Introduction:

In a significant ruling that clarifies and fortifies the appellate framework under the Prevention of Money Laundering Act, 2002 (PMLA), the High Court of Jammu & Kashmir has held that the Appellate Tribunal constituted under the Act possesses inherent powers to remand matters to the Adjudicating Authority after setting aside confirmation orders. The judgment was delivered by a Division Bench comprising Justice Sanjeev Kumar and Justice Sanjay Parihar in a case concerning appellants Sarwa Zahoor and Zahoor Ahmad Shah, who had challenged the confirmation of provisional attachment of their property by the Enforcement Directorate (ED). The Court held that the power to remand is not only implicit in the words of Section 26(4) of the PMLA—“pass such orders as it thinks fit”—but constitutes an essential element of effective appellate oversight. Without this power, the Bench observed, appellate jurisdiction would become weak, hollow, and incapable of correcting procedural lapses such as violations of natural justice. The ruling assumes national importance because it departs from a recent view of the Karnataka High Court, which curtailed the Tribunal’s ability to remand cases, thereby creating interpretational conflict. Against this backdrop, the Jammu & Kashmir High Court has reinstated the Tribunal’s pivotal role in ensuring transparency, procedural fairness, and due legal process in attachment proceedings under PMLA, especially where fundamental legal safeguards have been overlooked.

Arguments of the Appellants:

The appellants, Sarwa Zahoor and Zahoor Ahmad Shah, argued that the ED’s provisional attachment order dated 2019 was illegal and suffered from patent procedural defects. The property in question, worth approximately ₹1.64 crore, was attached under Section 5 PMLA, and the adjudicating authority later confirmed this attachment under Section 8(3) without adhering to statutory mandates. Counsel for the appellants contended that the authority neither disclosed the “reasons to believe” under Section 8(1), nor furnished the material relied upon for initiating attachment proceedings—both elements being prerequisites for ensuring compliance with the principles of natural justice. They asserted that the absence of such disclosure prevented them from effectively responding to the allegations or defending their ownership rights, as they had no opportunity to rebut the accusations made against the second appellant relating to alleged terror financing and links with Pakistan. The appellants highlighted that the Tribunal was justified in setting aside the confirmation order and remanding the matter because the Tribunal, while examining appeals under Section 26, is empowered to cure such defects. They argued that an appellate body incapable of remanding cases for rectifying fundamental procedural lacunae would be rendered functionally powerless. Additionally, they submitted that the statutory language—“pass such orders as it thinks fit”—must be interpreted broadly to include the power to remand, restore, review and issue directions to ensure compliance with procedural norms and prevent arbitrary exercise of power by enforcement agencies, particularly in cases where assets of citizens are attached without legal transparency. The appellants thus defended the Tribunal’s power not merely as incidental, but as indispensable to justice delivery under PMLA.

Arguments of the Respondents:

On the other hand, the Directorate of Enforcement argued that the Tribunal acted beyond its statutory mandate by remanding the matter back to the Adjudicating Authority. The respondents contended that Section 26(4) of the PMLA merely empowers the Tribunal to confirm, modify, or set aside orders passed by the adjudicating authority, but does not expressly confer remand jurisdiction. They insisted that the absence of explicit language allowing remand reflects legislative intention, asserting that powers not granted by statute must not be read into it. According to the ED, permitting remand would create endless procedural cycles, frustrate the purpose of provisional attachment—especially in cases concerning national security—and enable accused persons to delay proceedings indefinitely. The respondents further claimed that the Tribunal’s action compromised the adjudicatory timeline contemplated by the PMLA framework. By invalidating confirmation solely due to procedural lapses, the Tribunal failed to appreciate the gravity of the allegations, particularly those related to terror funding and anti-national activities. They argued that remand is permissible only where explicitly stated in law, and its absence in PMLA contrasts with other enactments such as the Income Tax Act and the Code of Civil Procedure, where remand powers are expressly provided. Therefore, the respondents urged the High Court to annul the Tribunal’s order and reinstate the confirmation of attachment, maintaining that the Tribunal must operate strictly within statutory confines.

Court’s Judgment:

The High Court decisively rejected the respondents’ interpretation and upheld the Tribunal’s authority to remand cases as an intrinsic feature of appellate jurisdiction. The Division Bench meticulously examined Section 26(4) of the PMLA, which empowers the Tribunal to “pass such orders as it thinks fit.” The Court observed that the breadth of this phrase cannot be curtailed artificially; rather, it mirrors language commonly employed in Indian appellate statutes that implicitly include the power to remand, revisit, and direct reconsideration of matters. In its reasoning, the Court asserted that appellate jurisdiction without the power to remand would reduce judicial review to a mechanical formality. If a confirmation order suffers from procedural defect, violation of natural justice, or failure to adhere to statutory safeguards, setting it aside without remand would result in a vacuum, leaving litigants remediless and authorities unclear on further course of action. Such a system, the Bench remarked, would render appellate power “illusory, inconsequential and devoid of practical relevance.” The High Court further emphasized that PMLA proceedings have severe civil consequences—including deprivation of property—and therefore cannot dispense with the fundamental procedural protections that lie at the heart of Indian jurisprudence. The Tribunal’s remand order, directing the adjudicating authority to issue fresh notice, disclose reasons, and grant a meaningful opportunity of hearing, was thus held to be a corrective, not a transgressive measure. In disagreeing with the Karnataka High Court, the Bench clarified that judicial power must be harmonized with constitutional principles and that restricting the Tribunal’s jurisdiction would amount to judicial abdication. Concluding the matter, the High Court affirmed the Tribunal’s authority, upheld the remand directions, and reiterated that the Tribunal remains a vital constitutional safeguard ensuring accountability and procedural fairness while adjudicating cases involving allegations of money laundering and terror financing. The judgment thus cements the doctrine that unless expressly prohibited, appellate powers necessarily include ancillary authority essential for their lawful exercise.