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    Money Laundering Act—tough bail provisions, summons, property seizure, and Vijay Madan Lal judgment



    Prevention of Money Laundering Act, 2002 makes headlines, almost every day. Many high-profile arrests are taking place from different parts of the country and their properties attached and seized. The tough bail provisions are finding it difficult for the accused to come out on bail, sending warning to money launderers, even as Supreme Court judgement in 2022 upheld the stringent provisions in the Vijay Madan Lal Chaudhary case.
    What are the provisions related to property attachment, bail and summons in the PMLA, 2022 and also highlights of the Vijay Madan Lal Chaudhary case? Have a look.

    Attachment of property involved in money-laundering: Section 5 of the Prevention of Money Laundering Act (PMLA), 2002 says, “where the Director or any other officer not below the rank of deputy director authorised by the Director for the purpose of this section, has reason( in writing) to believe, on the basis of material in his possession, that-a) any person is in possession of any proceeds of , and b) such proceeds of crime are likely to be concealed, transferred or dealt with in any manner which may result in frustrating any proceedings relating to confiscation of such proceeds of crime under this chapter( iii), he may, by order in writing, provisionally attach such property for a period not exceeding 180 days from the date of the order, in such manner as may be prescribed:

    Offences to be cognizable and non-bailable: Section 45(1) of the PMLA, 2002 states that, “ notwithstanding anything contained in the Code of Criminal Procedure, 1973, no person accused of an offence under this Act shall be released on bail or on his own bond unless (i) the Public Prosecutor has been given an opportunity to oppose the application for such release; and (ii) where the Public Prosecutor opposes the application, the court is satisfied that there are reasonable grounds for believing that he is not guilty of such offence and that he is not likely to commit any offence while on bail: Provided that a person who is under the age of sixteen years or is a woman or is sick or infirm (or is accused either on his own or along with other co-accused of money-laundering a sum of less than one crore rupees), may be released on bail, if the special court so directs.
    2) The limitation on granting of bail specified in sub section (1) is in addition to the limitations under the Code of Criminal Procedure, 1973 or any other law for the time being in force on granting of bail. The officers authorised under this Act are empowered to arrest an accused without warrant, subject to the fulfilment of conditions under Section 19 and subject to the conditions enshrined under this section. ( Section 19 of PMLA defines Power to arrest)

    The issues like ignoring the summons under the Money Laundering Act for example by the Delhi Chief Minister in the alleged Delhi liquor policy scam is defined elaborately in Section 50 of the PMLA Act, 2002 as follows.

    Powers of authorities regarding summons, production of documents and to give evidence etc: As per Section 50(1) of PMLA Act, the Director shall, for the purpose of section 13, have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 while trying a suit in respect of the following matters-
    a) Discovery and inspections
    b) Enforcing the attendance of any person, including any officer of a (reporting entity) and examing him on oath.
    c) Compelling the production of records
    d) Receiving evidence on affidavits
    e) Issuing commissions for examination of witnesses and documents and
    f) Any other matter which may be prescribed
    2) The Director, additional director, joint director, deputy director or assistant directors shall have power to summon any person whose attendance he considers necessary whether to give evidence or to produce any records during the course of any investigation or proceeding under this Act.
    3) All the persons so summoned shall be bound to attend in person or through authorised agents as such officer may direct, and shall be bound to state the truth upon any subject respecting which they are examined or make statements and produce such documents as may be required.
    4) Every proceeding under sub-section 2 and 3 shall be deemed to be a judicial proceeding within the meaning of section 193 and section 228 of the Indian Penal Code, 1860.
    5) Subject to any rules made in this behalf by the Central Government, any officer referred to in sub-section (2) may impound and retain in his custody for such period, as he thinks fit, any records produced before him in any proceedings under this Act. Provided that an Assistant Director or a Deputy Director shall not—
    a) impound any records without recording his reasons for so doing, or b) retain in his custody any such records for a period exceeding three months, without obtaining the previous approval of the Joint Director.

