Per Incuriam and the Appellate Tribunal’s Reading of Section 8(3) PMLA

(This is a guest post by Riddhi Alok Puranik)

The underlying dispute is narrow. Section 17 of the PMLA allows an authorised officer to search and seize or freeze property. Section 20 allows an authorised officer, on fresh recorded reasons, to retain that property for up to 180 days. Section 8(3) allows the Adjudicating Authority (also constituted under the PMLA) to confirm a retention. Rajesh Kumar Agarwal reads these as sequential i.e. without a Section 20 order the retention is void, and there is nothing for section 8(3) to confirm. The Directorate’s case, which the Tribunal accepted, is that Section 8(3) carries an independent power to order retention on a Section 17(4) PMLA application, so that Section 20 may be bypassed altogether.

That interpretive question is contested and is now before the Supreme Court. The Tribunal was entitled to think the Delhi High Court wrong about it. What it could not have done, in my respectful submission, was to declare a Division Bench judgment as per incuriam. This is for two independent reasons: the doctrine does not fit a judgment that construed the very provision said to have been overlooked, and a Tribunal subject to a High Court’s superintendence cannot invoke this rule to avoid a judgment it disagrees with. This piece takes both objections in turn, then sets out why the ED’s reading of section 8(3) fails on the ordinary tools of construction, and finally what is at stake institutionally if the Tribunal’s approach stands.

The Interpretive Question

Three provisions of PMLA govern what happens to property after an ED search:

The dispute here is about the “or” in Section 8(3) PMLA and the operative verb. Does “confirm” distribute across both objects, so that the Authority confirms either a Section 5 PMLA attachment or a Section 17/18 PMLA retention that must first exist under Section 20? Or, does “or” introduce a separate, verb-free power for the Authority to directly order retention on a section 17(4) application, bypassing section 20 entirely?

What the Delhi High Court Held, and What has Followed

In Rajesh Kumar Agarwal, the Delhi High Court read the PMLA scheme as sequential, where Section 17 supplies the seizure/freeze power, Section 20 supplies the executive-layer retention authority for up to 180 days, and Section 8(3) supplies quasi-judicial confirmation for any continuation beyond that. Section 17(4) PMLA is the procedural mechanism through which the officer brings the matter before the Authority and is not an independent retention mechanism [Rajesh Kumar Agarwal (41)–(60)]. Retention not founded on a Section 20 order is void ab initio, incapable of being cured by later confirmation [Anirudh Pratap Agarwal (88)].

Why the Per Incuriam Label Fails

The doctrine does not fit on its own terms

It does not decide, because it was not asked to decide, whether a Section 20(1) order is a mandatory precondition to the Authority’s section 8(3) power. A constitutional imprimatur on the overall architecture is not a specific holding on a sequencing question within that architecture. A court that subsequently decides that sequencing question does not thereby “ignore” the constitutional approval judgment. The Tribunal treated these as interchangeable when they are not.

A lower adjudicatory body may disagree with a High Court’s reasoning, but it lacks the institutional authority to treat that precedent as non-binding on that basis alone.

A Tribunal cannot in any case apply the label to a High Court

Why the ED’s Interpretation Cannot Hold: A Convergence of Methods

The foundational error does not depend on the underlying interpretation being wrong. But it is worth examining why multiple orthodox techniques converge against the ED’s position, because the Tribunal treated the grammar point as sufficient without considering what it does to the rest of the Act.

Grammar and the distribution of “confirm”

The subject-verb-object structure of section 8(3) is: “he shall, by an order in writing, confirm the attachment… or retention… under section 17 or section 18“. “Confirm” is the operative verb, governing a single object list connected by “or.” On the ED’s reading, “or retention” introduces a power to originate retention, i.e. a power for which there is no verb in the sentence and no source in Section 8’s architecture.

The Tribunal read “or” as disjunctive and derived from it a new, separate power. But “or” being disjunctive establishes only that there are two distinct objects; it does not supply a second, different verb [M/s N K Proteins (37)]. Filling that gap requires reading words into Section 8(3) that Parliament did not write, which is precisely what the Supreme Court in Vijay Madanlal Choudhary itself said constitutes rewriting the statute [Vijay Madanlal Choudhary [33)].

