Day 14 Oral Hearing: Prevention of Money Laundering Act

Challenges to the Prevention of Money Laundering Act

At the end of the fourteenth day of protracted final hearings in the challenges to the Prevention of Money Laundering Act, 2002, the Supreme Court appeared to be running out of patience. Justices A.M. Khanwilkar, Dinesh Maheshwari and C.T. Ravikumar reminded the Senior Advocates appearing on behalf of the accused persons challenging the Act to avoid repeating arguments already made by other advocates. 

Senior Advocates Dr. Maneka Guruswamy and Aabad Ponda argued on behalf of two separate PMLA accused today. Dr. Guruswamy focused on the problem with treating the Enforcement Directorate Manual as an internal circulation document. Mr. Ponda argued that Section 50 of the Act violates the accused’s right against self-incrimination. 

Non Disclosure of ED Manual and Attachment Provisions Under PMLA Are Unconstitutional

Dr. Guruswamy argued that since its Judgment in Vineet Narain (1998), the SC has emphasised the need for special investigative agencies to make rules concerning their procedure of investigation, prosecution and adjudication available to the general public in the interest of transparency. Twenty five years later, the Enforcement Directorate’s Manual remains elusive with the ED claiming that it is an internal document. Dr. Guruswamy argued that this non-disclosure left room for arbitrariness in proceedings.

Dr. Guruswamy briefly touched upon the provisions for attachment of property in the PMLA. She stated that even draconian legislations like the UAPA allow the investigative agency to attach the suspect’s property only after conviction. The PMLA allows for attachment at the investigation stage.  Khanwilkar J observed that the UAPA allows for  provisional attachment before conviction as well. Dr. Guruswamy responded that the PMLA is more harmful since possession of the attached property passes from the accused to the ED before conviction, unlike the UAPA. 

Section 50(3) Forces Accused To Be A Witness Against Themselves

Mr. Ponda argued against Section 50(3) of the  PMLA, which states that any person summoned by the ED is bound to make truthful statements and produce documents on any required aspect of the alleged offence. Mr. Ponda stated that he was only challenging the use of S 50 (3) to summon accused persons and force incriminating statements and documents out of them under threat of punishment and fine. 

Mr. Ponda pointed out that similar provisions in the Sea Customs Act, Customs Act, Central Excise Act and FERA had been upheld by the Supreme Court previously. He distinguished S 50(3) of the PMLA—the person does not stand ‘in the character of the accused in the other statutes. In PMLA, an FIR or complaint has been filed against the accused person, hence violating the right against self-incrimination. 

Khanwilkar J stated that the investigation would be hampered if the accused person is permitted to withhold documents from the ED. Mr. Ponda responded that the right against self incrimination extends to incriminating documents as well. The ED can uncover the documents through any other investigative means, but cannot use s 50(3) to compel the accused to hand them over. 

The Court will continue to hear arguments on February 22nd, 2022.