On July 27th, 2022 the Hon’ble Supreme Court of India comprising of the division bench of (J) A.M Khanwilkar, Dinesh Maheshwari, C.T. Ravikumar, gave a 545 page-long Verdict in the matter of Vijay Madanlal Choudhury & Ors Vs. Union of India ( famously known as “PMLA Verdict”) which upheld some provisions of the Prevention of Money Laundering Act, 2002 (“PMLA,2002”) and laid down certain principles which are contrary to the most basic fundamental rights guaranteed to us in the Magna Carta and are against the basic tenants of criminal jurisprudence.

In this post, we will aim to analyze and decipher instant judgment in light of constitutional and criminal jurisprudence.

Section 24 Vs, Magna Carta: –

Section 24 of the PMLA, 2002 stipulates that the Burden of Proof shall be on the respondent when he is subjected to an offense under section 3 (Offence of Money Laundering), this provision is against the most basic criminal jurisprudence of the land which states “innocent until proven guilty.”

 In the instant judgment the same was challenged by the petitioners on the ground that before the 2013 amendment in PMLA,2002 the person accused of the offense of money laundering is deemed guilty and had to prove his innocence beyond a reasonable doubt from investigation till judgment, however, the trauma has restored to same extent post-2013 amendment, the catastrophe of uncertainty continues. It was also contended that Section 24 whimsically grants an investigator to presume the commission of an offense. It is relevant to be noted here that the maximum sentence of imprisonment in case of the offense of money laundering is 7 years, therein such provision is simply ultra-vires and is against Article 21 and Article 20(3) of the Indian Constitution.

Additionally, if we refer to Section 2(1)(u) of the PMLA, 2002 it gives a very expansive meaning, whereby people who do not have any knowledge or have not participated in the process of money laundering but have some indirect benefit out of it are also being wrongfully roped in by the investigators. This reasoning de hors logic is ultra vires and does not pass the constitutional mandate, because unlike in civil cases there the person has to prove his case with preponderance of probabilities in case of offences relating to money laundering the same has to be proved beyond reasonable doubt.

However, the Hon’ble Supreme Court of India held that the legal presumption can only be made after the charge is filed under Section 24(a) and/or once the fact of the existence of proceed of crime and link of such person is established by the prosecution under Section 24(b). Thus, holding Section 24 constitutional.

ECIR Not Same as FIR: Is It Constitutional? –

Because of the unique mechanism envisaged through the 2002 Act, it is specified that Enforcement Case Information Report (“ECIR”) can’t be compared with an FIR under the 1973 Code. ECIR is an internal record of the ED and the reality that FIR in respect of scheduled offense which has no longer been recorded cannot come in the way the Authorities cited in Section 48, start esearch for initiating “civil action” of “provisional attachment” of assets being proceeds of crime.

But on the contrary, it can be seen that the ongoing procedure laid down under the PMLA is violative of Article 21 of the Constitution of India. The solution that we can attain here is to pass an amendment that will specify the procedure established by law which will be portrayed in the form of a statute or delegated legislation and pass the test of constitutional protections.

Guilty until proven innocent Deciphering the PMLA Verdict

Not providing the ECIR to the accused is a clear infringement of Article 21 of the Constitution, the ECIR is identical to an FIR filed by the ED. It contains the grounds of arrest and particulars of the offenses; and accordingly, without the information on the elements of such a report, the capacity of the accused to protect himself at the stage of bail can’t be completely recognized. It might likewise juxtapose the capacity to execute the trial at a later stage.

The right of an accused to get a copy of the First Information Report at the beginning phase can be equated with that of an ECIR and the right to know the allegations is considered to be an innate part of Article 21. Attention was drawn to Youth Bar Association of India vs. Union of India and Anr. in support of this contention.

Getting Bail, A Herculean Task:

The draconian provision – Section 45 (1) of the Prevention of Money Laundering Act, 2002 (PMLA), to the extent that it imposed two circumstances for the release of an accused on bail was held to be unconstitutional as it violated Article 21 of the Constitution in a landmark judgment of Supreme Court in Nikesh Tarachand Shah v. Union of India.

The conditions precedent that is required is that the state prosecutor should be allowed to go against any application for release on bail and the court shall be prima facie satisfied, where the prosecutor goes against the application, that there are reasonable grounds for accepting that the accused is not blameworthy for such offense and that he isn’t probably going to commit any offense while on bail.

Light may be thrown upon the application of the twin provisions with the inclusion of the word ‘or’ instead of ‘and’. With the constructive application of the same, the element of compulsion pictured through the twin provisions can be cut down to a liberal interpretation.

Presumably, now that the twin conditions have been restored, getting bail in a PMLA case will be a Herculean undertaking. Last month, the Apex court in Satender Kumar Antil’s case referred to Nikesh Tarachand with approval to stress that bail is the rule and jail the exception.

Conclusion: –

The PMLA, 2002 was introduced “to provide for confiscation of property derived from, or involved in money laundering and for matters connected therewith and incidental thereto.” And whereas, the intention of the legislation remains pure which is to prevent money laundering. However, the effective enforcement remains in troubled waters, as the instant judgment upholds various provisions of the statute which gives the Enforcement Directorate (ED) arbitrary powers, making the procedure of such a seizure whimsical, the burden of proof remains to be on the accused, getting bails to remain to be an impossible task and so on and so forth this makes the legislation unconstitutional.

A census report was cited in the instant judgment which stated that each year the cases of the raid by ED is increasing, however, the infectiveness was highlighted which showed that the conviction rate was zero till 2015 – 16, and thereafter reached a maximum of four conviction in 2018 -19. However, the said matter is pending determination as a review petition which was accepted by the Hon’ble Supreme Court however, we note the test of review petition, is only “limited to any mistake or error apparent on the face of the record.”

 In the meanwhile, we suggest that it is high time that amendment is required to the provisions of PMLA,2002, we suggest that the burden of proof shall be on the person making the accusation and not the accused, and we suggest that a high-level committee may be appointed to regulate the power of the ED, we suggest that the interpretation of “and” in Section 45 of Bail provision shall be substituted with “or”, we suggest that supplying ECIR shall be made an obligatory task of the ED.

Author: – Siddharth Addy  | Co author –  Sayani Das

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