PMLA verdict, an erosion of constitutional buffers

‘Although many of the conclusions in the judgment are tenuous, none is more striking, and more damaging, than its ruling upholding Section 45, which imposes twin conditions for bail’

‘Although many of the conclusions in the judgment are tenuous, none is more striking, and more damaging, than its ruling upholding Section 45, which imposes twin conditions for bail’ | Photo Credit: Getty Images/iStockphoto

India’s criminal justice system, we are led to believe, is built on a set of received axioms that are inherent to the basic precepts of justice and fairness. These include the idea that a person is presumed innocent until proven guilty; the idea that a person detained on suspicion of having committed an offence would be entitled to bail pending trial; the idea that a criminal law ought not to be retroactive; the idea that a person accused of an offence must be informed of the charges made against him; and the idea that a suspect has a privilege against incriminating herself.

Today, each of these principles is so consumed by a welter of exceptions that their bases have lost all vigour. Regrettably, this erosion in our values has time and again received the Supreme Court of India’s imprimatur. The latest example is the judgment of a three-judge bench in Vijay Madanlal Choudhary vs Union of India, delivered on July 27. In it, the Court has upheld vast parts of the Prevention of Money Laundering Act (PMLA), 2002, despite the law’s inversion of seemingly time-honoured maxims of criminal jurisprudence.

Defined in vague terms

Briefly put, “money laundering” refers to the process through which the proceeds from criminal activity are masked with a view to concealing their illegitimate source. From the mid-1980s onwards, countries around the world began to see a need to introduce special legislation to curb and punish this process. The PMLA came out of these initiatives. It defines the crime itself in vague terms. Section 3 of the Act says, “Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming it as untainted property shall be guilty of offence of money-laundering.”

The definition makes for difficult reading. But as we can see it is pegged on the use of what is termed as “proceeds of crime”. This phrase is separately defined to mean property that is obtained out of the commission of a crime “relating to a scheduled offence”. The schedule, in the law’s present iteration, contains an array of breaches under 30 different statutes. These range from specific offences under the Indian Penal Code, 1860, such as murder, extortion and kidnapping, and offences under laws such as the Arms Act, 1959 and the Immoral Traffic (Prevention) Act, 1956, to more minor infractions under the Copyright Act, 1957, and the Trade Marks Act, 1999. The judgment in Vijay Madanlal Choudhary confirms what ought to have been obvious on a bare reading of the law: although the offence under the PMLA is separately prosecutable, unless the proceeds of crime relate to a “scheduled offence” — or what is also described as a predicate offence — no case can be made out under the statute. In other words, if a person is ultimately acquitted or discharged in a case concerning the predicate offence, the charge under the PMLA can no longer be maintained.

The dangers

This finding, routine by itself, is perhaps the only silver lining in the judgment. As scholars of criminal law will surely attest to in the days to come, in almost every other regard the ruling either falls back on familiar misgivings in India’s criminal procedure law, or, worse still, creates a pathway for further violations of the Constitution. The lawyer, Abhinav Sekhri, has already published a fine analysis on different aspects of the judgment, particularly on the unfounded conclusion that the PMLA is not a penal statute, but a sui generis one, which means that the law can, according to the Court, overlook several constitutional safeguards, including the right against self-incrimination.

A section and bail conditions

Although many of the conclusions in the judgment are tenuous, none is more striking, and more damaging, than its ruling upholding Section 45. This provision imposes twin conditions for bail. Apart from mandating that the prosecutor is allowed a hearing before bail is granted, the clause also requires the court to be satisfied that there are “reasonable grounds” for believing that the accused is not guilty of the offence and that he or she is not likely to commit any offence while on bail.

In its previous version, prior to an amendment made in 2018, the law classified the predicate offences contained in the schedule into two categories. It separated those which carried with it an imprisonment for a term no less than three years from other offences. The twin requirement was mandated only for those cases where the predicate offence was viewed as more serious. A two-judge Bench in Nikesh Tarachand Shah vs Union of India declared this version unconstitutional. The Court found the classification between offences unreasonable and the conditions themselves too disproportionate.

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Now, Parliament could have introduced a new provision for bail, by removing the defects pointed out by the Court. But instead it chose to delete the classification that it had made, and imposed through Section 45 the twin conditions for all offences under the PMLA. The petitioners in Vijay Madanlal Choudhary argued that the legislature could not have validly amended a law that had already been declared unconstitutional. The Court, however, held that the judgment in Nikesh Tarachand Shah did not obliterate the provision and that Parliament was entitled to revive the law by deleting its defects. In this vein it found that the only flaw highlighted in Nikesh Tarachand Shah was the classification distinguishing different manners of offences in Section 45, which had now been removed.

This might have been an acceptable conclusion if Nikesh Tarachand Shah had indeed struck down Section 45 only on this ground. But a reading of the judgment shows (and strangely these portions find mention in the latter parts of the ruling in Vijay Madanlal Choudhary) that the Court also found the twin conditions by themselves manifestly arbitrary. Nikesh Tarachand Shah distinguished crimes of terror from crimes under the PMLA and pointed out that in virtually requiring something akin to a finding of innocence at the stage of bail, Section 45 far outweighed the ordinary demands of a penal law. This, therefore, should have meant that a provision for bail could not have been reintroduced into the PMLA without explicitly removing the twin conditions.

Yet, Vijay Madanlal Choudhary not only grants sanction to Parliament’s effort at reintroducing a law previously declared unconstitutional but also holds that the requirements for bail are by no means arbitrary or unreasonable. This, the judgment does, not through any independent analysis of the PMLA’s objectives, but through a mere equation, in the Court’s belief, of the offence of money laundering with the offence of terrorism. The Court arrives at this finding unmindful of the fact that the predicate offences contained in the Schedule include crimes ranging from the discharging of pollutants under the Environment Protection Act to penalties for applying for a false trade mark under the Trade Marks Act.

Test of proportionality

We are fast approaching the five-year anniversary of the Supreme Court’s judgment in K.S. Puttaswamy vs Union of India. In it, a nine-judge Bench declared the existence of a right to privacy. But the verdict turned momentous because it went beyond this otherwise unremarkable declaration. The Court held that fundamental rights operate not in silos, but by giving and taking meaning from each other and that any invasion of a constitutionally guaranteed freedom must satisfy a test of proportionality. This meant that every time the state impinged on a right, it had to show, among other things, that there existed not only a rational nexus between the law made by it and the objective at stake but also that it had satisfied itself that there were no less invasive means available to achieve the same aim.

Applied in its true spirit, Puttaswamy ought to have transformed India’s constitutional landscape. In theory, the Court had provided a road map for a jurisprudence grounded in ideas of justice, fairness, and due process. But the grand principles championed there in the abstract have failed to translate into genuine constitutional advancement. Instead, personal liberty has increasingly come to be seen as a pettifogging irrelevance.

Suhrith Parthasarathy is an advocate practising in the Madras High Court

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Printable version | Sep 21, 2022 7:12:25 am | https://www.thehindu.com/opinion/lead/the-pmla-verdict-overlooks-constitutional-safeguards/article65707726.ece