Harshness of amendments made to PMLA in 2019 shocking, says Kapil Sibal

Justice Bela Trivedi, one of the three judges on the Special Bench of the Supreme Court reviewing an apex court judgment of 2022 which upheld core amendments made in the Prevention of Money Laundering Act (PMLA), on Wednesday asked a senior Congress leader from Madhya Pradesh whether he was in the Opposition when the Act was brought in 2002.

The query from Justice Trivedi, who is part of a three-judge Bench headed by Justice Sanjay Kishan Kaul, was addressed to senior advocate Kapil Sibal, who was arguing for Madhya Pradesh Assembly Leader of Opposition Govind Singh. Mr. Sibal submitted that the amendments made to the anti-money laundering law in 2019 had armed the Enforcement Directorate (ED) with unbridled powers of summons, arrest, raids, attachment of property and made bail nearly impossible while shifting the burden of proof of innocence onto the accused rather than the prosecution.

Mr. Sibal argued that the amendments stripped a person of his right under Article 20(3) (fundamental right against self-incrimination) of the Constitution. He said the ED could arrest a person even without informing him of the charges. This power was violative of the right to ‘due process’ enshrined in Article 21 of the Constitution. Besides, Article 22 mandated that no person can be arrested without informing him or her of the grounds of the arrest, the petitioners contended.

He said the ED could summon a person without telling him whether he was being called as a witness or an accused. He said even possession of the alleged proceeds of a crime was money-laundering, making it into a continuous offence.

Mr. Sibal said the harshness of the amendments introduced in the 2002 law was quite shocking despite his client’s 35 years’ experience as an Assembly Member and Leader of Opposition.

“Were you in the Opposition in 2002? When this Act was passed, were you in the Opposition?” Justice Trivedi asked the senior lawyer.

The question from the Bench suggested that the law was the brainchild of the earlier United Progressive Alliance (UPA) regime.

“That was not a fair question. I am sorry… It may have been passed by anybody, but what you have done with the Act, we never did. There was no need for that question. The Act came into force in 2005. The draconian amendments came in 2019 and they were introduced through the Finance Act,” Mr. Sibal responded.

In an aside to his fellow lawyers, he said “We are not on politics here”. Mr. Sibal said a Constitution Bench would be separately looking into the question of passage of crucial or controversial amendments through the Money Bill route.

During the hearing, Mr. Sibal submitted that PMLA was under scrutiny from the Financial Action Task Force (FATF) for its use on NGOs. Solicitor-General Tushar Mehta, for the Centre, retorted that the law had a provision to restore assets attached by ED, and this was a sign of the “greatness of our nation”. The government has maintained in court that PMLA was not a standalone offence but part of a global response to money laundering and terror financing.

The Special Bench, also comprising Justice Sanjiv Khanna, was hearing a series of petitions which have questioned the correctness of the apex court’s judgment on July 27, 2022 in the Vijay Madanlal Choudhary case.

The judgment, delivered by a Coordinate Bench of three judges led by Justice (now retired) A.M. Khanwilkar last year, had hailed the PMLA as the law brought to end the “scourge of money laundering”.

However, discontent over the July 2022 judgment translated into more writ petitions being filed in the apex court. They challenged the impact of the PMLA on personal liberty, procedures of law, and the constitutional mandate. Review petitions were also filed against the judgment.

In its judgment in 2022, the apex court had called the PMLA a law against the “scourge of money laundering” and not a hatchet wielded against rival politicians and dissenters.