Arrest power under Section.19 of PMLA is ultra vires to Constitution?

Power to arrest given to ED has been a subject a discussion at various legal forums. To understand whole issue lets us first go through some legal provisions of PMLA related to Summon , property attachment and arrest.

2. Section 50. Powers of authorities regarding summons, production of documents and to give evidence, etc.-

(1) The Director shall, for the purpose of section 13, have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908) while trying a suit in respect of the following matters, namely:-

(a) Discovery and inspection;

(b) Enforcing the attendance of any person, including any officer of a reporting entity, and examining him on oath;

(c) Compelling the production of records;

(d) Receiving evidence on affidavits;

(e) Issuing commissions for examination of witnesses and documents; and

Any other matter which may be prescribed.

(2) The Director, Additional Director, Joint Director, Deputy Director or Assistant Director shall have power to summon any person whose attendance he considers necessary whether to give evidence or to produce any records during the course of any investigation or proceeding under this Act.

(3) All the person so summons shall be bound to attend in person or through authorized agents, as such officer may direct, and shall be bound to state the truth upon any subject respecting which they are examined or make statements, and produce such documents as may be required………………

3. Section 19.Power to arrest

1. If the Director, Deputy Director, Assistant Director or any other officer authorised in this behalf by the Central Government by general or special order, has on the basis of material in his possession, reason to believe (the reason for such belief to be recorded in writing) that any person has been guilty of an offence punishable under this Act, he may arrest such person and shall, as soon as may be, inform him of the grounds for such arrest.

2. The Director, Deputy Director, Assistant Director or any other officer shall, immediately after arrest of such person under sub-section (1), forward a copy of the order along with the material in his possession, referred to in that sub-section, to the Adjudicating Authority in a sealed envelope, in the manner, as may be prescribed and such Adjudicating Authority shall keep such order and material for such period, as may be prescribed.

3. Every person arrested under sub-section (1) shall, within twenty-four hours, be taken to a Judicial Magistrate or a Metropolitan Magistrate, as the case may be, having jurisdiction: Provided that the period of twenty-four hours shall exclude the time necessary for the journey from the place of arrest to the Magistrate's Court.

4. Section 5. Attachment of property involved in money-laundering.-

1. Where the Director, or any other officer not below the rank of Deputy Director authorised by him for the purposes of this section, has reason to believe (the reason for such belief to be recorde in writing), on the basis of material in his possession, that-

any person is in possession of any proceeds of crime; and such proceeds of crime are likely to be concealed, transferred or dealt with in any manner which may result in frustrating any proceedings relating to confiscation of such proceeds of crime under this Chapter, he may, by order in writing, provisionally attach such property for a period not exceeding one hundred and eighty days from the date of the order, in such a manner as may be prescribed:

Provided that no such order of attachment shall be made unless, in relation to the scheduled offence, a report has been forwarded to a Magistrate under section 173 of the Code of Criminal Procedure, 1973 (2 of 1974), or a complaint has been filed by a person authorised to investigate the offence mentioned in that Schedule, before a Magistrate or court for taking cognizance of the scheduled offence, as the case may be, or a similar report or complaint has been made or filed under the corresponding law of any other country…………..

5. So it can be seen that as per scheme of the PMLA , ED can record statement under Section 50 and can attach property U/s 5 as in these sections accused is “Guilty” of offence is not required to be established during investigation itself but arrest can be made only if person is found Guilty of offence by ED officers.

6. From the plain reading of the provisions of section 19 it emanates that to fasten the guilt of a person who is being investigated under PMLA without the rigours of judicial process, the reasonable belief of the arresting officer is enough which can neither be the intent of the Statute nor in consonance with Fundamental Rights enshrined in Constitution of India. Moreover, the powers of the Judiciary is sought to be conferred upon investigating agency u/s 19 as only Judiciary has powers to form a belief regarding guilt of the suspected person.

7. As per BLACK’S LAW DICTIONARY “Guilty" is defined as under:

(a) A plea of a criminal defendant who does not contest the charges.

(b) A jury verdict convicting the defendant of the crime charged.

Hence, legally, the state of being guilty means that either a person had pleaded guilty and that plea has been accepted by the Court, or there has been a trial, before judge, and the accused has been found guilty of the charges levelled against him or her. It may be mentioned that in a criminal proceeding existence of the guilt is perceived as the concomitant of a conviction and to assert otherwise is to deny the presumption of innocence, a presumption that operates until the entry of a conviction rebuts it. Presumption of innocence is expressly mentioned as a right in various covenants of international law that include the International Convention of Civil and Political Rights, 19632 and the Universal Declaration on Human Rights, 19483. Both of these, having been ratified by the Parliament are binding law in India and even otherwise are customary rules of international law. Further, In Kali Ram v. State of H.P.1974 SCR (1) 722, the Supreme Court reemphasized the importance of the principle of presumption of innocence and observed that “It is no doubt that wrongful acquittals are undesirable and shake the confidence of the people in the judicial system; much worse, is, however, the wrongful conviction of an innocent person. The consequences of the conviction of an innocent person are far more serious and its reverberations cannot but be felt in a civilized society.

8. The Constitution of India clearly demarcate the role of Executive, Legislature and the Judiciary. The function of adjudication is that of Judiciary and not of investigating agencies. Chapter II (Part V) and Chapter V & VI of Part VI of the Constitution of India provide for junior judiciary, High Courts in the States and the Subordinate Courts conferred with adjudicatory function. Thus no authority in the process of investigation can be conferred with power to form a belief even regarding guilt of any person. Investigating agency has the only power to collect the evidence and submit before the Court in the form of a report for its appreciation and cannot express any opinion about the guilt or the innocence of the person investigated against. Under section 229, 241, 245, 246, 248, 252, 253 and 255 etc. of Cr.P.C. it is the power of the Court to express an opinion or pronounce upon the guilt or innocence or conviction or acquittal or discharge. Thus, the provision of section 19 of PMLA, 2002 are against basic structure of constitution and are unconstitutional.

9. The section 19 of the PMLA, 2002 is ill drafted. It is incorporated in the Act with clear intent that the investigating agency can pronounce upon the guilt of the person investigated against. With such backdrop and intent only, in section 45 (1)(ii) of PMLA, 2002 it could be provided that the person arrested under section 19 of the PMLA could be released on bail only after satisfaction of the Court to believe that the applicant is not guilty. The said provision was earlier struck down by the Hon’ble Supreme Court vide judgment given in “Nikesh Tara chand Shah Vs. Union of India & Anr” but after its revival in "Vijay Mandallal Chaudhary Vs UOI" is again under consideration by Hon'ble SC in a review Petition. The logic behind the same in “Nikesh Tara chand Shah Vs. Union of India & Anr” was that in bail application it is not permissible to form an opinion or belief regarding guilt or innocence. So when even Court cannot form an opinion or belief regarding guilt or innocence, under no circumstances the investigating officer or agency can form such opinion during investigation. Thus the provision u/s19 are against basic structure of constitution .

#lawkriti

--- By Adv Garima Singh

PMLA arrest