No constitutionally-sincere citizen of India will ever say that money laundering (ML) should not be regarded as a serious crime threatening the unity and integrity of the country, and world order. Nor will she query the Political Declaration and Global Programme of Action adopted by the United Nations General Assembly on February 23, 1990 (of which the Prevention of Money Laundering Act [PMLA] is a normative offspring), which “calls upon the member states to develop a mechanism to prevent financial institutions from being used for laundering of drug-related money and enactment of legislation to prevent such laundering.”
There is universal agreement that “proceeds” of ML are well defined by the PMLA as “proximate” offences (as those listed in a schedule itemising offences against general and special criminal law). Both preventive and punitive aims and objectives of the law have been accepted by honest citizens as a means to confront this evil. But genuine difficulties and anxieties surround the recent Supreme Court decision (per Justices A M Khanwilkar, Dinesh Maheshwari and C T Ravikumar), which negates major constitutional challenges to PMLA in about 240 related petitions.
International instruments — from the basic Vienna and Palermo conventions to the soft law standards such as Financial Action Task Force (1989) — established the normative architecture for the PMLA. But these anti-ML instruments emphasise that such laws are “subject to constitutional principles”, norms and standards. The Court could have resorted to strict constitutional scrutiny, but instead prefers to name the PMLA as constituting a “complete” and comprehensive “Code”, “special and self-contained law”, “stand-alone” or even “sui generis” legislation. The petitioners, in effect, questioned whether PMLA may constitute itself as a parallel legal and constitutional system. The Court justifiably refers to the “mandate” of international law to combat ML. But can international law ever gainsay the mandates of international human rights law and the Constitution?
Even Parliament and state legislatures have accepted the discipline of the Constitution and further accepted adjudicative course correction as an aspect of constitutional morality of governance and development; the Court itself notes that the process of PMLA amendments was “evolutionary”! And the Court knows well that there are constitutional limits to freedom of adjudication. It, thus, wisely leaves open the question of whether the 2019 amendments to PMLA could have been brought through via the device of the Finance Act, a matter yet to be decided by the seven-judge bench tasked to consider whether the Aadhaar Act, 2016 was incorrectly certified as a Money Bill by the Speaker of the Lok Sabha, thus amounting to a “fraud on the Constitution”. Citizens are entitled to know why the Court now proceeds to articulate its judicial wisdom in a 545-page long decision without nudging legislative change in the context of human rights in the administration of criminal justice.
For example, it sustained mainly the powers of the Enforcement Directorate (ED) on the ground that only the senior echelons of the ED may take the decision to investigate, and record grounds in writing, but virtually ignores evidence of long undertrial detentions and the infinitesimal rates of conviction. A two-judge bench decision (in October 2020) was held “unfathomable” on the ground that ED were not police officials and this has the effect that the Article 20 fundamental human right against self-incrimination is rendered inapplicable now to PMLA cases.
No doubt the Court distinguished between the tasks of executive “inquiry” and “adjudication” by judicial authorities. But it dispelled all constitutional challenges to the former, sustaining also the powers to arrest and detain. While “confessions” made before senior ED officials were rendered admissible, no mandatory requirement stipulated that Enforcement Case Information Report (ECIR) may be supplied to the accused. The PMLA amendment — which modified the “twin test” — was held valid, allowing a very restrictive policy nearly ousting bail and requiring the court to decide whether the accused is “not guilty of such offence” in advance of a full trial, a requirement that puts the cart before the horse, inconsistently with the concept of fair trial enunciated by the Court itself as a fundamental, Article 21 human right in 2010.
The Court rightly accentuated the “heinous” quality of the proceeds of the crime of money laundering which “not only affects the social and economic fabric of the nation” but also “tends to promote other heinous offences (like terrorism, offences related to NDPS Act etc)”. The fact that Yashwant Sinha, the then Union Finance Minister, described the offences of money laundering as “heinous” obviously impresses the Court, although his successor in that office, P Chidambaram, merely described the Act schema as very “technical”.
The Indian criminal law nowhere defines or describes the term and the learned justices, as well as citizens, are free to use this term of approbation when so impelled. The Court, rightly, ruled that even an offence carrying the maximum sentence of seven years may not be so regarded. But ML is “not an ordinary offence” but a “serious offence”, “hatched in secrecy” and “executed in darkness”. Its call for “stringent measures” combating the menace of ML certainly summons special legislative will and administrative effort. But does the PMLA as “a special procedural law for prevention and regulation” and prosecution of the “offenders involved” exonerate the Court from all responsibility for securing a right to a fair trial?
One hopes that a vigilant Parliament, and a curative petition, will help in achieving the much-needed constitutional balance. Surely, international agreements and frameworks on ML do not relieve states of the responsibility of fair trial and of complying with due process, justice, and human rights in the administration of criminal justice. To think otherwise — to contend that the accused have no human or fundamental rights at all, save what the present legislative decision recognises — is to render the constitutional judicial oath entirely superfluous, in ways that may also monumentally undermine the Constitution.
The writer is professor of law emeritus, University of Warwick, and former vice-chancellor of Universities of South Gujarat and Delhi