Reversal Of Burden Of Proof Under PMLA Seems To Be Very Dangerous: Kerala High Court Says During Bail Hearing

The Kerala High Court on Thursday heard the arguments in the bail application filed by M Sivasankar, former Principal Secretary to the Chief Minister, in the money laundering case in relation to LIFE Mission bribe case.

Senior Advocate Jaideep Gupta, appearing for Sivasankar, submitted that predicate offences under Prevention of Money Laundering Act are usually investigated by State government, while money laundering is investigated by the Enforcement Directorate (ED). 

"That is why it has led to a serious controversy since in certain cases it is felt that it [ED] is being used as a weapon by the Central Government to attack certain persons in certain States," the Senior Counsel said. However, the senior lawyer quickly went on to add that he shall not be getting into that line of argument at present. 

During the hearing today, Senior Advocate Gupta also pointed took the Court through the Apex Court decision in Vijay Madanlal Choudhary v. Union of India (2022), in which the Court had upheld the reverse burden of proof under Section 24 of the Act and said that it has "reasonable nexus" with the objects of the Act.

Justice Badharudeen at this juncture, asked the Senior Counsel whether a review had been filed in the said judgment, which would be considered by a larger Bench, to which the senior counsel answered affirmatively. 

"The reversal of burden of proof seems to be very very dangerous," the Court remarked. 

Senior Advocate Gupta, on taking the Court through the factual matrix of the case, denied any sort of connection between Swapna Suresh, the other accused in the LIFE Mission case, and Sivasankar. 

"His [Sivasankar's] misfortune started sometime in 2019 when two lockers of Swapna Suresh were seized. Suresh is a family friend of Sivasankar, and there is no other connection. She was working at the UAE consulate general. In one locker around Rs. 64 lakhs along with gold was found. In another locker of hers around Rs. 34 lakhs was found in cash," the senior counsel averred. 

He pointed out that the UAE based Red Crescent entered into an understanding with the LIFE Mission Project of Kerala for giving money for construction of apartments as part of LIFE Mission Project. In pursuit of the same, the counsel averred that it had engaged a contractor, namely, UNITAC, represented by Santhosh Eapen. The Senior Counsel submitted that the allegation against Sivasankar was thus that the money found in Suresh's locker was meant as bribe for Red Crescent to give the contract to Santhosh Eapen, and that a part of the amount would be received by the petitioner, as well. However, the senior counsel argued that the same had consistently been denied by Eapen, and that the allegations against Sivasankar were 'flimsy'. 

He further pointed out that the health condition of Sivasankar has also deteriorated continuously. 

On these grounds, the senior counsel prayed that bail may be granted to Sivasankar. 

The matter has been posted for further hearing on March 27, 2023. 

Sivasankar approached the High Court seeking bail in the money laundering case related to alleged corruption in the LIFE (Livelihood, Inclusion and Financial Empowerment) Mission project, a housing project of the Kerala Government for the homeless.

A Special PMLA Court at Kochi had rejected Sivasankar's bail application on March 2 and extended his custody till March 21. The money laundering case emanates out of alleged illegal gratification obtained for awarding the contract work for the LIFE Mission's project for building 140 housing units in Thrissur district utilising the funds donated by UAE Red Crescent. Sivasankar has been under custody since his arrest by the Enforcement Directorate on February 14.

Case Title: M. Sivasankar v. Union of India & Anr.