The Section 5 PMLA Structural Argument

Section 17’s drafting rationale clearly departs from section 5. It could have, in order for it to be construed as a similar self-containing code, included language providing that the seizing officer may, by order in writing, retain such property for a period not exceeding 180 days. It does not thus, replicate the logic of section 5. Section 17 authorises officers to seize or freeze and contains no self-standing retention authority whatsoever. The officer who seizes under Section 17(1) has no power under section 17 to retain. Section 17(4)’s language confirms this: the officer files “an application requesting for retention”, the language of petition to another body, not the language of independent executive order.

The retention authority for Section 17 PMLA property was placed, deliberately and separately, in Section 20. Section 20(1) mirrors section 5(1) in structure and provides that property “may, if seized, be retained… for a period not exceeding one hundred and eighty days“. That is the executive retention order. Section 8(3) then confirms it, in the same manner that it confirms the section 5 attachment in the attachment track.

The ED’s argument effectively treats a seizure under Section 17 PMLA as the functional equivalent of an attachment under Section 5 for the purposes of Section 8(3). On this view, the Adjudicating Authority may confirm the seizure itself, even in the absence of a prior order under Section 20. Such an interpretation collapses the distinction that the statute deliberately maintains between the attachment and seizure mechanisms. If a seizure under Section 17 were by itself sufficient to attract Section 8(3), Section 20 would cease to perform any independent role within the search-and-seizure framework. The result would be to render Section 20 redundant, which is a consequence that the statutory scheme does not support.

Differential predicates

Section 20(1) PMLA obliges the authorised officer to record reasons showing that the property must be retained for the purposes of adjudication under Section 8. Section 8(2), which serves as the basis for any order under Section 8(3), requires the Adjudicating Authority to make a substantive finding that the property is involved in money laundering. These are materially different standards operating at different stages in the procedural machinery. The Section 20(1) determination is only a preliminary, executive-level judgement about investigative need while the Section 8(2) determination is a quasi-judicial finding on merits.

If the Section 17(4) PMLA application goes directly to the Adjudicating Authority without any section 20 order, the Authority is asked to make a full-blown section 8(2) money-laundering determination at the earliest possible post-seizure stage, before investigation is substantially complete, basis only the material forwarded under section 17(2). Parliament’s decision to give the ED 180 days under section 20 exists precisely because that determination cannot responsibly be made immediately. Collapsing these tiers forces the Adjudicating Authority into an adjudication on merits at a stage for which the statutory scheme provides no adequate procedural preparation.

The Convention architecture

That confirmation power is precisely a power of confirmation, not an original power of seizure. PMLA was enacted to address the money laundering which the NDPS regime had left uncovered, extending the Convention’s framework to the full range of scheduled offences. If the ED’s reading of Section 8(3) as an original retention power were correct, that expanded statute would provide fewer executive-layer accountability steps in its search-and-seizure track than the narrower NDPS regime it was designed to go beyond. That outcome can’t be reconciled with the Centre’s own framing of PMLA as giving effect to India’s Convention obligations.

The Institutional Stakes

The Tribunal’s interpretive disagreement with the Delhi High Court can very well be legitimate. The question remains contested, and with both Rajesh Kumar Agarwal and Anirudh Pratap currently pending before the Supreme Court, awaiting the Apex’s resolution on interpretation. The difficulty lies not in the Tribunal’s disagreement, but in the institutional consequences it drew from it.

The practical consequences of the Tribunal’s approach, left unchallenged, are that Section 20 protections become effective only for those who can afford to litigate back to the High Court under Section 42. The Adjudicating authority cites the ATPMLA and thus it has immunised itself from High Court correction. Property seized without a Section 20 PMLA order stays seized, and Article 300A operates at the Tribunal’s discretion rather than as a function of law. That is not a procedural quibble. It is the difference between a safeguard that functions and one that exists only on paper.