The Money Laundering Act
Source: By Apurva Vishwanath: The Indian Express
The Supreme Court 27 July 2022 upheld the constitutional validity of the Prevention of Money Laundering Act, 2002. A three-judge bench of the Supreme Court, headed by Justice AM Khanwilkar, on 27 July 2022 read out the operative part of the verdict on a clutch of petitions challenging the law. However, the fine print of the ruling is still awaited. A look at the key points in the verdict:
On Bringing ED operations under CrPC purview
The Enforcement Directorate under the PMLA Act is not considered “police” and hence does not follow provisions of the CrPC for search, seizure, arrest, attachment of properties.
The petitioners, arguing that the ED effectively exercises police powers, challenged the constitutionality of provisions that deal with arrest and seizure etc. This is significant because since the ED is not a police agency, statements made by an accused to ED officials is admissible in court. A statement made before a police officer during investigation is inadmissible.
The Supreme Court rejected the argument that the ED should be obligated to follow the CrPC while conducting investigations.
On bail and 2018 amendments
The PMLA Act stipulates a twin condition for bail where the accused has to make a case that she is prima facie not guilty of the offence and also satisfy the court that they will not commit any further offence.
In a 2017, ruling Nikesh Tarachand Shah vs Union of India, the Supreme Court struck down this as unconstitutional. However, in a subsequent amendment in 2018, Parliament inserted these provisions again, through the Finance Bill.
The petitioners had challenged the amendments on two grounds — the passing of these amendments through a Money Bill; and a substantive challenge that these provisions were essentially declared unconstitutional.
The government had argued that the amendments were in line with the 2017 verdict despite retaining the “twin test” that was struck down.
The Supreme Court has upheld the amendments, ruling that Parliament is competent to bring in any changes required to comply with the 2017 verdict.
On the issue of whether the amendments could have been passed as a Money Bill, it has left the question open for a larger bench to consider it.
A separate larger bench challenge is pending before the SC on whether certain laws, such as the Aadhaar Act, service conditions of the tribunal members etc. can be passed as a Money Bill. A bench is yet to be constituted on that issue.
