VVIP Chopper Scam | Constitutional Presumption In Favor Of 2018 Amendment To S.45 PMLA, Rigours Of Bail Apply: ED Opposes Christian Michel's Plea In Delhi HC

The Enforcement Directorate on Friday opposed the bail application filed by Christian Michel James, accused in the VVIP Chopper Scam.

ASG SV Raju, appearing for the agency before the Bench of Justice Manoj Ohri, argued that the rigours on grant of bail to an accused under the Prevention of Money Laundering Act will apply in this case.

Section 45 of PMLA provides two conditions to be fulfilled for granting bail to an accused:

(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.

The provision was struck down by the Supreme Court vide judgment dated 23rd November, 2017 in Nikesh Tarachand Shah v. Union of India.

Subsequently, on 19th April, 2018, the Central Government introduced and amendment to the PMLA Act, and amended Section 45.

The ASG argued that following this development, the twin conditions for bail stand revived.

Advocate Aljo K. Joseph, appearing for Michel, argued that the legislature cannot overrule the Supreme Court's judgment and hence, the rigours of bail provided under Section 45 do not apply.

At this juncture, the ASG made three-fold submissions:

First, since the Amendment Act has neither been stayed not struck off by the Supreme Court as yet, there is a presumption of constitutionality in favour of the legislation.

Reliance was placed on Nagaland Sr. Govt. Employees vs State Of Nagaland & Ors., where the Supreme Court had held that there is always a presumption in favour of the constitutionality of an enactment and that the burden is upon the person, who attacks it is a fairly well settled proposition.

"So, the burden of showing that a statutory provision is bad, ultra vires, void in view of Article 13 of the Constitution, is on the person who asserts it. He must prove that a particular portion of the statute is ultra vires, and that is a heavy burden," the ASG said.

Second, the AG submitted that the constitutionality of a provision cannot be challenged before a Court hearing Bail application under Section 439 CrPC.

He submitted,

"This burden has to be discharged in a particular manner; there has to be pleadings under Article 226 of the Constitution, not under Section 439 CrPC. Bail court can't interpret as if new provisions do not exist, unless the amendment provision is struck down...There is no whisper, no pleading in the application about Article 226. In a bail application, even if it is presumed that Section 482 CrPC power can be exercised at this stage, the amended Section 45 cannot be struck down. Therefore in absence of pleadings, this issue cannot be gone into."

The ASG added that the constitutionality of the Amendment is already under challenge before the Supreme Court, and it is being heard on a day to day basis (on non-miscellaneous days). "Hence, propriety requires that the this court should not decide the issue; and if it is not heard, then the presumption prevails."

Reliance was placed on D.K. Trivedi And Sons And Ors. vs State Of Gujarat And Ors., where the Supreme Court had held that if the High Court thought that the point raised by the Appellants was the same as was pending before the Apex Court, it ought to have stayed the hearing of the writ petitions until the Apex Court disposed of the other matters.

He added, "An ancillary question that may arise is that this is a bail matter. How can you not decide that issue? After all it affects the liberty of a person? So my answer to this possible question is that, the presumption will apply. My Lord will have to decide matter on presumption that the statute is valid."

Third, the ASG insisted that the prosecution is not canvassing to apply the same old Section 45 which was declared ultra vires. He submitted that the amended provision has done away with the unconstitutionality that the Supreme Court had pointed out and hence, it is not a case of overruling the Supreme Court judgment as argued by the applicant.

"The issue is, can the Parliament pass such a statute which purportedly amounts to nullifying a Supreme Court judgment? The power of legislature and judiciary are separate, one cannot encroach on the other. I will demonstrate this amendment is not encroachment."

The ASG contended that Supreme Court had struck off Section 45 since it denied bail in case of predicate offence.

"The mere circumstance that the offence of money laundering is being tried with the Schedule A offence without more cannot naturally lead to the grant or denial of bail (by applying Section 45(1)) for the offence of money laundering and the predicate offence," the Supreme Court had held.

In the amended provision, the ASG said, this defect was removed and the words "under Part A of the Scheduled" have been replaced with "under this Act". So, the legislature has removed the connection with predicate offence and brought in connection with PMLA offence, he submitted further.

"The Supreme Court held that you cannot pass a judgment saying we overrule this judgment, but, what is permissible is that the lacunae or the underlying cause on basis of which Supreme Court struck down the law, that defect can be removed by legislature. So if you remove the defect, it does not amount to overruling, it amounts to a fresh legislation- here legislature has precisely done this," the ASG said.

Reliance was placed on State Of Karnataka vs Karnataka Pawn Brokers Assn., where the Top Court held as follows:

"Legislature has the power to enact validating laws including the power to amend laws with retrospective effect. However, this can be done to remove causes of invalidity. When such a law is passed the Legislature basically corrects the errors which have been pointed out in a judicial pronouncement. Resultantly, it amends the law, by removing the mistakes committed in the earlier legislation, the effect of which is to remove the basis and foundation of the judgment. If this is done, the same does not amount to statutory overruling."

At this juncture, Joseph argued that the present ECIR against Michel was registered on 3rd July, 2014. Section 45 PMLA was struck down in 2018. So the question is whether the amended provision can operate retrospectively?

The ASG responded, that the amendment was introduced on 19th April, 2018 whereas Michel was arrested on 22nd December, 2018. Hence, the question of retrospective application does not apply

Nevertheless, ASG added, if the Court holds this to be a retrospective application, procedural law can apply retrospectively.

Joseph further argued that there is no money flow from AgustaWestland to Michel's account (to substantiate the charge). There is a categoric investigating outcome that he was never involved in any kind of activity in 2006.

Advocates Sriram Parakkat and MS Vishnu Shankar also represented the Applicant.

Arguments will continue on Monday, February 14.

The charge-sheet against Michel was filed in 2017 after which he was arrested in December 2018 after being extradited from Dubai. He is allegedly termed as a 'Middleman' for the illegal transactions that took place in the VVIP chopper scam.

The CBI had alleged that there was an estimated loss of Euro 398.21 million (about 2666 Crore) to the exchequer in the deal that was signed on February 8, 2010 for the supply of VVIP choppers worth Euro 556.262 million.

The Enforcement Directorate (ED) had then filed a chargesheet against Mr. Michel in June, 2016, alleging that he had received EUR 30 million (about Rs 225 crore) from Agusta Westland.

Read previous reports:

[Agusta Westland Case] 'Not Having Deep Rooted Connections In India Cannot Be Ground To Deny Bail': Christian Michel Tells Delhi High Court