Justice Abhay Shreeniwas Oka and Justice Augustine George Masih granted bail to former Tamil Nadu Minister of Electricity, Prohibition and Excise, Senthil Balaji in an alleged cash-for-jobs scam. Balaji was arrested in the wee hours of June 14, 2023 by the central agency Enforcement Directorate (ED).
The arrest which was termed as “controversial” is part of an unfolding investigation into a murky job racket scandal, dating back to his earlier tenure as transport minister under the 2011-16 AIADMK government. His multiple bail pleas have largely remained futile for over 16 months.
The Apex Court granted bail on the ‘ground of delay in trial’. The bench held that higher thresholds for granting bail in stringent penal statutes like the Prevention of Money Laundering Act (PMLA), Unlawful Activities (Prevention) Act, UAPA, and Narcotic Drugs Psychotropic Substances Act (NDPS) act cannot be a tool to keep an accused incarcerated without trial.
Justice Okha and Justice Masih observed, “ …At this stage, the contention of the appellant regarding the deposit of remuneration received as MLA and agriculture income cannot be accepted in the absence of any prima facie evidence to show the existence of the appellant’s agriculture income.
Therefore at this stage, it will be very difficult to hold that there is no prima facie case against the appellant in the complaint under Section 91)(b) of the PMLA and material relied upon therein.”
Among the five articles seized from Balaji’s house, the ED argued that the folder named “CSAC” in the pen drive showed money received in exchange for jobs. However, senior advocates Mukul Rohatgi and Sidarth Luthra for Balaji termed it as tainted, “the Tamil Nadu Forensic Science Laboratory (TNFSL)’s analysis of the seized pen drive shows that the said file CS AC was not found on the pen drive, and a file named csac.xlsx was found.”
This is not just an isolated case. Tens and hundreds of cases have been booked under such pretexts and the ED has launched investigations against high-profile politicians, businessmen and celebrities under the provisions of PMLA, attaching thousands of crores of properties without proper conclusion.
The PMLA Act per se has faced vociferous challenges, criticism, and the procedure adopted by the officials of the ED in conducting search operations, arrests and seizures of the accused without prior approval under the law from every quarter of the civil society.
Critics argue that these powers allow for arbitrary actions and overreach by the ED, leading to prolonged detentions without charges being framed for days and months together in many cases.
What is the punishment under PMLA 2002? Offenders, “shall be punishable with rigorous imprisonment for a term which shall not be less than three years but which may extend to seven years and shall also be liable to fine which may extend to five lakh rupees.” Today, it has been extended to 10 years.
Chief Justice of India (CJI), DY Chandrachud time and again advocated bail is a rule and jail as an exception. At a meeting in Bengaluru he said , “people who should be getting bail in the trial courts are not getting it there, as a result of which they have to invariably move to higher courts. People who should be getting bail in the high courts will not necessarily get it, as a result of which they have to move to SC. The delay compounds the problem of who is facing arbitrary arrests.”
If this is so, why is obtaining bail has become arduous? Which provisions of the law are becoming a hurdle to the judges in the lower courts and High courts in granting bail? Former Central Information Commissioner and Professor of School of Law, Mahindra University Prof. Madabushi Sridhar says, “it’s unreasonable, and we should remember that it was just an order on ‘bail’ which could further long for finalising judgment”.
In addition, there is an ambiguity in the definition of ‘Proceeds of Crime’. The PMLA definition provided in a way has raised legal and constitutional challenges. The ‘Proceeds of Crime’ includes property not only derived or obtained from the scheduled offence but also any property which may directly or indirectly be derived or obtained as a result of any criminal activity relatable to the scheduled offence. Isn’t this draconian? Prof Sridhar says, “I agree with this point, the definition of ‘Proceeds of Crime’ is made almost impossible to wriggle out of the case, because, recently the Parliament made three new criminal laws, especially the BNS (former IPC) on this subject the law was made further complicated and increased the ambiguity. When a criminal law is ambiguous, the police assume more powers make innocent suffer, and abuse the power of the Government. Unfortunately, our leaders and MPs are not bothered.”
ED’s Power to attach property without proof
At the outset, how can ED seize or attach a property without establishing the link to the alleged criminal activity? Second, the burden of proof is ‘on the accused to prove their innocence.’ This is surprising and totally contradicts what they teach at Law Schools, “…until proven guilty, he is innocent’. Prof Sridhar agrees; “I agree”.
Supreme court’s ruling on PMLA in 2022
In July 2022, a Division Bench of the Supreme Court of India unanimously upheld the validity of multiple challenged provisions of the PMLA Act and the wide powers of the ED. In his 545 page judgement, Justice Khanwilkar, Justice Dinesh Maheshwari and Justice CT Ravi Kumar expressed concerns regarding the due process of law and the need for the checks on the powers of ED. The bench held, “Even when ED manual is not to be published being an internal departmental document issued for the guidance of the Authorities (ED Officials), the department ought to explore desirability placing information on its website which may broadly outline the scope of the authority of the functionaries under the Act and the measures to be adopted them also the options/remedies available to the person concerned before the Authority and before the Special Court”.
Isn’t the provision, the burden of proof is on the accused sounds arduous and that too on offences committed before the law was even enacted? Prof. Sridhar says, “it further made undemocratic and unreasonably problematic”.
Political misuse of PMLA
It is an indisputable fact that the law is controversial and obtaining bail has become difficult. This becomes even more controversial when high-profile political figures and business leaders get arrested with the allegations of the Act is being used for political vendettas and harassment.
Need for reform in PMLA
No doubt, the country needs an Act of this nature to ensure financial integrity and keep a check on money laundering. But at the same time governments should not use its provisions to target its opponents and resort to selective investigations and arrests. Professor Sridhar argues, “The Constitution of India guarantees fair trial…and hence bail will become impossible unless accused need to incur huge money and difficult to access the apex court.”
Several controversial provisions in the Act and its implementation has raised several concerns about due process, civil liberties, freedom to fair trial, infringing on fundamental rights, prolonged trial and political misuse.
Time to re-examine the PMLA
Nothing is permanent in life. When the Law was designed to combat serious financial crimes, its application should not select individuals unpalatable to the ruling dispensation. When the situation gets reversed, it will continue to haunt the framers of the Law. Then there is the point in crying over spilt milk. Time to re-examine the controversial provisions of PMLA.
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