Supreme Court Dissolves Bench On PMLA Judgment Reconsideration After Centre Seeks Time; 'Doing With Heavy Heart', Says Justice Kaul

Yesterday, the special bench began hearing the challenge against the interpretation of the Prevention of Money Laundering Act, 2002 based on the Vijay Madanlal Choudhary judgment. This case, decided in July 2022, upheld the constitutional validity of several provisions of the Prevention of Money Laundering Act, 2002, pertaining to arrest, seizure, presumption of innocence, and stringent bail conditions.

After the petitioners' side completed their arguments today afternoon, Solicitor General of India Tushar Mehta requested that he be allowed to commence his submissions on another day citing the complexity of the issues involved. Responding to the solicitor general's request for the hearing to be deferred, Justice Kaul, alluding to his imminent retirement (on December 15), said, “The problem is that I am on a deadline. I will not be able to take the burden. I have a few things to wind up before demitting office.”

SG Mehta, however, insisted on being granted an adjournment, saying, “A very selective reading has been done. If Your Lordships are not taken through the entirety of the act and its purpose, you may not get sufficient assistance.”

He also pointed out that a coordinate bench will have to record some reasons for referring the decision to a larger bench. Justice Trivedi expressed similar views as well, saying, “We have to express some views before referring this because the larger bench must have two views before it. Otherwise, it'll be very easy to refer matters. There have to be reasons. And my impression is, there's a judgment on this.”

Finally acceding to the solicitor-general's request, Justice Kaul agreed to adjourn the hearing. “What can I do…I am doing this with a little heavy heart,” he told Senior Advocate Kapil Sibal, who had vocally opposed such a deferment. The judge pronounced –

“The matter has been heard till 3 PM. The learned solicitor submits that in view of arguments made, he will need time to examine these issues and seeks deferment. Deferment would leave no time for this court to pen down the order. In view of the deferment now taking place and looking to the nature of the challenge which is constitutional in its basis, and whether a case has been made out for referring some aspects to a larger bench, the amendment application is allowed. The amended petition is taken on record. Counter-affidavit to amended petition to be filed within four weeks. The rejoinder is to be filed within four weeks thereafter. The chief justice would have to reconstitute the bench in view of one of us demitting office. Necessary orders be obtained from the chief justice.”

After dictating the order, Justice Kaul orally told the solicitor-general -

"Mr Solicitor, we understand everything. On this side, we see and hear many things, but we don't say many things. On a lighter note, I'll have that privilege from January 1".

The hearing witnessed several heated moments after the union government raised repeated objections to the proceedings.

Last month, when the bench assembled for the first time, the union government objected to the bench hearing the matter, citing a pending review petition against the Vijay Madanlal judgment and the upcoming FATF mutual evaluation. Alleging an 'abuse of the process of law', Solicitor General Mehta argued that the three-judge bench could not 'sit in appeal' over a judgment of a coordinate bench. Although the solicitor-general's objections were noted, the court refused to defer the hearing of the batch of pleas. It also refused the law officer's contention that the bench did not have the prerogative to revisit the matter.

Yesterday, before the petitioners opened their submissions, the solicitor general raised objections to an alleged lack of specific pleadings in the petitions challenging PMLA provisions other than Sections 50 and 63, although this claim was met with opposition from the petitioners. Not only this, but he also vehemently urged the court to hear them first on the question of the admissibility of an amendment application filed by one of the petitioners, alleging that it proposed to change the entire structure of the petition.

Over the two days, the petitioners, represented by senior advocates Kapil Sibal and Abhishek Manu Singhvi, pressed the Supreme Court to refer the Vijay Madanlal Choudhary ruling to a larger bench for reconsideration. They expressed concerns over the extensive authority wielded by the central agency and its 'enormous impact' on citizens' right to liberty as well as the polity as a whole. Concerns about the classification of the PMLA as a regulatory rather than a penal statute, ambiguity regarding the capacity in which an individual is summoned by the agency, and the non-supply of the Enforcement Case Information Report (ECIR) were highlighted, among other things. Questions were also raised about the alleged misuse of the anti-money laundering legislation to persecute individuals owing to the overbroad and harsh provisions of the act, particularly, the twin conditions for granting bail under Section 45. These provisions, it was argued, were neither aligned with international covenants, nor our own constitutional principles. 

It may be noted that a review of the controversial judgment is also pending before the Supreme Court. Last year in August, while issuing notice on the review petition, a bench led by then Chief Justice NV Ramana had observed that two aspects of the judgment prima facie required reconsideration – one, the finding that a copy of the Enforcement Case Information Report (ECIR) need not be supplied to the accused; and two, the reversal of the presumption of innocence.

Case Details

Directorate of Enforcement v. M/s Obulapuram Mining Company Private Limited | Criminal Appeal No. 1269 of 2017

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