PMLA Judgment Allowing ED To Take Possession Of Property Before Trial In Exceptional Cases Leaves Scope For Arbitrariness : Supreme Court

In the judgment delivered on Tuesday relating to the Benami Transactions Prohibition Act 1988, the Supreme Court expressed concerns about the ratio in the recent PMLA judgment which allowed the taking possession of the property before trial in exceptional circumstances.A bench led by the Chief Justice of India NV Ramana, while dealing with the constitutionality of certain provisions of the Benami Transactions Prohibition Act, observed that the ratio of the PMLA judgment in relation to Section 8(4) requires "further expounding in an appropriate case,without which, much scope is left for arbitrary application".Section 8(4) of the Prevention of Money Laundering Act allows the officers of the Enforcement Directorate to take the possession of the attached property once the provisional attachment order is confirmed.In the case Vijay Madanlal Choudary & Ors v. Union of India, a 3-judge bench comprising Justices AM Khanwilkar, Dinesh Maheshwari and CT Ravikumar rejected the challenge to the constitutionality of Section 8(4) of PMLA. However, the bench held that "the provision in the form of Section 8(4) can be resorted to only by way of an exception and not as a rule."Observations in case concerning Benami Transactions Prohibition ActIn the case Union of India versus M/s Ganpati Dealcom Pvt Ltd, the bench comprising CJI NV Ramana, Justice Krishna Murari and Hima Kohli was dealing with the constitutionality of the provisions of the Benami Transactions Prohibition Act 1988.An issue arose is in the case as to whether the provision for forfeiture of property is punitive or a civil consequence. While discussing this issue, the bench referred to the PMLA judgment and observed as follows :"In Vijay Madanlal Choudary & Ors v. Union of India, SLP (Civ.) No. 4634 of 2014 and others, this Court dealt with confiscation proceedings under Section 8 of the Prevention of Money Laundering Act, 2002 ("PMLA") and limited the application of Section 8(4) of PMLA concerning interim possession by authority before conclusion of final trial to exceptional cases. The Court distinguished the earlier cases in view of the unique scheme under the impugned legislation therein. Having perused the said judgment, we are of the opinion that the aforesaid ratio requires further expounding in an appropriate case, without which, much scope is left for arbitrary application"It may be noted that the PMLA judgment, in which the expansive powers of the ED for arrest, raid and attachment and the stringent bail conditions were upheld as constitutional, has attracted widespread criticism. Recently, former Supreme Court judge Justice L Nageswara Rao, speaking at a public event, opined that he might have taken a different view in the PMLA judgment.Separate report about the judgment in the Benami Transactions Prohibition Act can be read here.Also Read : "Unduly Harsh" : Why Supreme Court Quashed Blanket Ban On Benami Transactions?Case detailsUnion of India vs Ganpati Dealcom Pvt. Ltd | 2022 LiveLaw (SC) 700 | CA 5783 of 2022 | 23 August 2022 | CJI NV Ramana, Justices Krishna Murari and Hima KohliHeadnotesProhibition of Benami Property Transactions Act, 1988 ; Section 3(2) - Benami Transactions (Prohibition) Amendment Act, 2016 - Section 3(2) of the unamended 1988 Act is declared as unconstitutional for being manifestly arbitrary. Accordingly, Section 3(2) of the 2016 Act is also unconstitutional as it is violative of Article 20(1) of the Constitution. (Para 18.1)Prohibition of Benami Property Transactions Act, 1988 ; Section 5 - Benami Transactions (Prohibition) Amendment Act, 2016 - In rem forfeiture provision under Section 5 of the unamended Act of 1988, prior to the 2016 Amendment Act, was unconstitutional for being manifestly arbitrary - In rem forfeiture provision under Section 5 of the 2016 Act, being punitive in nature, can only be applied prospectively and not retroactively - Concerned authorities cannot initiate or continue criminal prosecution or confiscation proceedings for transactions entered into prior to the coming into force of the 2016 Act, viz., 25.10.2016. As a consequence of the above declaration, all such prosecutions or confiscation proceedings shall stand quashed. (Para 18.1)Benami Transactions (Prohibition) Amendment Act, 2016 - The 2016 Amendment Act was not merely procedural, rather, prescribed substantive provisions. (Para 18.1)Click here to Read/Download Judgment

PMLA Judgment Allowing ED To Take Possession Of Property Before Trial In Exceptional Cases Leaves Scope For Arbitrariness : Supreme Court

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PMLA Judgment Allowing ED To Take Possession Of Property Before Trial In Exceptional Cases Leaves Scope For Arbitrariness : Supreme Court

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