SC upholds powers of arrest, raids, seizure under PMLA

New Delhi: The Supreme Court upheld the validity of stringent provisions of the Prevention of Money Laundering Act (PMLA) related to the power exercised by the Enforcement Directorate (ED) on arrest, search, and seizure of ill-gotten wealth, posing a threat to economic stability, as it observed that money laundering is no less heinous than terrorism.

A bench, headed by Justice A M Khanwilkar and comprising Justices Dinesh Maheshwari and C T Ravikumar, said: “The international bodies have been discussing the menace of money laundering on regular basis for quite some time, and strongly recommended enactment of stringent legislation for prevention of money-laundering and combating with the menace thereof including to prosecute the offenders and for attachment and confiscation of the proceeds of the crime having a direct impact on the financial systems and sovereignty and integrity of the countries.”

It added that money laundering is one of the heinous crimes, which not only affects the social and economic fabric of the nation but also tends to promote other heinous offenses, such as terrorism, offenses related to the NDPS Act, etc.

The top court affirmed the validity of Sections 5 (attachment of property), 8(4) (taking possession of attached property),3 (definition of money laundering), 17 (search and seizure), 18 (search of persons), 19 (powers of arrest), 24 (reverse burden of proof), 45 (offenses being cognizable and non-bailable and twin conditions for grant of bail by court), 50 (statements made to ED officials), and 44 (offenses triable by a special court).

The bench said the offense under Section 3 of the 2002 Act is dependent on the illegal gain of property, as a result of criminal activity relating to a scheduled offense and it is concerning the process or activity connected with such property, which constitutes the offense of money laundering.

“The authorities under the 2002 Act cannot prosecute any person on the notional basis or on the assumption that a scheduled offense has been committed, unless it is so registered with the jurisdictional police and/or pending inquiry/trial including by way of criminal complaint before the competent forum,” it added.

It further added that if the person is finally discharged/acquitted of the scheduled offense against him is quashed by the court, there can be no offense of money laundering against him or anyone claiming such property being the property linked to the stated scheduled offense through him.

The top court judgment came on over 200 writ petitions including former Maharashtra Home Minister Anil Deshmukh, Congress MP Karti Chidambaram, and former J&K Chief Minister Mehbooba Mufti among others.

A battery of senior advocates – Kapil Sibal, Siddharth Luthra, A M Singhvi, Mukul Rohatgi, Amit Desai – represented various parties in the matter. The Central government was represented by Solicitor General Tushar Mehta.

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