Delivering its verdict on a batch of petitions concerning the interpretation of certain provisions of the act, the Supreme Court bench on Wednesday opined that money laundering is a heinous crime which not only affects the social and economic fabric of a country but also tends to promote other serious offences like terrorism and drug trafficking. Upholding the validity of certain provisions of the Prevention of Money Laundering Act (PMLA) the bench noted that the law was enacted to address the urgent need for comprehensive legislation to prevent money laundering and prosecute those indulging in activities related to the proceeds of the crime. The court also upheld the Enforcement Directorate’s powers relating to arrest, attachment of property involved in money laundering, search and seizure under the PMLA which were challenged by multiple petitioners.
Vijay Madanlal Choudhary’s case is something that certainly is a major shot in the arm of the Enforcement Directorate as far as the administration of the PMLA is concerned. It will be seen how the Enforcement directorate under the current dispensation responds to the various cases that are being looked at by the agency and it’s clear that the Enforcement Directorate has now gotten stronger. The law has indeed given stringent powers to the Enforcement Directorate in dealing with those who it believes to be accused. I would hope that the Enforcement directorate will be morally stronger and more responsible in future to use its powers that have been clarified by the apex court of the land.
The money laundering problem is not just in India, this was the first time discussed in the Vienna convention. Later on, in 1990 the general assembly of the United Nations passed the resolutions in the cases relating to drugs and they recommended that every state should enact the money laundering act and also prescribed some guidelines.
The government of India has followed those guidelines and in 2002 this act was passed which was introduced in 1999. The accused in the money laundering cases are mostly powerful either money-wise or power-wise. They have the best of the advocates and that’s how they went to the high court and then to the Supreme Court challenging the constitutionality of the act itself and therefore all the provisions of the Act starting from what are proceeds of crime? What is money laundering (sec.3)? The power of search and seizure (sec.17&18), power of attachment (sec.5), the power of arrest (sec.19), the stringent conditions of bail (sec.45), the interrogation (sec. 50), they all have been challenged and the Supreme Court has analysed threadbare all their perspectives and arguments and came out with the conclusion that the Act is constitutionally valid with an exception that if there is no predicate offence then there is no money laundering.
The Supreme Court’s ruling would certainly help the investigating officers now because they are clear about which provision is constitutionally valid and the right procedure to be adopted to conduct an investigation. We expect that the Enforcement directorate would respond to this enhancement of its powers with greater responsibility and a commitment to expeditiously clear the cases. The judiciary, as well as the Enforcement agencies, must take it upon themselves, as it is the abundant responsibility that whatever cases are taken up should not be dragging on for years together. Instead, they should find closure at the earliest as the supreme court also has pointed out that the process itself should not become the punishment. In brief, it is the expeditious settlement of the cases that will address some of the concerns that are being raised right now.
The enforcement directorate has its internal checks and balances they have internal circulars on how to investigate, and who will check what. Secondly, the act itself provides checks and balances which has been tested by the Supreme Court even in this judgment. For example, in the case of attachment, the officer has to record the reason for attaching the property. These reasons have to be immediately sent to the adjudicating authority and within one month a complaint is to be lodged before the adjudicating authority who has to decide within 180 days whether the attachment done by the Enforcement Directorate is right or wrong. If the adjudicating authority finds it wrong, it can quash the complaint. If you are not satisfied with the adjudicating authority’s decision you can, go to the appellate tribunal. Another example is search, before going for the search, the officer has to record in writing the reasons for the search and what is the material in his position for which he is on the grounds of which he is searching. This material is immediate to be sent to the adjudicating authority and again within one month, it has to complain to the adjudicating authority. Within 180 days adjudicating authority to decide about this case.
Another example is the arrest, first, he has to record in writing in his file the reason to believe that arrest is required in this particular case, what are the grounds and then submit the grounds of arrest on the next day when produced before the court. The file is submitted before the court wherein the court can peruse what are the grounds of arrest, they can examine all the material available in the file and take a decision.
The Supreme Court in this ruling of PMLA has thus scrutinised each section threadbare, analysed it and confirmed checks and balances are rightly available in the act so that there is a robust system for internal checks and balances.
(The author is an advocate by profession)
