The Supreme Court on Tuesday resumed hearing the slew of petitions involving interpretation of the Prevention of Money Laundering Act, 2002.
Before the bench headed by Justice A.M. Khanwilkar, Senior Advocate Dr Abhishek Manu Singhvi placed the overview of his arguments by submitting that his contentions would be centred around Section 5, Section 8-Possession qua the rules, Sections 17, 18, 24 and 45 of the PMLA.
Singhvi emphasized on Section 24(A) of the Act which deals with burden of proof. He argued that unlike TADA, UAPA, POTA, etc., the burden of proof under PMLA lies entirely on the accused. The word, “presumption” used in the section further leads to the conclusion that the offence is being presumed without giving any safeguards or conditional precedents. He put forth that as soon as charge is framed against the accused, criminal culpability is dawned upon him. He further went on to compare the Act with various provisions of the NDPS and TADA under Sections 54 and 21 respectively. He pointed out that in any of these cases, heart of the offence is never presumed and even if they do, proper safeguards exist to protect the principle of “presumption of innocence until proven guilty”.
Singhvi contended that if there is no positive act of claiming/projection of the proceeds of crime as untainted, PMLA would not apply. Moreover, offences like murder cannot be PMLA otherwise all of IPC would come under the PMLA. Thus, this Act is not interchangeable with IPC or the Income Tax Act. The essential ingredient of PMLA is projecting tainted money as untainted and this is being presumed, charges are being framed and the entire burden is shifted onto the accused. The burden should be on the prosecution to prove beyond reasonable doubt that accused did a positive act. Therefore, Section 24 should be tested at the threshold of Article 21 of the Constitution.
Justice Khanwilkar observed that the language of the provision is very broad and has vast scope for interpretation.
Dr Singhvi concluded his first argument by stating that the heart and soul of the Act were to stop the cleaning of tainted money and that nobody shall presume the offence itself. He pressed for striking down of Section 24 but as an alternative, suggested the insertion of certain safeguards in the provision.
Second, he focused on Sections 17 and 18 of the Act which deal with Search and Seizure and Search of persons, respectively. He pointed out that originally these sections had some safeguards in place, in the form of “chargesheet” and “challan” and under Sections 173 and 157 of the CrPC. An amendment in 2009 did away with the safeguard under Section 173 and kept the one under 157 CrPC. Further by the 2019 amendment, the safeguards were deleted from Sections 17 and 18. Singhvi argued that a “walk in and walk out at will” attitude cannot be appreciated.
He contended that as Section 17 stands today, no safeguard in the form of investigation exists. No investigation is necessary at the end of the police officer nor the ED. He further compared these provisions with Sections 93, 94 and 95 of the CrPC where the procedural part of this intrusive process has been defined. He pointed out that the structure of search and seizure provisions has changed so much under the PMLA. Moreover, the threshold filter is also absent.
Third, he pointed out the draconian powers of the Enforcement Directorate by stating that it exercises power under the Act without any checks and balances. The provisions of this Act allow the ED to carry search and seizure without investigation in the predicate offence and in some cases even without registration of an FIR.
The lacunae and progressive deletion of the safeguards give power to the ED and lead to the harassment of the accused on a mere presumption of culpability.
Fourth, the second proviso of Section 5(1) of the Act appears to operate independent of predicate offence or proceeds of crime. It allows any property of any person may be attached which is unconstitutional. He contended that the second proviso to Section 5 cannot be allowed to act as a feudal lord, superseding the first provision of the Section as well as the Section itself. He further pointed out that due to the vague language of the provisions, great abuse is happening. He pleaded before the court that the second proviso must be read down.
Fifth, under Section 8 of the Act, possession Rules have no time limitation. It has not been specified until when the attached property will be in the possession of the Authorities under the Act. Neither is the phrase “which ever earlier” with reference to Acquittal or Conviction exists under the Act, nor any release provision is there. He contended that the provision of taking possession of the property is totally unnecessary. The attachment is done pre-adjudication therefore how does possession help? Freezing enjoyment, possession, etc is just to harass the accused and it doesn’t serve any purpose.
Singhvi contended that definition of “property” is wide and powers of ED cannot be hampered as the Court of Law has to strike a balance between the powers of ED and the Liberty. He suggested that in rare circumstances, the ED can approach the PMLA court and show to satisfaction of special court that non-possession would frustrate and/or render nugatory eventual confiscation if any, the Court may permit the possession of such attached property. Taking possession before conviction would be akin to conviction before conviction.
At last, he argued that under Section 45 of the Act, the twin conditions which demand presumption of innocence, create a bar to obtaining bail and will have to be scrutinized. The ECIR by the ED is registered pre-complaint and does not disclose the content to the accused. Therefore, he has no opportunity to challenge the allegations/charges. There is no case diary. Moreover, the possibility of interim bail is very dim. This prima facie is a bar to liberty. Therefore these provisions are arbitrary and draconian, Singhvi said.