[PMLA Challenge] "Intention of legislature for serious deterrent effect to be ascertained from provisions enacted for bail," SG Tushar Mehta tell Supreme Court

In a batch of petitions challenging the provisions of the Prevention of Money Laundering Act, 2002 (PMLA) Solicitor General Tushar Mehta on Wednesday submitted before the Supreme Court that apart from maximum punishment an offense carries, the intention of legislature to provide for a serious deterrent effect is also to be ascertained from provisions enacted by legislature with regard to bail.

A bench of Justice AM Khanwilkar, Justice Dinesh Maheshwari and Justice CT Ravikumar said, "Antecedents of a person, the amount involved shall be considered for that purpose (bail in money laundering offenses), for example, there is 25 Lakhs, 50 Lakhs or even 1 Crore that has to be considered. All those parameters will come into play and that has to be considered on case to case basis.

Mehta while clarifying that how PMLA is not arbitrary said, the PMLA was framed in a specific international context; PMLA has a separate and special architecture for investigation and other aspects of penal law; PMLA creates a new offense of money laundering; etc.

In addition to this, Mehta submitted that "presumption is always in favor of its constitutionality since it must be assumed, legislature understands and correctly appreciates needs of its people, that its laws are directed to problems made manifest by experience and discriminations based on the adequate ground."

"The principle does not take away from the State the power of classifying persons for legitimate purposes, if a law deals equally with members of a well-defined class, it is not obnoxious and it is not open to the charge of denial of equal protection on the ground that it has no application to other persons," Mehta added.

While referring to the limitations on bail in money laundering offenses said, money laundering usually takes place across the border, there are a few tax heaven countries as some countries give citizenship to such people, so the accused has that infrastructure ready to park that money and become fugitive. "Nowadays as the borders have become porous it is not safe enough that merely because his passport is submitted he'll not become fugitive," Mehta added.

Justice Maheshwari raised a question to Additional Solicitor General SV Raju sai, "what we notice is that in PMLA, the entire procedure is altogether different, you have reasons in writing that the accused is 'guilty' of an offense, this is a case where we find the person is not given a copy.

To which Raju referring to the Judgements of the apex court submitted that Foreign Exchange Regulation Act (FERA) and other similar acts related to arrest are all similar to PMLA. In addition to this Raju submitted that "As far as the PMLA officers are concerned they cannot file a charge sheet and therefore they are not police officers."

Further, referring to the Malimath Committee report Raju said, "Every man is presumed to be innocent until he is proved guilty. This is the cardinal principle of criminal law. In recognition of this right of the accused burden of establishing charge against the accused is placed on the prosecution. The concept of burden of proof is one of the most important contributions of Roman law to the criminal law jurisprudence. This principle is based on fairness, good sense, and practical utility and is accepted in the English common law,"

"What is meant by "proof beyond reasonable doubt"? It is not defined and is not easy to define. Prof. Wigmore in his classic treatise on Evidence points out the difficulty in ascertaining how convinced one must be to be convinced beyond a reasonable doubt, Raju added.

The report further said that the truth is that no one has yet invented or discovered a mode of measurement for the intensity of human belief. Hence there can be yet no successful method of communicating intelligible a sound method of communicating intelligibly a sound method of self-analysis for one's belief.

Referring to the Malimath Committee report Raju stated that the philosophy by the committee report can be seen in the judgments of this Hon'ble Court.

The bench will continue hearing Raju tomorrow, in addition to this the bench has asked the respondents to conclude their argument tomorrow.

Earlier, Mehta had submitted that in the last 17 years the total number of arrests in the money laundering cases is only 313 due to the existing screening layers that are needed to be passed before arrest.

Mehta had also argued that "PMLA offenses are never committed at the heat of the moment, the offences utilize the most advanced technology and they ensure that the authorities don't find out - and delete the entire trail within minutes if authorities get to know. Unlike IPC (Indian Penal Code) offenses, majority of which are committed and then investigated, money laundering is always a continuing offense."

In addition to this, Mehta further argued that PMLA is a complete Code whereas, CrPC is a generic law and under CrPC police officers need not record reasons and under PMLA they'll have to give reasons.

Referring to the rules, Mehta submitted that after conviction under money laundering the property and money attached may be returned to the claimant who suffered loss, and that by way of this rule Rs. 18,000 crores have been returned to the banks attached from the absconding businessmen.

Mehta further argued that FATF (Financial Action Task Force) conducts audits, it's 2012 normal evaluation report said that India's money laundering definition isn't consistent with Vienna Convention and the Government complied, as to be compliant, would be necessary for India's international stability.

In addition to this, Sr. Adv. Menaka Guruswamy arguing for the petitioner had submitted that with conviction numbers in PMLA cases being low, appeals by the Enforcement Directorate (ED) should have been higher, however, that is not the case. She cited that in 2010 and 2011, infact, there were no appeals by the ED.

Cause Title: Vijay Madanlal Chaudhary and Ors. vs Union of India & Other