Guest Post: Per Incuriam and the Appellate Tribunal's Reading of Section 8(3) PMLA

(This is a guest post by Riddhi Alok Puranik)

A May 2026 order of the Appellate Tribunal constituted under the PMLA 2002 (“ATPMLA”), disposing of four appeals in the NSEL investigation, does something I argue that a Tribunal is not permitted to do. Confronted with a Delhi High Court Division Bench judgment going against how the Directorate of Enforcement read the PMLA, the Tribunal neither followed that authority nor distinguished it on the facts. It held the judgment — Directorate of Enforcement v. Rajesh Kumar Agarwal — to be per incuriam and declined to follow it.

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:

• Section 17(1) empowers authorised officers to search and seize, or where seizure is impracticable, freeze property, on a recorded reason to believe. Section 17(2) requires the officer to forward those reasons and material to the Adjudicating Authority immediately. Section 17(4), inserted by the 2013 amendments, requires the officer, within thirty days, to file an application before the Authority "requesting for retention of such record or property seized....or for continuation of the order of freezing."
• Section 20 is titled "Retention of property". Section 20(1) provides that where property has been seized or frozen under Section 17, an officer authorised by the Director who has recorded fresh reasons to believe that the property "is required to be retained for the purposes of adjudication under Section 8" may retain or continue the freeze for up to 180 days. Section 20(2) requires that retention order and accompanying material to be forwarded to the Authority. Section 20(3) mandates return of property on expiry of 180 days unless the Authority permits continuation. Section 20(4) requires the Authority, before permitting such continuation, to satisfy itself that the property is prima facie involved in money-laundering and required for adjudication.
• Section 8(3) provides that where the Adjudicating Authority decides under Section 8(2) that property is involved in money-laundering, it shall, "by an order in writing, confirm the attachment of the property made under sub-section (1) of section 5 or retention of property or record seized or frozen under section 17 or section 18" whereupon the attachment or retention may continue during investigation for up to 365 days, or the pendency of proceedings.

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)].

This decision is, for now, settled law in the Delhi High Court. Anirudh Pratap Agarwal v. Enforcement Directorate called Section 20 "the crucial link" between seizure and adjudication [Anirudh Pratap Agarwal (34)]. Directorate of Enforcement v. Poonam Malik followed. Ravi Aggarwal v. Deputy Director, Enforcement Directorate treated Rajesh Kumar Agarwal as binding precedent and held that section 8(3) "only governs confirmation."

Why the Per Incuriam Label Fails

The doctrine does not fit on its own terms

A decision is per incuriam when rendered in ignorance or forgetfulness of an inconsistent statutory provision or a binding authority. The AT-PMLA itself quoted Morelle v. Wakeling and Municipal Corporation of Delhi v. Gurnam Kaur to this effect [M/s N K Proteins (58), (60)], correctly stating that decisions given "in ignorance of the terms of a statute" may be treated as per incuriam. But Rajesh Kumar Agarwal was not rendered in ignorance of section 8(3): it construed that provision exhaustively alongside Sections 17 and 20. 

The ATPMLA held that Rajesh Kumar Agarwal is in conflict with the Supreme Court's judgment in Vijay Madanlal Choudhary v. Union of India. This claim has a structural problem though which the ATPMLA did not confront: Vijay Madanlal Choudhary was a constitutional challenge to the PMLA's enforcement architecture, not a case where the precise sequencing of Sections 20 and 8(3) was in issue. Paragraph 84 of that judgment describes the Section 17(2) and 17(4) safeguards in general terms, noting that the Authority "passes an order of retention" following a show-cause process, as part of the Supreme Court's analysis that the overall scheme contains inbuilt safeguards rendering it constitutionally valid.

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.

Nor does the supposed conflict with Vijay Madanlal Choudhary sustain the per incuriam label even on its own terms. There is a fundamental difference between saying that a judgment is inconsistent with, or departs from, Paragraph 84 and saying that it is per incuriam because paragraph 84 was overlooked. Per incuriam requires ignorance of a binding, applicable ratio; it does not require agreement with every prior holding on a general scheme. The ATPMLA conflated disagreement with a precedent and holding that the precedent was per incuriam, which are entirely different propositions.

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

Even if the doctrine technically applied, the ATPMLA cannot invoke it against a judgment of the Delhi High Court. This is directly settled. In Union of India v. Chand Singh, the Delhi High Court held that "it is not open to the Tribunal to characterise a judgment of a High Court as per incuriam." [Chand Singh (7)]. One narrow latitude was recognised: where a tribunal has before it Supreme Court judgments that state the law differently from a High Court, it may follow the Supreme Court in preference. That is not a licence to call the High Court wrong on the statute; it is a duty, in cases of genuine conflict, to follow the higher court. That latitude is unavailable here because the claimed conflict with Vijay Madanlal Choudhary does not exist. 

What we have is a statutory tribunal substituting its own reading of section 8(3) for that of the High Court. The constitutional architecture forecloses this. The Supreme Court in East India Commercial Co. v. Collector of Customs held that a tribunal subject to a High Court's superintendence cannot ignore the law that court has declared and proceed in violation of it; if it could, the entire logic of supervisory jurisdiction collapses [East India Commercial Co Ltd (14), (31)]. L. Chandra Kumar v. Union of India placed High Court superintendence over tribunals within the basic structure of the Constitution [L. Chandra Kumar (79), (92)].

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

The most telling textual point comes from a direct comparison with Section 5 of the PMLA. Section 5(1) reads: "he may, by order in writing, provisionally attach such property for a period not exceeding one hundred and eighty days from the date of the order". This language is self-contained. It grants the Director an executive power of attachment directly, sets its own duration, and requires no separate provision to authorise retention. Section 8(3) then "confirms the attachment... made under sub-section (1) of section 5" and it confirms a prior executive order that Section 5 itself generates.

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 expressio unius (Latin: expression of one thing is exclusion of another) inference is straightforward.  Parliament clearly enacted two enforcement tracks in the same statute. Under the attachment framework in Section 5, the authority to act and the authority to retain the property for 180 days are contained within a single provision. By contrast, under the search-and-seizure framework, Parliament distributed those functions across Sections 17 and 20, with Section 17 authorising the initial seizure and Section 20 governing subsequent retention. This structural choice reflects deliberate legislative design, where both tracks converge at section 8(3) for quasi-judicial confirmation but both require a prior executive order.

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

The PMLA's Statement of Objects and Reasons, reproduced in the Solicitor General's Note II, names the United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances 1988 as one of the international instruments calling for prevention of laundering of drug proceeds and confiscation of proceeds derived from such offences. Chapter VA of the Narcotic Drug and Psychotropic Substances Act, 1985 (“NDPS Act”) was enacted to implement the same Convention's Article 5 on confiscation, and its seizure-confirmation architecture under Section 68F is a two-step structure where the investigating officer seizes or freezes under section 68F(1), and the quasi-judicial competent authority confirms within 30 days under section 68F(2), failing which property is returned.

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 ATPMLA sits in a legal order where it is subject to Delhi High Court jurisdiction under Articles 226 and 227 of the Constitution and, hears appeals that travel to the High Court under Section 42 of PMLA, and has before it a consistent body of Division Bench authority directly on point. If it disagrees with that authority, the remedies open to it are narrow and well-defined, which are to follow the High Court while recording the difficulty and distinguish on facts where facts genuinely differ. Declaring a Division Bench judgment per incuriam is not one of those remedies.

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.