PMLA verdict, an erosion of constitutional buffers

Source: This post is based on the article “PMLA verdict, an erosion of constitutional buffers” published in The Hindu on 1st August 2022.

Syllabus: GS 3 – Money-laundering and its prevention.

Relevance: About the issues surrounding PMLA.

News:  The Supreme Court in Vijay Madanlal Choudhary and Ors versus Union of India case upheld the provisions of the PMLA (Prevention of Money Laundering Act).

What was the case about?

What are the significant provisions of PMLA?

Section 3 of the Act says, “Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming it as untainted property shall be guilty of the offence of money-laundering.”

The term “proceeds of crime” is separately defined to mean property that is obtained out of the commission of a crime “relating to a scheduled offence”. The schedule offence contains an array of breaches under 30 different statutes including the Arms Act, 1959 and the Immoral Traffic (Prevention) Act, 1956, etc.

Nikesh Tarachand Shah vs Union of India case: The court declared the classification of offences under the PMLA into two categories as unconstitutional. The Court found the classification between offences unreasonable and the conditions themselves too disproportionate.

The Parliament deleted the classification. Later the court upheld it.

What are the basic precepts of justice violated by PMLA?

Some basic precepts of justice and fairness are inherent to India’s criminal justice system. These precepts are, a) A person is presumed innocent until proven guilty, b) A person detained on suspicion of having committed an offence would be entitled to bail pending trial, c) A criminal law ought not to be retroactive, d) A person accused of an offence must be informed of the charges made against him; and e) A suspect has a privilege against incriminating herself.

But the PMLA violated all these precepts.

What are the concerns associated with the PMLA?

The other concerns are,

PMLA is not a penal statute: The offence under the PMLA is separately prosecutable, unless the proceeds of crime related to a “scheduled offence” no case can be made out under the statute. In other words, if a person is ultimately acquitted or discharged in a case concerning the predicate offence, the charge under the PMLA can no longer be maintained.

Violative of K.S. Puttaswamy vs Union of India case: The recent verdict fails to protect personal liberty(Right to privacy) from draconian provisions.