PMLA verdict — due process will be bulldozed

The problem of the process being the punishment, which is present in the criminal justice system, can be aggravated

August 09, 2022 12:08 am | Updated 12:22 pm IST

‘Trumping all other considerations’

‘Trumping all other considerations’ | Photo Credit: PCH-Vector

Outcomes in matters of constitutional law disputes depend on the values that the constitutional court choose to emphasise over those it chooses to discount. The recent decision of the Supreme Court of India in Vijay Madanlal Choudhary vs Union Of India, where it found all the provisions of the Prevention of Money Laundering Act, 2002 as amended from time to time (“PMLA”) as constitutional, is a case where the Supreme Court repeatedly relies on the legislative intent behind the PMLA to fight the menace of money laundering to trump all other considerations — in particular due process.

A necessary precondition

The PMLA is an Act that is meant to deal with prosecution and punishment for the offence of “money laundering”, which an accused commits when he has relation with any process or activity with the “proceeds of crime” and has projected or claimed such proceeds as untainted property. Thus, for the PMLA to come into action, there must have been another crime — independent of the PMLA — from which monies were derived. This other crime, which is a necessary precondition for an offence under the PMLA is described as the predicate offence.

Affecting fair legal process

The substratum of the challenge before the Court was that when the predicate offences (these can be various offences under regular penal law such as the Indian Penal Code 1860, the Prevention of Corruption Act, etc.) are governed by the regular criminal process, the major deviations from this procedure in the PMLA, which is only a consequential act, are manifestly arbitrary and in any event violative of various fundamental rights, inter alia Articles 14, 20 and 21.

The major deviations in the PMLA scheme, all of which operate to the detriment of the accused that were challenged were: non-supply of the Enforcement Case Information Report (ECIR) to the accused/arrested person; power to make any person (including existing or future accused) state the truth on oath even though it may amount to self-incrimination (Section 50); if the Public Prosecutor opposes bail, then the court can grant anticipatory/regular bail, only if the court has reason to believe that the accused is not guilty (Section 45); once a person is accused of committing the offence of money laundering, the burden of proving that proceeds of the crime are untainted property shall be on the accused (Section 24); blanket common and non-graded punishment for anyone associated with money laundering (Section 4).

It is not too difficult to imagine that these deviations from regular criminal law are capable of great mischief, and strike at the very core of what the Constitution envisages: a fair legal process to determine the criminal culpability of a person. A person under arrest, without knowing what is the primary case against him, being made to give self-incriminating statements under oath and then required to prove his own innocence at trial is hardly a criminal procedure that appears either just or fair. All this, when the Act which brings taint to the money, i.e. the original crime, continues to be governed by regular criminal law, where none of these draconian provisions applies.

And yet, the Supreme Court in finding these provisions as constitutional has repeatedly relied upon the legislative intent of the PMLA, which it describes as “a special mechanism to deal with the scourge of money laundering recognised the world over and with the need to deal with it sternly.” The Court even compared the intensity of money laundering with terrorism, while disagreeing with its earlier judgment, where the Court had made a distinction between the two.

The errors

This is a fundamental error for multiple reasons. One, legislative intent can be a beginning point of a constitutional analysis, i.e., whether the state has legitimate purpose in making a law. However, faced with a specific fundamental rights challenge to specific provisions of such a law, the use of legislative intent to sanctify the provisions as constitutional means that the Court has also treated legislative intent as the end point of its analysis.

Second, the overemphasis on the seriousness of money laundering is not borne out by the PMLA itself. The maximum punishment under the PMLA is 10 years imprisonment (Section 4). There are so many offences under regular penal law that are punishable with life imprisonment or even death, where none of these draconian provisions applies. Clearly, if in the eyes of the legislature, money laundering was as serious as these offences, the punishment prescribed would have been as severe. The incongruous situation is that a person who is accused of murdering for money, will have his murder trial (where he is punishable with death) with all the constitutional protections available, while in his trial for the money proceeds from the murder (where he can be imprisoned for maximum 10 years), he will be stripped of these constitutional protections.

Third, legislative intent is reflected by Parliament as part of its normal law-making power, whereas constitutional due process is incorporated in the Constitution itself and is meant to define the limits of parliamentary law, irrespective of its intent. The net effect of elevating legislative intent to such a high pedestal that it can bulldoze any constitutional argument/reasoning is that due process has been completely compromised in PMLA cases. The problem of the process being the punishment, which is anyway omnipresent in our criminal justice system, is likely to be aggravated in PMLA cases. The likelihood that many would face long incarceration as PMLA accused, even though eventually found innocent has just increased manifold. One can only hope that sometime in the not distant future the Court corrects the error.

Shadan Farasat is an advocate practising in the Supreme Court of India. The views expressed are personal

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