Khushi Bajpai

Published on: 27 July 2022 at 18:16 IST

Recently the Supreme Court confirmed the Prevention of Money Laundering Act’s (PMLA) constitutional validity.

The Bench of Justices AM Khanwilkar, Dinesh Maheshwari, and CT Ravikumar issued the ruling on a group of 241 petitions contesting the legality of the law.

The Court upheld the legality of Section 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 Court further determined that because an ECIR is an internal document and cannot be compared to a First Information Report, it is not required to be provided as part of PMLA proceedings (FIR).

ECIR is an internal ED document and cannot be compared to FIR.”

The Court stated that, “It is sufficient to simply explain the circumstances of the arrest; providing the accused with an ECIR is not required. Given that it is an internal document, even the ED handbook should not be disseminated.”

The Court deemed “completely arbitrary” to the argument regarding the proportionality of punishment under the PMLA Act with regard to scheduled offences.

The Court did rule that a larger bench of seven judges, who are now hearing a similar case, must decide whether or not to adopt changes to the PMLA Act as a money bill in 2019.

The Court said that, in light of the Constitution Bench’s ruling in Kartar Singh and the grave danger that money laundering poses to the nation, it is unable to concur with the conclusions in Nikesh Tarachand Shah.

The judgement also stated that, “it was open to the Parliament to cure the defect note by this Court so as to revive the same provision in the existing form.”

For each provisions in question, the Court has given detailed explanation and also held that the any kind of amendment in statute is the matter of legislative policy and nature or class of any predicate offence has no bearing on the validity of the Schedule.

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