The Supreme Court on Wednesday upheld the constitutional validity of the Prevention of Money Laundering Act (PMLA).
The judgment was pronounced by a bench of Justice A.M. Khanwilkar, Justice Dinesh Maheshwari and Justice C.T. Ravikumar on a batch of 241 petitions, challenging the validity of law.
The validity of Sections 3 (definition of money laundering), 5 (attachment of property), 8(4) [taking possession of attached property), 17 (search and seizure), 18 (search of persons), 19 (powers of arrest), 24 (reverse burden of proof), 44 (offences triable by special court), 45 (offences being cognizable and non-bailable and twin conditions for grant of bail by court) were upheld by the court.
It was held by the court that the supply of Enforcement Case Information Report (ECIR) was not mandatory under the PMLA proceedings, as the ECIR was an internal document and cannot be equated to a First Information Report.
“The ECIR cannot be equated with FIR, since ECIR is an internal document of ED,” noted the Bench.
It held that ECIR supply to the accused was not mandatory and the disclosure of reasons during arrest was sufficient.
The court said the ED manual was not to be published, since it was an internal document.
The Apex Court ruled that Section 3 had wider reach and it dealt with direct and indirect proceeds of crime. It said explanation to Section 3 was clarificatory in nature and that the expression “and” in Section 3 has to be read as “or”.
As per the Court, projecting a property as tainted would constitute money laundering as its own. An offence under Section 3 was based on illegal gain and the authorities could not prosecute someone under the 2002 Act, unless such a complaint was registered and produced before a competent forum.
It upheld the constitutional validity of Section 5, stating that the section provided a balancing act and showed how proceeds of crime could be traced.
The Apex Court ruled that Section 24 has nexus to object sought to be achieved.
The Bench further said that there was no merit to challenge Section 44, which did not suffer from arbitrariness. It ruled that this section will be dealt by the court and authorities in accordance with the earlier judgement.
It said the provision of Section 45 post the amendments was also legal and not unreasonable. The Court further permitted application of the underlying principle of Section 45, while granting bail.
The petitioners had raised a question mark on various aspects of the law, including the wide powers given to the ED for search, seizure and attachment, the reverse burden cast on accused to prove innocence, the admissibility of statements made to the ED as evidence, the stringent conditions for grant of bail and the impact of predicate offence and its outcome on PMLA case.
According to the Central government, the offence of money laundering under Section 3 was a standalone offence, so long as there was a predicate offence, irrespective of whether there is acquittal or conviction in such predicate offence.
The Centre had further contended that money laundering under Section 3 was a continuing offence, irrespective of time at which the predicate offence was included in the Schedule.
Read full judgment below
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