SC Issues Notice to Center Regarding Court’s Verdict Upholding Constitutional Validity of PMLA


Priya Gour

Published on: 25th August, 2022 at 20:20 IST

The Supreme Court issued notice to the Central Government regarding the review of its July 27 verdict that upheld the validity of the Prevention of Money Laundering Act (PMLA).

A Bench of Chief Justice of India (CJI) NV Ramana with Justices Dinesh Maheshwari, and CT Ravikumar issued notice with respect to two issues in particular. It said that while the objective of PMLA is noble and the offence of money laundering is serious, certain aspects of the judgment would need a relook.

A review petition was filed by Karti Chidambaram for the review of the Apex Court’s verdict.

The Supreme Court upheld the validity of the provisions of PMLA in July It also held valid the stringent bail conditions in money-laundering cases.

The court also agreed that supply of Enforcement Case Information Report (ECIR) under PMLA proceedings is not mandatory. The ECIR is an internal document and taken as equal with the First Information Report (FIR).

“ECIR cannot be equated with FIR, and ECIR is an internal document of ED.”

The Court had also upheld that the following Sections of the act be valid:

  • Sections 3 (definition of money laundering),
  • Section 5 (attachment of property),
  • Section 8(4) [taking possession of attached property),
  • Section 17 (search and seizure),
  • Section 18 (search of persons), Section 19 (powers of arrest), Section 24 (reverse burden of proof), Section 44 (offences triable by special court), Section 45 (offences being cognizable and non-bailable and twin conditions for grant of bail by court) and
  • Section 50 (statements made to ED officials).

The petitioner challenged the verdict concerning the ECIR.

The Court wanted to review the provisions concerning the provision of the ECIR copy to the accused and reversal of presumption of innocence. The CJI noted in this regard:

“Country cannot afford such offence. Object is noble. (But) no providing of ECIR and reversal of presumption of innocence which are two issues which needs reconsideration as per us. We will issue notice and let the Central government respond.”

This was presented by Solicitor General (SG) Tushar Mehta who submitted that this could have serious impacts.

The CJI stated that:

“Error in judgment cannot be a ground of review. This is not a standalone provision and we are part of the larger global structure and Supreme Court held it is in tune with international and constitutional scheme.”

To this the bench said that they are not opposing government to stop money laundering or bringing back black money.

“It is a serious thing, we are not doubting the objective of the government. But there are prima facie issues. We issue notice. Let writ petitions be heard along with review,”

The earlier judgment had held that the provision of ECIR to accused is not mandatory and that only disclosure of reasons during arrest is enough. The amendments in 2019 to PMLA Act as money bill will be decided by a larger bench of seven judges.

The previous judgment was taken as violation of fundamental right to liberty under Article 21 of the Constitution.

Also, earlier the Bench of Chief Justice of India NV Ramana and Justices Krishna Murari and Hima Kohli said that the ratio concerning Section 8(4) laid down by the PMLA judgment in Vijay Madanlal Choudary & Ors v. Union of India needed review.

Thereby, the Court has issued notice to the Central government and ordered that interim protection granted to accused-petitioners would stand extended for 4 weeks.

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