Single Non-Judicial Member Can Adjudicate PMLA Attachment Proceedings, Properties Acquired Before Crime Can Be Attached: Kerala High Court

"There can be single-member benches of the AA and Критерии [the AT] under the PMLA. Such single-member benches need not mandatorily have to be JMs and can be AMs as well." Kerala High Court, in a judgment dated July 30, 2026, held that an Adjudicating Authority under the Prevention of Money Laundering Act, 2002 consisting solely of a financial member is legally competent to pass orders under Section 8, while also reaffirming that properties acquired prior to a scheduled offence can be validly attached.

A bench of Justice G. Girish observed that the statutory framework of the PMLA does not mandate a judicial member's presence for internal review proceedings.

The petitions arose from the multi-crore Karuvannoor Service Co-operative Bank scam in Thrissur district, where the Irinjalakkuda Police had registered Crime No.650 of 2021 for offences including cheating and criminal breach of trust under the IPC. The Directorate of Enforcement subsequently initiated money laundering proceedings under the PMLA, issuing a provisional attachment order against loan defaulters and their relatives who allegedly held properties derived from the proceeds of the crime. The Adjudicating Authority confirmed the attachment vide an order dated December 3, 2024, prompting the aggrieved parties to invoke the constitutional writ jurisdiction under Article 226 of the Constitution of India.

The primary questions before the court were whether an adjudication order passed under Section 8 of the PMLA by a sole financial member without a judicial member is unconstitutional. The court was also called upon to determine whether properties acquired years prior to the alleged scheduled offence could be attached under the statute.

Challenge To Single Member Adjudication

The petitioners contended that empowering the Chairperson of the Adjudicating Authority under Section 6(5)(b) of the PMLA to constitute benches without a legally trained member violates the separation of powers. The court rejected this proposition, clarifying that the Adjudicating Authority is an internal review mechanism and not a court replacing regular judicial functions.

"Adjudicating Authority Is Not A Court"

Justice Girish noted that numerous statutory authorities like District Collectors and Income Tax functionaries exercise civil court powers without requiring a judicial member in their coram. Relying on the Delhi High Court ruling in J.Sekar v. Union of India and the Calcutta High Court decision in R.P Infosystems Ltd. v. Adjudication Authority, the bench reiterated that single-member administrative benches are legally sound.

"Single-Member Benches Are Valid Under PMLA"

The court underscored that the availability of statutory remedies through an appeal to the Appellate Tribunal under Section 26 and a further appeal to the High Court under Section 42 adequately safeguards the rights of aggrieved persons. Therefore, the absence of a judicial member does not render the adjudication proceedings constitutionally vulnerable.

Attachment Of Pre-Existing Properties

Addressing the challenge against attaching assets acquired prior to the commission of the predicate offence, the court relied on the Supreme Court's authoritative pronouncement in Vijay Madanlal Choudhary v. Union of India. The bench emphasized that property derived or obtained indirectly or directly as a result of criminal activity relating to a scheduled offence constitutes proceeds of crime.

"Proceeds Of Crime Encompasses Indirect Acquisitions"

The court pointed out that the interpretation accorded by the Apex Court leaves no room for ambiguity regarding the width of Section 2(1)(u) of the PMLA. Following the Division Bench ruling of the Kerala High Court in Abdul Rasheed v. Deputy Director, Directorate of Enforcement, the bench affirmed that pre-acquired assets linked to money laundering processes can be lawfully attached.

Reasons To Believe Recorded Independently

The court further dismissed the contention that the Deputy Director and the Adjudicating Authority failed to record proper reasons to believe. A perusal of the impugned orders established that independent assessments were conducted regarding the likelihood of proceedings being frustrated and the possession of proceeds of crime.

Concluding the proceedings, the Kerala High Court dismissed all the writ petitions, holding the challenges against the attachment orders and the composition of the Adjudicating Authority to be devoid of legal merit.

Date of Decision: 30 July 2026