Procedural Fairness Under PMLA Section 8(1): Adjudicating Authority Must Decide “Relied Upon Documents” (RUDs) Disputes Before Proceeding Further

1. Introduction

The writ petition was filed by Dipak De (petitioner) against the Union of India and the Enforcement Directorate (ED), arising out of proceedings before the Adjudicating Authority under the Prevention of Money-laundering Act, 2002 (PMLA).

Following searches in October 2025 and the seizure/retention of movable properties (including cash of Rs. 25,50,000/-, digital devices, and records), the ED moved the Adjudicating Authority under Section 17(4) PMLA. The Adjudicating Authority issued a show cause notice under Section 8(1) PMLA, calling upon the petitioner to show cause why retention under Sections 20 and 21 should not be permitted.

The petitioner’s principal grievance was procedural: despite repeated requests, he alleged that the ED had not supplied the complete “Relied Upon Documents” (RUDs) as required by Rule 13(2) of the Adjudicating Authority (Procedure) Regulations, 2013 (which speaks of service “along with complete relied upon documents in a bound paper book”). On that basis, he sought (i) a direction for supply of all RUDs and (ii) quashing of the show cause notice.

The respondents contended that documents had been served electronically (PDF/USB via email), that service was valid under the Regulations, and that the petitioner had an adequate statutory remedy within the PMLA framework (including appeal under Section 26).

The core issue before the High Court was not the merits of alleged money-laundering, but whether the adjudicatory process under Section 8 could proceed when there was a live dispute about what constitutes “complete” RUDs and whether they had been supplied.

2. Summary of the Judgment

The Calcutta High Court declined to quash the show cause notice and did not find illegality in the Adjudicating Authority’s recorded “reasons to believe”. At the same time, it recognized that a meaningful Section 8(1) response depends on access to the documents the ED actually relies upon.

The Court disposed of the writ with process-protective directions:

• The Adjudicating Authority must first decide whether the additional documents demanded by the petitioner are in fact “relied upon documents”. If they are RUDs and have not been served, the Adjudicating Authority must direct the ED to supply them within two weeks before proceeding further.
• If further RUDs are supplied pursuant to such an order, the petitioner must be given an opportunity to file a supplementary reply within two weeks of supply.
• If either party is aggrieved by the Adjudicating Authority’s order on RUD-supply, it may take steps under Section 26 PMLA.

Importantly, the Court held that service of summons/notice through electronic mode is valid under Rule 13(11) read with the Information Technology Act, 2000; however, the dispute as to whether “complete” RUDs were supplied was left to be determined in the first instance by the Adjudicating Authority.

3. Analysis

3.1 Precedents Cited

(i) Natwar Singh v. Director Of Enforcement and Another reported in (2010) 13 SCC 255.

This decision was cited by the petitioner to reinforce the broader natural justice imperative in enforcement/adjudicatory actions—namely, that when the State proceeds against a person based on materials, the person must be afforded a meaningful opportunity to respond. While the present judgment does not reproduce extracts from Natwar Singh, its invocation aligns with the Court’s ultimate procedural stance: a reply under Section 8(1) must not be illusory, and the RUD-question must be addressed before the matter moves forward substantively.

(ii) Excel Powmin Ltd. v. Union Of India and Another reported in 2020 SCC OnLine Cal 384.

Also cited by the petitioner, this Calcutta High Court authority was relied upon to support fair procedure in regulatory/enforcement contexts, particularly around supply/access to materials relevant to the proceedings. Although the Court did not expressly analyse this precedent in the body of the judgment, the relief moulded here—directing a structured determination of what constitutes RUDs, and ensuring supply before further hearing—reflects a consistent emphasis on procedural fairness.

(iii) J. Sekar v. Union of India and Others reported in 2018 SCC OnLine Del 13481.

The Court referred to J. Sekar to articulate the statutory scheme under PMLA and the layered nature of remedies: departmental/adjudicatory proceedings (Director → Adjudicating Authority → Appellate Tribunal) and criminal trial before the Special Court, with further appellate review.

The relevance in the present case is twofold:

• It underscores that the Adjudicating Authority’s role under Section 8 is procedurally structured—notice, reply, hearing, consideration of materials on record, and findings.
• It supports the Court’s restraint in writ jurisdiction: rather than substituting itself for the Adjudicating Authority, the High Court directed the authority to perform a threshold procedural task (deciding the RUD dispute) within the PMLA framework, with an appeal route under Section 26.

(iv) Naresh Jain v. Deputy Director Directorate of Enforcement, Delhi reported in 2019 SCC OnLine Del 11877.