    Retention of Property: Section 20(1) of PMLA , “ Where any property has been seized under Section 17 or Section 18 or frozen under sub-section (1A) of Section 17 and the officer authorised by the Director in his behalf has, on the basis of material in his possession, reason to believe (to be recorded by him in writing) that such property is required to be retained for the purposes of adjudication under Section 8, such property may, if seized, be retained or if frozen, may continue to remain frozen, for a period not exceeding one hundred and eighty days from the day on which such property was seized or frozen, as the case may be.

    Vijay Mdan Lal Chaudhary case:
    The Vijay Madan Lal Chaudhary case revolves around the constitutionality and interpretation of various provisions of the Prevention of Money Laundering Act, 2002. In 2022, the Supreme Court upheld certain provisions of the PMLA, including the powers of the Enforcement of Directorate related to attachment, search, seizure and arrest without prior judicial oversight, which have been criticized as draconian

    Vijay Madanlal Chaudhary refers to a notable legal case in involving Vijay Madanlal Chaudhary and others. They were accused of money laundering and other financial crimes. Vijay Madanlal Chaudhary was implicated in these activities, involving significant sums of money having being moved through various accounts to hide their origins.
    The Enforcement Directorate (ED) responsible for investigating financial crimes after conducting investigations brought the charges under the Prevention of Money Laundering Act (PMLA). Chaudhary challenged the charges in various courts. However Supreme Court upheld the constitutional validity of the PMLA and its stringent provisions. The ruling was criticised for allegedly expanding the powers of Enforcement Directorate.
    The key issues in the review as per critics of 2022 SC judgement are related to ECIR, Presumption of innocence and powers of ED like– in attachment of properties etc. The review seeks reconsideration of the Supreme Court's decision, particularly the provisions that could lead to abuse of power by the ED thereby violating protections granted by the Constitution.

    1)Enforcement Case Information Report (ECIR), it is similar to FIR in regular in criminal cases and the review petition challenges the non-mandatory disclosure of the ECIR to the accused, arguing that it infringes on the right to a fair trial.

    2) Presumption of innocence under PMLA has also been challenged as Section 24 of the PMLA shifts the burden of proof onto the accused once the prosecution has established a prima facie case of money laundering. In 2022, Supreme Court had upheld the constitutionality this provision also.

    3) Wide powers of Enforcement Directorate: As PMLA grants wide powers to ED including its powers to conduct searches, attach properties and arrest individuals without a warrant. These powers too were upheld by the Supreme Court. The review petitions seek need for stronger checks and balances against alleged abuse of such powers.

    Action against some high-profile under PMLA, 2002

    Several high-profile arrests have been made, properties attached under PMLA, involving politicians, businessmen, bureaucrats, celebrities etc including P. Chidambaram, former union Minister, Anil Deshmukh, former Home minister of Maharashtra, Rana Kapoor, the founder of Yes Bank, Deepak Kochhar, the husband of former ICICI Bank CEO Chanda Kochhar, Chhagan Bhujbal, former Maharashtra Deputy Chief Minister, DK Shivakumar, present deputy chief minister of Karnataka, Arvind Kejriwal, Chief Minister of Delhi, Manish Sisodia, the former deputy chief minister of Delhi, Anil Tuteja, Ex IAS officer on April 21, 2024 in matter of liquor scam in State of Chattisgarh, attachment of immovable property worth Rs 97.79 Crore belonging to Ripu Sudan Kundra aka Raj Kundra and attached properties include residential flat situated at Juhu in the name of Shilpa Shetty, residential bunglow in Pune and equity shares in the name of Raj Kundra, arrest of Smt K Kavitha MLC Telangana on March 15, 2024 in case of Delhi liquor policy scam.

    ( For awareness purpose only)

    The Northlines is an independent source on the Web for news, facts and figures relating to Jammu, Kashmir and Ladakh and its neighbourhood.

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