Supreme Court upholds PMLA

In News: The Supreme Court upheld the core amendments made to the Prevention of Money Laundering Act (PMLA)

• The act gives the government and the Enforcement Directorate (ED) powers of summons, arrest, and raids, and makes bail nearly impossible while shifting the burden of proof of innocence on to the accused rather than the prosecution.
• The apex court called the PMLA a law against the “scourge of money laundering” and not a hatchet wielded against rival politicians and dissenters.
• The verdict came on an extensive challenge raised against the amendments introduced to the 2002 Act by way of Finance Acts.
• The three-judge Bench said the method of introduction of the amendments through Money Bills would be separately examined by a larger Bench of the apex court.

Contended Provisions

• Over 240 petitions were filed against the amendments which the challengers claimed to violate personal liberty, procedures of law and the constitutional mandate.

Summoning

• Petitioners’ argument: The accused are summarily summoned by the ED and made to sign statements on the pain of threat of arrest and ED assumed the powers of a civil court.
• SC: The court said statements were recorded as part of an “inquiry” into the relevant facts in connection with the proceeds of crime. It cannot be equated to an investigation for prosecution.
• A person cannot claim protection under Article 20(3) (fundamental right against self-incrimination) of the Constitution

Arrest

• Petitioners’ argument: The ED could arrest a person even without informing him of the charges.
• This power was violative of the right to ‘due process’ enshrined in Article 21 of the Constitution.
• Besides, Article 22 mandated that no person can be arrested without informing him or her of the grounds of the arrest, they had contended.
• SC: The court rejected the notion that the ED has been given blanket powers of arrest, search of person and property and seizure.
• The court said there were “in-built safeguards” within the Act, including the recording of reasons in writing while effecting arrest.
• The court also noted that the Special Court could verify using its own discretion if the accused need to be further detained or not.
• The court said that supply of a copy of ECIR in every case to the person concerned is not mandatory and “it is enough if ED at the time of arrest, discloses the grounds of such arrest

Bail

• Petitioners’ argument: The “twin conditions” of bail under the PMLA rendered the hope of freedom non-existent for the accused.
• The two conditions are that there should be “reasonable grounds for believing that he is not guilty of such offence” and the accused “is not likely to commit any offence while on bail”.

SC: The court said that money laundering was no ordinary offence. It was an “aggravated form of crime the world over”.

• The court said that there is a need for “creating a deterrent effect” through a stringent law.
• Even a plea for anticipatory bail would have to undergo the rigours of the twin conditions under PMLA.
• However, the court said undertrials could seek bail under Section 436A of the Code of Criminal Procedure if they had already spent one half of the term of punishment in jail for the offence prescribed in law.

Burden of Proof

• Petitioner’ argument: Burden of proof resting heavily on the shoulders of the accused
• SC: The provision did not suffer from the “vice of arbitrariness or unreasonableness”.
• Once the issue of admissibility of materials supporting the factum of grave suspicion about the involvement of the person in the commission of crime under the 2002 Act is accepted, in law, the burden must shift on the person concerned to dispel that suspicion.

Attaching a property

• Petitioners’ argument: They objected the powers bestowed on the ED to attach a property as proceeds of crime.
• They had contended that even properties which were not proceeds of crime could be attached by the agency.
• SC: The court said Section 5 of the PMLA, which concerns with the provisional attachment of property, cannot be used by the agency “mechanically”.
• Authorities under the 2002 Act cannot resort to action against any person for money-laundering on an assumption that the property recovered by them must be proceeds of crime and that a scheduled offence has been committed, unless the same is registered with the jurisdictional police or pending inquiry by way of complaint before the competent forum.
• The court said the provision provided a “balancing arrangement” between the interests of the accused and that of the State.
• Further, if the accused was eventually absolved of the crime, no further action could be taken against the attached property suspected to have been linked to the crime.

Must Read: Prevention of Money Laundering Act (PMLA), 2002

Source: The Hindu

Indian Express

Previous Year Question

Q.1) With reference to the ‘Prohibition of Benami Property Transactions Act, 1988 (PBPT Act), consider the following statements: (2017)

1. A property transaction is not treated as a benami transaction if the owner of the property is not aware of the transaction.
2. Properties held benami are liable for confiscation by the Government.
3. The Act provides for three authorities for investigations but does not provide for any appellate mechanism.

Which of the statements given above is/are correct?

1. 1 only
2. 2 only
3. 1 and 3 only
4. 2 and 3 only