The Court cited Naresh Jain on the discipline surrounding “reason to believe”: it cannot be a matter of mere suspicion or arbitrary subjective satisfaction and must be grounded in relevant material capable of scrutiny.

Applying that lens, the Court noted that the petitioner had been served the “reasons to believe” recorded under Section 8(1), and it extracted the Adjudicating Authority’s reasoning that, upon a prima facie perusal and reviewing the RUDs, the authority found prima facie reasons to believe the respondents were involved, while keeping the final view open after responses and hearing. The Court then held:

Thus, Naresh Jain influenced the judgment by marking the boundary: while “reason to believe” must be lawful, the present record did not justify writ interference on that ground.

3.2 Legal Reasoning

The Court’s reasoning proceeds in three connected steps.

1. Validity of electronic service of notice/documents:
   The petitioner argued for supply of complete RUDs “in a bound paper book” under Rule 13(2). The Court read Rule 13 as a whole, especially:
   • Rule 13(3)(iii) (service may be by electronic mail/fax), and
   • Rule 13(11) (electronic communication as per Section 13 of the Information Technology Act, 2000 is valid service).
   It therefore held that service through email is valid in law, rejecting any argument that only physical bound volumes can constitute valid service.
2. The Section 8 decision must follow a fair opportunity to reply:
   The Court emphasised the statutory obligation under Section 8(2) PMLA—the Adjudicating Authority must consider the reply (if any), hear parties, and evaluate materials on record to determine whether the properties are involved in money-laundering. That scheme presupposes that the noticee can access what the applicant relies upon.
3. Institutional competence and sequencing—RUD dispute first, merits later:
   Instead of deciding document-by-document entitlement in writ jurisdiction, the Court pointed to:
   • Section 11 PMLA (Adjudicating Authority’s civil-court-like powers, including discovery/inspection and compelling production),
   • Rule 16 (inspection), and
   • Rule 21 (examination of witnesses/commission).
   On this basis, the Court held that it is for the Adjudicating Authority to determine whether the petitioner’s requested documents are indeed “relied upon documents”. The High Court’s role was to ensure procedural sequencing: decide the RUD-supply issue before the matter proceeds further, and provide time for a supplementary reply if new RUDs are furnished.

3.3 Impact

The judgment is significant for Section 8(1) PMLA practice, especially in cases where notice and supporting materials are served electronically:

• Electronic service is affirmed as legally valid; objections cannot succeed merely because a “bound paper book” was not physically delivered, if electronic service is otherwise proved.
• At the same time, the judgment strengthens procedural fairness by requiring a clear, preliminary determination of what constitutes RUDs and ensuring their supply before the hearing advances.
• It offers a workable remedial architecture: the Adjudicating Authority decides RUD disputes first; parties retain a targeted appellate route under Section 26 for grievances on that issue.
• For future cases, this may reduce premature writ challenges to Section 8 notices by clarifying that High Courts may prefer to enforce intra-statutory procedural discipline rather than quash notices.

4. Complex Concepts Simplified

• “Relied Upon Documents (RUDs)”: documents the authority/applicant actually uses to support allegations. Fair hearing generally requires that such documents be made available to the noticee so the noticee can respond meaningfully.
• Section 8(1) PMLA show cause notice: the formal notice issued by the Adjudicating Authority asking the person to explain the source of funds/assets and why the property should not be treated as involved in money-laundering and eventually confiscated.
• “Reason to believe”: a legal threshold requiring objective, relevant material—more than suspicion. Courts can examine whether the reasons show a rational link to material on record, without deciding the final merits.
• Rule 13(2) vs Rule 13(11) (bound paper book vs electronic service): Rule 13(2) mentions service with complete RUDs in a “bound paper book”, but Rule 13(11) expressly validates electronic communication. The judgment harmonises these by accepting e-service as valid, while still insisting that the noticee must receive the complete set of documents actually relied upon.
• Section 26 appeal: an internal appellate remedy under PMLA against the Adjudicating Authority’s orders—here, expressly preserved for disputes about RUD supply determinations.

5. Conclusion

This decision reframes a common procedural conflict in PMLA adjudication—non-supply or disputed supply of RUDs—as primarily a matter for the Adjudicating Authority to decide first, using its statutory powers, before moving to merits. While affirming the legality of electronic service, the Court ensured that Section 8(1) proceedings remain anchored in effective opportunity of hearing by mandating a threshold ruling on whether additional requested documents are “relied upon” and, if so, their timely supply and corresponding time to respond.

The broader significance lies in the Court’s calibrated writ intervention: it neither derails the statutory process by quashing the notice nor permits procedural unfairness to persist. Instead, it imposes a clear sequencing discipline—decide RUD completeness → supply if needed → allow supplementary reply → proceed—backed by appeal under Section 26.