What Do Pleas Challenging PMLA, Powers Of ED In SC Contend?

A Bench of Justices AM Khanwilkar, Dinesh Maheshwari and CT Ravikumar will hand down the judgment on pleas challenging the provisions of PMLA and powers of ED.

File Photo of Supreme Court
File photo of Supreme Court of India.

New Delhi: The Supreme Court will on Wednesday, July 27, pronounce its verdict on a batch of petitions raising issues concerning the interpretation of Prevention of Money Laundering Act, 2002, and the powers of the Enforcement Directorate.

A Bench of Justices AM Khanwilkar, Dinesh Maheshwari and CT Ravikumar will hand down the judgment on the pleas challenging the provisions of PMLA and powers of ED. The PMLA has been questioned for providing unbridled powers to the ED. Congress leader Karti Chidambaram and NCP’s Anil Deshmukh, who are facing charges under the PMLA, are also among the 242 petitioners who have approached the apex court opposing various provisions.

PMLA Gives Unchecked Powers To ED

In February 2022, senior advocate Kapil Sibal had contended in front of the three-judge Bench that the PMLA gives the ED unchecked powers. The probe agency, which has not been classfied as a police agency, escapes the restraints under Criminal Procedure Code (CrPC) depriving the accused of the procedural safeguards. For instance, the accused do not get to avail their fundamental right to self-incrimination, guaranteed by Article 20(3) of the Indian Constitution, as their statements during the course of investigation can be used against them in judicial proceedings.

Article 20(3) says that “no person accused of an offence shall be compelled to be a witness against himself”.

Further, the PMLA does not allow bail to an arrested accused unless the public prosecutor has been given an opportunity to oppose the application for such release or the public prosecutor opposes the application and the court is satisfied that there are reasonable grounds for believing that the accused is not guilty of such offence and that he is not likely to commit any offence while on bail.

On Tuesday, July 26, senior advocate Amit Desai attacked the twin conditions for the grant of bail laid down in Section 45(2) of the PMLA, calling them unreasonable, excessive and therefore are liable to be struck down.

PMLA Provides Adequate Safeguards: Centre

Earlier, in March this year, the Centre had defended the PMLA provisions in the Supreme Court saying if a person “knowingly” becomes a party or is actually involved in any activity connected with the proceeds of crime, then such an individual is prima facie guilty of the offence of money laundering.

Explaining the need for PMLA, Solicitor General Tushar Mehta had on March 2 said, “Money-laundering poses a serious threat not only to the financial systems of countries but also to their integrity and sovereignty. To obviate such threats international community has taken some initiatives. It has been felt that to prevent money-laundering and connected activities comprehensive legislation is urgently needed.”

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On March 3, 2022, Mehta argued that section 19 of the PMLA contains adequate safeguards against arrest in comparison to section 41A, CrPC.

Comparing the provisions under the PMLA and CrPC, he said that under section 19 of the PMLA, the power of arrest lies with higher authorities, unlike the case in CrPC. He went on to say that while a person can be arrested on mere suspicion under CrPC, under PMLA, the threshold is “reason to believe” that any person has been guilty of an offence punishable under that Act.

Mehta cited secrecy and confidentiality of the material in possession of the ED officials as one of the important provisions under the PMLA,

ED Registered Max Cases In 2021-22

In the last 10 years, the Enforcement Directorate registered the highest number of money laundering and foreign exchange violation cases in the 2021-22 financial year — at 1,180 and 5,313 complaints respectively, according to government data provided to Parliament on Monday. The data was provided to Lok Sabha in a written reply by the minister of state for finance, Pankaj Chaudhary.

During the financial years between 2012-13 to 2021-22, the federal probe agency filed a total of 3,985 criminal complaints under the Prevention of Money Laundering Act (PMLA) and 24,893 under the civil law of the Foreign Exchange Management Act (FEMA).

(With PTI inputs)