The provisions of Section 44 of PMLA concern “crimes that may be tried by Special Courts.” A provision has been added to Section 44(1)(b) stating that, if no evidence of money laundering is found at the completion of the inquiry, the relevant body must submit a report of closure to the Special Court. This amendment allows for the dismissal of a case if an inquiry by the relevant authorities reveals no evidence of a violation.
After Section 44(1)(d), an Explanation has been added stating that the jurisdiction of the Special Court during investigation, inquiry, or trial under this Act shall not be dependent on any orders passed in relation to the scheduled offence, and that the trial of both sets of offences by the same court shall not be construed as a joint trial.
The Explanation further specifies that “Complaint” include a second complaint as a consequence of additional inquiry against any suspected individual engaged in the offense, regardless of whether they were identified in the first complaint or not.
The first section of the Explanation seems to have been added to address the trial of a “standalone money laundering offense,” since the trial of a money laundering offense is independent of the trial’s result.
Due to the single use of the term ‘complaint’ in the Act, it now grants the authorities the authority to submit a supplemental complaint as the investigation develops, as described in the second section of the Explanation.
Cacophony between the Money Bill and the Amendment
The amendments do not meet the requirements of Article 110. Five Finance Acts [Money Bills], namely the Finance Acts of 2015, 2016, 2018, 2019, and 2019, have altered the PMLA. All five Acts were primarily concerned with tax rates and implementing various fiscal goals of the federal government. On the other hand, the Finance (No. 2) Act of 2019 expressly declares that its purpose is also to change some statutes. There is no connection between the PMLA modifications and the goals.
Therefore, it cannot be stated that these revisions are just ancillary to the primary act, which is a spending measure. A piece of legislation seeking support under Article 110(1)(g) must be ancillary to the purposes listed in Article 110(1)(a) – (f). A bill including measures not directly related to Article 110(1)(a) through 110(1)(f) cannot be considered a Money Bill.
It is important to highlight that the PMLA modifications do not come within the scope of Article 110(1)(a) – (f).
Consequently, it is apparent at first glance that these revisions are a sham power grab designed to make extensive changes to criminal law without the examination of the Rajya Sabha. The PMLA modifications may likewise be detached from the remainder of the Finance Acts, demonstrating that
a) there was in reality no connection between the PMLA and the main Finance Act and
b) invalidating the PMLA amendments would have no influence on the constitutionality of the Finance Acts. Thus, it is argued that the Amendment does not meet the standards of Article 110 of the Constitution and is a questionable use of authority by the legislature, making it unconstitutional.
The Constituent Assembly proposed a federal system to balance national unity and regional authority. In Kesavananda Bharati v. State of Kerala, when the “basic structure theory” was established, the Supreme Court made a similar observation. Democracy and federalism are fundamental characteristics of our Constitution and are a component of its Fundamental Structure and the Bicameralism concept is one of the Constitution’s most precious elements. The Rajya Sabha exemplifies the Constitution’s by representing the principles of bicameralism and federalism, therefore, any supersession of the Rajya Sabha must closely comply to the Constitution’s stipulations.
Unlike an ordinary legislation, which requires the approval of both Houses of Parliament prior to receiving Presidential Assent under Article 107 r/w Article 111 of the Constitution, the Lok Sabha has the upper hand in the passage of a money bill. A money bill is deemed to have been enacted by both houses of parliament if the Rajya Sabha does not return it to the Lok Sabha within 14 days following its passage by the Lok Sabha.
It is essential to understand that the Rajya Sabha can only offer recommendations to the Lok Sabha, which are also not binding. Moreover, a Money Bill cannot be submitted to a Joint Committee of the Houses of Parliament, enabling it to avoid the scrutiny of the Rajya Sabha. The Rajya Sabha, which embodies the principles of federalism and bicameralism, is a crucial element of the legislative process and should not be omitted unless expressly mandated by the Constitution.
Thus, it is argued that the alteration brought about by the 2019 Finance Act, which is a money measure, is not only technically ultra-vires, but also violates the constitutional concepts of bicameralism and federalism.
Subsequently, Articles 110(3) and 110(4) of the Constitution provide judicial review of the Speaker’s certification. In accordance with Article 110(3) of the Constitution, “if any issue arises as to whether a Bill is a Money Bill or not, the Speaker of the House of the People’s judgment shall be definitive.”
