What is the ‘Adjudicating Authority’ that has confirmed ED’s attachment of Rahul-Sonia-promoted company’s assets?

Congress leaders Sonia Gandhi and Rahul Gandhi together control YI, with 38% shares each. YI is being investigated by the ED after accusations that it acquired AJL and its assets for a “pittance” against an alleged loan extended by the Congress.

What is the role of the Adjudicating Authority?

Section 5 of the PMLA provides for the attachment of any property that is suspected to have been acquired with the proceeds of crime in a case of any offence that is listed in the schedule of the law. The attachment order is issued if the ED Director feels that “such proceeds of crime are likely to be concealed, transferred or dealt with in any manner which may result in frustrating any proceedings relating to confiscation of such proceeds of crime”.

This provisional attachment order is valid for a period of 180 days. It must be confirmed within this time by an Adjudicating Authority appointed by the central government, failing which the property is automatically released from attachment.

Because the initial attachment is provisional, the accused can continue to enjoy the property until the Adjudicating Authority confirms the attachment — after which the ED has the power to claim possession.

However, this is largely a procedural step, because there is hardly any attachment under PMLA that the Adjudicating Authority has refused to confirm so far.

What happens after the Adjudicating Authority confirms the attachment?

The accused has the right to challenge the Adjudicating Authority’s confirmation order at the PMLA’s Appellate Tribunal within 45 days. If the Appellate Tribunal too confirms the order, the accused can file a plea in the High Court, and so on.

Unless the property is released along the way, it shall remain out of bounds for the owner until the trial is completed. Following final confirmation, in case of a residential property, the ED will ask the owner to vacate the premises along with his belongings, and will take over possession.

In case of a conviction, the trial court may order confiscation of the attached property, and vest the rights to the property with the central government.

Attached properties may remain locked for years as the legal process continues, and may start to crumble and decay.

Any vehicles that are attached are sent to warehouses owned by the Central Warehousing Corporation, where the ED pays to park the vehicle. As cases drag on for years, the vehicles too rot. At the end of the trial, neither the accused nor the ED recovers anything from the vehicle. The agency could, in fact, end up paying more rent than the value of the vehicle.

This is an edited and updated version of an explainer that was first published in October 2018.