Thread by @LawBeatInd

#SupremeCourt continues hearing batch of Petitions challenging the provisions of Prevention of Money Laundering Act.
Senior Advocate Vikram Chaudhri appearing for other petitioners to continue arguments.
#PMLA
#moneylaundering

A 3-judge bench of Justices AM Khanwilkar, Dinesh Maheshwari and CT Ravikumar will continue hearing the matter today.

Bench assembles.

Senior Advocate Vikram Chaudhri continues with his submissions.

Chaudhri refers to Deepak Mahajan case.

Chaudhri continues reading from the judgment.

Chaudhri says the judgment settles two things:
firstly, that CrPC is the parent statute and
secondly, all those judgments which referred to customs/ enforcement officers were not police officers, did not apply to the procedure but only with the admissibility aspect.

Chaudhri now refers to Om Prakash case.

The judgment deals with issue of arrest and procedure as per the Central Excise Act and Customs Act.

Chaudhri continues reading from the judgment.

Chaudhri says that court has clarified after the Om Prakash judgment that issue on S. 155 CrPC has been decided.

Chaudhri now refers to Union of India v Thamisharasi

Referring to S 160, 161 and 162 CrPC, Chaudhri says these provisions are not displaced by PMLA.

PMLA does not provide for commencement of investigation for cognizable or non-cognizable offences and thus CrPC would apply: Chaudhri

Chaudhri now refers to Union Of India vs Ashok Kumar Sharma wherein court dealt with the newly added cognizable offences under the Drugs and Cosmetics Act.

Chaudhri concludes his submissions.

Senior Advocate Amit Desai begins with his submissions.

Desai refers to the context of the 'draconian legislation' which is a special and unique legislation and says that many ordinary crimes are not being looked at a very different light in the context of Sec 3 PMLA.

Desai: PMLA has been enunciated as a part of Global cooperation, and that was in the context of a certain kind of organised crime which was all pervasive and was affecting the financial aspect of countries.

Desai reads out the Preamble to PMLA Act.

Desai: The underlying principle of the Act is to deal with proceeds of crime which were integrated into legitimate economy and started affecting the financial integrity.

Desai: The Act intends to tackle these criminals. Money would flow to financially weak countries..

Desai: This was the original intent, and over a period more offences have been added. Thus, the original intent is being lost.

Desai: If Sec 3 is construed as per the intent of the legislature, there are issues of grammar, language and drafting.

Desai: The fundamental nature of the offence is regarding the process of converting illegitimate money into legitimate money.

Desai refers to a Financial Action Task Force Report which explains the scope of Section 3.

Desai says the FAQs deal with what is money laundering.

Desai: The three layer stages of Money laundering offence is placement, layering and integration. These are the three core offences which were unfortunately not used in Section 3.

Desia: The RBI while issuing guidelines to banking institutions explaining money laundering has also relied on these three layers.

Desai now refers to an FAQ put out by the Enforcement Directorate.

Desai points out that the FATF principles have also been incorporated by the ED.

Desai: If this is the essence of the offence, then Sec 3 must be construed in line of these three layers and stages.

Desai reads Section 3. He adds that if there is a proceed of crime which is only concealed but is not a part of the process, it must not come under S 3.

Desai: Any activity which has the effect of laundering money so that it gets integrated, that will come under S. 3

Desai: In relation to ordinary crimes, if the property moves out and there is an element of possession, concealment that would come under PMLA.

Desai: The original section was much wider and was illustrative to clarify which action will be included under Section 3.

Desai: Possession of any goods that were taken during a robbery will not come under PMLA, but under the parent act that is IPC

Desai: There is a serios issue of conflict between statutes

Desai gives example of demonetization, says there was a conflict between income tax authorities and the enforcement directorate

Desai: While interpreting Section 3, Section 452 CrPC will have to be seen.

Desai: Court must bear in mind the intent and gravamen of the PMLA Act while deciding scope of S. 3

Desai: The ultimate object of the offence, that is integration of crime proceeds in the economy, must be kept in mind.

Desai says excessive use of powers of arrest and the power of attachment are two issues. In a bank fraud case they have gone ahead and attached a factory..

Desai: Section 3 must be construed strictly and narrowly bearing in mind the intent of the legislation and the obligation to the international community.

Desai: Ordinary crimes are now being looked at by the PMLA authorities, and genuine victims, innocent third parties who may have acquired properties are being attached.

Desai: How do we balance this legislation?

