Senior Advocate Kapil Sibal said in the Supreme Court on Wednesday that authorities enforcing the Prevention of Money Laundering Act, 2002 (PMLA) act in an arbitrary manner without procedural restraint.
The Division Bench of Justices A.M. Khanwilkar, Dinesh Maheshwari and C.T. Ravikumar heard the batch of petitions on the Interpretation of PMLA, 2002 and adjourned it for tomorrow.
Nearly 200 petitioners have challenged the powers of investigation agencies that deal with economic offences such as the Directorate of Enforcement (ED), Serious Fraud Investigation Office (SFIO) and the Directorate of Revenue Intelligence (DRI). These include petitions filed by several politicians accused of money laundering, such as Lok Sabha Member Karti Chidambaram, former Punjab MP Sarwan Singh Phillaur and former Jammu and Kashmir CM Mehbooba Mufti.
Senior Advocate Sibal submitted that when an accused is arrested and the material is not disclosed to the said accused, the provision of bail is defeated, as only grounds for arrest are disclosed, hence making it almost impossible to attain bail. Subsequently, Sibal took the court through an array of judgements to supplement his arguments.
Justice Khanwilkar: “Sibal, just wondering how many hours of judicial hours have been invested in this case, thinking of different High Courts, it’s a lawyer’s paradise.”
“Yes, my lord, it is also a bureaucrat’s paradise,” replied Sibal in a lighter vein.
Sibal submitted that without there being procedural restraint, the authorities act in an arbitrary manner and rested his case by making the following statement.
Sibal: “We have created a Frankenstein monster… it’s like a horse without reins.”
Senior Advocate Siddharth Luthra submitted that he seeks to address two issues, one being if provisions of CrPC should be applicable to offences under PMLA and the other being bail restriction being an arbitrary impediment to liberty.
Luthra argued that when a court deals with the ambit of PMLA statute it must do so, in reference with Article 21 as it deals with curtailment of personal liberty. He suggested that there should be a procedure established by law, which could be a statutory law or delegated legislation capable of passing the constitutional test.
He enumerated various provisions of CrPC 1898, which is a pre-Constitution legislation but has myriad provisions providing safeguards while dealing with arrest.
Section 56: Deputation of junior officers for arrest.
Section 60: Production before a magistrate.
Section 61: Production within 24 hours.
Section 62: Reporting of arrest and apprehension to magistrate.
Chapter 4: Section 154-176, dealing with arrest and powers of police
Section 491: Power to issue direction in nature of Habeas Corpus for personal liberty.
Siddharth Luthra: ”We are in law-less regime if this statute is allowed to stand, bail prior to complaint has become an impossibility as I cannot argue against what I do not know.”
Luthra claimed that just because of its complaints procedure doesn’t mean that investigating officers are not police officers. According to him, even though the investigating officer is not a police officer but performs all functions of a police officer.
He added that the then Finance Minister P. Chidambaram in 2004 on the floor of the House had criticized PMLA and had admitted that there was a lacuna in law. Chidambaram, whose son is one of the plaintiffs in one of the connected matters, said on May 6, 2005:
“While we were examining the question of notifying the Act, I found that there were certain lacunae in the Act. I regret to say that not enough homework had been done in the definitions, and in the division of responsibility and authority. So, in consultation with the Ministry of Law, we came to the conclusion that these lacunae had to be removed. Broadly, the reasons for the amendment are the following.
Under the existing provisions in Section 45 of the Act, every offence is cognizable. If an offence is cognizable, then any police officer in India can arrest an offender without warrant. At the same time, under Section 19 of the Act, only a Director or a Deputy Director or an Assistant Director or any other officer authorised, may arrest an offender. Clearly, there was a conflict between these two provisions. Under Section 45(1)(b) of the Act, the Special Court shall not take cognizance of any offence punishable under Section 4 except upon a complaint made in writing by the Director or any other officer authorised by the Central Government. So, what would happen to an arrest made by any police officer in the case of a cognizable offence? Which is the court that will try the offence? Clearly, there were inconsistencies in these provisions.”
The court will resume the matter tomorrow for Luthra to conclude his arguments.