Supreme Court agrees to look at key aspects of PMLA verdict

Issuing notice to the Union government on the review petition filed by Congress MP Karti Chidambaram against the July 27 judgment, CJI Ramana also clarified that the other two judges on the bench — justices Dinesh Maheshwari and CT Ravikumar — were of the view that only the above mentioned two issues should be reconsidered and that the entire judgment is not up for review.

Clearing the decks for a review of its July 27 verdict that affirmed certain controversial provisions of the 2002 Prevention of Money Laundering Act (PMLA), the Supreme Court on Thursday agreed to reconsider if a person being arrested can be denied a copy of the Enforcement Case Information Report (ECIR), and whether the law can ascribe presumption of guilt on an accused as against the presumption of innocence.

On Monday, Karti Chidambaram moved the first challenge to the July 27 judgment, enumerating 40 grounds to argue that the reasoning of the top court was flawed and erroneous, and was contrary to settled decisions by the Supreme Court. (HT file photo)

Issuing notice to the Union government on the review petition filed by Congress MP Karti Chidambaram against the July 27 judgment, CJI Ramana also clarified that the other two judges on the bench — justices Dinesh Maheshwari and CT Ravikumar — were of the view that only the above mentioned two issues should be reconsidered and that the entire judgment is not up for review.

“We are completely in support of prevention of black money or money laundering. Country cannot afford such offences. The object is noble. But we three (judges) feel that there are two aspects in the judgment that require a relook. First, not providing ECIRs and second, reversal of presumption of innocence...these are two issues which needs reconsideration,” said a bench, led by CJI NV Ramana. An ECIR is the equivalent of an FIR in an ordinary criminal case.

“Prima facie, we feel these are the only two issues that can be looked at...we cannot go into the whole issue all over again. My brother judges do not agree to consider any other issue,” the CJI told senior advocate Kapil Sibal, who was appearing for Chidambaram.

Sibal wanted the court to issue notice on the entire review petition to enable him to argue against several other findings in the judgment, which included allowing retrospective operation of the law and permitting violations of constitutional guarantees protected by apex court rulings in the past. The July 27 verdict was given by a bench of justices AM Khanwilkar (who retired on August 19), Maheshwari and Ravikumar.

However, solicitor general (SG) Tushar Mehta, appearing for the Centre, countered Sibal on the grounds that a review petition must be limited to errors apparent on the face of the record and grave infirmities. “We are part of the larger global structure and Supreme Court held it is in tune with international and constitutional scheme...any change will have global repercussions,” argued Mehta.

To this, the bench replied that it is not preventing the government from acting against black money or money laundering. “We understand these are serious offences. We are not doubting the objective of the government. But there are prima facie issues. So, we are issuing notices. Please, file your reply,” it told the SG, fixing the matter after four weeks. Those protected from arrest or any other coercive action under the existing interim orders of the top court shall remain protected for another four weeks, added the bench.

The July judgment by the top court held that an ECIR does not have to be given to the accused since it is just an internal document of the Enforcement Directorate (ED), and that informing a person about the grounds of arrest is sufficient.

Further, holding that money laundering cannot be considered less severe than terrorism, the July ruling upheld PMLA provisions which invoke the principle of reverse burden of proof, in contrast to the cardinal common law principle of “innocent until proven guilty”. In all PMLA proceedings including the bail proceedings, the statute lays down that the court will presume an accused to be involved in money laundering unless proved contrary.

The PMLA judgment affirmed the sweeping powers given to ED under the 2002 Act for summoning individuals, making arrests, conducting raids and attaching properties of the suspects, saying that law enforcement agencies must be armed with an effective mechanism to safeguard the nation’s wealth from dreaded criminals.

The ruling came while dismissing a batch of over 200 petitions filed by several persons facing PMLA proceedings, including Karti Chidambaram, former J&K chief minister Mehbooba Mufti, and former Ranbaxy vice-chairman Shivinder Mohan Singh. The pleas alleged that the law gives unbridled and arbitrary powers to ED in the teeth of constitutional guarantees of right to liberty, property, and right against self-incrimination. But the top court, in July, held that it is “imperative for the State to frame such a stringent law” by grouping the PMLA offenders as a separate class from ordinary criminals.

This judgment came under attack from several quarters for a disquieting erosion of the safeguards for rights to life, liberty, property and against self-incrimination, especially at a time when a spate of ED raids and other actions against Opposition leaders has mired the federal financial crime agency in allegations of politicisation.

On Monday, Karti Chidambaram moved the first challenge to the July 27 judgment, enumerating 40 grounds to argue that the reasoning of the top court was flawed and erroneous, and was contrary to settled decisions by the Supreme Court. Since review petitions are usually considered in the judges’ chambers through circulation of the petition, the parliamentarian also asked for an open court hearing. By a brief order on Wednesday, the CJI-led bench allowed the plea for an open court hearing.

Meanwhile, on Tuesday, a different bench led by CJI Ramana delivered an important ruling with respect to another financial crime statute, namely the Prohibition of Benami Property Transactions Act, 1988. Observing that a law which is overly broad, disproportionately harsh and operates without adequate safeguards is unconstitutional, this bench struck down two offensive provisions on prosecution and confiscation under the 1988 Act.

In this judgment, the court also doubted the correctness of the PMLA ruling that allowed ED to take interim possession of properties under the Prevention of Money Laundering Act (PMLA). Further, the verdict on the 1988 law asserted that any punitive provision must be integrated with presumption of innocence, “as the same forms a part of the fundamental right.”

Tuesday’s verdict coupled with concerns regarding “arbitrary application” of a PMLA provision was seen to open a window for challenging the July 27 judgment by the court that affirmed ED’s vast coercive powers under the PMLA.

Karti Chidambaram, in his review plea, challenged the judgment for allowing retrospective operation of the law by allowing PMLA proceedings to be initiated against a person who is charged with an offence which later in point time gets included as a predicate offence under the schedule attached to PMLA.

Among other grounds, it also questioned how the PMLA judgment was delivered without a finding on whether amendments in the law could be introduced under the parent Act by way of a money Bill. This question is pending before a five-judge Constitution bench in the Roger Mathew v South Indian Bank case of 2020.