By: Aryaman Kapoor
Introduction
The Code of Criminal Procedure of 1973 [‘CrPC’] is applicable to the whole of India for investigation, inquiry and trial of every offence which is committed under the Indian Penal Code and most statutes which regulate offences that are criminal in nature. However, when it comes to the offence of money laundering, the situation is a bit more complicated. The Prevention of Money Laundering Act of 2002 [‘PMLA’] lays down special procedures for summons, search, seizure, arrest, and presumption of innocence which varies significantly from the procedure laid down in CrPC and the rest of Indian criminal jurisprudence. This is because the scope of PMLA is restricted to the offence of money laundering and other offences connected to it. The same is justified on the pretext that the commission of the offence of money laundering is different from the major offences elucidated in IPC as money laundering does not require physical presence for the commission of this offence. Hence, it is difficult for the authorities to investigate and collect evidence.
This had created the need to provide more power to the investigative authorities which was catered with the legislation of PMLA. In furtherance of the same, PMLA gave the government the power to create an authority as well as an adjudicating authority which works as a fast-track court specifically for the offence of money laundering. This paper aims to analyze the difference between PMLA and CrPC and compare the procedure laid down for search, seizure, and presumption of innocence under PMLA with the procedure laid down in CrPC and the rest of Indian criminal law jurisprudence using various statutes and case laws.
Presumption of innocence
The Supreme Court of India has noted in the case of Noor Aga Khan vs. State of Punjab that even though it is not expressly mentioned in the Constitution of India, the doctrine of presumption of innocence and the concept of innocent until proven guilty is the bedrock of the justice system of India. Even the Law Commission of India [‘LCI’] noted, in their 118th report, India’s obligation under the Universal Declaration of Human Rights [‘UDHR’] and International Covenant on Civil and Political Rights [‘ICCPR’] to provide the citizens with the presumption of innocence until they are proven guilty.
The LCI in this reported also noted that this doctrine is being neglected by the legislature while enacting recent legislations such as the Prevention of Corruption Act of 1988 [‘PCA’] where the burden of proof is shifted upon the accused who has to prove where the unaccounted proceeds came from. Unfortunately, even though this report of the LCI was sent to the government just a few months before the enactment of PMLA, the situation of PMLA when it comes to applying the doctrine of presumption of innocence, is quite similar to that of PCA.
Section 24 of PMLA states that if one is accused of money laundering under Section 3, the onus to prove that the proceeds alleged to be of money laundering are untainted is on the accused. This means that it is the onus of the accused to prove that he did not commit the offence money laundering instead of the authority. This is a stark detour from the law laid down by the Apex Court that the burden of proving the guilt of the accused always rests on the prosecution from the beginning to the end of the trial and the same cannot be shifted on the accused.
Procedure for search and seizure
Search of property
Section 93 of CrPC gives the Court the power to issue a warrant of search a place when the Court has a reason to believe that the person to whom a summon has been issued will not produce the required thing, where the document or the thing is not known to be the possession of any person and where the Court thinks that the inspection of a document or a thing would assist a trial or inquiry. It has been clarified that the person executing such a warrant can only search the place that has been specified by the court. Section 94 of CrPC further gives the Court the power to issue a search warrant allowing the police to search a place in case the Magistrate believes that such a place is used for deposit or sale of stolen property. Further, Section 103 of CrPC states that the Magistrate can also issue a search warrant and direct that the search be conducted in his presence.
In addition to this, police officers who are making an investigation also have the power to search a place without a warrant if they have reasonable grounds to believe that something which is important for the investigation will be found in the place he wishes to search. The detailed procedure for all these searches has been laid down under Section 100 of CrPC.
Now under PMLA, Section 17 allows the concerned authority to enter, search any place suspected of containing proceeds or records of a crime, break open any lock or door if the concerned authority has reasons to believe that records or proceeds are related to a criminal activity. There is no requirement of a warrant here but there are certain checks and balances as the authority must have reasons to believe that must be recorded and be sent to the Adjudicating Authority.
Seizure of property
Section 102 of CrPC gives Police the power to seize any property that is alleged or suspected to be stolen or part of commissioning an offence. The police officer seizing the property has to report the seized property to the nearest magistrate. However, this is different when it comes to PMLA. Section 17 states that when the authorized person has a reason to believe that a person has with him money obtained from money laundering or records or property relating to money laundering, he may seize and make a note of such a record or property. The authority seizing such evidence is required to forward the reasons for the seizure, along with the records to the Adjudicating Authority.
This seizure is only mandated for a period of thirty days as after thirty days, the seizing authority may request the Adjudicating Authority for continuing the seizure. This shows that there is a better safeguard under the PMLA as the investigating authority needs permission to keep the property in custody for more than 30 days. The same does not exist under CrPC and the police can keep the seized property in possession for the whole period of investigation without any time imposition. The Magistrate can make decisions as they seem fit relating to such seized property under Section 457 of CrPC.
The Delhi High Court, in the case of Abdullah Ali Balsharaf v. Directorate of Enforcement where the action of Enforcement Directorate seizing property under both Section 102 of CrPC and Section 17(1)(a) of PMLA was challenged, has discussed both provisions in detail and held that the Enforcement Directorate acting under PMLA cannot issue orders under CrPC. The Court noted that the scheme of seizure and checks and balances in PMLA are substantively different than what is enshrined in CrPC. The authorized officer under PMLA can only go ahead with seizing a property if (a) they have material in possession that provides a reason to believe that the property is related to a crime and (b) the seizing officer has to record the reasons. Both these checks do not exist under Section 102 of CrPC. This clearly shows that Section 17(1)(a) of the PMLA is inconsistent with Section 102 of CrPC and cannot be applied to a case relating to money laundering that is punishable under PMLA as Section 65 of PMLA states that the provisions of CrPC can only apply when they are not inconsistent with the provisions of PMLA.
The Delhi High Court in this judgement also disagreed with the view of the Gujarat High Court where in the case of Paresha G. Shah v. State of Gujarat, it was held that an order under Section 102 of CrPC can be said to be aiding the order of provisional attachment passed under Section 5(1) of PMLA or an order for seizing/freezing property under Section 17(1A) of PMLA.
conclusion
In a nutshell, PMLA and CrPC, are very similar in terms of the procedure that has been prescribed, is a both, a boon and a bane when it comes to applying the procedure. PMLA procedure for search and seizure does put a higher onus on the authority as it must have reasonable grounds for searching and seizing that must be recorded in writing. This check goes a long way in preventing misuse of power by the authority as the Adjudicating Authority can easily ascertain if the search and seizure took place on a weak or no reasons at all.
On the other hand, as it was seen above, PMLA shifts the onus of proof on the defendant to prove that he is not guilty which means taking away the legal doctrine of presumption of innocence. Due to these reasons, the nature, and the limits of the power of the Enforcement Directorate, the authority to enforce PMLA are under challenge right now in the Supreme Court in the case of Vijay Madan Lal Chaudhary v. Union of India where all these issues are up consideration. The decision of the Supreme Court in this case would serve as a landmark judgment showcasing the debate relating to the checks and balances of the criminal justice system relating to money laundering as well as how the Supreme Court interprets the different sections of PMLA to limit the power of the Enforcement Directorate.
[Aryaman Kapoor is a student of law at Jindal Global Law School, Sonepat]
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