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Sr. Adv. Mukul Rohatgi on Wednesday appearing for the petitioners in a batch of petitions challenging provisions of the Prevention of Money Laundering Act submitted that in case of proceeds of crime the importance is of projection of money as tainted or untainted, if the money is not projected as untainted there is no offence of PMLA.

A bench of Justice AM Khanwilkar, Justice Dinesh Maheshwari and Justice CT Ravi Kumar said, "Money laundering is of proceeds of crime, therefore if you are acquitted in the scheduled offense then there is no substance."

Earlier, Sr. Adv. Abhishek Manu Singhvi had argued in the Prevention of Money Laundering Act (PMLA) challenge that the "uniqueness of the PMLA is the entire heart and soul of money laundering" and that one "cannot presume the heart and soul."

Singhvi arguing for the petitioners had also submitted that, "In terms of the PMLA - use, projecting, and claiming it to be untainted, are three heads, without your Lordships finding these three heads, it would be stretching of an offence to bring money laundering."

Concluding his arguments, Singhvi while referring to the issue of bail being not allowed accused in the offences under PMLA submitted that, "Here there is a closure of the door, this is the pernicious evil which your Lordships will allow under Article 21. Whereas, the substance of PMLA is to make impossible for the accused and the judge to give bail, which amounts to "no bail". It is the closure of the door."

Suggesting a solution to the issue of arrest in the PMLA cases, Singhvi added that, "This GPS anklet system is so effective. It is in use in a large number of countries including USA, these people are kept not in jail."

In addition to this, Rohatgi argued over the validity of explanation in Section 44 of the PMLA . "The explanation wrongly sits in Section 44, I don't think it clarifies Section 44 at all," Rohatgi added.

Arguing over the issue if a person accused under PMLA  is acquitted for the predicate offence, Rohatgi submitted that, "Suppose I rob a bank and invest that money in a business and launder it, project it as a profit. I am a common accused there and here, then if I'm acquitted, I can not be convicted for money laundering."

"If the accused is discharged or acquitted in the first offence then the essence of Section 3 is gone," Rohatgi added.

In addition to this, Rohatgi further argued that Enforcement Directorate (ED) in every case, roping in under PMLA, all the people who are accused of a predicate offence.

Rohatgi contended that there cannot be an Enforcement Case Information Report (ECIR) immediately after filing of an FIR in a predicate offence, there has to be a proper way to structure it.

Rohatgi explained the same through an example stating, "The Smugglers and Foreign Exchange Manipulators Act (SAFEMA) is dependent upon conviction, that if you are convicted under A offence then only SAFEMA comes in." There has to be some investigation, it cannot be as if the same day FIR is filed in predicate offence and the PMLA comes in.

Referring to the ED, Rohatgi submitted that they are jumping with the offences, as soon as someone commits robbery they'll file an ECIR for the purpose of PMLA.

"What I'm arguing is that there must be some investigation before filing an ECIR," Rohatgi added.

After completion of Rohatgi's submissions Sr. Adv. Vikram Chaudhri argued while pointing over another issue that Section 45(1)(ii) was declared unconstitutional in the case of Nikesh Tarachand, whereas, "The bare acts kept on publishing it, which is an editorial issue," Chaudhri added.

The bench will continue hearing the matter on February 10, 2022.

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