Vijay Madanlal Choudhary VS. Union Of India (2022)

Special leave petition (Criminal)

Introduction:

You  can correctly assume that threat of money laundering has been widespread ever for the reason that foundation of cash, such is the character of crime itself. It takes its first breath as quickly as society shall we it. In India and nearly each different country, money laundering has been chargeable for plaguing the state’s assets and depriving the overall population of their difficult earned assets. To counteract this, all the signatories to the Vienna conference were directed to realise money laundering as crook offence and to enact the essential legal guidelines in opposition to it.

Facts:

The Parliament, in reaction to the international conventions in opposition to money laundering, enacted the Prevention of Money Laundering Act, 2002. Ever on account that its enactment, a couple of petitions have been filed in numerous capable courts to dispute its alleged stringent provisions, The Hon’ble ideally suited courtroom of India become referred to as upon to decide the validity and in addition interpretation of sure dispute provision of the Prevention of cash Laundering Act,2002. It had been widely contested over approximately 80 % petitions that the research provision within the PMLA, 2002 were extremely-vires to the constitution, citing violations of essential rights specifically Article 14, Article 20, Article 21 of the Indian charter. The petitioner argued over section 3, 5, 8, 16, 17, 19, 24, 44 (2), 45, 46, 50, and 63 of the Prevention of money laundering Act, 2002

  Issues:  

The petitioner regarded multiple section of the PMLA, 2002 as unconstitutional and violation of the rights of an accused. The petitioners raised the following concern.

1. Whether all provision of Chapter 12 of the Criminal Procedure Code,1973,must be followed when commencing and conducting investigation under the Prevention of Money Laundering Act,2002
2. Whether or not the recent amendment to Section 45 of the Prevention of Money Laundering Act (PMLA), which remove the foundation of a previous judegenent from 2018, and reinstates the twin conditions for granting bail, renders the current version of Section 45 of the PMLA, which twin condition for bail, unconstitutional.
3. Is the 2018 decision that ruled these criteria cannot apply to anticipatory bail the correct application of the law if the Prevention of Money Laundering Act’s (PMLA) twin condition are determine to have been revived.
4.  Whether the accused person’s fundamental rights are violated by the PMLA’s provision governing the burden of proof.
5. What is violation of the Prevention of Money Laundering Act’s (PMLA) Section 3? Does the 2019 amendment’s explanation to Section 3 enlarge the definition of the offence, and is the expansion permitted under the law?
6.  Whether it is necessary to file a chargesheet, complaint, or FIR for the primary offence before using the PMLA’s arrest power? In the context of section 3 read with section2 (u) of PMLA, is it possible for money laundering not be stand-alone offence?
7. Does the arrest authority granted by section 19 of the PMLA violate Article 14 and 21 of Constitution?
8. Whether the search and seizure provision of Section17 of the PMLA, as amended, are unlawful and discriminatory.
9. Whether judicial procedure that rely on statements taken  down by Enforcement Directorate agents during their investigation violate article 20(3) of the Constitution and invalid under section 25 of the Evidence Act.
10. Will there be charge and prosecution for money laundering even after the primary offence has occurred? If the predicate offence wasn’t already listed as a scheduled offences when it was committed, may money laundering still be viewed as crime?
11.  Whether or not the PMLA’s provision for property attachment violate article 300A’s right to property?
12.  Whether the PMLA apply to action that had place before the addition of the offence listed in the Act’s Schedule? 

Contention:  

Petitioner’s Arguments:

• The enforcement directorate follows an investigative technique that completely undermines the rights of an accused enshrined in our constitution. (Article 20 of the Indian constitution) The ECIR ((Enforcement Case facts file) is mentioned as an inner file that doesn’t want to be disclosed, and most effective the mere listening to of the expenses is commonplace.
• The definition of cash Laundering in section 3 of the PMLA, 2002 has been given a extensive interpretation through allowing the word “and” to be read as “or”, giving manner for folks who didn’t devote the crime to be charged with it.
• The statements of an accused may be used in opposition to them as evidence in court, all at the same time as they might be unaware of the charges towards them since the ED isn’t always required to inform them of the equal, which actually ends in self-incrimination.

• It was submitted that the ED must fulfill that the “proceeds of crime” were projected as untainted belongings for there to be an ECIR filed in opposition to an accused.
• The ED is technically similar to the Police and accordingly ought to be held to the equal standard and empowered without an energy that overrides the rights of an accused.

• The reality that a penalty or an arrest can be the outcome of giving an wrong assertion results in conclude that the provisions below the act are draconian and unconstitutional.
• • The reverse burden of evidence is a destruction of the presumption of innocence which is the bedrock of our crook justice device.

