The Supreme Court on Wednesday, 22 July, passed their order in the batch of petitions concerning the the interpretation of the Prevention of Money Laundering Act, 2002 (PMLA). The Court, in their order, said:
Section 5 (powers regarding attachment of property involved in money-laundering cases), of the PMLA is constitutionally valid. The procedural safeguards provided herein are effective measures.
Challenge to validity of Section 19 (Enforcement Directorate’s power to arrest), rejected as they are “stringent safeguards.”
Section 45 (cognisable and non-bailable nature of offence) of the amended act is reasonable and has direct nexus with the object of the Act.
"Twin-conditions" for bail under Section 45 of the Act upheld, and the Parliament is competent to amend Section 45 to weed out the defects pointed out in the Supreme Court judgment in the Nikesh Tharachand Shah case (which had struck down the twin conditions).
Authorities under this Act are not police officers as such.
Section 63 ( punishment for false information or failure to give information) of the Act does not suffer from arbitrariness.
Supplying of Enforcement Case Information Report (ECIR) is not mandatory and disclosure of reasons during arrest is enough.
ECIR cannot be equated with FIR.
Challenge to PMLA’s reversal of burden of proof rejected
The bench led by Justice AM Khanwilkar did however state that they have not decided on the question pertaining to whether the amendment to the PMLA could not have been by way of the Finance Act. “It is open to be interpreted after the decision of the larger Bench,” they said.
The court also rejected the petitioners’ contention that the offence of money laundering under Section 3 is attracted only in cases where a property is projected was ‘untainted’ property.
Section 3 says: “Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime and projecting it as untainted property shall be guilty of offence of money-laundering.”
The top court, on their part, said that and" in Section 3 has to be read as "or”, and that "Section 3 has wider reach and it deals with direct and indirect proceeds of crime.”
Further the court told the centre to fill up the vacancies in the PMLA Appellate Tribunal.
The interim relief granted to the petitioners in the case will continue for a period of four weeks from the date of the judgment, “to enable the private parties to take recourse to appropriate remedies before the concerned forum, if so advised,” the bench went on to say in their judgment.
Personal Liberty, Test of Proportionality: Petitioners' Arguments
The petitioners had, on their part, pointed out that the ED officials have only secured nine convictions out of the 1,700 raids and 1,569 specific investigations they had conducted since 2011 and that the Appellate Tribunal being understaffed is a serious hurdle in securing remedy for unjustified attachments.
Further, through the course of the hearing, they had, according to LiveLaw, their arguments included:
Absence of a provision to share the ECIR with the accused results in the accused not being aware of the material on which their arrest is based.
Without regular safeguards, the “twin-bail condition” under Section 45 is a blatant violation of Article 21 (right to liberty) of the Constitution. This is because the Courts can only give bail under the PMLA when they are prima facie satisfied that the accused is not guilty, but in both pre- and post- complaint stages, the accused does not have sufficient means to establish the same.
Even though the maximum punishment for these offences is seven years, which is indicative of the fact that these are not grave offences, the standard for securing bail is extremely high. Therefore, the petitioners contended, it fails the test of proportionality.
The ECIR is registered simply on the basis of predicate offence, even in the absence of evidence to establish that attempts have been made to legitimise the proceeds of the crime or that the tainted money has been legitimised.
Summoning of accused, recording their statement and forcing them to sign the statement is violative of the constitutional rights against self incrimination and personal liberty.
'Disappointing' Says Gehlot, BJP Hails Order
Reacting to the apex court's order, Rajasthan Chief Minister Ashok Gehlot said that the order is 'disappointing' and 'worrying'. He further added that after this judgment the chances of an increase in political usage of ED by the Central Govt will increase.
BJP National President JP Nadda also reacted to the order saying that the investigative agencies are working for the country.
"The investigative agencies have unearthed crores of rupees, and are working for the country. The Supreme Court has upheld the PMLA and jurisdiction of ED. The law is taking its course, and we must respect the law of the land," Nadda said.
Union Law Minister Kiren Rijiju also supported the Supreme Court's order upholding validity of various provisions of PMLA. "When Supreme Court has passed an order or a judgement that validates the stand of the govt or the provisions of the Act, that itself is something that I should not be making any comment now: Union Law Minister," he said, as quoted by news agency ANI.
Will Have Far-Reaching Implications for India’s Democracy: Congress
Meanwhile, Congress' General Secretary Jairam Ramesh said on Wednesday, 27 July, that the SC's judgment will have far-reaching implications for India's democracy, "especially when governments are anchored in political vendetta," reported PTI.
He said,
"However, there is one specific aspect of the judgement I would like to address immediately; I had moved the Supreme Court on the blatant misuse of the Money Bill route by the Modi Government, on the amendments made to the Prevention of Money Laundering Act, 2002. The Supreme Court had issued notice on my petition on 2 July, 2019. This question remains unresolved in today's judgment."
Ramesh also noted that the court has agreed that they "are conscious of the fact that if that ground of challenge is to be accepted, it may go to the root of the matter and amendments effected vide Finance Act would become unconstitutional or ineffective."
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