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of <h1>Supreme Court validates Prevention of Money-Laundering Act provisions including twin bail conditions and attachment powers</h1> <h3>VIJAY MADANLAL CHOUDHARY & ORS. Versus UNION OF INDIA & ORS.</h3> VIJAY MADANLAL CHOUDHARY & ORS. Versus UNION OF INDIA & ORS. - 2022 INSC 757, (2023) 12 SCC 1 Issues Involved:1. Jurisdiction and powers of authorities under the Act.2. Reciprocal arrangements for assistance and procedure for attachment and confiscation of property.3. Miscellaneous and incidental matters including rule-making power.4. Validity of amendments to the Act.5. Definition and scope of 'money-laundering' and 'proceeds of crime.'6. Provisional attachment of property.7. Search and seizure provisions.8. Arrest provisions.9. Burden of proof.10. Functioning of Special Courts and trial procedures.11. Bail conditions under the Act.12. Summons, production of documents, and giving evidence.13. Penalties for false information or failure to give information.14. Validity and interpretation of the Schedule of the Act.15. Registration and furnishing of ECIR.16. Publication and usage of ED Manual.17. Functioning and vacancies in the Appellate Tribunal.18. Proportionality of punishment under Section 4.Detailed Analysis:1. Jurisdiction and Powers of Authorities:The authorities under the Act are empowered with significant jurisdiction and powers, including the ability to conduct inquiries, attach properties, and prosecute individuals involved in money-laundering activities. These powers are detailed in various chapters of the Act, including Chapter VIII, which outlines the authorities' jurisdiction and powers.2. Reciprocal Arrangements and Procedure for Attachment and Confiscation:Chapter IX of the Act deals with reciprocal arrangements for assistance in certain matters and procedures for attachment and confiscation of property. This includes international cooperation and coordination to combat money-laundering.3. Miscellaneous and Incidental Matters:Chapter X addresses miscellaneous and incidental matters, including the Central Government's rule-making power under Section 73. The rules cover various aspects such as the manner of forwarding orders of provisional attachment, receipt and management of confiscated properties, and maintenance of records.4. Validity of Amendments:The petitioners challenged the amendments brought by the Parliament through the Finance Bill/Money Bill. However, this ground of challenge was not examined in the present proceedings as it is pending before a Larger Bench of the Court.5. Definition and Scope of 'Money-Laundering' and 'Proceeds of Crime':The definition of 'money-laundering' under Section 3 and 'proceeds of crime' under Section 2(1)(u) were extensively discussed. The court clarified that the offence of money-laundering captures every process and activity connected with the proceeds of crime, not limited to the final act of integration of tainted property into the formal economy.6. Provisional Attachment of Property:Section 5 of the Act, which deals with the provisional attachment of property, was upheld as constitutionally valid. The court noted the procedural safeguards provided to protect the interests of the person concerned.7. Search and Seizure Provisions:Sections 17 and 18, which deal with search and seizure, were challenged but upheld by the court. The amendments to these sections, including the deletion of certain provisos, were found to have reasonable nexus with the objectives of the Act.8. Arrest Provisions:Section 19, which deals with the power to arrest, was also upheld. The court noted the stringent safeguards provided to ensure fairness and accountability in the exercise of this power.9. Burden of Proof:Section 24, which shifts the burden of proof to the accused in money-laundering cases, was upheld. The court found this provision to have reasonable nexus with the objectives of the Act and not arbitrary or unconstitutional.10. Functioning of Special Courts and Trial Procedures:Sections 43 and 44, which deal with the establishment and functioning of Special Courts, were discussed. The court upheld these provisions, noting that they ensure the effective prosecution of money-laundering offences.11. Bail Conditions under the Act:Section 45, which imposes stringent conditions for granting bail, was upheld. The court found that the twin conditions for bail are reasonable and have a direct nexus with the objectives of the Act.12. Summons, Production of Documents, and Giving Evidence:Section 50, which empowers authorities to summon individuals, require the production of documents, and give evidence, was upheld. The court noted that this process is in the nature of an inquiry and not an investigation for prosecution.13. Penalties for False Information or Failure to Give Information:Section 63, which provides penalties for giving false information or failing to provide information, was upheld. The court found this provision to be reasonable and necessary for the effective implementation of the Act.14. Validity and Interpretation of the Schedule of the Act:The Schedule, which lists the scheduled offences, was upheld. The court noted that the inclusion or exclusion of offences is a matter of legislative policy and has no bearing on the validity of the Schedule.15. Registration and Furnishing of ECIR:The court clarified that the Enforcement Case Information Report (ECIR) is an internal document and not equivalent to an FIR. The non-supply of ECIR to the accused does not violate constitutional rights as long as the grounds of arrest are disclosed.16. Publication and Usage of ED Manual:The court noted that the ED Manual is an internal document for departmental use and not required to be published. However, it suggested that the department explore the feasibility of placing relevant information on its website.17. Functioning and Vacancies in the Appellate Tribunal:The court expressed concern over the vacancies in the Appellate Tribunal and urged the executive to take corrective measures to ensure its proper functioning.18. Proportionality of Punishment under Section 4:The challenge to the proportionality of punishment under Section 4 was rejected. The court found that the punishment prescribed is reasonable and has a direct nexus with the objectives of the Act.Conclusion:The court upheld the validity and interpretation of the various provisions of the Prevention of Money-laundering Act, 2002, and provided clarifications on the procedural and substantive aspects of the Act. The court emphasized the importance of the Act in combating the menace of money-laundering and ensuring the integrity of the financial system.
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