On 25-01-2025, Eastern Book Company released Jai Anant Dehadrai’s ‘Prevention of Money Laundering Act, 2002: A Practitioner’s Guide’. The book is a comprehensive practitioners’ guide offering a detailed chapter-wise explanation of the Prevention of Money Laundering Act, 2002 (‘PMLA’), along with practical insights on compliance.
The event began with a welcome speech by Ms Prachi Bhadarwaj, Senior Associate Editor, EBC. She earmarked the flow of the event and introduced the distinguished guests, namely, Mr Atmaram N.S. Nadkarni, Senior Advocate, Supreme Court; Ms Aagam Kaur, Advocate, Supreme Court; Mr Zoheb Hussain, Advocate, Supreme Court; Mr Sanjoy Ghose, Senior Advocate, Delhi High Court; Mr Vijay Aggarwal, Advocate, Supreme Court; and Mr Jai Anant Dehadrai, Advocate, Supreme Court.
Mr Sudeep Malik, Director, EBC, delivered an introductory address wherein he mentioned the importance and role of legal books. He highlighted how information was curated in law books and what role such curation plays in the field of legal knowledge. On the issue of money laundering, he stated that this area of law had to navigate a Scylla and Charybdis, wherein the Scylla was the protection from unwarranted invasion of personal liberty and breaches of due process, and the Charybdis was money laundering, which was a cancer to honest nation development. Lastly, he underscored that the most controversial area of this law was the lack of protection when a person gets arrested under PMLA.
The event proceeded to the panel discussion titled ‘Procedural Fairness in PMLA’ moderated by Ms Kaur. She mentioned how, over the years, many grey areas have been found in the PMLA and posed a question to Mr Nadkarni about the principle of ‘bail is the rule, jail is the exception’ in light of PMLA.
Mr Nadkarni responded that PMLA was implemented to prevent the proceeds of crime from being used. The idea was that one would not be punished for gathering the money via a criminal act but rather for hoarding and laundering that wealth. However, unfortunately, instead of the proceeds of crime, people were being lodged in jail, and bail was being denied. He highlighted that these proceeds, which are in the possession of the accused persons, cannot be recovered by arresting them. Thus, instead of arresting these persons, the proceeds of the crime should be recovered, and the accused shall be punished under the predicate offence. He underscored that the Supreme Court struck down the provision of no bail in Section 45, but it was re-enacted by the parliament in the same form. Due to the Supreme Court coming down heavily on this issue, bail was now being granted in such cases by the High Courts. Thus, he concluded that there was no good reason why the general principle of ‘bail is the rule, jail is the exception’ should not apply here.
Ms Aagam added that the reason the government apprehended people for such a long time was the threat of the proceeds of crime being siphoned off.
Moving further, Ms Aagam asked Mr Vijay about the impact of the accused languishing in custody for many years as pre-trial prisoners due to the investigation being carried out for many years. Mr Vijay responded that Section 66(2) was the most dangerous in PMLA. He highlighted that the biggest issue with the judgment in Vijay Madanlal Choudhary v. Union of India (2023) 12 SCC 1 was that, on one hand, it stated that the Enforcement Directorate (‘ED’) had no jurisdiction to arrest if it was not related to the scheduled offence but on the other hand, gave power to the ED to lodge a complaint with the police.
Ms Aagam asked Mr Sanjoy where should the line be drawn regarding the power of ED to attach properties under the PMLA. Mr Sanjoy stated that the first thing that happens is that the property is provisionally attached, then finally attached and confiscated if the accused is found guilty. He stated that the problem was that the law provides for the recovery of money laundered or the value thereof. Thus, the ED which must do the hard work of finding the tainted money, is also given the soft option of taking any other property with such value, so instead of finding proceeds of the crime, they attach the property. He stated that there were two competing thoughts; one says go after everything because it would be hard to figure out what is tainted and what is untainted, and the other thought says that the ED must first do its homework, find the tainted money, and if it cannot be found, only then it can attach the untainted property. Lastly, he underscored how this would affect the common public.
