PMLA cannot override constitutional safeguards on the mere ground that it is a special legislation, submitted Senior Advocate Amit Desai on Tuesday before the Supreme Court, while arguing on the aspect of Section 45 (offences to be cognizable and non-bailable) PMLA Act against rights enshrined under Article 21, in grant of bail.
The three-Judge Bench of Justice A.M. Khanwilkar, Justice Dinesh Maheshwari and Justice C.T. Ravikumar heard the batch of petitions on the Interpretation of PMLA, 2002 and adjourned it for tomorrow. Today, the Court heard the arguments put forth by Senior Advocates Amit Desai and S. Niranjan Reddy.
Desai began his submissions by canvassing the provisions relating to bail as under the penal laws in force and their validity and efficacy as under the ambit of Article 21 of the Constitution. He submitted that anticipatory bail granted to an accused during the pre-trial proceedings is a necessary aspect of Article 21. He cited the ratio laid down in Sanjay Chandra, to submit that the objective of bail is not punitive in nature. This is because punishment begins after conviction, and refusal of the Court to grant bail as a measure to punish the accused prior to the conclusion of the trial, or to express its disapproval in any manner whatsoever is arbitrary and beyond the scope of the Constitutional guarantees. That being said, it was submitted that as per the well-settled principles of law, the Court does have the discretion to decide whether or not to grant bail to the accused. Reliance was placed on the cases, Budhi Kanti,
Babu Singh, and Moti Ram to impress upon the Court that three-pronged test of nature of crime, nature of punishment provided for that crime and the nature of the offender ought to be taken into account by the Courts to decide the matter of grant of bail.
So far as Section 45 of the PMLA is concerned, the Senior Advocate submitted that the high threshold as set out in the aforementioned section does not pass the test of Article 21, in the way that bail provisions under ordinary penal laws do.
At this point, Justice Khanwilkar observed, “Respondents would argue that the PMLA is a special legislation and the rigorous conditions under S.45 are valid”.
Desai submitted that the nature of the legislation does not preclude the grant of bail at the Court’s discretion and the bail conditions need not be as restrictive as it is in S.45, given that several contemporaneous enactments comply with the provisions of Cr.PC and the Constitution. The PMLA cannot override constitutional safeguards on the mere ground that it is a special legislation.
Additionally, the punishment for money laundering as under the PMLA is 7 years. Therefore, it was submitted by Desai that from a legislative perspective, it is not the most severe of offences and when graver crimes as covered under the IPC or other special enactments make provisions for grant of bail, the bar in S.45 ought not to be so un-scalable. Reliance was placed on Gurcharan Singh which had considered the ordinary provisions for grant of bail. It was
submitted, by the Sr. Adv. that in all cases the discretion to grant bail remains with the Court.
Desai further contended that Bail is not a matter of right, and the limit of seven years as in this case, cannot make the grant of bail a guarantee. The Counsel reiterated that the legislative intent while enacting the statute ought not to be neglected while considering grant of bail. The submission of the Counsel was that bail serves a greater purpose in the scheme of constitutional safeguards and should be accordingly construed.
In answer to Justice Maheshwari’s query, as to whether or not the proposition of seven years of punishment being a deciding factor as to the severity of the offence as submitted by the Counsel, takes into account the facet of minimum punishment of three years, the Sr. Adv. submitted that legislative intent in pegging the punishment must be taken into account and the rule of ‘not guilty’ as under S.45 does not fall within the purview of Art.21.
While the PMLA as it was originally enacted applied primarily to syndicate organizations habitually dealing in criminal activities and its recurrent proceeds, the Act as it stands today applies to ordinary people who are often not the principal beneficiaries of the proceeds and are unnecessarily tangled in the PMLA web. They have their constitutional protections snatched away by virtue of S. 45. When the provisions of S.45 do not apply, the provisions of ordinary law still remain and can guide senior, experienced judges in reaching a decision
reaching a decision concerning grant of bail to the accused.
The bench expressed its concern that this would take away the power of the special courts or the trial courts, and the accused would necessarily need to appear before the High Court.
Desai said, the Courts are never completely deprived from taking away personal liberty. That for the grant of bail in a special law or otherwise the principle of proportionality in the light of Maneka Gandhi needs to be considered. The balance of interests of the state and the individual/s need to be weighed in order to construe this provision and arrive at a decision and herein, the legislative limit of seven years, stemming from the legislative intent ought not to be forgotten.
So far as power of Court is concerned as under S.45, he submitted that the Court should act as a filter and accordingly, the power of the senior judges, adapt at dealing with complex crimes should not be curtailed by the twin conditions of S.45 and the discretion to grant bail, or not, to the accused must remain with the Court. The Court by virtue of its seniority is perfectly capable of deciding the contours of conflicting interests and balancing them and the statute should not put restrictions on the same, he added.
He submitted that the object of bail, is to grant time and freedom to the accused to disprove the accusations against him in preparation for the trial and to ensure that the accused is present in the Court during the trial. With consideration to all circumstantial facts
and evidences produced, the concerned Court can reach a decision.
As far as S.19 of the PMLA is concerned, given that the scope of the Section has been widened over time, the officers who can arrest under this Act requires scrutiny and only personnel of an equivalent rank with that of the Director, Assistant Director and person authorized thereunder, should be posited with the power to arrest, it was submitted. Additionally, building on his previous arguments, the Sr. Adv. submitted that the exchange of information between the ED and contemporaneous authorities must be observed and the ED should pass any information received to the concerned authority or police personnel so that a FIR can be registered. The ECIR can only be filed after the registration of the FIR by the police officials. Without compliance with these procedures by the ED, the PMLA which is already a draconian Act would be made worse.
Lastly, he submitted that in order to make an arrest or attach property under this Act, the mens rea in the light of S.3 of the PMLA must be taken into account, it was submitted, as the same act can have different connotations and a person can be accused under this Act only when he has the necessary mens rea to project tainted proceeds of crime as untainted money and subsequently integrate that with the economy.
These were the primary contentions as raised by the Senior Advocate in today’s hearing, and
with that he concluded his submissions.
Senior Advocate S. Niranjan Reddy began his submissions for the day on Money Laundering Offence – Whether standalone or dependant on the final scheduled offence. “Money Laundering is “parasitic” and hence cannot arise if there is no scheduled offense and/or if there are no proceeds of crime. It is only when proceeds of crime are sought to be projected as clean money the separate offense of money laundering arises,” he said.
“Enforcement Directorate however contends that money laundering is a standalone offence and the result of the scheduled offence would not matter for continuation and determination of the money laundering offence,” he added.
He further stated that, “The Enforcement Directorate’s view has been rejected by the Delhi High Court, Allahabad High Court and Telangana High Court. However, the said view has been accepted by the Madras High Court and the Bombay High Court. ED’s contention is premised on the explanation to Section 44(1)(d) which has been introduced by an amendment of the Finance Act 2019.”
Case Name- Vijay Madanlal Choudhury vs Union of India.