The Supreme Court has found on many occasions that such wording would nonetheless make the subject matter of the clause open to judicial review in situations where the judgment was unlawful or unconstitutional. Only if the decision of the Speaker is unlawful or unconstitutional may it be subject to judicial scrutiny. This is because all institutions established by the Constitution, including the Speaker’s office, are governed by its requirements. Thus, it is argued that alterations to the PMLA that cannot be made via a budget bill should be subject to judicial scrutiny and may be struck down as unconstitutional.
Changes made in Section 44 through the way of Finance act of 2019 provide for the serious loopholes between the scheduled offense of the PMLA and the CRPC
This clause does not foresee a combination trial of the planned crime and the offense under Provision. It is contended that this modification’s rationale is difficult to comprehend. However, 37 of the 58 scheduled crimes of the IPC mentioned in the Schedule to the 2002 Act may only be tried by a Magistrate of the First Class or any Magistrate, which violates the accused’s right to a trial under the Cr.P.C. for a scheduled offense.
This argument is based on A.R. Antulay v. R.S. Nayak & Anr. It is argued that the contention of Judges in Vijay Madanlal Chaudhary vs. Union of India was based on the assumption that Section 44 was based on the Procedure established by Law (emphasis on Khanwilkar, J. ), but this is not necessarily the case when it violates the right to a Magistrate First Class trial, a first appeal to the Sessions Court under Section 374(3), and a review by the High Court.
However, Maneka Gandhi v. Union of India was a landmark post-emergency decision that revealed a paradigm change from the objectives of the Indian Constitution’s founders and gave Article 21 its spirit. The attitude of judicial activism is reflected in the decision by granting increased powers and substantive meaning to ‘lawful process.’ It was determined that Article 21 must be fair, just, and reasonable, and not arbitrary, harsh, or whimsical.
This logic leads in a highly stringent interpretation when a person who has only been charged with the underlying crime and not the PMLA offense is also brought before the Special Court. This is further complicated by the fact that a number of the PMLA’s listed crimes are themselves governed by special laws that provide that only the Special Court established by those acts may trial them. The National Investigation Agency Act, the PC Act, and the NDPS Act are other examples. In such a circumstance, the PMLA Special Court cannot have the jurisdiction to pursue violations of these statutes.
Subsequently, Section 44(1)(b) of the PMLA was amended by deleting the words “upon perusal of police report of the case(s) constituting an offence,” making it clear that cognizance of an offence under Section 3 of the PMLA can only be taken upon a written complaint and not a Police report, i.e. a charge sheet filed by the police pursuant to Section 173(5) of the Criminal Procedure Code. PMLA does not define “complaint,” however Section 2(d) CrPC defines “complaint” as an accusation submitted verbally or in writing to the Magistrate for the purpose of taking action against those who have committed the offense. In addition, the ‘complaint’ referred to in subsection 44(1)(b) is not a private complaint as defined by subsection 190(1)(a) of the Criminal Code, but rather a complaint made by an authorized authority pursuant to subsection 48 of the PMLA or a police officer pursuant to subsection 45(1A) of the PMLA.
Furthermore, The Special Court cannot proceed with the trial for the Section 3 offense after an acquittal for the underlying offense. Section 44 clearly allows for the trial of money laundering by a Special Court.
In the current situation in lieu of the amendments, it is crucial to note that an Explanation has been inserted to Section 44(1)(d) of the by means of the Finance Act of 2019, which stipulates that a trial under the PMLA may continue independently of the trial of a scheduled crime. It is argued that the Explanation is being misconstrued when it should be understood in a straightforward manner. It is contended that the Explanation only applies to the Special Court and not to the trial of the scheduled offense. It is argued that a Special Court can never convict a defendant under the PMLA without first determining that a scheduled offense has been committed.
Recent amendments have provided an explanation to Section 44 (1) (d) of the PMLA Act, which grants the Special Court exclusive jurisdiction over certain offenses. The amendment clarifies that the trial conducted by the Special Court for listed offenses should be different from any other trial for the same listed offense. The issue that emerges is that in order to create an offense under the PMLA Act, a predicate offense, which is the scheduled offense as defined in the PMLA Act, is required.
Though various aspects of ‘standalone money laundering’ have been the subject of dispute and a point of contention before various forums, the issue has been resolved by the recent decision of the Supreme Court, which ruled that (a) authorities initiating action under the Act for attachment & confiscation is a ‘standalone’ process and (b) upon acquittal/discharge of a person in the scheduled offence by a competent Court, there cannot be a continuation of proceedings under PMLA. It was emphasized that criminal behaviour related to scheduled offenses and money laundering offenses are inextricably linked.