Supreme Court Comes Down Hard on Challenges to PMLA by Accused Seeking Relief

The Supreme Court on Tuesday (30.05.2023) deprecated and stopped a concerted attempt by money laundering case accused persons to challenge validity of certain provisions of PMLA, despite their constitutionality having been upheld by a three-judge bench of SC, to plead for interim relief of 'no coercive step' by Enforcement Directorate to virtually derail the agency's probe into many scams.

Dealing with a batch of petitions by accused in the purported Rs 2000 crore Chhattisgarh liquor scam case, an approach similar to what started in the year 2018 was noticed by a vacation bench of Justices Bela M Trivedi and P K Mishra, which on Monday had pointed out the fallacy in filing of writ petitions challenging the validity of provisions of PMLA when these have been upheld by the SC and reiterated by a two-judge bench.

When lawyers representing the accused realised that their pleas challenging validity of PMLA would not earn them the shield from arrest, they sought to withdraw the petitions. But, the bench ensured that they would not come back with the same challenge later, possibly to piggyback on a few pending petitions in which a bench headed by Justice S K Kaul had issued notice and granted protection from arrest.

Justice Trivedi said the court would have come down heavily on the petitioners for indulging in such litigation had they not withdrawn their petitions. She said that it was the duty of senior advocates to guide the briefing counsel about the fallacy in the approach - to mount fresh challenges to provisions of a legislation which have been upheld by the SC.

On July 27 Last year, a 3-J bench led by Justice A M Khanwilkar had put to rest the practice of getting 'no coercive step' orders for PMLA case accused after deciding a batch of nearly 300 petitions, some of which were transferred from various HIgh Courts, in the judgment titled 'Vijay Madanlal Chaudhary vs Union of India', in which it was also ruled that Enforcement Case Information Report (ECIR) is not akin to FIR to disentitle accused from a copy of it.

The history of challenge to provisions of PMLA for seeking 'no coercive step' orders, or anticipatory bail relief, started in 2018. After two division benches of the Delhi HC took contrasting views, the SC transferred the case to itself. A deluge of petitions challenging provisions of PMLA flooded the SC, solely for the purpose of seeking shield from arrest. The mechanical passing of 'no coercive step' orders saw some of the accused absconding, including Sterling biotech scam case accused Sandsaras fleeing the country, and derailing the probes.

The entire scheme of PMLA, especially specifically the constitutional validity of Section 50 and 63, was challenged with the accused lining up the best of the lawyers. The Union government through solicitor general Tushar Mehta and advocate Kanu Agrawal presented a wide array of arguments and convinced the court on most counts about the validity of the provisions.

But, the practice of seeking 'no coercive steps' through challenge to the provisions of PMLA returned this year. Leader of Opposition in the Madhya Pradesh Assembly moved the SC with a writ petition challenging validity of sections 50 and 63 of PMLA and that the 3-J bench judgment was wrong, a procedure unknown to the SC. But a bench led by Justice Kaul decided to entertain the plea. Encouraged, the accused in the Chhattisgarh liquor scam decided to adopt the same approach, but the vacation bench stopped them in their tracks.

Interestingly, just weeks back another SC bench in 'Y Balaji V Karthik Desari' case had refused to entertain the petitions despite being told that a bench led by Justice Kaul had entertained a similar plea. The bench had said mere pendency of another petition, and its reference to a 3-J bench headed by Justice Kaul, cannot erase the standing of the 3-J bench ruling in the Vijay Madanlal case.