PMLA case: SC considers reevaluating 2022 verdict with larger bench

The Supreme Court on Wednesday said its "limited ambit" was whether the 2022 verdict that had upheld the Enforcement Directorate's (ED) powers to arrest and attach property involved in money laundering was required to be reconsidered by a larger bench of five judges.

While the Centre told the apex court that the Prevention of Money Laundering Act was an "important legislation" for the nation, the petitioners' side claimed the ED has become an "unruly horse" and can go anywhere it wanted.

A three-judge bench headed by Justice Sanjay Kishan Kaul was hearing the pleas seeking reconsideration of the July 27, 2022 verdict by a three-judge bench on certain parameters.

In that verdict, the top court had upheld the ED's powers of arrest, attachment of property involved in money laundering, search and seizure under the PMLA.

"Whether there is a need at all for having a review or not having a review. That is the limited ambit," the bench, also comprising justices Sanjiv Khanna and Bela M Trivedi, observed on Wednesday.

"We have to also see whether...the matter needs to go to five-judges," the bench said.

Senior advocate Kapil Sibal, who opened the arguments from the petitioners' side, said the issues were so fundamental to the rule of law that they were required to be reconsidered.

"I am not here to convince your lordships whether the judgement is right or wrong. I am here to only prima facie suggest to your lordships that the issues are so fundamental to the rule of law that this whole issue requires to be reconsidered. That is the limited argument I am going to make," he said.

At the outset, Solicitor General Tushar Mehta, appearing for the Centre, said when the matter was heard on October 18, the petitioners' had started arguing on a "wide canvass" and he had objected to it saying there were no pleadings except the challenge to sections 50 and 63 of the Act.

While section 50 of the PMLA deals with powers of authorities regarding summons, production of documents and to give evidence etc, section 63 pertains to punishment for false information or failure to give information.

Mehta said they have received an amendment petition which virtually challenges everything under the PMLA and says that the 2022 verdict needs to be reconsidered.

"We are opposing that amendment. If he (petitioner) is confining to sections 50 and 63, I have no difficulty, but if he is going to argue the whole thing, which is based on a proposed amendment, I would be opposing that amendment...," he said.

"I have understood your point. You are saying if they (petitioners') are amending the petition, you need to file a response," Justice Kaul told the solicitor general, adding, "Let us see what they are arguing. You have flagged an issue and I have understood it."

During the day-long hearing, the bench observed the limited contours would be whether a view on the legal point settled by a three-judge bench raises issue which was required to be considered by a larger bench.

"I am only on the process. The process is only limited to this. Beyond that we really don't have any mandate or ambit to go," Justice Kaul observed.

Sibal, who referred to several provisions of the PMLA, said the fundamental principle of rule of law was that a person, who was summoned by the investigating agency, should know whether he was called as a witness or an accused.

"If I (person) am being summoned... I must know why I am being summoned and in what capacity," he said.

"We have reached a stage where the ED, and I quote and I use this expression intentionally, is an unruly horse. It can go anywhere it wants. And what it does is. It does not tell you whether you are being called as a witness or an accused...," Sibal said.

The petitioners' claimed that ED was applying the anti-money laundering law to cases like that of income tax evasion by using Section 120-B (criminal conspiracy) of the Indian Penal Code.

The bench observed the ED cannot invoke PMLA by using section 120-B of IPC when the alleged conspiracy was not related to a scheduled offence.

The arguments in the matter remained inconclusive and would continue on Thursday.

While hearing the matter on October 18, the bench had observed it will examine whether its 2022 verdict required any reconsideration.

It had noted the objection raised by the solicitor general "that an academic exercise should not be carried out without there being substance and that merely because someone approaches the court and wants the issue decided by the three judges bench to be revisited, should not be an occasion to revisit it".

Mehta had said PMLA was not a "standalone offence" but a piece of legislation prepared in conformity with the recommendations of the Financial Action Task Force.

FATF is the global money laundering and terrorist financing watchdog.

In August last year, the top court had agreed to hear a plea seeking a review of its July 2022 verdict and observed that two aspects-- not providing an Enforcement Case Information Report and reversal of the presumption of innocence -- "prima facie" required reconsideration.

The apex court had in its 2022 verdict said ECIR filed by ED cannot be equated with an FIR, and providing a copy of it to the person concerned in every case was not mandatory.

It had upheld the validity of certain provisions of the PMLA, underlining it was not an "ordinary offence".

The bench had said authorities under the Act were "not police officers as such" and the ECIR cannot be equated with an FIR under the Code of Criminal Procedure.

It had said supply of an ECIR copy in every case to the person concerned was not mandatory and it was enough if ED, at the time of arrest, discloses the grounds of such arrest.