PMLA validity: Key provisions Supreme Court will rule on

The Supreme Court will deliver a crucial judgment today on the validity of the Prevention of Money Laundering Act [Vijay Madanlal Choudhary v. Union of India]..The judgment will be delivered by a bench of Justices AM Khanwilkar, Dinesh Maheshwari and CT Ravikumar on a batch of 241 petitions challenging the validity of the law.The petitions have questioned various aspects of the law including the wide powers given to ED for search, seizure and attachment, the reverse burden cast on accused to prove innocence, the admissibility of statements made to ED as evidence, the stringent conditions for grant of bail and the impact of predicate offence and its outcome on PMLA..Some of the key provisions of PMLA, which the Court will examine, are as follows:.Section 3 defines money laundering.It lays down that whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming it as untainted property shall be guilty of offence of money-laundering.Section 5 lays down powers regarding attachment of property involved in money-laundering.Section 11 confers powers upon the adjudicating authority constituted under section 6 of the Act which are ancillary and incidental powers without which the said independent authority cannot exercise its powers.Section 19 provides for powers of arrest. It lays down that if the Director, Deputy Director, Assistant Director or any other officer authorised by the Central government by general or special order, has on the basis of material in his possession, reason to believe that any person has been guilty of an offence punishable under this Act, he may arrest such person and inform him of the grounds for such arrest..Another issue before the Court is regarding the applicability of Code of Criminal Procedure and whether the offences under the Act are cognizable or non-cognizable.As per Section 45 of the Act, the offences under PMLA are cognizable and non-bailable.Section 45 lays down that where the public prosecutor opposes the bail application of an accused, the court can grant bail only if it is satisfied that there are reasonable grounds for believing that the accused is not guilty of such offence and that he is not likely to commit any offence while on bail.Section 24 of PMLA reverses the burden of proof on the accused contrary to established criminal law principle of innocent until proven guilty.It lays down that in the case of a person charged with the offence of money-laundering under Section 3, the Authority or Court shall, unless the contrary is proved, presume that such proceeds of crime are involved in money-laundering..Section 50 of the Act was another crucial provision challenged in Court. It provides that ED can summon any person whose attendance is considered necessary whether to give evidence or to produce any records during the course of any investigation or proceeding under this Act.Such persons summoned shall be bound to attend in person or through authorised agents, 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.Pertinently, the above proceedings will be considered a judicial proceedings which effectively means that the statement made by such person shall be admissible as evidence.Section 63 makes giving of false information or failure to give information punishable with two years imprisonment..One of the most important aspects before the Court was regarding the predicate offence and its interplay with money laundering offence under PMLA.It was the Central government’s argument the offence of money laundering under Section 3 is a standalone offence so long as there is a predicate offence irrespective of whether there is acquittal or conviction in such predicate offence.Pertinently it was also argued by the government that money laundering under Section 3 is a continuing offence, irrespective of time at which the predicate offence is included in the Schedule.Therefore, if a person is found to be directly or indirectly enjoying the proceeds of crime, continues to conceal it or otherwise deal with it, or continues to be in possession of it, or continues to use it or acquires the same after the insertion of the predicate offence in the Schedule, he/she would be said to have committed the offence of money laundering.In other words, it was the contention if any activity or process mentioned in first part of Section 3 continues after insertion of the predicate offence in the Schedule, it shall be no defence for an accused to contend that the said penal activity took place at a point of time when predicate offence was not in the Schedule.In a nutshell, the Court will decide if PMLA is a standalone offence and whether the effect of the result of predicate offence may or may not impact PMLA proceedings.Besides deciding the above aspect, the Court will also decide whether power of attachment under Section 5 can be exercised based solely on information received or obtained by the Director irrespective of registration of any predicate offence..Read more about petitioners' argument here.Read Central government's arguments here.