PMLA Is A Penal Statute And Enforcement Directorate Officials Are Police Officers: Kapil Sibal Submits Before Supreme Court

The Supreme Court on Tuesday resumed hearing on a string of petitions challenging the constitutional validity of several provisions of the PMLA Act.Senior Advocate Kapil Sibal, for the petitioners, made his rejoinder submissions."The heart of criminal jurisprudence is the fundamental constitutional premise that you cannot start an investigation without information that you record and without the accused knowing the information that you record. The reason behind that is that under the code of criminal procedure, in the absence of my knowing that procedure, I will not be able to exercise my right of anticipatory bail or bail, in the context of any piece of information that is kept within the confines of the ED. The second fundamental premise is that the code of criminal procedure is to regulate investigation; it is a procedure through which you do not allow the police officer to do what he likes. That is why there is judicial oversight, provisions requiring the maintenance of a case diary- why is the case diary necessary and why is it important to paginate? So that you cannot fudge the investigation, you will have to include all the statements recorded in the case diary when you file the challan ultimately and seek prosecution. It is necessary to regulate the conduct of the police officer by virtue of Article 21", he began.Mr. Sibal countered the ED's argument that by virtue of Section 3 of the PMLA, mere acquisition, possession and use of proceeds of crime alone is sufficient to constitute money laundering and the projection of tainted property as untainted is not a mandatory requirement. SG Tushar Mehta had told the Court the 'and' in section 3 which preceded the phrase 'projecting or claiming' is to be read as 'or'.Mr. Sibal advanced on Tuesday, "Without claiming and projection of tainted property as untainted, possession itself will result in money laundering, because the SG said that the provision regarding projecting as untainted of tainted is otiose? The argument of the other side is that PMLA is also a preventive statute- if possession itself is money laundering, how is it a preventive statute? Because in that case, if there are proceeds of crime, which the ED officer seizes, then it is money laundering! So projecting is at the heart of section 3; it is only when there is projection is the offence committed.""In the case of 'use', take the example of a person stealing a car. If he steals the car and simply uses it, it will not amount to money laundering. But if the same person, after stealing the car, sells the car, projecting it to be legitimately purchased by him, he will be committing money-laundering. Mere use is not money-laundering", he continued.The SG had traced the evolution of the PMLA statute in its present form from the 1988 Convention Against Illicit Traffic in NDPS to the Palermo Convention to the UN Convention Against Corruption. "It started off for drug money as it was drug money which was laundered. 'Determined to deprive persons engaged in illicit traffic (in NDPS) of the proceeds of their criminal activities and thereby eliminate their main incentive for so doing', the 1988 Convention said that Each Party shall adopt such measures as may be necessary to establish as criminal offences under its domestic law, when committed intentionally: The organisation, management or financing of any [drug trafficking] offences, and so on...So 'Intentionally' is an ingredient from the beginning. The argument of prejudice was that if a property is taken or purchased out of proceeds of crime and I am living there as a tenant, I would also be liable. No, unless I live there knowing that this is a part of criminal proceeds. But 'knowingly' is a part essential to constitute a criminal offence", the SG had advanced.Responding to the same, Mr. Sibal on Tuesday submitted, "Article 3(1) of the Vienna convention says that each State party has to have a law to prohibit the possession of narcotics. This does not deal with PMLA; it deals with the Narcotics Act where mere possession is an offence. It is a separate offence under the Narcotics Act, and not in reference to the PMLA Act. Possession of what? Narcotics! Section 3 is dealt with in Article 3(1)(b) of the Vienna convention which deals with transfer etc (transfer, conversion, concealment and disguise of property derived from offences established under the Article). When you transfer something, when you convert something, you want to conceal its origin. That is why it is a PMLA offence. You get proceeds of trial, you transfer it and conceal it in a way to show it as untainted money. That is why it is money laundering. Concealing means concealing the origin of the proceeds of crime, it does not mean to physically hide."The SG had also told the bench, "The second major breakthrough came in the year 2000 in what is known as the Palermo convention. Global community recognised the need to expand horizons of PML statutes beyond drug money and to all organised...

PMLA Is A Penal Statute And Enforcement Directorate Officials Are Police Officers: Kapil Sibal Submits Before Supreme Court

Mehal Jain

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