Case: Vijay Madanlal Choudhary vs. Union of India
Date of / Judgment: 27 July 2022
Bench: Justice A.M. Khanwilkar, Justice Dinesh Maheshwari, Justice C.T. Ravikumar
Introduction The case deals with the constitutionality of certain provisions of the Prevention of Money Laundering Act (PMLA), 2002. The petitioners challenged powers granted to the Enforcement Directorate (ED) regarding arrest, property attachment, and investigation under PMLA, and questioned the legality of provisions like reverse burden of proof, bail conditions, and statements made during investigations.
Facts of the Case
• The petitioners challenged the constitutionality of several sections of the PMLA, 2002:
- • Sections 5, 8(4), 15, 17, 19: Powers of arrest, attachment, search, and seizure given to the Enforcement Directorate (ED).
- • Section 24: The reverse burden of proof, where the accused has to prove their innocence.
- • Section 45: The "twin conditions" for granting bail in money laundering cases.
- • Section 50: Whether statements recorded by ED officials during investigation violate the right against self-incrimination under Article 20(3).
- • Enforcement Case Information Report (ECIR): Whether ECIR, an internal document of ED, has the same legal status as an FIR under the Criminal Procedure Code (CrPC).
Issues
- 1. Are the powers of arrest, attachment, search, and seizure under PMLA constitutionally valid?
- 2. Does the reverse burden of proof under Section 24 violate the accused’s right to a fair trial?
- 3. Are the twin conditions for bail under Section 45 reasonable and constitutional?
- 4. Do statements recorded under Section 50 of the PMLA violate the right against self-incrimination under Article 20(3) of the Constitution?
- 5. Does the Enforcement Case Information Report (ECIR) have the same legal status as an FIR under the CrPC?
Observation
• Constitutionality of PMLA Provisions:
- • The Supreme Court upheld the validity of the powers under Sections 5, 8(4), 15, 17, 19, affirming that these provisions have a reasonable link to combating money laundering.
- • The 2018 amendments to Section 45 were also upheld, addressing judicial concerns over previous bail conditions.
• Reverse Burden of Proof (Section 24):
- • The Court validated the reverse burden of proof under Section 24, where the accused must prove their innocence. This is seen as a reasonable measure to fight money laundering, considering the difficulty in proving the origin of illicit money.
• Twin Conditions for Bail (Section 45):
- • The twin conditions were upheld as reasonable to ensure that serious criminals do not evade justice on bail.
- • For context the ‘twin conditions’ of s.45 PMLA are:
- 1. The Court must be satisfied that there are reasonable grounds for believing that the accused is not guilty of the offense
- 2. The Court must be satisfied that the accused is not likely to commit any offense while on bail
• Right Against Self-Incrimination (Section 50):
- • The Court ruled that statements recorded by ED officials do not violate the right against self-incrimination, as the person is not an accused at that stage of the investigation.
- • THE Court ruled that the authorities under the 2002 Act are not Police Officers. Ex-consequenti, the statements recorded by authorities under the 2002 Act, of persons involved in the commission of the offence of money-laundering or the witnesses for the purposes of inquiry/investigation, cannot be hit by the vice of Article 20(3) of the Constitution or for that matter, Article 21 being procedure established by law.
- • The Court clarified that only those formally accused of a crime (e.g., through an FIR or formal charge) have protections under Article 20(3) against self-incrimination.
• Status of ECIR:
- • The Court distinguished ECIR from an FIR, clarifying that the ECIR is an internal document used by the ED and does not carry the same legal weight as an FIR.
- • The supply of ECIR to the accused is not mandatory, and a Special Court can review it if necessary during proceedings.
Implications
• Strengthening the ED’s Role:
- • The ruling strengthens the powers of the Enforcement Directorate (ED) to tackle money laundering effectively, confirming the constitutional validity of provisions that allow for asset attachment and investigations.
• Shifting Burden of Proof:
- • The Court’s endorsement of the reverse burden of proof places more responsibility on the accused in money laundering cases, which may make it harder for accused individuals to defend themselves unless they provide credible evidence of their innocence.
• Impact on Bail Conditions:
- • The decision to uphold stringent bail conditions means that those accused of serious crimes like money laundering will face higher hurdles in securing bail, reinforcing the severity of the offense.
• Protection Against Self-Incrimination:
- • The ruling clarifies that statements made during the inquiry under Section 50 of the PMLA are not considered as self-incriminating unless the person is formally accused, which ensures that investigations can proceed without violating constitutional rights.
• Clarification on ECIR:
- • By stating that ECIR is not equivalent to an FIR, the Court provides clarity on the ED’s investigation procedures, making it clear that the investigation under PMLA does not have to comply with CrPC procedure like FIR registration.