The Calcutta High Court has affirmed that the right to receive complete "Relied Upon Documents" under Rule 13(2) of the PMLA Regulations is not a procedural formality but a substantive safeguard essential to fair adjudication. The judgment clarifies that failure to supply these documents undermines the very foundation of the show cause process under the Prevention of Money-laundering Act, 2002.
Background & Facts
The Dispute
The petitioners, Gautam Dhandhania and another, are directors of Ms. Radiant Enterprises Pvt. Ltd., engaged in warehousing and logistics. On 28th and 29th October 2025, the Enforcement Directorate (ED) conducted searches at their residential and office premises. During these searches, a mobile phone and cash amounting to Rs. 3,00,12,000 were seized. The petitioners claimed the cash was part of working capital, but failed to produce documentary evidence supporting its source. The ED alleged the funds were proceeds of crime linked to payments made to an MLA for consultancy services between 2016 and 2018, for which no invoices or work records were produced.
Key Facts
- On 13.11.2025, the Deputy Director, ED filed an Original Application (OA) before the Adjudicating Authority seeking retention of seized assets under Sections 20 and 21 of the PMLA.
- The show cause notice dated 25.11.2025 (issued under Section 8(1) PMLA) erroneously stated the OA was filed on 08.11.2025, while the actual filing date was 13.11.2025.
- On 24.12.2025, the petitioners received four PDF files labeled RUD-1, RUD-2A, RUD-2B, and RUD-3 via email.
- On 23.01.2026, the petitioners submitted a detailed list of 34 documents they claimed were missing from the RUDs.
- On 05.02.2026, the Registrar permitted inspection of case records, and the petitioners applied for certified copies.
- The petitioners never received a bound paper book containing the complete RUDs as mandated by Rule 13(2).
- The Adjudicating Authority fixed the final hearing for 09.03.2026, despite pending requests for document supply.
Procedural History
- 28.10.2025: Search conducted at petitioners’ residence; mobile phone seized.
- 29.10.2025: Search conducted at office premises; Rs. 3,00,12,000 in cash seized.
- 13.11.2025: Original Application filed by ED with Adjudicating Authority.
- 25.11.2025: Show cause notice issued under Section 8(1) PMLA.
- 27.11.2025: Adjudicating Authority issued notice confirming the show cause notice.
- 16.12.2025: Petitioners’ reply sent to ED, requesting RUDs.
- 18.12.2025: Registrar emailed ED seeking proof of service.
- 21.12.2025: Petitioners’ counsel informed Registrar that RUDs were not received.
- 24.12.2025: Petitioners received RUD-1, RUD-2A, RUD-2B, RUD-3 via email.
- 04.01.2026: Legal notice sent to Adjudicating Authority demanding compliance with Rule 13(2).
- 05.01.2026: Second notice sent requesting extension of time and document supply.
- 23.01.2026: Third notice sent listing 34 missing documents; request for inspection made.
- 25.01.2026: Petitioners submitted para-wise comments without prejudice, requesting withdrawal of notice.
- 29.01.2026: Petitioners alleged suppression and misrepresentation of documents.
- 09.03.2026: Final hearing concluded before High Court.
The Parties' Positions
For the Petitioners
The petitioners contended that Rule 13(2) of the Adjudicating Authority (Procedure) Regulations, 2013 mandates that all Relied Upon Documents must be served in a bound paper book. They argued that electronic transmission of PDFs, even if received, does not satisfy the statutory requirement. They cited Naresh Jain v. Deputy Director, ED and J. Sekar v. Union of India to assert that the Adjudicating Authority’s belief must be based on material actually disclosed to the noticee, and that failure to supply documents violates natural justice.
For the Respondent (ED & Union of India)
The ED argued that service via email under Rule 13(11) is valid under the Information Technology Act, 2000. They claimed RUD-1 to RUD-3 were received and that the petitioners had ample opportunity to file a reply. They relied on Rule 15 (reply deadline) and Rule 21 (witness examination) to argue that the petitioners had not availed procedural remedies available before the Adjudicating Authority. The Union of India adopted these submissions, emphasizing that appeals under Section 26 PMLA remain available.
Relief Sought
The petitioners sought:
- Quashing of the show cause notice dated 25.11.2025.
- Direction to the ED to supply all Relied Upon Documents in a bound paper book as required by Rule 13(2).
- Extension of time to file reply upon receipt of complete documents.
- Stay on further proceedings until compliance.
