Adjudicating Authority

Sometimes the Directorate of Enforcement attaches a person's property. It does so when it believes the property is the proceeds of crime. But that seizure cannot stand just because the investigator says so. Someone independent has to test it.

That someone is the Adjudicating Authority. Section 2(1)(a) of the PMLA defines it as an Adjudicating Authority appointed under Section 6(1). It is set up by the Central Government. It has quasi-judicial powers. That means it decides matters in a way that is like a court, without being one. It issues notices. It rules on attachments of property. It confirms confiscations.

It is not a court, and it is not the investigator. It sits between them.

The sequence the Act builds is worth holding as a chain, because questions test the links rather than the boxes:

1. Under Section 5, the Director — or an officer not below the rank of Deputy Director authorised by the Director — who has reason to believe, recorded in writing, on the basis of material in his possession, that a person is in possession of proceeds of crime and that those proceeds are likely to be concealed, transferred or dealt with so as to frustrate confiscation proceedings, may by written order provisionally attach the property for a period not exceeding 180 days.
2. The Adjudicating Authority then adjudicates: notice, hearing, and confirmation or otherwise of the attachment.
3. Appeals go to the Appellate Tribunal established under Section 25 (Section 26), and from there to the High Court under Section 42.
4. Trial of the offence itself is before a Special Court — a Court of Session designated under Section 43(1) — with offences triable by Special Courts under Section 44.

Civil courts have no jurisdiction (Section 41), and Members are public servants (Section 40).

Take the Paytm Payments Bank facts one step further than the FIU-IND order did.

The underlying criminality was not the bank's. First Information Reports were lodged by the Cyber Crime Station, Hyderabad, under the Indian Penal Code and the Telangana State Gambling Act, against a syndicate of entities connected to a foreign state that had organised and assisted online gambling, cheated lakhs of Indians through fraudulent gambling, dating and streaming services, and remitted the proceeds abroad through payment intermediaries.

Suppose the Directorate of Enforcement traces Rs 46 crore of those proceeds into a Gurugram commercial property and a portfolio of listed shares. On 12 June, a Deputy Director authorised by the Director records in writing his reason to believe that the property is proceeds of crime and is about to be transferred, and provisionally attaches it. That order is good for 180 days — to 9 December — and no longer.

Within that window the Adjudicating Authority issues notice to the owners, hears them, and either confirms the attachment or lets it lapse. If confirmed, confiscation follows on conviction before the Special Court; if the owners lose, they appeal to the Appellate Tribunal under Section 26 and then to the High Court under Section 42.

Meanwhile the bank that let the money through paid Rs 5,49,00,000 under Section 13. Two entirely separate tracks, from one set of FIRs.

Chapter 2 (section 2.3.3) defines the Adjudicating Authority and section 2.1.4 gives the Section 5 attachment mechanics, including the 180-day cap and the Deputy Director rank. The Chapter 2 sample questions test which authorities hold exclusive and concurrent powers under the Act. Expect a question distinguishing the Adjudicating Authority from the Special Court, the Appellate Tribunal and the Directorate of Enforcement.

• Provisional attachment lasts a maximum of 180 days, not 90 and not one year.
• The attaching officer must be the Director or an officer not below Deputy Director, authorised by the Director, and the reason to believe must be recorded in writing.
• The Adjudicating Authority is constituted under Section 6; the Appellate Tribunal under Section 25; the Special Court under Section 43(1). Three different bodies, three different sections.
• It is not the same thing as an FIU-IND adjudication order. FIU-IND penalises reporting failures under Section 13; the Adjudicating Authority deals with attached property. The workbook uses the word "adjudicating" for both, which is exactly why it is tested.
• Civil courts are ousted by Section 41 — an owner cannot go to the ordinary civil court about an attachment.
• Attachment requires both limbs of Section 5: possession of proceeds of crime and a likelihood of those proceeds being dealt with so as to frustrate confiscation.