Accused Can't Be Left Without Documents To Defend: Calcutta High Court Directs Adjudicating Authority To First Decide Whether Complete 'Relied Upon Documents' Were Served In PMLA Proceedings

"It Is Upon The Adjudicating Authority To Decide Whether The Documents Already Supplied Are The Only Relied Upon Documents Or The Complete Relied Upon Documents Are Not Served Upon The Petitioner", In a significant ruling safeguarding the right of fair hearing in money laundering proceedings, the Calcutta High Court has held that an accused person cannot be compelled to face final arguments before the Adjudicating Authority under the Prevention of Money-laundering Act, 2002 (PMLA) without being supplied the complete set of 'Relied Upon Documents' (RUDs) that the Enforcement Directorate intends to use against him. Justice Krishna Rao, disposing of a writ petition on March 16, 2026, directed the Adjudicating Authority to first adjudicate the dispute over whether the documents already supplied constitute the complete RUDs before proceeding further in the matter.

Background of the Case

The petitioners, Gautam Dhandhania and another, faced a show cause notice dated November 25, 2025, issued under Section 8(1) of the PMLA, after the Enforcement Directorate conducted searches at their residential and office premises on October 28 and 29, 2025. During the searches, cash amounting to Rs. 3,00,12,000/- was seized from the office premises along with a mobile phone from the residential premises. The petitioners could not satisfactorily explain the source of the seized cash. The Managing Director of M/s. Radiant Enterprises Pvt. Ltd., engaged in warehousing and logistics operations, admitted to having paid approximately Rs. 63 lakhs to an MLA named Sujit Bose between 2016 and 2018 for manpower management and industrial relations consultancy, but failed to produce documentary evidence of the work performed beyond oral assurances.

Following the searches, the Deputy Director of the Enforcement Directorate filed an application under Section 17(4) of the PMLA before the Adjudicating Authority, which in turn issued a show cause notice on November 27, 2025, calling upon the petitioners to show cause why the seized cash, digital devices, and documents should not be retained by the Enforcement Directorate. The petitioners approached the Calcutta High Court challenging the show cause notice and praying for supply of all Relied Upon Documents in a bound paper book as mandated under Rule 13(2) of the Adjudicating Authority (Procedure) Regulations, 2013.

Legal Issues and Court's Observations

On the Right to Receive Complete Relied Upon Documents

The central grievance of the petitioners was that despite repeated requests commencing December 16, 2025, only four documents — RUD-1, RUD-2A, RUD-2B, and RUD-3 — were served upon them through email, whereas they had specifically requested supply of 34 documents by their letter dated January 23, 2026. The petitioners contended that without the complete RUDs, they were unable to file a meaningful reply to the show cause notice.

The Court took note that the petitioners, without prejudice to their rights, had filed para-wise comments before the Adjudicating Authority on January 25, 2026, and had also brought to the Adjudicating Authority's notice the specific documents they alleged were relied upon but not supplied. The Court found that the resolution of this dispute lay squarely before the Adjudicating Authority itself, not the High Court in writ jurisdiction, holding: "It is upon the Adjudicating Authority to decide whether the documents which have already been supplied to the petitioners are the only 'Relied Upon Documents' or the complete 'Relied Upon Documents' are not served upon the petitioner."

On the Validity of Electronic Service of Show Cause Notice

The petitioners raised a specific contention that the notice and the RUDs were required to be supplied in a bound paper book as mandated by Rule 13(2) of the Adjudicating Authority (Procedure) Regulations, 2013, and that service through email was inadequate for this purpose. The Court carefully distinguished between the mode of service of the notice and the obligation to supply documents in a bound paper book.

On the question of whether email service of the show cause notice itself was valid, the Court held squarely in favour of the Enforcement Directorate. Rule 13(3)(iii) expressly permits service through electronic mail, and Rule 13(11) further reinforces this by providing that "notwithstanding anything in sub-regulation (3), a summon or notice may be communicated through electronic mode as provided in section 13 of the Information Technology Act, 2000 and transmission of such communication shall be regarded as valid service." The Court found no illegality in the service of the show cause notice through email.

On the Standard for Recording 'Reason to Believe' Under Section 8(1), PMLA

The petitioners challenged the Adjudicating Authority's recording of reasons to believe under Section 8(1) of the PMLA. The Court referred to the Division Bench of the Delhi High Court in Naresh Jain v. Deputy Director, Directorate of Enforcement, which had authoritatively held that "the belief must be that of an honest and reasonable person based upon reasonable grounds; the officer concerned may act on direct or circumstantial evidence but not on mere suspicion or the allegations mentioned in the FIR or charge-sheet."

Examining the Adjudicating Authority's recorded reasons to believe, the Court found that the authority had, upon prima facie perusal of facts and the RUDs, noted the petitioners' involvement in the process of money laundering in connection with the seized cash, digital devices, and documents. The Adjudicating Authority had specifically recorded: "Since, there is a scheduled offence under PMLA and the role of the respondents in money laundering has been described in the application, therefore, there are prima facie reasons to believe that M/s. Chinese Quisine Restaurant & Ors. are involved in the offence of money laundering. However, the final view shall be taken after receiving responses from both sides and granting an opportunity for a hearing to both parties." Finding that this recording of prima facie reasons was based on materials placed before it and not on mere suspicion, the Court found no illegality in the Adjudicating Authority's exercise of this power.

On the Broad Powers of the Adjudicating Authority Under Section 11, PMLA

The Court reminded the petitioners that they were not without adequate remedies before the Adjudicating Authority itself. Under Section 11 of the PMLA, the Adjudicating Authority possesses the same powers as a Civil Court, including the power of discovery and inspection of documents, enforcing the attendance and examining any person on oath, compelling production of records, receiving evidence on affidavits, and issuing commissions for examination of witnesses and documents. Rules 16 and 21 of the Adjudicating Authority (Procedure) Regulations, 2013, specifically provide for inspection of records and examination of witnesses respectively. The Court noted that if the petitioners required any document or wished to produce evidence, the appropriate forum was the Adjudicating Authority itself.

Furthermore, the Court noted that any party aggrieved by an order of the Adjudicating Authority had the remedy of a statutory appeal under Section 26 of the PMLA before the Appellate Tribunal, and thereafter before the High Court under Section 42 of the PMLA.

Disposing of the writ petition, Justice Krishna Rao passed a three-pronged direction: first, that the Adjudicating Authority shall decide whether the documents requested by the petitioners are indeed 'Relied Upon Documents' and, if found to be so and not yet served, direct the Enforcement Directorate to supply them within two weeks; second, that upon such supply, the petitioners shall be given two weeks to file a supplementary reply; and third, that any party aggrieved by the Adjudicating Authority's order on the question of supply of RUDs shall be at liberty to pursue the remedy under Section 26 of the PMLA. The interim order operating in favour of the petitioners was simultaneously vacated.

The ruling reaffirms that while the PMLA framework confers wide powers on the Enforcement Directorate and the Adjudicating Authority, the right of an accused to know and respond to the documents relied upon against him is a foundational requirement of fair procedure — and the Adjudicating Authority is itself equipped and duty-bound to ensure that this right is vindicated before the proceedings are taken to finality.

Date of Decision: March 16, 2026