SC defers hearing on pleas seeking a review of 2022 PMLA order

The central government and the Enforcement Directorate have been granted more time by the Supreme Court to respond to a set of petitions calling for a reconsideration of a July 2022 verdict that upheld contentious provisions of the Prevention of Money Laundering Act. The case will be heard by a new bench in at least two months, as one of the current judges will retire. The July 2022 verdict affirmed the wide-ranging powers of the Enforcement Directorate under the Act.

The central government and the Enforcement Directorate (ED) on Thursday succeeded in buying more time from the Supreme Court to respond to a clutch of petitions demanding reconsideration of a July 2022 verdict that had affirmed a spate of contentious provisions of the Prevention of Money Laundering Act (PMLA).

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The case will now be heard after at least two months by a new bench since one of the judges on the current bench, justice Sanjay Kishan Kaul, will retire on December 25. Justice Kaul, who heads the bench, said that he is letting go of the matter with a “heavy heart” since there would be no time left for him to write the final order in view of persistent request by the Centre and ED to defer the hearing.

The development came on a day when the bench said that the Centre and ED will have to explain how the onus can be shifted on an accused to prove his innocence for being released on bail when PMLA requires the ED officers to make an arrest only after they have evidence to show guilt of the person concerned.

As the bench, also comprising justices Sanjiv Khanna and Bela M Trivedi, adjourned the proceedings by eight weeks after hearing the petitioners over the last two days, it became clear that the matter would go to a new bench where all submissions will have to be made afresh. In the meantime, the 2022 verdict upholding the sweeping powers of ED under PMLA for summoning individuals, making arrests, conducting raids, and attaching properties of the suspects, will continue to remain.

During the hearings in September and October, the court said that it may refer the matter to a larger bench of five judges if it reached a conclusion that the July 2022 verdict needs a re-look while the Centre and ED vehemently opposed the reference and further questioned the proceedings before the three-judge bench. At one point, ED also opposed the continuance of the case before the justice Kaul-led bench. The Centre and ED are represented in the court through solicitor general Tushar Mehta and additional solicitor general SV Raju. Senior counsel Kapil Sibal and Abhishek Manu Singhvi, who lead the petitioners in the matter, called the deferment “unfortunate”, complaining there always was an endeavour from the other side to get the matter deferred.

“On this side, we see and hear many things, but we don’t say many things,” justice Kaul remarked, as he said in the order that the matter be placed before the Chief Justice of India for setting up a new bench to hear the case after eight weeks.

The three-judge bench on Wednesday set the ball rolling on the reconsideration of its July 2022 verdict after it brushed aside the Centre’s protest against hearing the matter without first examining the latter’s objections to the manner in which the petitioners reportedly sought to rake up the legal points already settled by the previous verdict.

“It’s not fair not to allow the court to proceed. Let the petitioners open the case and we will then see what is to be done...The limited ambit of this bench is to see whether there is a need to send it to a bench of five judges. This is not something new or being considered for the first time,” it told Mehta and Raju on Wednesday who stood their ground that the hearing should be adjourned to let them file a proper response to some of the new issues raised by the petitioners. Justice Kaul further commented that a judgment is an opinion that can always change in future because judges also have a duty to keep thinking and evolving.

As soon as the proceedings began on Thursday, the S-G again made the point that they should be given some time to adequately assist the court, asking for an adjournment. The bench, however, said it would take that call after hearing the petitioners.

Subsequently, Singhvi argued on behalf of one of the petitioners, attacking the stringent conditions that PMLA stipulates for releasing an accused on bail. The twin conditions mandate an audience of the prosecutor and a satisfaction of the trial court that the accused is not guilty of the offence alleged against him. Singhvi pointed out that there are at least 10 scheduled offences that are bailable and non cognisable under the IPC but once a person is booked under PMLA, he must satisfy the twin conditions to be let out on bail.

At this point, the bench asked the S-G as to how the Act can reverse the onus of proof when Section 19 of PMLA prescribes that a person may be arrested on the basis of material in the possession of ED that fives the agency reason to believe that the person being arrested has been guilty of an offence punishable under the Act. It asked how the law can ascribe presumption of guilt on an accused as against the presumption of innocence.

“Under Section 19, the onus is on you. Can the onus completely shift after arrest? That’s something for you to answer,” the bench told the S-G, who replied that he would answer the queries during his submissions.

Again, while granting the Centre and ED four weeks to file their replies to the amendments moved by the petitioners, the court observed that one of the chief issues that they needed to address would be the reverse burden of proof. “There’s an issue regarding the shifting of onus. You’ll have to answer that,” it told Mehta.

The bench was seized with a batch of petitions that have questioned the validity of sections 50 and 63 of PMLA, which pertain to ED’s power to summon witnesses, extract confessions, and press for punishment for giving false information.

The 2022 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 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.

The 2022 judgment further held that an Enforcement Case Information Report (ECIR) does not have to be given to the accused since it is just an internal document of ED, and that informing a person about the grounds of arrest is sufficient. An ECIR is the equivalent of an FIR in an ordinary criminal case.

It had affirmed 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 bail proceedings, the statute lays down that the court will presume an accused to be involved in money laundering unless proved contrary.

The top court had on August 25 issued notice to the Union government on the review petition filed by Congress MP Karti Chidambaram against the July 27, 2022, judgment. At the time, the court observed only the two issues relating to the supply of ECIR and the reverse onus of guilt on the accused would be reconsidered for the present and that the entire judgment was not up for review. The review petition has not come up for an effective hearing ever since while another three-judge bench set about to consider whether the 2022 judgment warranted a re-look.

The PMLA judgment was criticised for a disquieting erosion of the safeguards to 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.