The Supreme Court of India on Wednesday delivered an important verdict upholding various provisions of the Prevention of Money Laundering Act, 2002.
The law deals with investigations into the offences of money laundering by the Directorate of Enforcement. Over 200 petitions were filed challenging various provisions of the PMLA, including summons, attachment and the burden of proof, etc.
The apex court ruled that:
An Enforcement Case Information Report cannot be equated with a first information report. The petitioners had argued that disclosure of ECIR should have the same standards as an FIR registered by a police officer.
Supply of copy of an ECIR is not mandatory. Giving the ground of arrest at the time of the arrest is sufficient.
The challenge to provision of power of arrest is also rejected. The court said the provision does not suffer from any arbitrariness.
The PMLA provisions dealing with summons, search and seizure powers have also been upheld.
The petitioners’ challenge to amendments to the PMLA via the Finance Act has been left open. The bench, presided by Justice AM Khanwilkar, said this issue will be decided by a larger bench.
The full copy of the judgment is awaited.
During the hearings, the petitioners argued that the right to life and liberty was guaranteed by the Constitution, and it cannot be taken away without a just, reasonable and fair procedure for investigation and prosecution of offences.
These safeguards, the petitioners said, were present in the Code of Criminal Procedure,1963 but not in the Prevention of Money Laundering Act, 2002. Hence, the checks should also be built into the PMLA.
The petitioners’ requested the top court:
That the safeguards present in the Code of Criminal Procedure must also be applied to the PMLA.
The absence of distinction between an accused and witness at the summons stage should be addressed.
Power of the ED to attach assets also needed to be curbed.
Lack of a specific standard on when the burden of proof shifts on the accused.
The central government responded by pointing to the special nature of the offence of money laundering.
Solicitor General Tushar Mehta said the law came to be as part of the international effort to fight money laundering and the provisions should be judged in that context.
The nature of money laundering as an offence is different from the offences under the Indian Penal Code, 1860, Mehta said.
He said money laundering entails intricate layering of money through dummy companies and the offence takes place within and outside the boundaries of India. In money laundering cases, there is a potential of an accused removing even the traces of offence in order to frustrate the investigation.