PMLA Reverses Burden Of Proof Without Safeguards; Gives Unchecked Powers To ED To Take Over Properties : Singhvi To Supreme Court

The Supreme Court on Tuesday continued hearing the batch of petitions concerned with the interpretation of the Prevention of Money Laundering Act, 2002 ("PMLA Act").The matter was listed before the bench of Justices AM Khanwilkar, Dinesh Maheshwari and CT Ravikumar.Submissions Of Senior Advocate AM SinghviSection 24 Gives Presumption Regarding The Offense Without Giving Any Safeguard With Regards To The OffenseWith regards to section 24 of the PMLA Act, the senior counsel submitted that the section dealt with presumption of offence but it did not have any safeguards. Presenting a comparison between the burden of proof under PMLA and Indian Evidence Act, POTA, TADA, UAPA and NDPS, Senior Counsel said,"There are more draconian laws than PMLA but the law doesn't shift the burden of proof on the accused. The entire burden never shifted the way PMLA under section 24 has done. The moment a charge is framed, suppose after charge any question is raised at charge stage & thereafter, how do I prove the negative. Trial judge-moment he frames the charges- it'll have a direct impact on criminal culpability. There are conditionalities, safeguard but there is no safeguard in sec 24 of PMLA. Its presumption regarding the offence without giving any safeguard with respect to the offence."Section 24. Burden of Proof.—When a person is accused of having committed the offence under section 3, the burden of proving that proceeds of crime are untainted property shall be on the accused.While the Senior Counsel was arguing on the aspect of reverse burden of proof u/s 24 of PMLA Act, Justice AM Khanwilkar, the presiding judge of the bench said, "Presumption is very limited that proceeds of crime are involved in law. Therefore proceeds of crime are firstly to be proved by the prosecution and then you have to prove that they are not proceeds of crime. As arguments of Mr Sibal, merely having proceeds of crime is not money laundering but it's when you project tainted into untainted. If that's so- then the section fits in appropriately."Responding to the remarks posed by the bench, Singhvi said, "PMLA comes in when only the offense is complete when I take the third step, therefore it's intertwined. For eg I use the money that I have for expenditure without laundering or claiming- that's a positive act. I do nothing- claiming, projection without a positive act of projection, there is no offense of money laundering committed. It is a third level statute for laundering money which involves a positive act of projection. For these 3 ingredients- you are making a presumption of 3rd one & you are presuming the offense effectively."Pressing for striking down section 24, Senior Counsel said, "you may presume things which are not an essential ingredient of the offense itself but you shall not presume the 3rd ingredient which is heart & soul of the offense".Failure To Trace Doesn't Give You Power To Attach; Complete Omission Of Safeguard Can Allow The ED To Search Without Registration Of FIR; ED One Of The Most Draconian Departments Today But Without Judicial Guidance & Diktat, Mere Hope Will Not Do; Section 5(1) Second Proviso Cannot Operate As Umpire ItselfWith regards to the search and seizure of any person and property u/s 17 and 18 of the PMLA, Singhvi argued that by a process of progressive amendment of 17 & 18 & by progressive omission of safeguard proviso, we have reached a stage where ED can search place or person without the existence of FIR in predicate offence."Alternatively, on mere information report or information in any manner of an offense without doing any investigation on the same day, on mere immediate registration of FIR, it can search person & place. This is one of the most draconian departments today but today without judicial guidance & diktat, mere hope will not do. There is no dog but the tail is wagging," Senior Counsel further submitted.Arguing that under PMLA cases Magisterial involvement is replaced by the requirement of oversight authority and that search & seizure are conducted without any checks & balances, which is violative of Article 21, Senior Counsel said, "Second proviso of sec 5(1) is either completely unconstitutional or significantly read down because it appears to operate independent of predicate offense & proceeds of crime & is not anchored in either."Referring to the Top Court's judgment in Nikesh Tarachand Shah and on Anuradha Bhasin's judgment, the Senior Counsel argued that, "This is harassment. These will last forever & in a sense some of which your lordships can do, not strike down but sanitize it in a very good way. Failure to trace doesn't give you power to attach. Today the practical reality is that crime registered, proceeds of crime & existing property of old lineage & assuming that there is presumption, attachment is fastening as one of the easiest ways. You are not to find an easy path & use any property & any person in this casual manner & you're going far into constitutionality & there has ...

PMLA Reverses Burden Of Proof Without Safeguards; Gives Unchecked Powers To ED To Take Over Properties : Singhvi To Supreme Court

Shruti Kakkar

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