Continuing the discourse, Ms Aagam asked Mr Zoheb how and where the line would be drawn between personal liberty and the objective of prevention of money laundering. Mr Zoheb answered that the purpose of attachment, as per the definition in Section 2(d), was the prohibition on transfer, conversion, and alienation of property. Thus, the only object was to preserve the property so that the victims could be compensated, which was not a new phenomenon as it was present in other laws as well. He stated that in this regard, the decision in Vijay Madanlal (supra) struck a balance by saying that the accused shall not be dispossessed unless there are very exceptional circumstances before trial. The Supreme Court read down the provision which said that the moment attachment is confirmed, the person must be dispossessed, and stated that unless there were very exceptional circumstances, which would be determined on a case-to-case basis, a person must not be immediately dispossessed.
“There are two levels at which we analyse a law; one is the law, and the other is how it is being implemented, and at both levels, there are judicial corrections.”
-Mr Zoheb Hussain
Mr Sanjoy added that in the process of removing old laws and bringing new laws, the Government should also regularly audit these laws. Similarly, in PMLA, an audit should be done to figure out how many confiscations have happened and how much of those recoveries have been returned to the victims. Thus, he stated that if there is a want for a system where jail was the rule and there was a presumption of guilt, then there must be more judges and efficient trials.
Lastly, Ms. Aagam asked Mr Jai about instances where lookout circulars (‘LOCs’) could be an effective tool or weapon in the hands of investigating agencies. Mr Jai stated that there are situations where one is not actively incarcerated as a pre-trial prisoner, but rather a LOC is used to assure their presence, and they are not allowed to leave the country or travel freely. There are also instances where LOCs are used as a coercive measure to trouble someone. He added that there had to be some sort of balance between incarcerating innocent people and preventing corruption.
After the panel discussion, the book was launched by Justice JK Maheshwari, Judge, Supreme Court; Mr Tushar Mehta, Solicitor General of India; Retired Justice Gita Mittal; and Mr Sumeet Malik, Director, EBC.
Mr Mehta, in his speech, talked about how the term ‘money laundering’ was coined due to the infamous gangster, Al Capone in the USA. He stated that there are many draconian laws in the country, but PMLA was the only law that targeted powerful and influential people, both financially and politically. Thus, a narrative is built against PMLA, which has now started affecting the process of law. Highlighting the global nature of money laundering, he mentioned how India was a part of the United Nations Financial Action Task Force, which provided 40-point guidelines for national legislation, and thus, the PMLA was enacted. Mr Mehta also talked about how the implementation of such laws is analysed at a global scale, failing or getting a low grade which, a country’s capacity to take financial assistance from the World Bank or Asian Development Bank would be impacted, the credit rating of the country would go down and the economy would be directly affected. He underscored that ED officials were also humans with follies, and there may be cases where there is abuse, misuse, or overuse of the provisions, and that was why there were courts.
“Even in those cases where prima facie as citizens you must’ve thought to be political when we found the cash we were running short of cash counting machines, but the narrative would be built that because of political reasons, a person was being persecuted.”
– Mr Tushar Mehta
“To classify a particular act or an agency as an oppressor merely based on a narrative which is built for professional or political reasons may be a little unfair to the nation, to the efforts being made at a global level to control the menace of money laundering.”
– Mr Tushar Mehta
In his address, Justice Maheshwari talked about the history of PMLA, the necessity of examining the procedure of implementation from the perspective of courts, and the usefulness of Mr Jai’s book. He stated that PMLA is a cornerstone of India’s legal framework as its provisions empower the state to combat the grave threat of money laundering while aligning with international standards. It is imperative to address its challenges and to ensure that its enforcement remains fair, impartial, and aligned with constitutional principles.
Lastly, Mr Jai delivered a speech about the journey of writing and publishing his book. He stated that when he began his practice in PMLA matters, he felt the need for a simple-to-read primer for ready reference with an easily accessible list of the latest cases and thematically organised chapters. He also mentioned that the most fundamental aspect of our justice system was the legal principle that every person accused of an offense is presumed to be innocent unless proven guilty beyond all reasonable doubt and by a procedure established by law. He stated that this spirit of fairness in protecting the rights of individuals unites the legal fraternity.
The event concluded with a vote of thanks by Ms Nilufer Bhateja, Senior Associate Editor, EBC.
