Supreme Court upholds PMLA's stringent provisions giving ED wider powers of arrest, seizure

Satya Prakash

New Delhi, July 27

The Supreme Court on Wednesday upheld the validity of several stringent provisions of the Prevention of Money Laundering Act (PMLA) which gave the Enforcement Directorate wider powers of arrest and seizure and made it difficult for the accused to obtain bail.

The verdict comes at a time when a host of top Opposition leaders, including Congress chief Sonia Gandhi, TMC minister Partha Chatterjee and National Conference leader Farooq Abdullah, are under the ED’s lens for alleged money laundering.

A three-judge Bench led by Justice AM Khanwilkar said the supply of Enforcement Case Information Report (ECIR) under the PMLA proceedings was not mandatory as it was an internal document that could not be equated with an FIR.

• Edit: Surge in ED raids

The Bench, which also included Justice Dinesh Maheshwari and Justice CT Ravikumar, said, “The supply of a copy of the ECIR in every case to the person concerned is not mandatory. It is enough if the ED, at the time of an arrest, discloses the grounds of such arrest.”

It said, “In view of special mechanism envisaged by the 2002 PMLA, the ECIR cannot be equated with an FIR under the 1973 CrPC . The ECIR is an internal document of the ED and the fact that the FIR in respect of the scheduled offence has not been recorded does not come in the way of the authorities referred to in Section 48 to commence investigation for initiating “civil action” of “provisional attachment” of property being proceeds of crime,” it said.

The Bench said, “So long as the person has been informed about the grounds of his arrest, that is sufficient compliance with the mandate of Article 22(1) of the Constitution (right to be informed of the grounds for such arrest, and right to consult and to be defended by a lawyer of his choice).

However, the top court left the question of the 2019 amendment to the PMLA Act having been passed as Money Bill to be decided by a larger Bench of seven judges before which the question was already pending.

The verdict came on 242 petitions, including those by Anil Deshmukh, Karti Chidambaram and Mehbooba Mufti, challenging the stringent provisions of the PMLA.

The Bench also upheld the validity of “twin conditions” for bail under the amended Section 45 of the PMLA. First, the prosecutor is given opportunity to oppose the bail plea; and the second that there are reasonable grounds to believe that the accused is not guilty of such offence and that he is not likely to commit any offence while on bail.

Money-laundering is one of the heinous crimes, which not only affects the social and economic fabric of the nation but also tends to promote other heinous offences such as terrorism, offences related to NDPS Act, etc, it said.

Regarding the process envisaged by Section 50 of the PMLA, it said the provision was in the nature of an inquiry against the proceeds of crime and not an “investigation” in the strict sense of the term for initiating prosecution.

It also held that the authorities under the 2002 Act (referred to in Section 48) are not police officers and as such “the statements recorded by the authorities under the 2002 Act are not hit by Article 20(3) (right against self-incrimination) or Article 21 of the Constitution (right to life and personal liberty).”

Giving a liberal interpretation to Section 3 of the Act, it said the provision has a wider reach and captures every process and activity, direct or indirect, in dealing with the proceeds of crime and is not limited to the happening of the final act of integration of tainted property in the formal economy.”

The top court said the explanation inserted in Section 3 by the 2019 amendment did not expand the purport of Section 3 as it was only clarificatory in nature.

The top court declared Section 5 of the 2002 PMLA “constitutionally valid”, saying: “It provides for a balancing arrangement to secure the interests of the person as also ensures that the proceeds of the crime remain available to be dealt with in the manner provided by the 2002 Act. The procedural safeguards… are effective measures to protect the interests of the person concerned.”

During the hearing, the Centre had told the Supreme Court that proceeds of crime worth Rs 98,368 crore were identified and attached in 4,850 cases taken up for investigation under the PMLA in the last 17 years.

Twin bail conditions under PMLA

• The court has to first give opportunity to public prosecutor to oppose bail plea, and only when it is satisfied that accused is not guilty and unlikely to commit a similar offence when released can bail be granted
• Concealment, possession, acquisition or even projecting a property connected to proceeds of crime as untainted constitutes an offence under PMLA