“The history of liberty is a history of the limitation of governmental power, not the increase of it”. The aphorism of Woodrow Wilson is a poignant reminder of the dangers of absolute power. Throughout history, rights of innocent people have been slain at the altar of untrammeled executive power, amplifying the onerous duty of Courts to rein the despots in. Over the last decade, the Enforcement Directorate (hereinafter referred to as ‘ED’) has revealed its disturbing propensity for reducing rights to rubble. Drawing its power from an adulterated statute and political will, the ED continues to show complete disregard for the rule of law, warranting immediate course correction.

International obligations to combat the global menace of laundering of illicit funds engendered the Prevention of Money Laundering Act, 2002 (hereinafter referred to as ‘the Act’). The Act gave expression to India’s commitment to the United Nations to enact a domestic legislation to curb the laundering of money linked to drug trafficking. The avowed objective of the guiding international conventions, leading to the promulgation of the Act was to inhibit the proceeds derived from serious crime. Concomitantly, the scheme of the Act before any amendments to it (hereinafter referred to as ‘the original Act’), evinced the unequivocal intention of the Legislature to crack down on the ‘proceeds of crime’ arising out of the scheduled offences specified under the Act. 

However, a series of subsequent amendments have sought to systematically dilute the cardinal intent of the Act, reducing it to an instrument of arbitrary power in the hands of the ED. The abysmal ratio of convictions to cases, coupled with the appalling figures of under trial prisoners facing prosecution under the Act, bares testament to the extent of abuse of power by the investigating agency and beckons judicial intervention to impose constitutional fetters on them.

The alarming rise in investigations under the Act, unleashing the scourge of raids and arrests by the ED has raised serious questions about the trigger and procedure of investigation under the Act. Unlike the codified procedure for commencing and conducting investigation under the Code of Criminal Procedure, 1973, (hereinafter referred to as the ‘Code’) mystery surrounds the basis and manner of investigation under the Act. The consistent approach of the ED has been to mechanically record an enforcement case information report (hereinafter referred to as ‘ECIR’) merely on the basis of an FIR registered for the commission of any scheduled offence specified in the Act. This practice of prematurely launching investigation not only defies the scheme of the Act, but also threatens to defeat its very object viz. to tackle ‘proceeds of crime’.

The provisions of attachment, survey, search and seizure under the Act provide for the formation of reasonable belief based on material in possession about the commission of the offence of money laundering or the existence of proceeds of crime. Section 19 however, places an even higher burden on the ED of having reason to believe on material basis that the person sought to be arrested has been ‘guilty’ of the offence of money laundering, necessitating the existence of conclusive evidence capable of satisfying the ingredients of section 3 of the Act to justify arrest.

Thus, the fundamental pre-requisite emerging from these provisions for launching investigation is material showing the generation of proceeds of crime within the meaning of section 2(1)(u) of the Act, which inextricably links them with the scheduled offence. As a corollary, it would be apposite to first establish the commission of the scheduled offence and then its causal link with the proceeds. 

Inarguably, an FIR of the scheduled offence, being nothing more than an unverified statement of facts, is grossly insufficient to meet the rigour engrafted in the Act and hence, fails to ipso facto justify the recording of an ECIR. It is precisely for this reason that legislative wisdom, when enacting the original Act, deemed it necessary for the final report or prosecution complaint to be filed in respect of most of the scheduled offences, before proceeding with coercive steps like attachment, raids, seizures etc. under the Act. Imbued with the same rationale, sections 43 and 44 provide for the trial even of the scheduled offence to be conducted by the Special Court itself.

Unfortunately, that wisdom has faded over time through amendments to the Act aimed at unhitching its wagon from that of the scheduled offence. The Amendment Act of 2012 led to the insertion of an exception to the necessity of prior filing of a charge sheet in the scheduled offence for attachment under section 5 of the Act. 

Similarly, the Amendment Act of 2019 brought about the omission of the provisos to sections 17 and 18 of the Act, which required the filing of a charge sheet or prosecution complaint regarding the scheduled offences before commencing with search or seizure under the Act. In the same vein, it also inserted an explanation to the most salient provision of the Act, section 2(1)(u), which seeks to expand the scope of proceeds of crime beyond what is derived from the scheduled offence. 

Another glaring insertion is the explanation to section 44 of the Act, postulating distinct jurisdiction of the Special Court while dealing with the offence of money laundering, independent of the proceedings related to the scheduled offence. The legislature in its complacent slumber appears to have overlooked the provenance of proceeds of crime, which are indispensable to the offence of money laundering. These amendments have not only laid waste to the seminal work of the legislature which produced the original Act, but have also deluded the ED into believing that the offence of money laundering can stand alone on its own legs, paving the way for impetuous investigations and derailing trials under the Act.

