Sweeping powers of Enforcement Directorate to arrest, seize, attach properties of 'money-launders' under Supreme Court's scrutiny

 SC bench turns down plea of solicitor-general Tushar Mehta for adjourning the matter in 'national interest' for one or two months as a FATF visit is due soon

R. Balaji, TT, New Delhi, 19.10.23: A special three-judge bench of the Supreme Court on Wednesday said it would hear on November 11 a batch of petitions seeking recall of a judgment passed by another three-judge bench in July last year upholding the sweeping powers of the Enforcement Directorate (ED) to arrest, seize and attach properties of alleged money-launders.

The bench of Justices Sanjay Kishan Kaul, Sanjiv Khanna and Bela M. Trivedi turned down the plea of solicitor-general Tushar Mehta for adjourning the matter in “national interest” for one or two months as a FATF (Financial Action Task Force) visit was due soon. Justice Kaul remarked that the scrutiny of the Prevention of Money Laundering Act (PMLA) by the court was also in “national interest”. The FATF is an international organisation dedicated to framing policies against money-laundering.

The July 27, 2022, judgment had drawn flak as it had come at a time when the Narendra Modi government has been accused of using the ED and the PMLA to target Opposition parties and its critics.

Justice Kaul, heading the bench, indicated that the court would confine the issue to

the law relating to certain provisions of the PMLA as the July 2022 order was already under challenge before the top court.

On July 27 last year, a bench of Justices A.M. Khanwilkar, Dinesh Maheshwari and C.T. Ravi Kumar had upheld the constitutionality of the PMLA relating to the overarching powers of the ED, including imposing stringent bail conditions and those related to “search, seizure, summoning and arrest”. The court said it was necessary to curb heinous offences like terrorism and drug trafficking that affect the “social and economic fabric” of the country.

Justices Khanwilkar and Maheshwari have since retired.

In August last year, a bench headed by then Chief Justice of India N.V. Ramana had agreed to hear the review petition filed by Congress MP Karti Chidambaram. Thereafter, several others moved the apex court challenging the provisions of the PMLA as being unconstitutional.

During the special hearing on Wednesday, solicitor-general Mehta urged the court to restrict the hearing to certain limited issues and said the matter cannot be an endless academic exercise. The bench agreed, but said it wanted to seek certain answers from the petitioners. It said that on November 22, it would hear detailed arguments from the petitioners and the government.

Mehta argued that since the review petition was already under consideration, the July 2022 judgment cannot be revisited in the present petition. The government law officer wondered whether a three-judge bench can hear an appeal against a judgment by another bench with the same number of judges.

“Can a person be allowed to bring a petition that he does not agree with the five-judge bench ruling in the same-sex marriage (matter) and can it be referred to another five-judge bench?” Mehta asked.

According to rules, a three-judge bench ruling can be overruled only by a five-judge bench, and a five-judge bench verdict by a seven-judge bench.

Mehta urged the court to schedule the hearing after at least a month as the FATF meeting was due to take place next month and it was in “national interest”. However, Justice Kaul turned down the request and said: “Even scrutiny can be in national interest.”

“Is it written in a stone that a bench cannot look into another bench judgment?” Justice Kaul said. “We are alert, we won’t be alarmed by any party.”

Justice Khanna said the bench would look into certain nuances of the earlier judgment.

Senior advocate Kapil Sibal, appearing for one of the petitioners, said the July 2022 judgment was erroneous on various counts. He said it had taken the wrong view that the PMLA was not a penal statute despite the fact that a person can be convicted and sentenced to imprisonment for money-laundering offences.

Sibal said a person summoned under the PMLA has no clue as to why he is being called as he is not furnished with the ECIR (equivalent to the FIR) by the ED. A person summoned is also not given any explanation as to whether he is being called as an accused or as a witness, Sibal pointed out. The senior counsel argued that a person is also not given a copy of the ECIR or the grounds of arrest, making bail difficult.