PMLA Oppressive, Has No Reasonable Procedure : Kapil Sibal

Senior Advocate Kapil Sibal called the Prevention of Money Laundering Act, 2002, (PMLA) oppressive and devoid of any procedure established by law guaranteed under Article 21. 

While addressing the Sikkim Judicial Academy, Sibal called out the Supreme Court for upholding the provisions of PMLA in Vijay Madanlal Choudhary v. UOI and not listing the review petition for two years. 

Sibal was addressing the audience in the context of judicial precedents and the doctrine of stare decisis. He stated that precedents offer some kind of stability and predictability while it offers limited flexibility. In this context, he spoke about PMLA and its provisions. 

He said: "What is 'procedure established by law'? Is PMLA procedure established by law? PMLA is the law and if you remember in Menaka Gandhi's judgment, J Bhagwati said: 'procedure must be reasonable, substantive law must be reasonable'."

Sibal tested certain provisions of PMLA. For instance, Section 45 of PMLA. He said: "You have Section 45 of PMLA, which says anybody prosecuted under PMLA when his application of bail is moved before Court, notice should be given to public prosecutor. Unless the Court comes to conclusion that person is not guilty of offence, he can't be granted bail. Look at a scenario-I am accused and I get arrested pursuant to ECIR which is registered by ED. Unlike FIR, ECIR is not in public domain. So, I dont know why I was arrested. I get arrested and produced before magistrate, I dont know what the allegations against me is. I go to magistrate, a remand application is filed by public prosecutor which he hands over to the judge. I have no access to remand application. dont know what the case is against me.Section 45 says unless I am able to show that I am not guilty of the offence, I cant be granted bail."

He added: "Where is the procedure to show I am not guilty of the offence?I dont know the accusations, I dont have remand, I will have remand at that point where I cant have discussion with lawyer, I am not given grounds of arrest nothing. Art 21 says procedure should be reasonable. But is this reasonable procedure? SC has upheld this procedure but is it a precedent? Yes. Precedent in the context of letter of law. This letter of law cant be a precedent. The letter of law tells you that you surely cant get bail unless you satisfy you are not guilty of the offence."

Referring to Section 19 of PMLA, he said: "Interestingly, S.19 of PMLA says authorities can arrest after they have material in their possession that you are guilty of the offence. See the chasm. The authority that arrests me must have material in its possession that I am guilty. Then only they can arrest me. But the material which says I am guilty of the offence is not given to me That material is sent in sealed cover to magistrate. That's the law."

Sibal said that law and justice are not the same thing and added that the PMLA has nothing to do with justice. Since it was upheld by the Supreme Court, it is the law.

He then asked if the law was procedurally reasonable. 

Sibal said: "Under CrPC, Supreme Court has held in various judgments is the procedure established by law. In other words, when you have FIR, within 24 hours you have to produce the accused before magistrate which applies to PMLA also..before a magistrate, remand is taken. I am given FIR, I have access to it because its in public domain because of the pronouncement of Supreme Court judgment. Then there are procedures which say after 14 days of remand, I have to be produced. There is daily diary under CrPC in which whatever the investigating authority does, has to be recorded. Which witness is examined in S.`161 is recorded in daily diary. After the investigation is over, either the closure report or final report on which cognisance is taken and sent notice to the accused. That's the procedure which is absent in PMLA."

He also pointed how the wide discretion given to investigating authorities under PMLA. 

Sibal said: "Under PMLA, let's assume I have committed crime set out in Schedule of PMLA. S. 420(Cheating) is scheduled offence. Suppose I have cheated someone for 1 crore, if it were under IPC, PMLA wont apply. If he proceeds under PMLA, twin conditions apply. What does it lead to? I dont have to tell you that when you give that kind of discretion."

Sibal also questioned the substantive law under PMLA. He took an example of 'proceeds of crime' and 'money laundering' and how two distinct offences have been considered one and the same thing by the Supreme Court. 

He said: "I gave you examples of 1 crore, proceeds of crime. Proceeds of crime is "predicate offence" but there is separate offence of money laundering. For instance, if you have dirty clothes which you have laundered it. If you have dirty money, and you put in legal system, you have laundered. This is called money laundering. Now judgment says there is no difference b/w proceeds of crime and money laundering. Every individual can be proceeded against money laundering even if there is nothing to show he has ever laundered money. Suppose I have committed a crime for 10k or 1 crore rupees and I keep that 1 crore in my house. I have done nothing about it. I am the person who has cheated and I have kept it in the house and I have not laundered it. I will still be prosecuted for money laundering."

He added that when such laws are in place, the subordinate Courts cannot do anything unless the Constitutional Courts like the High Courts and Supreme Court challenge its constitutional validity. 

Sibal said as that far as the Supreme Court is concerned, post-Vijay Madanlal Choudhary, the Court realised the absurdity with which the people remained incarcerated under PMLA. Thereafter, the Pankaj Bansal judgment granted some relief to them in the sense that grounds of arrest must be furnished to the accused in writing and another judgment, in the face of long incarceration, the accused could be released on bail if he was not wanted by the investigating authorities. 

Sibal added that in cases where it cannot strike down the law, it creates exceptions through the constitutional basis of Article 21 to find a way for ordinary citizens to get relief. 

He concluded by adding that the issue of whether amendments could be brought to PMLA through a money bill remains pending in Supreme Court.