The Supreme Court will continue hearing a batch of petitions related to the Prevention of Money Laundering Act, 2002, tomorrow.
A three-Judge Bench, led by Justice A.M. Khanwilkar, on Wednesday heard submissions made by Senior Advocate Abhishek Manu Singhvi, who commenced his arguments.
Dr Singhvi reiterated the high ceiling of Section 45 of the PMLA, whereby the twin conditions place the threshold of bail too high for any accused. Such a position under the tenets of criminal jurisprudence is manifestly arbitrary and unjust as he had submitted yesterday.
The Finance Act of 29th March, 2018 revived the position of the Act as it stood prior to the Apex Court judgment, striking down the twin conditions for granting bail under Section 45 of the Act, in Nikesh Tarachand. The position was made so that the incarceration of the accused was permanent until acquittal.
It was submitted that there was not even an intention to address the reverse presumption of innocence and the offence was made cognizable and non-bailable. He argued that the postulate in the Bill was to delink the scheduled offences from the offence of money laundering, which is specifically defined under Section 3 of the Act.
It was submitted that the procedure established by law as under the PMLA and other penal enactments must meet the test of constitutional protections, especially under Articles 14 and 21 of the Constitution. He contended that in criminal part of Article 21, presumption of innocence is the jewel in the crown.
“Even though we follow the principle of ‘procedure established by law,’ in reality a law is substantially being reviewed as reasonable or unreasonable, which is not akin to the principle that we follow. Further, this is dehors Articles 14 and 19 of the Constitution,” he contended.
Dr Singhvi submitted that today, a law is substantively being reviewed and has to independently satisfy conditions under Articles 14 and 21 of the Constitution. That, under Section 45, the conditionalities curtail the possibility of release on bail of the accused while the presumption of innocence remains operative.
It was submitted that the power to grant bail exists at the discretion of the Court; however these twin conditions take away this right of incarceration of judges to grant bail. Also, under the accused’s Constitutional right under Article 21, he must have the right to seek bail and the presumption of innocence until proven guilty must be kept intact.
He submitted that a departure from procedure can be made in the rarest of rare cases but where the right to bail is reduced or impeded in regular instances, the safeguard of Article 21 comes into play.
The crux of the submission is that given the peculiarities of the criminal justice system in India, that is marked by lengthy trials, under trial imprisonment until an acquittal or conviction is decreed and the consequent overcrowding of prison houses, the high threshold to gaining bail, is an inversion of normal procedure and against the test of reasonableness.
Lastly, the Senior Advocate cited Ajay Kumar vs the Directorate of Enforcement to submit that even in the post-Nikesh stage, a lot of discrepancies exist in the trial courts and High Courts and need to be remedied. There exists plethora of cases after the Nikesh judgement, which treat the twin conditions as done away with.
Senior Advocate Mukul Rohatgi commenced his submissions by apprising the Court that he will be confining his arguments to the validity of Section 44 and its concomitant Explanation, as was added by the Finance Bill of 2018, which thereby amended this Act.
Previously, it was provided that the trial for the predicate offence that precedes the offence of money laundering under PMLA would necessarily be conducted jointly by the same special court.
However, as is seen now, the offence under PMLA is given pre-eminence over the trial in the predicate offence and such practice is manifestly arbitrary as it is contrary to the provision as under Section 3, which is the main charging section under this Act.
According to Section 3, an offence of money laundering under this Act can only be committed when there is a predicate offence and the tainted proceeds of such a crime is projected as untainted. The act of projection is necessarily a positive act, without which a charge under this Act cannot exist.
However, as he is being tried separately, the accused if acquitted in the trial concerned with the predicate offence, does not mean that his trial under the PMLA must consequently cease. He submitted that even though under Section 44, jurisdiction of one court does not have a bearing on the other court, with the acquittal in the predicate offence, a charge and therefore, a trial under PMLA cannot stand.
Additionally, it was submitted that a charge under the PMLA cannot be used to widen the scope of investigation of the predicate offence, so as to introduce new offences to the existing FIR and report and thereby derive proceeds from those subsequently found crimes. The proceeds of the crime that are projected as untainted money must originate from the predicate offence that the accused was originally charged with, prior to a charge under this Act.
The Senior Advocate urged that a proper implementation of the Act is crucial and a charge and subsequent search and seizure cannot precede an independent investigation by the ED.
An instance was presented before the Bench, where the FIR filed by the police personnel or person so authorized was used to register an ECIR, and the same was used to charge a person under this Act. It was submitted that this is against the constitutional protections guaranteed. The Sr. Adv. relied on former Finance Minister P Chidambaram’s speech where he had stated that Money Laundering is a scientifically defined term and it was held that a scheduled offence wherefrom the proceeds of the crime is generated, is a sine qua non to an offence of money laundering.
Subsequently, the Sr. Adv. delved into the grammatical imports of the Act, the crux of which is that in the absence of the three ingredients as laid down in S.3 of the PMLA, no charge under it can follow. A regular offence under IPC, without the necessary projection of tainted money as untainted cannot be imported into this Act to implicate a person of a much graver offence. While the post-amendment stance is that ‘concealment’ of proceeds is included in the definition of money laundering, a crime simpliciter whose proceeds have not been projected as untainted money can in no case be the foundation of a charge under this Act.
These were the salient that were forwarded today by the Sr. Advocate.
Submissions of Sr. Adv. Vikram Chaudhri.
Sr. Adv. Mr Chaudhri commenced his submission by apprising the Bench of the limited scope of his argument.
It was submitted that in the judgement of Nikesh Tarachand, it has been held that the offence of money laundering and a person so accused as a launderer is very wide. A person who is remotely involved in the whole scenario is roped in. While the conditionalities in S. 45 were read down in Nikesh Tarachand, they were resurrected by the amendment of 2018, with certain modifications. He argued that such revival must, if it reinstates the previous conditions, be read down.
The Senior Advocate made his final submissions for the day regarding the trial of scheduled offences and the PMLA offence by the same special court. It was submitted that the trial in the predicate offence would have a bearing on the PMLA but the umbilical cord between the chains of occurrences that implicates a person under PMLA can never be broken.