Supreme Court To First Hear ED's Objections To Maintainability Of Review Petitions Against Judgment Upholding PMLA Provisions

The Supreme Court on Thursday (July 3) observed that it will first hear the issue of maintainability of the review petitions filed against the Vijay Madanlal Choudhary judgement, which upheld various provisions of the Prevention of Money Laundering Act (PMLA), before going into other issues raised by the petitioners.

Clarifying the above, a bench of Justices Surya Kant, Ujjal Bhuyan and N Kotiswar Singh posted the review petitions for hearing on August 6.

During the brief hearing today, Additional Solicitor General SV Raju, for the ED, raised the issue of maintainability, saying that the review bench cannot sit in appeal over the Vijay Madanlal Choudhary judgment. The bench on its part took note of the order passed in August 2022 issuing notice on the review petitions, where it was observed that at least two issues required reconsideration (the order had not recorded what those two issues were).

Senior Advocate Kapil Sibal, for the review petitioners, urged the bench to also consider the other batch of cases where the issue relating to the correctness of the Vijay Madanlal Choudhary judgment was raised. Notably, that batch did not get listed after Justice SK Kaul, who was heading the bench, retired in December 2023.

Justice Kant told Sibal to make a mention before CJI BR Gavai to get the other batch also listed along with the review petitions. The judge further said that the ED is justified in raising the preliminary issues regarding maintainability and said that the petitioners will have to first address those.

"You'll (petitioners) proceed on the premise as if entire matter has been re-opened...they (ED) are justified in raising preliminary issues...review has limitations...first what we will suggest is you address preliminary issues..." Justice Kant said.

In the order, the bench noted that the ED has raised 3 preliminary issues regarding maintainability, while the petitioners have raised 13 issues.

"Since the proposed issues are arising in the review proceedings, we propose to first hear the parties on the issue of maintainability of the review petitions followed by a hearing on the questions proposed to be raised on behalf of the review petitioners. Eventually, the questions that would finally arise for consideration will also be determined by us if we hold that the review petitions are maintainable," the bench said.

Issues raised by the ED

The three preliminary objections raised by the ED are:

1. Whether the review petitioner satisfies the threshold requirements of entertainability of a review petition of a final judgment suffering from an “error apparent on the face of the record”?
2. Whether the present review petition is an appeal in disguise and deserves to be dismissed on that ground alone?
3. Whether, even otherwise, in light of the order dated 25 August 2022, only two issues viz. supply of copy of ECIR and validity of reverse burden of proof under Section 24 PMLA can be examined?

Issues raised by the review-petitioners

1. Whether the Court in Vijay Madanlal Choudhary ought to have first decided if amendments to key PMLA provisions via Money Bills in 2015, 2016, 2018 and 2019 were unconstitutional and hence violative of the Constitution?
2. (a) Whether the Court in Vijay Madanlal Choudhary erred in reading the word “and” in Section 3 PMLA (preceding the phrase “projecting or claiming”) as “or”, thus diluting the offence of money laundering (b) Whether interpretation of Section 3 erased the distinction between commission of a scheduled offence and offense of money laundering?
3. Whether the observation that money laundering is a continuing offence and has retrospective operation renders Section 3 PMLA violative of Articles 20 and 21 of the Constitution?
4. Whether the classification of PMLA in Vijay Madanlal Choudhary as a sui generis legislation, rather than a penal law, was erroneous?
5. In view of the finding in VMC judgment that the words “investigation” and “inquiry” are interchangeable, are the requirements in Section 50 PMLA, in particular Section 50(3), where the person so summoned shall be bound to attend in person and shall be bound to state the truth (under the threat of a penalty), violative of Articles 19, 20(3) and 21 of the Constitution?
6. Whether the Court erred in holding that ED officers are not police officers?
7. Whether in view of Section 65 PMLA, all CrPC provisions apply to PMLA cases unless inconsistent, and whether the Court's ruling to the contrary is erroneous?
8. Whether the finding that ECIR is an internal document not required to be supplied to the accused violates Article 21 and all canons of criminal jurisprudence?
9. Whether the judgment erred in holding that the twin conditions for bail under Section 45 stood revived by the 2018 amendment of Finance Act?
10. Whether Section 45 PMLA with the twin conditions should have been declared unconstitutional, as even after the 2018 amendment to Finance Act, the conditions continue to violate Articles 14, 19, and 21?
11. Whether a review is warranted as the Court in Vijay Madanlal Choudhary encroached upon legislative field and judicially expanded scope of Section 5 PMLA by holding that property attachment can occur even without a registered scheduled offence?
12. Whether upholding the reverse burden of proof upon the accused constituted a manifest and material error causing irremediable injustice?
13. Whether the Court's view in VMC judgment that Explanation (i) to Section 44(1)(d) PMLA is merely clarificatory in nature, and jurisdiction of the Special Court trying PMLA offense does not depend on the trial in the scheduled offense, warrants review?

Previously, on May 7, the Union Government told the Court that the review hearing could not go beyond 2 specific issues which were orally flagged by the bench which issued notice in August 2022. The 2 issues related to supply of the ECIR to the accused and the reversal of burden of proof (Section 24 PMLA), said Solicitor General Tushar Mehta. The petitioners however countered the submission, highlighting that no such thing was recorded in the 2022 order. "The order must be taken for what it is...It can't be that the Government of India's affidavit (stating the 2 issues) will override the Court's order," said Senior Advocate Kapil Sibal. The petitioners also made reference to a judgment by Justice Abhay S Oka regarding the right of the accused to get list of documents in PMLA cases.

Background

The VMC judgment was delivered on July 27, 2022 by a bench comprising Justices AM Khanwilkar, Dinesh Maheshwari and CT Ravikumar. Vide this judgment, certain provisions of the Prevention of Money Laundering Act, 2002 (PMLA) were upheld. These included -

(i) Sections 5, 8(4), 15, 17 and 19 of PMLA, relating to Enforcement Directorate's power of arrest, attachment, search and seizure;

(ii) Section 24 of PMLA, relating to reverse burden of proof (in this regard, the Court said the provision had "reasonable nexus" with the objects of the Act);

(iii) Section 45 of PMLA, which provides "twin-conditions" for bail (in this regard, it was said that the Parliament was competent to amend the provision in 2018 even after the Supreme Court's judgment in Nikesh Tarachand Shah, which struck down the conditions).

Subsequent to this decision, the instant review petitions (8 in number) were filed. With the retirement of Justice Khanwilkar, then CJI NV Ramana presided over the bench to consider the petitions.

While issuing notice on August 25, 2022, CJI Ramana-led bench orally observed that at least two conclusions of the judgment required relook - first, that the copy of the Enforcement Case Information Report (ECIR; equivalent of FIR in money laundering cases) need not be given to the accused, and second, the upholding of the reversal of presumption of innocence.

Thereafter, the Court allowed an application for open court hearing of the review petitions. Since issuance of notice, the petitions were listed for hearing for the first time on August 7, 2024. On this date, the matter had to be adjourned at request of SG Tushar Mehta, who sought some time to prepare and argue. Subsequently, pursuant to a mentioning, the matter was listed on September 18 but got re-listed for October 16, 2024. On the said date, it could not be taken up as Justice Kant was on leave.

Appearance: Senior Advocates Kapil Sibal and Dr Abhishek Manu Singhvi, Advocates Mayank Jain, Madhur Jain and Arpit Goel (for review-petitioners); ASG SV Raju (for ED)

Case Title : Karti P Chidambaram v. The Directorate of Enforcement | RP(Crl) 219/2022 (and connected cases)

Click Here To Read/Download Order