• The ECIR is the same as the FIR. It contains the grounds of arrest and details of the offences; and as such, without the knowledge of the ingredients of such a document, the ability of the accused. To guard himself at the stage of bail cannot be fully realized. It can also bog down the potential to put together for the trial at a later stage.
• The PMLA, 2002 does no longer have ok safeguards to assure a fair research and a fair trial and is restricted to Sections 16 to 19 and 50 of the PMLA, 2002.
• As Section 45 of the PMLA, 2002 was held unconstitutional by the decision in Nikesh Tarachand Shah [2], it cannot be brought back to life by a subsequent amendment that seeks to remove the constitutional objection.
• The ED has in the past widened its investigation beyond what was contained in the ECIR which was not the intent at the time of enactment, due to the lack of efficient safeguards.

Respondent’s Arguments:

• The arguments in opposition to the severity of the provisions of the act do now not think about the international impact and its subsequent obligation to the nation. Monetary crimes which includes money laundering affect the economies of different countries as properly and accordingly name for strict actions towards it.
• The PMLA, 2002 isn’t always a penal statute but a hybrid statute with preventative, regulatory, and penal aspects. As a result, it can’t be equated with acts that adjust different crimes such as the Crpc 1973. The PMLA, 2002 is a aware departure from the Crpc, 1973 because of the extraordinary nature and far-attaining results of money Laundering because the Crpc, 1973 is a universal procedural law and does no longer have any prevalent utility because of the abnormal nature and a ways-reaching results of money Laundering.
• The PMLA, 2002 isn’t always a penal statute but a hybrid statute with preventative, regulatory, and penal aspects. As a result, it can’t be equated with acts that adjust different crimes such as the Crpc 1973. The PMLA, 2002 is a aware departure from the Crpc, 1973 because of the extraordinary nature and far-attaining results of money Laundering because the Crpc, 1973 is a universal procedural law and does no longer have any prevalent utility because of the abnormal nature and a ways-reaching results of money Laundering.
• The wide interpretation of phase 3 of the PMLA, 2002 is preventative in nature. If someone conceals something (proceeds of crime), it’s far an act dedicated knowingly and, hence, the question of that man or woman projecting that very aspect both as tainted or untainted does not arise.
• Similarly, all of the terms inside the definition after the phrase “such as” are not dependent on each different to be construed as against the law however independent of the offence of money Laundering.
• The phrase “and” within the definition was usually supposed to be examine as “or” as any interpretation aside from this will fail to fulfil the legislative motive of the act.
• The arguments in opposition to the legislature’s selection to enact a regulation with provisions not in compliance with the Crpc, 1973 are unfounded. The parliament is well within its proper to prescribe a exceptional process than the ones in Crpc, 1973, furnished that there are safeguards to make sure that it aligns with the constitutional value.
• The Enforcement Directorate cannot be dealt with as cops as they are not law enforcement officials below this act and may hence, no longer be held to the identical requirements as a police officer could.
• Due to the character of the offence, and the ability crook having the sources to flee the fees, the supply of an FIR, or earlier submission of it earlier than an arrest was deliberately avoided by using the legislature. The ECIR is an inner document handiest intended for administrative comfort.
• The contention regarding the shortage of safeguards is unjustified. There are multiple safeguards to all of the sections highlighted by the petitioners, in particular in Sections 5&19 inclusive of the arrested man or woman to be produced earlier than the magistrate inside 24 hours of the arrest and the reasons for the accusation to be put in writing and submitted.
• Its miles stated that the twin situations beneath section forty five of the PMLA, 2002 are reasonable from the standpoint of the accused and his rights beneath Article 21 of the constitution, which provides an goal criteria and intelligible differentia, as a result, does no longer violate Article 14 of the constitution.
• The recording of a declaration under phase 50 of the PMLA, 2002 does not violate Article 20(three) of the Indian charter if there hasn’t been a proper criticism against the character and he isn’t always accused yet.
• The load of proof on this act intentionally shifted to the accused become vital due to the seriousness and gravity of the offence and to prevent the offenders of such serious crimes to be beneficiaries even as the society suffers an economic loss. 

Judgement

The Hon’ble Supreme Court decided on 27 July 2022 brought its Judgement upholding the constitutional validity of the Prevention of cash Laundering Act, 2002. The court noted the legislative cause behind the act and justified the stringent provision of the act as parallel to the charter values of the United States and at par with the essential

Inference 

The Hon’ble Supreme Court, however nicely based in their justification concerning the severity and international aspect of money laundering, in my humble opinion, did not comprehend the potential misuse of the act. The ECIR, being an “inner report” is an unjustified claim. The reluctance of framing of costs and permission earlier than arrest must be valid considering the capability get entry to sources on the arms of the accused but the blatant refusal to provide the ECIR restricts the accused from having the ability to correctly defend himself at trial. Even as “draconian” may be a stretched perception of the act, by using manner of a cursory studying of it; the argument that it may be extraordinarily harsh to the innocent is nicely-founded.

The act, in my opinion, requires additional provisions for redressal and reimbursement for those, towards whom the allegations of money laundering, hold no advantage. The court determined the validity of maximum of the harsh provisions of the act towards the gravity of the crime, but failed to realise that the act misses the coronary heart of Indian crook justice gadget: “innocent till tested responsible.”

Author: Mudit Vikaram Singh a 3rd year student at Bareilly College, Bareilly.