Apex court says burden of proof is on accused to come clean
In a landmark judgment, the Supreme Court on Wednesday upheld the sweeping power of the Enforcement Directorate for search, seizure, arrest, and attachment of property under the Prevention of Money Laundering Act (PMLA).
The court also upheld stringent bail conditions in money-laundering cases and said the burden of proof is on the accused to come clean.
Amid outcry by the Opposition parties that the ED was used as a tool by the Centre to target its political rivals, nearly 240 petitioners, including Congress MP Karti Chidambaram, had challenged certain provisions of the PMLA.
Rejecting their pleas, the SC observed that it was a common experience world over that money laundering can be a “threat” to the good functioning of a financial system.
A host of top Opposition politicians, including Congress leaders Sonia Gandhi, Rahul Gandhi, P Chidambaram, his son and MP Karti Chidambaram, Shiv Sena’s Sanjay Raut, National Conference leader Farooq Abdullah, TMC MP and West Bengal Chief Minister Mamata Banerjee’s nephew Abhishek Banerjee and Delhi Minister Satyendar Jain are among those under the ED’s lens for alleged money laundering.
Interestingly, several stringent provisions in the PMLA were introduced by the UPA regime in 2012, when Chidambaram was Finance Minister.
Endorsing the powers of the federal anti-money laundering agency, a bench headed by Justice AM Khanwilkar said authorities under the 2002 Act are “not police officers as such” and the Enforcement Case Information Report (ECIR) cannot be equated with an FIR under the Code of Criminal Procedure (CrPC).
The bench, also comprising Justices Dinesh Maheshwari and CT Ravikumar, said supply of an ECIR copy in every case to the person concerned is not mandatory and it is enough if ED, at the time of arrest, discloses the grounds of such arrest.
The petitioners in the case had challenged the ED’s power of not disclosing the contents of ECIR, contending it violated the fundamental rights of the accused. The bench said in view of the special mechanism envisaged by the 2002 Act, ECIR cannot be equated with an FIR.
“The ECIR is an internal document of the ED and the fact that FIR in respect of scheduled offence has not been recorded does not come in the way of the authorities referred to in section 48 to commence inquiry/investigation for initiating ‘civil action’ of ‘provisional attachment’ of property being proceeds of crime,” said the apex court in its 545-page judgment, empowering the ED.
The court said section 45 of the PMLA, which deals with offences to be cognisable and non-bailable and have twin conditions for bail, is reasonable and does not suffer from vice of arbitrariness or unreasonableness.
The petitioners had also challenged the stringent bail conditions laid down by the law for the accused. Section 45 says when the public prosecutor opposes the bail plea of an accused, the court can grant relief only after it is satisfied that there are reasonable grounds to believe that the accused is not guilty of having committed such an offence and is unlikely to commit any offence if granted bail.
“The challenge to the constitutional validity of section 19 (power to arrest) of the 2002 Act is also rejected. There are stringent safeguards provided in section 19. The provision does not suffer from the vice of arbitrariness,” said the judgment. It also said section 5 of the Act, which relates to attachment of property involved in money laundering, is constitutionally valid.
“It provides for a balancing arrangement to secure the interests of the person as also ensures that the proceeds of crime remain available to be dealt with in the manner provided by the 2002 Act,” the bench said.
The SC said the question as to whether some of the amendments to PMLA could not have been enacted by Parliament by way of money bills has not been examined and is left open to be considered along with or after the decision of a larger bench of seven-judges which is looking into the matter.
The bench also endorsed section 24 of PMLA relating to self-incrimination. Section 24 says when a person is accused of having committed the offence of money-laundering, the burden of proving that proceeds of crime are untainted property shall be on the accused.
The bench said Section 24 of the law has reasonable nexus with the purposes and objects sought to be achieved by the Act and it cannot be regarded as unconstitutional.
The CrPC guards a citizen’s right against self-incrimination. Section 162 of CrPC says every person is bound to answer truthfully all questions put to them by a police officer other than questions the answers to which would have a tendency to expose that person to criminal charge, penalty or forfeiture.
The bench said statements recorded by authorities under the 2002 Act are not hit by Article 20(3) or Article 21 of the Constitution. While Article 20 (3) says no person accused of any offence shall be compelled to be a witness against himself, Article 21 deals with protection of life and personal liberty.
The bench, however, conceded that petitioners are justified in expressing serious concern “bordering on causing injustice” owing to the vacancies in appellate tribunal. “We deem it necessary to impress upon the executive to take corrective measures in this regard expeditiously,” it said. The judgment said section 63 of the Act, which deals with punishment regarding false information or failure to give information, does not suffer from any vice of arbitrariness.
“The argument about proportionality of punishment with reference to the nature of scheduled offence is wholly unfounded and stands rejected,” the bench said. The court said it did not find merit in the challenge to section 44, which deals with offences triable by special courts, being arbitrary or unconstitutional. “The inclusion or exclusion of any particular offence in the Schedule to the 2002 Act is a matter of legislative policy; and the nature or class of any predicate offence has no bearing on the validity of the Schedule or any prescription there under,” it said.