16 May 2023 3:15 PM GMT
A two-judge bench of the Supreme Court has turned down a plea to refer the judgment in Vijay Madanlal Choudhary vs Union of India, which upheld several provisions of the Prevention of Money Laundering Act 2002, to a larger bench.The plea for larger-bench reference was raised on behalf of the accused in the Tamil Nadu cash-for-jobs scam before a bench comprising Justices Krishna Murari and...
A two-judge bench of the Supreme Court has turned down a plea to refer the judgment in Vijay Madanlal Choudhary vs Union of India, which upheld several provisions of the Prevention of Money Laundering Act 2002, to a larger bench.
The plea for larger-bench reference was raised on behalf of the accused in the Tamil Nadu cash-for-jobs scam before a bench comprising Justices Krishna Murari and V Ramasubramanian, which was hearing the appeals filed by the Enforcement Directorate challenging the order of the Madras HC halting the proceedings in the money laundering case. The ED's appeals were considered along with other appeals challenging the High Court ordering re-investigation in the case, in which Tamil Nadu Minister and DMK MLA Senthil Balaji is one of the accused.
In the judgment delivered on Tuesday, the bench rejected the plea for larger bench reference, citing principles of judicial discipline and the doctrine of stare decisis(regarding binding nature of previous decisions). Vijay Madanlal Choudhary was rendered by a larger bench comprising three judges.
The bench also stated that a larger bench reference will bring all pending investigations in money laundering cases to a "grinding halt". It further noted that review petitions have been filed against Vijay Madanlal Choudhary. On August 25, 2022, the Court issued notice on the review petitions observing that two aspects of the judgment prima facie required reconsideration. Those were (i) not providing the accused with a copy of the ECIR; and (ii) reversal of the burden of proof and presumption of innocence.
As regards the instant case, the bench observed that the accused are canvassing other points, which are not related to the above aspects. "Therefore, the accused cannot have a piggyback ride on the review petition", the bench observed.
Also, the bench noted that the accused persons have not filed any appeals against the High Court order. "Therefore, they are entitled at the maximum, to argue only for the dismissal of the appeals filed by ED and others against the said decision. Suppose we agree with the learned counsel for the accused and dismiss the appeals filed by ED, even then they cannot have an escape route since the impugned order of the High Court protects them only till the other proceedings are kept at bay", the bench observed.
"Therefore, the accused is not entitled at all either to seek a reference to a larger Bench or to seek to defer the matter till a decision is rendered in the matters involving larger issues", it said.
Arguments raised against PMLA
The hearing of the case witnessed arguments being made against the Prevention of Money Laundering Act.
Senior advocate Kapil Sibal told the top court that the Supreme Court’s July 2022 decision in Vijay Madanlal Choudhary needed a ‘relook’. On another day, senior counsel C Aryama Sundaram argued that he would read the judgement “as it stood” to support his interpretation of the act, but such an interpretive scheme did not support the modus operandi of the ED which routinely conducted ‘fishing’ enquiries to implicate people in money laundering cases. The central agency’s modus operandi, Sibal said, was not only against all ‘canons of justice’, but also violative of the principles of federalism. Later, senior advocate Sidharth Luthra also weighed in, saying the haste with which and the manner in which the directorate had started working made it seem like they were ‘cowboys’ in the ‘Wild West’, and not an agency following statutory principles.
Besides emphasising the importance of the Prevention of Money Laundering Act as a part of the global response to transnational organised crime and other insidious activities taking place across geopolitical borders, in rejoinder, the solicitor-general addressed a number of contentions raised by the other side, including the argument that once an accused is discharged for a predicate offence, the Enforcement Directorate had no jurisdiction to investigate. The top law officer also reiterated that the involvement in any one or more of the following activities or processes connected with the proceeds of crime, namely, concealment, possession, acquisition, use, projecting it as untainted property, or claiming it as untainted property, would be an offence of money laundering under the Prevention of Money Laundering Act. He explained:
“Imagine a person has been accused in a corruption case. Now, based on that corruption case, the ED lodges an enforcement case information report. Its jurisdiction is to figure out where the money, which is the proceeds of the crime, goes. Even if such a person is in possession, he would be guilty of money laundering. It is not necessary for him to ‘launder’ the money in the conventional sense.”
One of the central planks of the argument by the other side was that the jurisdictional facts necessary for the directorate to begin an investigation was the commission of an offence, together with the generation of the proceeds of crime with respect to that offence. Sundaram submitted that the existence of identified property or ill-gotten gains in the hands of the accused were the sine qua non of an offence of money laundering. Luthra also raised a similar concern. Sibal went one step further and said that an interpretation which removed the difference between the proceeds of crime and money laundering was constitutionally suspect, and only when any tainted property was integrated into the formal economy, should charges of money laundering be attracted. Mehta responded to these contentions by saying:
“The moment a predicate agency, be it a state agency or the Central Bureau of Investigation, registers an FIR which falls within the predicate offence list in the schedule annexed, the jurisdiction of the Enforcement Directorate starts. There is no stay in its jurisdiction merely because the predicate offence is stayed. This court has read only one condition which is that the ED’s investigation will stop only if the accused is acquitted in the scheduled offence. The act has also provided for the director of the agency to share information relating to any proceeds of crime recovered during a raid from an accused, with another agency, where the predicate offence is gone. The Prevention of Money Laundering Act is a complete code taking into account all scenarios.”
The solicitor general also said that the provisions of the Prevention of Money Laundering Act were in compliance with the global standard set by the Financial Action Task Force (FATF) and a part of the intergovernmental response to organised crime.
Y. Balaji v. Karthik Desari & Anr. | Special Leave Petition (Criminal) No. 12779-12781 of 2022 and other connected matters
Citation : 2023 LiveLaw (SC) 440
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