Prevention of Money Laundering Act

From Indpaedia
Jump to: navigation, search

Hindi English French German Italian Portuguese Russian Spanish

This is a collection of articles archived for the excellence of their content.


Section 45 (1)

PMLA bail terms rejected by SC revived by govt tweak: HC

February 7, 2022: The Times of India

Tough PMLA bail terms rejected by SC revived by govt tweak: HC

Mumbai: The Bombay high court bench in Nagpur has held that the Centre, by amending the Prevention of Money Laundering Act (PMLA) Act in 2018, revived the twin conditions under Section 45 (1) of the Act that make it tougher to obtain or grant bail, reports Swati Deshpande.

The conditions stipulate that when an accused applies for bail, the court has to give an opportunity to the public prosecutor to be heard and only when it is satisfied that the accused is not guilty and unlikely to commit a similar offence can it grant bail. 
A controversy arose after various single-judge benches of the HC took a divergent view citing a 2017 decision of the Supreme Court striking down the section as unconstitutional.

‘Defect identified by SC rectified, twin terms stand revived’

The top court rejected it on the grounds that it violates Article14 (right to equality) and Article 21 (right to life and liberty). The top court had pointed out the burden on the accused to show lack of guilt.

On March 29, 2018, the Centre amended Section 45 (1) of PMLA Act where the pre-bail conditions were made applicable to all offences under the PMLA, and not solely to “scheduled offences” — those mentioned in the schedule of the Act. Ajay Kumar, an accused under PMLA, had sought bail before the high courtlastyear, saying the twin conditions no longer exist under PMLA. 
The single-judge bench disagreed with views taken by other single-judge benches and felt the twin conditions stood revived and thus on December 3, 2021, referred the legal issue to a larger division bench.

A bench of Justices V M Deshpande and Vinay Joshi heard if the amendment, by curing the defect pointed out by the SC, had the effect of reviving the twin conditions. Kumar’s senior counsel Sunil Manohar, citing the SC ruling and several orders of various HCs including by the Bombay HC granting bail to Sameer Bhujbal on his 2018 application, said the twin conditions to decide bail under PMLA no longer exist as the entire Section 45 has been struck down and the 2018 amendment has not cured all defects. 
Additional solicitor general Anil Singh with advocate Aditya Thakkar for Enforcement Directorate said since the unconstitutionality or defect identified by the SC was rectified through the 2018 amendment to PMLA, rigours of the twin conditions stand revived to decide a bail plea under PMLA.

The ASG submitted that the amendment has cured the arbitrariness found by SC in Section 45 by making the twin conditions criterion “limited to offences of money laundering, and thus ensuring the section has a rational nexus…to curb money laundering.” 
The ASG said the twin conditions by themselves have not been struck down, only the applicability which was dependent on non-money laundering offences was held as unconstitutional, which now stood rectified. 
The HC bench of Justices Deshpande and Joshi held that the amendment did revive the twin conditions.

Section 5(1) second provision

Not violative of Article 14 of the Constitution: HC

January 12, 2018: The Times of India

The Delhi high court upheld the constitutional validity of a key provision in the anti-money laundering law while rejecting 19 pleas, including that of former Himachal Pradesh chief minister Virbhadra Singh's wife and daughter.

The clause in the Prevention of Money Laundering Act (PMLA) empowers Enforcement Directorate to provisionally attach the properties allegedly bought from proceeds of crime.

Apart from Singh's family, sand mining baron and former Tirumala Tirupathi Devasthanams (TTD) Board member J Sekar Reddy and his business associates S Ramachandran and K Rethinam had also challenged the constitutional validity of section 5(1) second proviso, which deals with the power of an officer not below the rank of deputy director in the ED to provisionally attach a person's property suspected to be brought from proceeds of crime, if he has "reasons to believe" that not doing so could frustrate the PMLA proceedings.

A bench of Justices S Muralidhar and I S Mehta, in a 48-page judgment, said "the second proviso to Section 5(1) PMLA is not violative of Article 14 of the Constitution and the challenge in that regard in these petitions is hereby negatived."

HC found nothing in the clause that is "so excessive and disproportionate so as to render it arbitrary". The court, while upholding the validity of the provision of PMLA, however, clarified that ED must communicate the 'reasons to believe' at every stage to the person to whom an attachment notice was being issued under the Act.

"If there is a violation of the legal requirements, the order of the provisional attachment would be rendered illegal," it noted, adding that a person being prosecuted by ED is entitled access to the materials on record that would constitute the basis for 'reasons to believe', subject to redaction for reasons to be recorded in writing.

The various accused in two separate cases challenged the ED's FIR against them, provisional attachment orders regarding their assets and all further proceedings.

HC said the expression 'reasons to believe' has to meet the safeguards in-built in the clause and has to satisfy the requirement of the law.

Another question of law before the bench was if a single member of the adjudicating authority of ED can exercise powers and conduct proceedings relating to provisional attachment of assets and should it be a judicial member.

In answer, the court held that there can be single-member benches of the adjudicating authority and appellate tribunal under the PMLA and such single-member benches need not mandatorily have to be judicial members.

In the money laundering case against Virbhadra and his wife, ED had attached assets worth nearly Rs 5.8 crore belonging to Pratibha Singh and Rs 1.34 crore of the former chief minister.

Personal tools