18 Oct 2023 1:08 PM GMT
In a significant development, a three-judge bench of the Supreme Court agreed to hear applications seeking reconsideration of the judgment in the 'Vijay Madanlal Chaudhary' which became controversial for strengthening the powers of the Directorate of Enforcement.A three-judge bench of Justices SK Kaul, Sanjiv Khanna and Bela M Trivedi on Wednesday (October 18) listed the matter for hearing...
In a significant development, a three-judge bench of the Supreme Court agreed to hear applications seeking reconsideration of the judgment in the 'Vijay Madanlal Chaudhary' which became controversial for strengthening the powers of the Directorate of Enforcement.
A three-judge bench of Justices SK Kaul, Sanjiv Khanna and Bela M Trivedi on Wednesday (October 18) listed the matter for hearing on November 22.
Solicitor General of India Tushar Mehta, appearing for the Centre, vehemently objected to the bench hearing the matter when a review petition against the Vijay Madanlal judgment is pending. Pointing out that an international delegation of the Financial Action Task Force (FATF) is visiting India in November to review the working of the Prevention of Money Laundering Act (PMLA), the SG said that it will be in the "national interest" to adjourn the hearing by a month or two.
But the bench refused, with Justice Kaul saying, "national interest can be sometimes in hearing the matter also."
The bench said that there are certain "nuances" to be considered. "A three-judge bench has said there are certain aspects to be considered," Justice Kaul said. Earlier, in August 2022, a bench led by the then CJI NV Ramana had issued notice in a petition for review of the matter and had observed that two aspects of the judgment prima facie required reconsideration - one, the finding that the copy of the Enforcement Case Information Report (ECIR) need not be given to the accused; two, reversal of the presumption of innocence.
Justice Khanna said that "there are nuances in Section 3 which probably have to be ironed out."
In the order passed after today's hearing, the Apex Court made it clear that it will only be addressing the issues relating to PMLA. The Court noted the preliminary objection of the Solicitor General that in view of a separate review petition pending against the judgment, any further consideration of the matter should await that. However, the Court also noted the submission of the petitioner that they are only seeking reconsideration of the judgment on certain parameters.
The Court clarified that it will hear Centre's preliminary objections as well on the next date.
Broad Issues Raised By Petitioners
In today's hearing Senior Advocate Kapil Sibal appearing for one of the petitioners laid out the broad issues for consideration of the Court.
The first issue raised is that the judgment says that the PMLA is not a penal statute. "How is it not a penal statue? That is my first problem. I can be convicted for money laundering and sentenced to 7 years imprisonment and in some cases 10 years. And it's not a penal statute? Court says it is a regulatory statute because the intent of the PMLA is to protect the property not the person. I don't think any interpretation of the act can lend any support to that," Sibal said.
The second issue raised is when one is summoned under PMLA, one does not know in what capacity they are being summoned- whether as an accused or a witness. "Under general law, I can be summoned as witness under S.160 CrPC or as an accused under Sec. 41A CrPC. Here I don't know in what capacity I am being summoned," he said. Sibal added that the contours of Section 50 of the PMLA are not well defined.
The third point raised was about the non supply of the Enforcement Case Information Report (ECIR, the counterpart of FIR in ED cases). "When I don't know what the allegation against me is, how do I get bail? Sibal said.
The fourth issue raised pertains to the interpretation of Section 3 (Offence of money-laundering) of the PMLA. "Section 3 says money laundering is an offence when I project proceeds of crime as legitimate money. Tainted money projected as untained money is money laundering. But the court says there is no such distinction" Sibal said. "The main section says 'and' and explanation says 'or'. Under principles of interpretation you can't read 'or' in the explanation and 'and' in main section" he added.
The fifth issue relates to the twin conditions for bail under Section 45 of the PMLA. The twin conditions are that when an accused applies for bail under PMLA, the public prosecutor has to be given an opportunity to oppose the same and if the court is considering grant of bail, there must be reasonable grounds for it to believe that the person is not guilty and is unlikely to commit any offence while on bail. "I have no ECIR, I have no document when I'm produced before the Magistrate. How do I defend myself at the pre trial stage? I can't cross examine..I don't have any information.." Sibal said.
The next issue raised by Sibal was the retrospective application of the PMLA. If there is an alleged criminal activity in 1999, even before the enactment of PMLA, a person can be proceeded against on the present day on the ground that he is possessing proceeds of crime.
"There are nuances in Section 3 which probably have to be ironed out. Generation is one question which came up. Generation takes place in 1999 and the possession is retained. Will it be an offence now? The judgment does not answer it. It says 'may be'," Justice Khanna said.
The seventh issue raised by him was regarding the jurisdiction. Suppose there is a predicate offence in Karnataka and proceeds of crime are generated there, and if a bank account of the accused is maintained in Delhi, the ED can take the case out of Karnataka to Dehli, Sibal said.
When the bench pointed out the ED's stand that the PMLA was enacted as per international conventions, Sibal said that the statute is not in conformity with the Constitution. Stating that the international conventions related to only drug money and terror financing, Sibal said that the schedule of the PMLA included several offences as predicate offences- ranging from copyright violation to kidnapping to counterfeiting.
Preliminary Objections of the Enforcement Directorate
Solicitor General Tushar Mehta appearing for the Enforcement Directorate prima facie objected to the matter being revisited, since the judgment was passed by a bench of 3 judges. "Can this bench sit in appeal over another coordinate bench? Can a person tomorrow bring a petition that he does not agree with the 5-judge bench judgment in the same-sex marriage case and can it be referred?" he said.
"The judgment was rendered after a lot of deliberations. I am on the abuse of process of law. The averment is petitioner is an enlightened citizen and he feels that Sec 50 is wrongly interpreted. Is that a ground to reconsider a coordinate bench judgment?" Mehta added.
However, the Court said that nothing prevented it from hearing the matter.
Justice Kaul said that "Prima facie my view is, if it is worth it, the three judge bench can revisit. The Court will show circumspection in deciding whether to look into it. But there cannot be bar in hearing. Is it written in stone that a bench cannot look into another judgment?"
Justice Kaul said that there are numerous instances of coordinate benches doubting judgments of coordinate benches and referring them to larger benches.
"We may say tomorrow, after hearing the parties, that we will wait for the review. But we can't say we can never revisit the decision. Review order says at least two aspects need to be reconsidered. Jurisdiction and review are different" Justice Kaul added.
Justice Khanna agreed with Justice Kaul and added "this is the final court, please don't assume we are saying the decision is wrong, but certain nuances have been raised"
The SG also said that there was no urgency in the matter and urged the Court to consider it after a month or two after the mutual evaluation by Financial Action Task Force. He said that it will be in 'national interest' to wait to hear the matter. However, Justice Kaul said that scrutiny of the judgment may also be in National Interest.
"PMLA is not a standalone offence. There is a global response. Unlike other laws, PMLA is prepared by the legislature in conformity with the directions issued by the Financial Action Task Force. Accordingly, every member country has prepared their money laundering and terror financing laws. FATF conducts mutual evaluation, meaning thereby, 7 members of 7 different countries come to India and examine if our law is in tune with the standards." the SG explained.
The SG further argued that the Court should not hear the matter as a pure "academic exercise" without any underlying legal dispute involved.
Case Title: Directorate Of Enforcement v. M/S Obulapuram Mining Company Pvt Ltd Crl.A. No. 1269/2017