Section 65 of the Prevention of Money Laundering Act, 2002 (hereinafter, PMLA) has been under scrutiny for long, it being one of the means of exploitation by the authorities. It gives them the opportunity to pick and choose the provisions they want to apply in case a certain aspect is covered by both the Criminal Procedure Code, 1973 (hereinafter, CrPC) and PMLA. S. 65 of PMLA states that:
The provisions of the Code of Criminal Procedure, 1973 (2 of 1974) shall apply, insofar as they are not inconsistent with the provisions of this Act, to arrest, search and seizure, attachment, confiscation, investigation, prosecution and all other proceedings under this Act.
Although the legislators have included the word ‘inconsistent’ to create a demarcation as to when will the provisions of CrPC be used to supplement PMLA the authorities under the Enforcement Directorate (hereinafter, ED) have become blatantly ignorant towards it.
The Supreme Court in the case of Innoventive Industries Ltd. v. ICICI Bank laid down the test for determining if there is repugnancy between two statutes by finding out whether one of the statutes has adopted a plan or a scheme, which will be hindered or obstructed by giving effect to the other statute. In the case of Abdullah Ali Balsharaf v. Directorate of Enforcement a case arose in relation to an inconsistency between S. 109 of CrPC and S. 17(1A) of PMLA where the ED seized the assets of the petitioner u/s 102 of CrPC. The court while explaining how the provisions of CrPC were inapplicable for seizing the property for the offence of money laundering, cited inconsistencies on two grounds:
- The power u/s 17(1) of PMLA to provisionally attach, seize or freeze a property can be exercised only (a) if the specified officer has material in his possession, which provides him ‘reason to believe’ that the property sought to be attached or seized is proceeds of crime or related to a crime; and (b) after recording the reasons in writing. Whereas the power under S. 102 of CrPC can be exercised without meeting any of the abovementioned requirements.
- U/s 20 of PMLA the orders of provisional attachment and/or seizure and/or freezing cannot extend beyond the period of 180 days. Whereas the property can be seized u/s 102 of CrPC for an indeterminate period.
The nature of the power of seizure contemplated under the provisions of CrPC is drastic and exercise of such power is likely to have adverse effects on the person concerned. The parliament in its wisdom did not confer upon the ED any powers to attach or freeze assets on a mere suspicion. The Authorities cannot bypass the legislative intent using the tool of arbitrary discretion and need to abide by the legislative wisdom behind a particular provision.
In another case Moin Akhtar Qureshi v. UOI the Delhi High Court held that there lies an express inconsistency between the provisions of arrest under CrPC and PMLA. The authorities cannot resort to S. 41 of CrPC to arrest a person for an offence of money laundering. While u/s 41 of CrPC the ED can arrest a person on ‘mere suspicion’ however the arrest provisions u/s 14 of PMLA have preliminary requirements that need to be complied with. U/s 14 of the PMLA sufficient evidence to form a “reason to believe” that the person is guilty of the offence of money laundering is required. This requirement is not required to be fulfilled in case an arrest is made u/s 41 of the CrPC.
It is evident from the above two cases how the ED is these days acting in a grossly arbitrary manner and using S. 65 of PMLA as a means of justifying their illegal and random acts. The utter ignorance of the provisions of PMLA by the ED is frightening and needs to be dealt by the courts in a stringent manner. Deviating from the scheme of the act in any case directly impinges on the fundamental right of the victim u/a 14 of the Constitution as the act becomes arbitrary. Therefore, the superior authorities need to be pro-active and take strict action against erring officers to curb this gradually increasing encroachment of the rights of the victim to resolve this issue.