Pinnacle court told that money laundering as heinous as terrorism

The Supreme Court Wednesday upheld the validity of stringent provisions of the Prevention of cash Laundering Act associated with the facility exercised by the Enforcement Directorate on arrest, search, and seizure of ill-gotten wealth, posing a threat to economic stability, because it observed that cash laundering was no less heinous than terrorism.

A bench, headed by Justice A M Khanwilkar and comprising Justices Dinesh Maheshwari and C T Ravikumar, said: "The international bodies are discussing the menace of cash laundering on regular basis for quite your time, and strongly recommended enactment of stringent legislation for prevention of money-laundering and combating with the menace thereof including to prosecute the offenders and for attachment and confiscation of the proceeds of a criminal offense having an immediate impact on the financial systems and sovereignty and integrity of the countries.”

It said that money laundering was one in all the heinous crimes, which not only affects the social and economic fabric of the state but also tends to market other heinous offences like terrorism and offences associated with the NDPS Act.

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

However, the highest court left the question of whether a number of the amendments to the PMLA, 2002 couldn't are enacted by the Parliament by way of a Finance Act, to be considered by a bigger bench.

The bench said that the offence under Section 3 of the 2002 Act was addicted to the illegal gain of property, as a results of criminal activity regarding a scheduled offence and it had been concerning the method or activity connected with such property, which constitutes the offence of cash laundering.

“The authorities under the 2002 Act cannot prosecute a person on the notional basis or on the belief that a scheduled offence has been committed unless it's so registered with the jurisdictional police and or pending inquiry or trial including by way of criminal complaint before the competent forum,” it said.

It said that if the person was finally discharged or acquitted of the scheduled offence against him was quashed by the court there can be no offence of cash laundering against him or anyone claiming such property being the property linked to the stated scheduled offence through him.

The top court said: "Section 3 of the 2002 Act encompasses a wider reach and captures every process and activity, direct or indirect, in coping with the proceeds of crime and isn't limited to the happening of the ultimate act of integration of tainted property within the formal economy. the reason inserted to Section 3 by way of the amendment doesn't expand the purport of Section 3 but is just clarificatory."

The bench also declared that the availability of a replica of ECIR (Enforcement Case Information Report) in every case to the accused wasn't mandatory, if the ED, at the time of arrest, discloses the grounds of such an action.

The top court upheld the dual conditions for bail as mentioned in Section 45 of the Act.

"It was argued that the dual conditions of bail contained in Section 45 of the 2002 Act would act grossly disproportionate and illogical qua an individual who isn't directly connected with the scheduled offence but merely an adjunct after the very fact. Even this argument must be stated to be rejected for the identical reason," the bench said.

The top court said that the Parliament was competent to amend the supply in 2018 even after the Nikesh Tarachand Shah case judgment gone the apex court held those conditions unconstitutional.

The top court judgment came on over 200 writ petitions including former Maharashtra Home Minister Anil Deshmukh, Congress MP Karti Chidambaram, and former J&K chief minister Mehbooba Mufti among others.

A battery of senior advocates - Kapil Sibal, Siddharth Luthra, A M Singhvi, Mukul Rohatgi, and Amit Desai - represented various parties within the matter.

The Union government has represented by SG Tushar Mehta.