"Definition of money laundering threat to existing democratic structure": Kapil Sibal argues in challenge to PMLA provisions

  • Gautam Mishra
  • 05:34 PM, 25 Jan 2022

Senior Advocate Kapil Sibal submitted before the Supreme Court on Tuesday in the batch of plea's challenging the provisions of the Prevention of Money Laundering Act, 2002 (PMLA) that the definition of money laundering is a threat to the existing democratic structure.

A bench of Justice AM Khanwilkar and Justice CT Ravikumar noted, "PMLA just doesn't get triggered because of the predicate offence but triggers when proceeds are used in a certain manner."

Sibal appearing for the petitioners submitted that, "Under PMLA the offense is of money laundering, it's when you launder the money, the act of projecting the money as untainted that is tainted, in such cases how can you file an ECIR, and then how will he get to know."

"Can there be a law, through which criminal, penal proceedings can be initiated against a person without him knowing?" Sibal added.

"Those who indulge in these activities should be prosecuted, but there are some protections for the accused. You can't pass a law like this. Constitutionally this court can't regard this as law, it should be in accordance with the law," Sibal added.

Further arguing on the procedure to follow in the initiation of PMLA proceedings Sibal said, "If a person puts the money that is proceeds of crime in a bank then it is money laundering, what is the procedure to proceed under PMLA, is not given in PMLA. I don't have ECIR, evidence must be available with the ED before the case is registered, that is not disclosed to me and I'm arrested."

Justice Khanwilkar said, "Detenu is bound to get the documents, even when it is detention."

Justice Khanwilkar further stated that PMLA just doesn't get triggered because of the predicate offense but triggers when proceeds are used in a manner.

Thereafter, Justice Khanwilkar referring to a recent recovery of a huge amount from a businessman's house in Uttar Pradesh, asked Sibal, "Now, in the State where elections are about to be conducted, a huge amount of money has been found, can ED interfere?"

Sibal to which answered stating, "it's a predicate offense, money can be seized, ED will not come in."

Sibal further added, "If I commit a crime and take money to my house, it'll not come under PMLA, ED will not come in, as long as I have money in that form only, it'll not be laundering. It may be an offense under any other act."

The bench will continue hearing Sibal on January 27, 2022.

Case Title: Vijay Mandal Choudhary Vs. Union of India and Ors.