Thread by @lawbarandbench

[DAY 2 HEARING: PMLA VALIDITY]

#SupremeCourt to continue hearing a batch of petitions concerned with the interpretation of the Prevention of Money Laundering Act #PMLA @dir_ed

Sr Adv Kapil Sibal: We've given the legislative history on this. It's the one with the table.
"And projecting as untainted property" is missing in the original definition in the original bill as it was passed by the parliament.

Sibal: It was inserted by the Amendment of 2012. Then came the finance act where the word or came after use instead of and. 'or ' projecting as untainted property it reads.
I'm not dealing with the subject matter since it is controvercial.

SC: What is the distinction between assisting and knowingly a party?

Sibal: One is assisting and another is attempt.

SC: There has to be actual commission of the offence?

Sibal: That can be, yes.

Sibal: The predicate offence without the proceeds of crime is not an offence under PMLA.

SC: The core of the offence is projecting it as untainted. Is that your submission?

Sibal: Yes, my lord.

Sibal: There are several judgements of this court where your lords have held that explanations cannot take over the main statute.
In taxing statutes it can be done but not in criminal statutes.
Let's now get back to my original note.

SC: This note is only explaining the first part of the explanation not the second.

Sibal: Not even that I'm only addressing my lords on the main provision.

SC: Yes, you are right.

Sibal: We must catch those people who convert tainted money to untainted and use it for criminal activities.

SC: It cannot be a case of conspiracy. The original person might not have the intention.

Sibal: That's why it says 'knowingly' 'actually' to catch the first and last man

Sibal: involved in money laundering.
Our discussion led us here but I was on ECIR if my lord remembers.
Page 5, para 9.
*Reads*
If I keep it in my house it is not money laundering because proceeds of crime are not a part of it, that will be in the predicate act.

Sibal:It was 30L, then 1Cr and now there's no limit because of the amendment.
*Continues reading*
There is no procedure at all in this Act.

SC: The offence can only be taken note of after its committed. I'm the preparatory stage it's very fluid.

SC: On predicate offence there cannot be PMLA. Unless that is registered, there cannot be PMLA.

Sibal: Suppose there is a predicate offence and I'm named in the FIR. Can I be called by ED at that stage?

SC: That will be the proceeds of crime at that stage.

Sibal: CBI or police

Sibal: can investigate, not the ED.
Suppose the investigation agency find that the money is in a bank.
Then ED can be called.

SC: There is a gap. If there is a predicate offence, that means the amount deposited in the bank will be PMLA offence.

Sibal: That's what I'm saying

Sibal: there might be cases where my name is not mentioned in the FIR but it comes up, I can be called up by the ED because I'm not accused.
This procedure is missing unless you refer to CrPC. Then the process is complete.
Kindly come to section 160 of CrPC.

Sibal: The police under 160 can summon a witness.

SC: Under PMLA which section says statements can be recorded?

Sibal: that is Section 50. I will come to that after this please.
Section 41 deals with arrest without warrant for cognizable offence.
Now Section 41A.

Sibal: This relates to offences where maximum sentence is 7 years. Now see section 50 asy lord was asking me. May I read the whole of 50 so my lords can get a sense of it?

SC: Yes.

Sibal: It is with respect to 13. Before we go to that let's see what is the reporting entity. S2(w)(a). It means banking company, financial institutions, etc.

SC: The similar definition is in Aadhar act.

Sibal: In order to convert it into untainted money these will be involved.

Sibal: We've gone through sub section 1, now 50(2).
*Reads*
Sibal: the summons do not say that you're being summoned for the activity and as well.

SC: Summons will come later.

Sibal: the summon is a part of investigation too. That's why in mentioning

Sibal: There is only an ECIR which is only with the ED. 65 says you have to follow CrPC.

Sibal: 2002 it was made mom cognizable because prior to that a chargesheet had to be filed. Whether it is cognizable or not, in one case 154 applies and other 155 applies. PMLA applies neither.

SC: By now there are two main issues
Mr Raju is not getting sleep also.

Sibal: My learned friend has all the answers.

SC: He is right and you're also right.

Sibal: what he's saying is that if a complaint is filed, it is a non cognizable offence and the people concerned here are not police officers. Who are police officers- the court had said if you

Sibal: file and offence it's not PMLA.

