The union government on Wednesday received a shot in the arm with the Supreme Court affirming the constitutional validity of the stringent provisions of the Prevention of Money Laundering Act (PMLA).
A bench, headed by justice AM Khanwilkar, rejected a slew of challenges to the spectrum of issues pertaining to the rigorous provisions enunciated under PMLA and the wide powers accorded to the Enforcement Directorate (ED) under the statute.
The bench, which will also comprise justices Dinesh Maheshwari and CT Ravi Kumar, held that the power given to ED for making arrests, conducting search and seizures and attach proceeds of crime are constitutionally valid and do not suffer from the vice of arbitrariness.
Ruling that the definition of the proceeds of crime under the law must be given an expansive approach, the court underlined that every process of activity involved in money laundering, generation, possession and concealment of tainted money, shall be treated as an offence under the PMLA and that it is not required of ED to compulsorily demonstrate an endeavour to legitimise the proceeds of crime.
It also upheld the stringent twin bail conditions required under the law for granting bail to an accused. The two conditions require a court to hear the public prosecutor against the bail plea and reach a satisfaction that there are reasonable grounds to believe that the accused is not guilty of the offence and that he is not likely to commit any offence while on bail.
Dismissing the challenge to non-supply of Enforcement Case Information Report (ECIR), which is equivalent of an FIR in an ordinary criminal case, to the accused, the bench held that an ECIR is an internal document of ED and is therefore, not required to be given to the accused. Informing the accused about the grounds of arrest is sufficient at the initial stages, it added.
A batch of petitions filed by several persons facing ED proceedings under PMLA, including Congress MP Karti Chidambaram, has alleged that the law is violative of constitutional guarantee of right to liberty and right against self-incrimination under Articles 20 and 21. They have also questioned the alleged unbridled power given to ED and widening of the law to convert any offence into a money-laundering offence.
In its defence, the union government submitted in the court that the PMLA advances India’s commitment to fight against money laundering, in tandem with its international obligations.
Referring to how the amendments have yielded results in cases probed against fugitive economic offenders Vijay Mallya, Mehul Choksi and Nirav Modi, solicitor general Tushar Mehta said: “In these three cases alone, ED has confiscated over ₹18,000 crore worth proceeds of crime due to orders issued by the courts and the amount was returned to the banks.”
In the last five years, according to the Centre, “only 2,086 cases were taken up for investigation under the PMLA out of approximately 33 lakh (3.3million) FIRs registered for predicate offences by police and other enforcement agencies.”