Desai: If a PMLA asset is spotted, the investigating agency must be given authority to take steps... Section 3 needs to be articulated by this court

Section 19 is being invoked, business people are being picked up on the first day of registration of ECIR: Desai

Desai: Are we dealing with organized crime or only with people in the business community? Legitimate business activities are the subject matter of the offence of cheating, but before that happens there is an ECIR and there is an attachment...

Desai: There is mass attachment, what happens to your humans right and the ability to live...

Desai: There must not be an overlapping with ordinary crimes, and the mens rea which is critical to section 3...

Desi refers to Section 23 which deals with presumption of interconnected transactions.

Layering is a series of interconnected transactions/ illicit transactions...and integration is the last step when the process stands completed: Desai

Desai gives example of diamond trade.

Desai: In every business, it is very easy to say that the business is a money laundering business... where does it stop the agency from saying so about legitimate business activities...

Because of the ambiguity of the provision, the authorities are opening up offences committed twenty five years ago and saying that it will come under PMLA: Desai

Courts will have to clarify that if the integration is before 2005, the PMLA cannot be invoked: Desai

We are seeing situations where 15 year old matters, private disputes are being taken up under PMLA: Desai

Desai refers to a judgment of the Delhi High Court where the doctrine of ex post facto was dealt with in the context of Section 3 PMLA.

Desai also refers to Tech Mahindra judgment.

Court: ED searched a premises and got 190 crores in cash. How will we deal with this money? Can we say that ED has no jurisdiction?

Desai: The fact that an authority does not do its job, does not confer jurisdiction on another authority.

Desai while responding to the Court's question says that its very nice that ED went and attached the property, but after that it has to pass on the matter to the concerned authority...

Court breaks for lunch.

Desai continues arguing- The ECIR is never given and the ED walks in to anybody's house, it is the invasion of his privacy.

J Khanwilkar- You are right but what is the the better way.
#PMLA
#moneylaundering

Desai- I remeber in a case long ago ED summons were going to people from a personal email ID, anything like this may happen, but your lordships will protect everyone.

#PMLA
#moneylaundering

J Khanwilkar- You are telling only that protect, tell us... The argument is that ED is dealing with other properties as well except the proceeds of crime, but what is the solution so that we can spell it out.
#moneylaundering
#PMLA

Desai- The ED must inform the appropriate authority and the authority must take immediate action.
#PMLA
#moneylaundering

Desai- All kinds of individual things are being roped in that your Lordships need to deal with.
There are provisions in all these other laws, it may not be money laundering just a property but the PMLA will also come in and say that I'm also attaching it.
#PMLA

Desai- If your Lordships clearly specifies the contours of the offence under PMLA it would be great.

#PMLA
#moneylaundering

Desai- Till today in the Income Tax offences it is 2000 crores, 3000 crores but still under that there is no power to arrest.
#PMLA
#moneylaundering

Desai- Even in the Black Money Act, my impression is that there is no power of arrest.

#PMLA
#moneylaundering

Desai- I'm trying to test the intention of this legislature for the welfare of the State. Let us not presume that officers who are investigating in the predicate offence will not be able to investigate this, they can do it.
#PMLA
#moneylaundering

Desai- Special legislations doesn't have the same essence as that of the CrPC.

J Khanwilkar- You have argued much beyond your written submissions.

Desai- I'm the officer of the Court first, There is only one other point, a Slightly different approach to Section 45.

#PMLA

Desai- Liberty is the facet of 21, the law on bail are also a facet of 21, I want to show the approach in which your lordships has laid down bail as a facet of 21.
There are 4 key Judgments, it is the most important aspect of harassment to citizen.
#PMLA
#moneylaundering

Desai referring to the Judgment said, 45 is a bail provision, therefore we should deal with it in that context only. What your Lordships needs to observe is that does section 45 subserves the object of bail.
#PMLA
#moneylaundering

Desai- The argument against me is that these provisions have completed the test of time, but there is another thing that the law has always done, there may not be any case where no remedy is available.

#PMLA
#moneylaundering

Desai- The punishment under section 3, normally it is 7 and with Narcotics it is 10, but 7 years 437(b) magistrate may grant bail. On the ground that the person will be available for trial then he may be released on bail.
#PMLA
#moneylaundering

J Khanwilkar- Mr Desai you said 2 more lines.

Desai- Your Lordships I would need sometime tomorrow.

J Khanwilkar- Now you can argue on Tuesday, we'll keep it through VC as there are too many parties and Advocates in the matter.

#PMLA
#moneylaundering