Can the PMLA Appellate Tribunal Remand an Attachment Case? The J&K High Court’s Sarwa Zahoor Ruling

The High Court of Jammu & Kashmir and Ladakh has resolved an important procedural question under the Prevention of Money-Laundering Act, 2002: when the Appellate Tribunal sets aside an attachment-confirmation order for breach of natural justice, may it return the matter to the Adjudicating Authority for a fresh decision?

In Sarwa Zahoor v. Deputy Director, Directorate of Enforcement, a Division Bench of Justice Sanjeev Kumar and Justice Sanjay Parihar answered that question in the affirmative. The Court held that the broad words of Section 26(4) PMLA include a consequential power of remand. It also held that setting aside a confirmation order does not, without more, extinguish the underlying adjudication under Section 8.

The judgment was pronounced on 20 November 2025 in RFA (OS) Nos. 1, 2 and 3 of 2025. It is significant because it expressly disagrees with a recent Karnataka High Court decision that had read Section 26(4) more narrowly.

Background of the attachment proceedings

The case arose from a provisional attachment order dated 11 March 2019. ED attached the basement and ground floor of a property in DLF Phase II, Gurugram, stated to be worth approximately ₹1.64 crore and standing in Sarwa Zahoor’s name.

According to the judgment’s factual account, the investigation concerned alleged funding routed to separatist elements in Kashmir. The Adjudicating Authority later confirmed the attachment under Section 8 PMLA.

The affected parties appealed under Section 26. On 24 September 2024, the Appellate Tribunal accepted their objection that the Adjudicating Authority had not communicated its “reasons to believe” with the show-cause notice. The Tribunal set aside the confirmation order for this denial of a meaningful opportunity to answer the case. It then remanded the proceedings, directing a fresh notice accompanied by the reasons and a de novo decision.

The appellants challenged only the Tribunal’s authority to order that remand. Their appeals reached the High Court under Section 42 PMLA.

The statutory question under Section 26(4)

Section 26(4) authorises the Appellate Tribunal, after hearing the parties, to “pass such orders thereon as it thinks fit, confirming, modifying or setting aside the order appealed against.” The appellants argued that a statutory tribunal possesses only powers specifically conferred by its parent enactment. Since “remand” is not expressly listed, they said that the Tribunal could confirm, modify or set aside the order, but could not send the matter back.

ED argued that setting aside an order necessarily includes authority to issue the ancillary directions required to make appellate relief effective. Where an order is annulled for a procedural defect rather than on its merits, a fresh first-instance decision may be the only lawful way to complete the proceeding.

The High Court’s answer

At paragraph 10, the High Court held that the words “pass such orders thereon as it thinks fit” are of wide amplitude. Read with the express power to set aside an order, they include the power to remand as a consequential measure.

The Court did not treat the Tribunal as having the same general reservoir of inherent power as a civil or constitutional court. Paragraph 20 accepts the orthodox rule that a statutory tribunal is confined to the authority conferred by legislation. The decisive point was narrower: remand was treated as an integral incident of the appellate power that Section 26(4) itself grants, unless the statute expressly or by necessary implication excludes it.

At paragraphs 18, 19 and 22, the Court reasoned that an appellate power to annul an order may become ineffective if the appellate body cannot restore the matter for a lawful decision. This is especially so where the first order fails because of a curable procedural defect, such as denial of natural justice, rather than because the underlying proceeding is legally barred.

The Supreme Court authorities on implied remand power

The principal authority was Union of India v. Umesh Dhaimode, Civil Appeal No. 4472 of 1990, decided on 13 February 1997, reported in (1997) 10 SCC 223. That case concerned the former Section 128(2) of the Customs Act, 1962. At paragraph 2, the Supreme Court held that the combined power to pass such order as the appellate authority deemed fit and to confirm, modify or annul necessarily included authority to set aside and remand for a fresh decision.

The High Court also relied on Commissioner of Income Tax, Shillong v. Assam Travels Shipping Service, Civil Appeal Nos. 2735–2736 of 1977, decided on 24 September 1992, reported in 1993 Supp (4) SCC 206. Paragraphs 6 and 7 construed the Income Tax Appellate Tribunal’s power to pass orders “as it thinks fit” as wide enough to include remand to the competent authority.

