New Delhi: The Supreme Court on Wednesday affirmed the stringent provisions of Prevention of Money Laundering Act (PMLA) in connection with definition of the proceeds of crime, power of arrest, search and seizure, attachment of properties and also the twin bail conditions. The top court said stringent conditions for bail under the Act is legal and not arbitrary.

The top court clarified that the authorities under the 2002 Act are not police officers

A bench comprising justices AM Khanwilkar, Dinesh Maheshwari, and CT Ravi Kumar delivered the judgment on over 200 petitions challenging various provisions of the PMLA. Anil Deshmukh, Karti Chidambaram, and Mehbooba Mufti were among the high-profile petitioners.

The top court said it is not mandatory for the Enforcement Directorate (ED) officers to disclose the grounds of arrest at the time of detaining an accused in a money laundering case.

The top court said the supply of ECIR in all cases isn’t necessary, however when a person is before a special court, the court can ask for records to see if continued imprisonment is necessary. It added that ECIR cannot be equated by FIR, as it is an internal document. Detailed judgment will be uploaded later in the day.

The top court dealt with the validity of a wide range of powers granted to the ED under the amended law against money laundering. The powers available to the ED for search, arrest, seizure, investigation and attachment of proceeds of offence under PMLA have been challenged.

The bench added that such a provision has reasonable nexus with the purposes and objects sought to be achieved by the Act of prevention of money laundering and confiscation of proceeds of crime involved in money laundering, including to prosecute persons involved in the process or activity connected with the proceeds of crime.

The PMLA is a comprehensive legislation, not limited to provide for prosecution of persons involved in the offence of money laundering, but mainly intended to prevent money laundering activity and confiscate the proceeds of crime involved in money laundering, it said.

The bench added that this legislation is an amalgam of different facets including setting up of agencies and mechanisms for coordinating measures for combating money laundering.

“It is not as if after every inquiry, prosecution is launched against all persons found to be involved in the commission of offence of money laundering. It is also not unusual to provide for the arrest of a person during such inquiry before filing of a complaint for indulging in alleged criminal activity,” it noted.

The top court said it is, thus, obliging the person to be obedient to law. “The safeguards provided in the 2002 Act and the preconditions to be fulfilled by the authorised officer before effecting arrest, as contained in Section 19 of the 2002 Act, are equally stringent and of higher standard,” added the bench, in its 545-page judgment.

The top court said safeguards ensure that the authorised officers do not act arbitrarily, but make them accountable for their judgment about the necessity to arrest any person as being involved in the commission of offence of money laundering even before filing of the complaint before the special court under Section 44(1)(b) of the 2002 Act.

“Suffice it to observe that this power has been given to the high-ranking officials with further conditions to ensure that there is objectivity and their own accountability in resorting to arrest of a person even before a formal complaint is filed under Section 44(1)(b) of the 2002 Act.

“Investing of power in the high-ranking officials in this regard has stood the test of reasonableness.”

The top court clarified 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,” it added.

The bench noted that in a given case, whether the protection given to the accused who is being prosecuted for the offence of money laundering, of Section 25 of the Evidence Act is available or not, may have to be considered on a case-to-case basis being the rule of evidence.

The petitioners had argued that the procedure being followed under the PMLA is draconian as it violates the basic tenets of the criminal justice system and the rights enshrined in Part III of the Constitution, in particular Articles 14, 20 and 21.