The Supreme Court on August 25 prima facie agreed to re-consider two aspects of the Prevention of Money Laundering Act (PMLA) upheld by its judgment on July 27, which deprives an accused a copy of the Enforcement Case Information Report (ECIR) and transfers the burden of proof of innocence onto shoulders of the accused instead of the prosecution.
A Review Bench led by Chief Justice of India N.V. Ramana clarified that its move to reconsider these two key points in the apex court judgment which upheld several core amendments made to the PMLA should not be construed to mean that the court was opposing the efforts of the government to prevent the circulation of black money or money-laundering. It said the objective of the government was “noble”.
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“We feel that only these two aspects need to be looked into. We are in principle completely in support of the efforts to prevent black money, its circulation and money laundering. We cannot afford such types of offences. The object is noble… But after reading the judgment, prima facie we feel that these two areas — non-provision of ECIR and reversal of presumption of innocence — may require re-consideration. We will issue notice. Let the Government of India respond,” Chief Justice Ramana observed orally.
Solicitor General Tushar Mehta, appearing for the Centre, said entertaining a review of the July judgment would entail serious repercussions. The PMLA was not a standalone law, but part of a larger global structure against the offence of money laundering. India may lose its standing and may not even get financial assistance for its fight against the offence.
He said the review petition filed by Karti Chidambaram, represented by senior advocate Kapil Sibal, was “an appeal in the guise of a review”.
“We are part of a global structure. This is not a standalone legislation for our country alone. We are part of a global structure. Our law will have to be in tune with that larger structure. We had explained this to the court and the court had examined the provisions in detail and found the amendments in tune with not only the global structure but also our Constitution. Any deviation will risk India being sent to another list where we would not be able to get certain financial assistance,” Mr. Mehta objected.
To this, the court said it has already acknowledged the seriousness of the offence of money laundering.
“We are not opposing any of the actions taken by the government to stop money laundering or bringing back black money from abroad…” Chief Justice began to explain.
“But this would have serious repercussions…” Mr. Mehta interjected.
“Yes, it is serious. We do not doubt the object or aim… We thought prima facie that these two issues are there and we will issue notice and see,” the Chief Justice completed his train of thought while issuing notice to the government and posting the review before an appropriate Bench after four weeks.
The court also ordered several writ petitions, one of them filed by Shivshankar Bhatt through advocate Vipin Nair, which have primarily challenged the introduction of the amendments to the PMLA via the Finance Act route, to be tagged along with the review petition. The July verdict had said the method of introduction of the amendments through a Money Bill would be separately examined by a larger Bench of the apex court.
The July 27 judgment authored by Justice A.M. Khanwilkar had found no reason for the Enforcement Directorate, the prosecuting agency under the PMLA, to share the ECIR with an accused. The judgment had classified the ECIR as an “internal, departmental document”. It had concluded that revealing its contents to the accused before the completion of inquiry or investigation into the proceeds of the crime would have a “deleterious impact” on the final outcome of the case.
“So long as the person has been informed about grounds of his arrest, that is sufficient compliance with the mandate of Article 22(1) of the Constitution,” Justice Khanwilkar had observed.
On the issue of burden of proof resting on the accused, Justice Khanwilkar had said the provision did not suffer from the “vice of arbitrariness or unreasonableness”.
“Once the issue of admissibility of materials supporting the factum of grave suspicion about the involvement of the person in the commission of crime under the 2002 Act is accepted, in law, the burden must shift on the person concerned to dispel that suspicion,” Justice Khanwilkar had observed in the July verdict.
The apex court had in fact called the PMLA a law against the “scourge of money laundering” and not a hatchet wielded against rival politicians and dissenters.
“This is a sui generis [unique] legislation… The Parliament enacted the Act as a result of international commitment to sternly deal with the menace of money laundering of proceeds of crime having transnational consequences and on the financial systems of the countries,” the Justice Khanwilkar Bench had noted in a 545-page judgment.
The verdict had come in an extensive challenge raised against the amendments introduced to the 2002 Act by way of a Finance Act in 2019. Over 240 petitions were filed against the amendments which the challengers claimed to violate personal liberty, procedures of law and the constitutional mandate. The petitioners had claimed that the “process itself was the punishment” under the PMLA.
