Procedural safeguards available to persons whose properties are attached;
• Institutional independence and quasi-judicial functioning of specialised authorities; and
• Future challenges to PMLA attachment proceedings.
Importantly, the Supreme Court has not yet delivered its final judgment on this issue. Therefore, the present legal position should not be treated as finally settled.
LEGAL INSIGHT
The case raises a fundamental procedural question within India’s anti-money-laundering framework:
When an executive agency exercises extensive powers affecting property rights, what level of independent adjudicatory scrutiny is required before that attachment is confirmed?
The answer may have significance beyond the immediate PMLA proceedings because it concerns the balance between effective financial-crime enforcement, procedural fairness and institutional independence.