V.K. Modi v. Director, Enforcement Directorate, Criminal Appeal Nos. 1059–1061 of 2008, decided by the Delhi High Court on 9 February 2009, reported in 2009 SCC OnLine Del 24, supplied a third strand. Paragraph 22 described remand as a necessary concomitant of effective appellate jurisdiction in the statutory setting considered there.

Partha Chakraborti and the PMLA-specific approach

The closest PMLA authority was Partha Chakraborti v. Directorate of Enforcement, CRA (DB) No. 168 of 2024, decided by the Calcutta High Court on 6 March 2025. Paragraph 9 held that Section 26(4)’s broad language, together with the power to set aside, permits the Tribunal to remand where the original order is invalidated for procedural error.

The J&K High Court found that reasoning directly applicable. At paragraphs 12 and 13 of Sarwa Zahoor, it noted that the confirmation order had been set aside because the affected parties were not supplied the reasons required to prepare an adequate reply. The merits of the attachment had not been finally adjudicated. Remand restored a fair opportunity without predetermining the outcome.

The contrary Devas Multimedia decision

The appellants relied on Joint Director, Directorate of Enforcement v. Devas Multimedia Pvt. Ltd., MSA No. 24 of 2020, decided by the Karnataka High Court on 25 September 2025, Neutral Citation 2025:KHC:39016-DB. Paragraphs 10 and 11 held that, because a statutory tribunal has no inherent powers and Section 26 does not expressly use the word “remand,” the PMLA Appellate Tribunal could not return the matter to the Adjudicating Authority.

Sarwa Zahoor expressly declined to follow that view. At paragraph 21, the J&K High Court reasoned that Devas Multimedia had not sufficiently accounted for remand as an incident of the express power to annul or set aside an appellate order. It preferred the approach in Umesh Dhaimode and Partha Chakraborti.

This produces a direct conflict between two High Courts on the scope of Section 26(4). Unless resolved by the Supreme Court, parties should examine the binding position in the relevant territorial jurisdiction and any later appellate development.

Why the other authorities did not alter the result

At paragraph 7, the appellants also cited Central Bureau of Investigation v. V.C. Shukla, Criminal Appeal Nos. 247–256 of 1998, decided on 2 March 1998, reported in (1998) 3 SCC 410; Babu Verghese v. Bar Council of Kerala, Civil Appeal No. 1504 of 1999, decided on 16 March 1999, reported in (1999) 3 SCC 422; Meera Sahni v. Lieutenant Governor of Delhi, Civil Appeal Nos. 3413–3414 of 2001 and connected appeals, decided on 15 July 2008, reported in (2008) 9 SCC 177; Aslam Mohammad Merchant v. Competent Authority, Criminal Appeal Nos. 1053–1057 of 2003, decided on 8 July 2008, reported in (2008) 14 SCC 186; and Kranti Associates Pvt. Ltd. v. Masood Ahmed Khan, Civil Appeal Nos. 7472 and 7474 of 2010, decided on 8 September 2010, reported in (2010) 9 SCC 496.

Those decisions address distinct propositions concerning admissible material, compliance with a prescribed statutory method, transfers affected by acquisition law, the requirement of “reason to believe,” and the duty to give reasons. They supported the broader submission that statutory action must remain within legislated limits and follow prescribed safeguards. The J&K High Court accepted that general principle but held at paragraphs 20 and 21 that it did not answer the specific textual question against remand: Section 26(4) itself supplied the necessary appellate authority.

Effect of expiry of provisional attachment

The appellants separately argued that the provisional attachment had exhausted its statutory life under Section 5(1), making remand futile. The High Court rejected that submission at paragraphs 24 to 26.

It relied on M/s Kaushalya Infrastructure Development Corporation Ltd. v. Union of India, SLP (Crl.) No. 565 of 2022, order dated 7 February 2022, reported in (2023) 18 SCC 526 and 2022 SCC OnLine SC 531. The Supreme Court explained that setting aside a provisional attachment does not, by itself, nullify the adjudication already triggered under Sections 5 and 8; that adjudication may proceed to its lawful conclusion.