The Legal Issue
The central question was whether Rule 13(2) of the Adjudicating Authority (Procedure) Regulations, 2013 requires the Enforcement Directorate to serve complete Relied Upon Documents in a bound paper book, and whether service via email alone satisfies this mandatory requirement.
Arguments Presented
For the Petitioner
The petitioners relied on Naresh Jain v. Deputy Director, ED (2019 SCC OnLine Del 11877) to argue that the reason to believe must be based on material that is actually disclosed to the noticee, and that subjective satisfaction without disclosure violates Article 14 and 21. They emphasized that Rule 13(2) uses the phrase "complete relied upon documents in a bound paper book" - a specific, unambiguous requirement. They contended that electronic service under Rule 13(11) cannot override the substantive mandate of Rule 13(2). They further cited J. Sekar v. Union of India (2018 SCC OnLine Del 13481) to show that the Adjudicating Authority’s role is quasi-judicial and requires full disclosure for fair hearing.
For the Respondent
The ED argued that Rule 13(11) explicitly permits electronic service, and that the petitioners had received the RUDs in PDF format. They contended that the bound paper book requirement is merely a formality and that the substance of disclosure - receipt of documents - has been satisfied. They relied on Excel Powmin Ltd. v. Union of India (2020 SCC OnLine Cal 384) to assert that technical objections cannot override the procedural flexibility granted under the IT Act. They also argued that the petitioners had not filed a reply, thereby waiving their right to challenge the sufficiency of documents.
The Court's Analysis
The Court undertook a detailed textual and purposive interpretation of Rule 13(2) and Rule 13(11). It noted that while Rule 13(11) permits electronic service, it operates "notwithstanding anything in sub-regulation (3)" - meaning it supplements, but does not supplant, the requirements of Rule 13(2). The Court held that Rule 13(2) imposes a distinct, substantive obligation: the documents must be served in a bound paper book. This is not a mere formality but a safeguard to ensure the noticee can review, annotate, and respond to the entire evidentiary basis against them.
"The requirement of a bound paper book is not an archaic formality; it is a procedural guarantee that the noticee is not left to navigate fragmented digital files without context, pagination, or authentication."
The Court distinguished Naresh Jain and J. Sekar as cases where the Adjudicating Authority relied on undisclosed material to form its belief - a clear violation of natural justice. Here, while the RUDs were received electronically, the absence of a bound volume raised legitimate concerns about completeness, authenticity, and accessibility. The Court rejected the ED’s argument that the petitioners had not filed a reply as a waiver of rights, noting that the petitioners had repeatedly requested documents and submitted para-wise comments without prejudice.
The Court further observed that the Adjudicating Authority, under Section 11 PMLA, possesses powers akin to a Civil Court, including the power to compel production of documents. It is therefore the Authority’s duty to ensure compliance with its own regulations before proceeding to final hearing.
The Verdict
The petitioners succeeded in part. The Court directed the Adjudicating Authority to determine, within two weeks, whether the documents requested by the petitioners constitute additional Relied Upon Documents not previously supplied. If so, the Enforcement Directorate shall supply them in a bound paper book within two weeks of that determination. The petitioners shall then be granted two weeks to file a supplementary reply. Any party aggrieved by the Adjudicating Authority’s decision on document supply may appeal under Section 26 of the PMLA, 2002. The interim order is vacated. All parties may act on the server copy of this judgment.
What This Means For Similar Cases
Procedural Compliance Is Non-Negotiable
- Practitioners must insist on physical bound volumes of RUDs in all PMLA proceedings, even if electronic copies are received.
- Failure to comply with Rule 13(2) renders the show cause notice procedurally defective, regardless of actual receipt of PDFs.
- Courts will not accept "substantial compliance" as a substitute for mandatory statutory form.
The Burden Shifts to the Adjudicating Authority
- The Adjudicating Authority must proactively verify compliance with Rule 13(2) before fixing hearings.
- Petitioners may now file applications under Rule 16 (inspection) and Rule 21 (witness examination) to compel disclosure, with the Court likely to support such requests.
- ED officers must maintain a dual record: electronic copies for transmission and bound paper books for formal service.
Strategic Implications for Defense
- In PMLA matters, the first procedural step must be a formal demand for RUDs in bound form under Rule 13(2).
- If denied, petitioners should immediately file a written request for inspection under Rule 16 and seek judicial intervention if ignored.
- Para-wise comments submitted without prejudice preserve the right to challenge sufficiency of evidence at a later stage.
