The Chhattisgarh High Court has issued notice to the Directorate of Enforcement on a petition challenging various provisions of the Prevention of Money Laundering Act, 2002, relating to arrest, as ultra vires the Constitution.
The said plea also seeks quashing of the Enforcement Case Information Report (ECIR) registered against the Petitioner namely Alok Shukla, former IAS and Principal Secretary to the Department of Parliamentary Affairs, Chhattisgarh, allegedly for money-laundering.
The Petitioner, through Advocate Aayush Bhatia, has challenged the constitutionality of the PMLA on the following grounds:
1) Section 50 of the Act is contrary to the right against self- incrimination enshrined under the Constitution
The Petitioner has submitted that while recording the statement of a person summoned under Section 50, the ED compels the person to sign the statement [as recorded by the Investigating Officer], whether the statement of the person has been accurately recorded or not. Respondent ED threatens the person with a penalty under Section 63(2) if he refuses to sign the statement. The authority further records that the statement is liable to be used in the prosecution of the case and against the person making the statement or any other person.
This is projected to be contrary to Article 20 (3) of the Constitution and an equivalent safeguard contained under S. 161 of CrPC.
2) The provisions of Chapter III of PMLA dealing with attachment, adjudication and confiscation are unreasonable and void
It is submitted that Chapter III allows the authorities under PMLA to attach a property, adjudicate the same and reach a conclusion that the property is involved in money laundering and take possession of the property. In this process however, only the act of confiscation of the property is postponed until the conclusion of the trial.
"As far as the owner of the property is concerned, the acts of attachment, adjudication and taking possession are acts that visit the owner of the property with serious and adverse consequences. Since the acts of attachment, adjudication and taking possession are based solely on the belief of the officer/ authority concerned that the property is "involved in money laundering" and the source is tainted because it is derived from a predicate offence, even when the predicate offence is under investigation and no charge sheet has been filed, it is submitted that the whole of Chapter III of PMLA is violative of Articles 14, 19, 21 and 300A of the Constitution," the plea states.
3) Provisions of search & seizure are arbitrary
In relation to this ground the plea states,
"Section 17 of PMLA relating to search and seizure and Section 18 relating to search of person had a valuable safeguard that no search or seizure could be done unless the proviso to section 17(1) and the proviso of Section 18(1), as the case may be, was satisfied. However, the two proviso were deleted by the Finance [No. 2] Act of 2019 wef. 01.08.2019. Consequently, it is submitted, the two sections confer an arbitrary and unfettered power upon the authorities under PMLA to conduct searches and seizures even before the agency investigating the predicate offence has reached a prima facie conclusion that the predicate offence has been committed."
4) Section 19 of the Act enables the authorities to arrest a person even before forming a prima facie opinion about complicity of the accused
The Petitioner has submitted that Section 19 of PMLA is unconstitutional and void for the reason that it enables the authorities under PMLA to arrest a person arbitrarily. The plea states,
"Arrest has serious and adverse consequences upon the person's life, liberty, reputation and honour, and is an invasion of the person's fundamental rights under Articles 14, 49 and 21 of the Constitution. In so far as Section 19 of PMLA enables the arrest of a person before the agency investigating the predicate offence has reached the prima facie conclusion that the predicate offence has been committed and as a result there may be proceeds of crime, it is submitted Section 19 of PMLA violates Articles 14, 19 and 21 of the Constitution."
5) Section 24 of PMLA violates criminal law principle that accused is innocent until proven guilty
The Petitioner has pointed out that the provision creates a presumption in favour of the Respondent ED and against the Accused, that the proceeds of crime are involved in money-laundering.
This is alleged to be "opposed to the settled principles of criminal law i.e. the accused is innocent until proven guilty and the onus is always upon the prosecution to prove its case beyond reasonable doubt."
Irregularities in the ECIR registered against the Petitioner herein
The Petitioner has alleged that the ECIR registered against him is illegal inasmuch as the case was commenced and continued by the authorities without:
(i) Recording any information relating to the commission of a cognizable offence under u/s 154 of the Cr.P.C.
(ii) Forwarding any report/ FIR ./ ECIR of the cognizable offence to the competent Magistrate u/s 257 of the Cr.P.C.
(iii) Producing such case diary before the Magistrate, if the Petitioner was arrested and produced before the Magistrate (u/s 167 Cr.P.C).