The notoriety of the ED emanates from its arrogant belief that the Act is a complete code in itself, throwing section 65 of the Act and section 4 of the Code into the dark abyss of oblivion, and with them the procedural safeguards entailed in the Code. Its penchant for operating in vacuum is evident from its varying stands before different Courts about the existence of its manual. Unlike the crime manual proudly unveiled by the Central Bureau of Investigation, ED’s manual remains an enigma. 

In the absence of any published manual, ED’s self-proclaimed procedural autonomy reeks of arbitrariness and threatens to stifle the fundamental right to fairness. The ED’s refusal to furnish a copy of the ECIR to the accused by touting it to be an internal document distinct from an FIR, continues to jeopardize the legal recourse ordinarily available to an accused. Decrying the Code may ostensibly shield the ED from the checks and balances built into the Code to guard against abuse of power, but it does not dispense with the fundamental rights enshrined in the Constitution of India. The purported internal procedure of the ED must pass the test of fairness and reasonableness and in order to do so, it must inhere a system of accountability. 

However, the ED has exposed its aversion to accountability by contending that the power of monitoring investigation under section 156(3) CrPC does not vest in the Special Court. The scope for accountability is further diminished by the lack of a case diary for cataloguing the investigation, and of a mechanism for the safe custody of articles and documents seized during investigation. On its retributive rampage, the ED has endeavoured to proscribe the benefit of statutory bail prescribed under section 167(2) of the Code, although this misadventure has been arrested by the Supreme Court in the case of Ashok Munilal Jain vs Assistant Director, assuaging the plight of an accused.

The opaque investigative procedure isn’t the only demon under the Act which is attacking the personal liberty of an accused. The greatest danger therein is posed by the twin conditions impeding the grant of bail. Section 45(1), which prescribed reasonable grounds for believing that the accused is ‘not guilty’ of the offence as a precondition for granting bail, was struck down as arbitrary and unconstitutional by the Supreme Court in 2017 in the case of Nikesh Tarachand Shah. The twin conditions have since been reintroduced vide the Amendment Act of 2018, with cosmetic changes contrived to overcome the judicial pronouncement. The question of legality of the resurrection of the twin conditions has roamed the different High Courts across the Country and has found its coffin in the registry of the Supreme Court, buried under the growing weight of pending cases. 

Meanwhile, the prejudice of section 45(1) continues to eclipse the prospects of bail for many, ordaining them to fester in prison for prolonged periods of time. The irony though is that, while sections 19 and 45 place an equally high burden, albeit on different parties, the burden imposed on the accused to satisfy the requirement of ‘not guilty’ is a real one, which is expected to be discharged on the basis of credible material, whereas the satisfaction about an accused being ‘guilty’ before affecting arrest is almost invariably an illusion conjured by the bewildering imagination of the ED.

The Act as it stands today bears little resemblance to the original Act and the new façade has rendered the Act a complete farce by attempting to alter the definition of money laundering. In common parlance, money laundering is the projection of tainted money as untainted and section 3 of the original Act expressly acknowledged the pivotal role of projection in the offence of money laundering. However, the explanation to section 3 inserted vide the Amendment Act of 2019, seeks to reduce the crucial element of projection to a dispensable ingredient thereof. A transaction involving proceeds of crime sans projection could at best be linked to the scheduled offence, but the explanation seeks to exalt it to the offence of money laundering. A separate prosecution based on this distorted definition would tantamount to a second prosecution for the scheduled offence. This amendment has steered the Act to the edge of the precipice, leaving it up to the Courts to salvage it by interpreting the amendment in a manner which advances the objective of the Act, instead of in a manner which renders the Act superfluous.

Successive Amendments and insidious enforcement have moulded the Act into a weapon of harassment. From bail to acquittal, the accused is burdened with establishing his innocence.

Section 24 denies the accused the benefit of the hallowed precept of criminal jurisprudence viz. presumption of innocence. Habitual of placing the cart before the horse, the ED indiscriminately invokes the presumption of guilt without even proving the facts which are fundamental to draw the presumption. In the present framework, all odds are stacked against the accused and the only hope of reprieve is through judicial intervention. Unchecked and unfettered, even the most virtuous can be corrupted by power, let alone an investigating agency with mystical powers. This is a risk which the Constitution does not afford. As sentinels of the fundamental rights guaranteed under the Constitution, the Judiciary must keep vigil over the functioning of the investigating agency and bring the hammer down on destructive amendments in order to stem this tide of executive tyranny.

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Advocate Manu Sharma has been practising at the bar for over sixteen years. He specialises in Criminal Defence. Some of the high profile cases he has represented are – the 2G scam case for former Union minister A Raja; the Religare/Fortis case for Malvinder Singh; Peter Mukerjee in the P Chidambaram/ INX Media case; Devas Multimedia in ISRO corruption act case; Om Prakash Chautala in PMLA case; Aditya Talwar in the aviation scam case; Dilip Ray, former Coal Minister in one of the coal scam cases; Suhaib Illyasi case.

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