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Senior Advocate Kapil Sibal told Supreme Court on Thursday that money laundering cannot be a standalone offence, however, the amendment in the Finance Act has made it a standalone one.

A bench of Justice AM Khanwilkar, Justice Dinesh Maheshwari, and Justice CT Ravi Kumar observed that, "The essence of this offence is predicate offence until predicate offence is registered, there cannot be PMLA. There cannot be an offense till it is preparatory."

The petitions pertain to issues ranging from the Enforcement Directorate's (ED) powers for taking on investigations, issuance of summons, carrying out arrests, etc., and the constitutional validity of the PMLA.

Sibal argued that in absence of a scheduled offence there cannot be a an offence of money laundering, there has to be a crime from where the money became tainted. However, after the 2019 amendment in the Finance Act the offence of money laundering has been made a standalone offense.

In addition to this over the allegation of Criminal procedure not being followed in the investigation of offences under PMLA, Sibal submitted that "by virtue of the amendment in the Finance Act 2019 money laundering has been made a cognizable offense, but whether it is Cognizable or non Cognizable it has to follow procedures of criminal code."

Sibal further argued that "If they say Rs. 2000 Crores are involved then whole businesses may get involved, There are some serious problem at the working out of the Act which needs to be addressed."

Continuing his arguments on the issue of predicate offense Sibal argued that "for the original offense I can get bail but under PMLA no, Under section 385 (Extortion under Indian Penal Code) it is bailable but the moment PMLA gets involved it becomes non-bailable. That shows it is inconsistent with the criminal law."

Agreeing with the contention raised by Sibal, Justice Khanwilkar said, "We get your point that there are so many offenses that are bailable but once PMLA comes in it becomes non-bailable."

It was also argued by Sibal that these kind of laws have interfered with the economic progress of India and due to which people will feel that why should I do business in India if the ED will come after me also.

Sibal also raised the issue of whether officers of the Enforcement Directorate are considered Police Officers stating, "The primary objective of the act should be regulatory that is why they submit a complaint, not a charge sheet that is why the customs officer, railway officers, etc are not police."

Earlier, Sibal had argued that the definition of money laundering is a threat to the existing democratic structure. Whereas, in addition to this the bench noted, "PMLA just doesn't get triggered because of the predicate offence but triggers when proceeds are used in a certain manner."

Case Title: Vijay Madanlal Chaudhary and Ors. Vs. Union of India & Other