SC: When the amendment came, headlines were not changed.

Sibal: My Lord is absolutely right.
I'm sorry I'm taking time, this will decide the fate of so many people that we need to be careful.

*reads*
Sibal: Kindly look at the Vienna convention in Vol 7.
Page 4, definition p. Proceeds.
*Reads*
Whatever property bough with proceeds of money laundering must be seized.

Sibal: Narcotics money being converted to legitimate money and whoever assists in disguising will be charged and punished.our S3 is consistent with the convention.

Sibal: It is not an individual act. It is an organised crime that seeks to convert tainted money.

Khanwilkar J: Can you read easily Mr Sibal?

Sibal: Yes, my lord. I'm 74 but I can.

Khanwilkar J: *laughs* okay

Sibal: I'll give your lordships better font next time.

Sibal: We are not dealing with proceeds of crime. We are dealing with its conversion to untainted.

Sibal: I'm not presenting any arguments about the finance act because these questions still need to be answered

Sibal: How you interpret section 3 will determine what the breadth of the schedule includes.

The bench reconvenes.

Sibal: You cannot have a standalone offence of money laundering. There has to be a scheduled offence first.
Now the finance bill amendment says it is a stand alone offence.

Sibal: Earlier it was trial of the scheduled offence now it is under this Act. I'll explain that in a minute.

SC: The attachment proceedings have to be terminated with the trial. PMLA trial will be held along with the predicate offence.

Sibal: That is my submission exactly.

The bench moves into a breakout session.

SC: What happens to PMLA proceedings if the sole accused dies?

Sibal: It will continue. The Bofors matter continued even after Rajiv Gandhi passed away.

SC: Acquittal in predicate matter will not lead to acquittal in PMLA.

Sibal: If money laundering is not proved how can we prosecute under PMLA.

SC: We can't generalise that once predicate offence goes..it depends on a variety of features.

Sibal: I concede to that

Sibal: There cannot be an investigation of 154, 155 of CrPC. Several of the safeguards of CrPC are not complied with. ED doesn't lodge FIR or maintain a case diary.
Chapter 12 applies, they have to have a case diary. ED doesn't give the accused a copy of ECIR.

Sibal: Your lordships are sitting only till 3:25 today?

SC: Yes. There's a special bench after.

Sibal: I'll give you a note over the weekend.

Sibal: Those acting under the customs act are deemed not to be police officers. The primary object of the customs act is to collect custom duty. The customs officers do not check luggage of each individual. Purpose is not to detect crime. If someone is found to have brought

Sibal: something without paying duty, then the customs officer can proceed with it. This is called a regulatory statute.
When confronted with the admissibility of statement made infront of custom officers SC has held that it will be admissible as they aren't police officers

Sibal: When it is regulatory, what is submitted is a complaint and not a chargesheet. Hence, you have held excise officers, custom officers, railway protection officers are not police officers.

Sibal: NDPS being a penal statute, statements made before officers will be deemed with that made before police officers. This is a pure penal statute.

Sibal: Every penal statute requires investigation, collection of evidence culminating into a chargesheet or complaint.

SC: It can be both as well.

Sibal: It can be both also. The customs officer is both because you can be punished also.

SC: This is proceeds of crime. It has to be penal.

Sibal: It has to be penal.

Sibal: The predicate offence trial will take place in the same court but in predicate offence,police officer cannot call him to make a statement.
This is a very unique way of getting hold of people.I'm only trying to show that the trial is together(for predicate offence and PMLA)

Sibal: In terms of 65, some of these provisions are not consistent with CrPC. The trial also, in terms of 225 onwards.
We are trying to show that the code of criminal procedure applies.

Sibal: They'll be tried together according to CrPC. That's the scheme. You were asking the question on 45(1)(a). If a police officer is investigating, in any case he has to file a chargesheet. All which my ld friends are relying upon have no application on this at all

Sibal: Section 46 about trial in front of a special court I've read. Then there are the search and seizure rules. I'll come to that later.
So this is the entire scheme. What is regulatory about it?
It is a pure penal statute so the officers are police officers.

Sibal: I'll end here today. I'll give you the note as soon as I can.