In Sarwa Zahoor, the Tribunal had set aside the confirmation order, not terminated the Section 8 proceeding. Remand therefore restored the proceeding to the stage at which the defective confirmation order had been made. The Adjudicating Authority still had to issue a lawful notice, disclose the reasons, hear the affected parties and decide the matter afresh.

What the judgment does—and does not—decide

The judgment does not uphold the attachment on its merits. It upholds the Tribunal’s authority to require a fresh adjudication. Nor does it permit remand whenever an appellate body prefers another factual view. Its reasoning is strongest where an order is set aside for a procedural failure that prevented a fair first-instance determination.

For affected property holders, the ruling makes procedural objections important but not necessarily dispositive of the underlying PMLA proceeding. For ED and the Adjudicating Authority, it reinforces the need to record and communicate the statutory reasons, supply a meaningful opportunity to respond and pass a reasoned order. For the Appellate Tribunal, it indicates that any remand should identify the precise defect, the stage restored, the issues left open and the procedure to be followed.

Conclusion

Sarwa Zahoor adopts a functional but text-based view of Section 26(4): the power to set aside includes the ancillary authority required to make that appellate decision effective. At the same time, it preserves the rule that statutory tribunals cannot invent powers unrelated to their legislative mandate.

Because Karnataka and J&K now express opposing positions, the issue remains nationally unsettled. Until authoritative resolution, remand orders under Section 26 should be carefully reasoned and confined to what is necessary for a lawful, fair and effective adjudication.

This article is for general legal information and does not constitute legal advice.

Sources

High Court of Jammu & Kashmir and Ladakh, Sarwa Zahoor v. Deputy Director, Directorate of Enforcement, RFA (OS) Nos. 1–3 of 2025, judgment dated 20 November 2025, especially paragraphs 1, 6–27.

Supreme Court of India, Union of India v. Umesh Dhaimode, Civil Appeal No. 4472 of 1990, order dated 13 February 1997, (1997) 10 SCC 223, paragraph 2.

Supreme Court of India, Commissioner of Income Tax, Shillong v. Assam Travels Shipping Service, Civil Appeal Nos. 2735–2736 of 1977, judgment dated 24 September 1992, 1993 Supp (4) SCC 206, paragraphs 6–9.

Delhi High Court, V.K. Modi v. Director, Enforcement Directorate, Criminal Appeal Nos. 1059–1061 of 2008, judgment dated 9 February 2009, 2009 SCC OnLine Del 24, paragraphs 18–25.

Calcutta High Court, Partha Chakraborti v. Directorate of Enforcement, CRA (DB) No. 168 of 2024, judgment dated 6 March 2025, especially paragraph 9.

Karnataka High Court, Joint Director, Directorate of Enforcement v. Devas Multimedia Pvt. Ltd., MSA No. 24 of 2020, judgment dated 25 September 2025, 2025:KHC:39016-DB, paragraphs 9–11.

Supreme Court of India, M/s Kaushalya Infrastructure Development Corporation Ltd. v. Union of India, SLP (Crl.) No. 565 of 2022, order dated 7 February 2022, (2023) 18 SCC 526.

Supreme Court of India, Central Bureau of Investigation v. V.C. Shukla, Criminal Appeal Nos. 247–256 of 1998, judgment dated 2 March 1998, (1998) 3 SCC 410.

Supreme Court of India, Babu Verghese v. Bar Council of Kerala, Civil Appeal No. 1504 of 1999, judgment dated 16 March 1999, (1999) 3 SCC 422.

Supreme Court of India, Meera Sahni v. Lieutenant Governor of Delhi, Civil Appeal Nos. 3413–3414 of 2001 and connected appeals, judgment dated 15 July 2008, (2008) 9 SCC 177.

Supreme Court of India, Aslam Mohammad Merchant v. Competent Authority, Criminal Appeal Nos. 1053–1057 of 2003, judgment dated 8 July 2008, (2008) 14 SCC 186.

Supreme Court of India, Kranti Associates Pvt. Ltd. v. Masood Ahmed Khan, Civil Appeal Nos. 7472 and 7474 of 2010, judgment dated 8 September 2010, (2010) 9 SCC 496.

Prevention of Money-Laundering Act, 2002, Sections 5, 8, 26 and 42: https://www.indiacode.nic.in/handle/123456789/15402

#PMLA #AppellateTribunal #PropertyAttachment