Explained: The Supreme Court verdict on PMLA, and why petitioners have sought a review

How is a judgment reviewed?

A ruling by the Supreme Court is final and binding. However, Article 137 of the Constitution grants the SC the power to review its judgments or orders. A review petition must be filed within 30 days of pronouncement of the judgment. Except in cases of death penalty, review petitions are heard through “circulation” by judges in their chambers, and not in an open court. Lawyers make their case through written submissions and not oral arguments. The judges who passed the verdict decide on the review petition as well.

The SC rarely entertains reviews of its rulings. A review is allowed on narrow grounds to correct grave errors that have resulted in a miscarriage of justice. “A mistake apparent on the face of record” is one of the grounds on which a case for review is made. This mistake, the court has said, must be glaring and obvious — such as relying on case law that is invalid.

Why is the PMLA verdict under review?

Congress MP Karti Chidambaram, one of the petitioners who challenged the PMLA, sought a review of the verdict. The key grounds on which review is sought are:

* Amendments introduced as Money Bills: In 2015, 2016, 2018, and 2019, amendments including on bail and classification of predicate offences were made to the PMLA through the Finance Act. The petitioners argued that the PMLA amendments do not qualify as a Money Bill as defined under Article 110 of the Constitution.

While the Court agreed that this could be a valid contention, it did not decide on the issue since the question of what qualifies as a Money Bill has been referred to a larger seven-judge Bench in another case. The seven-judge Bench — which is yet to be constituted — is supposed to decide the contours of a Money Bill, and whether amendments to service conditions of Tribunal members and passing of the Aadhaar Act could have been made through the Money Bill route.

The review petition argues that the court could not have upheld the PMLA Act without deciding this crucial question or deferring the challenge till the larger Bench settles the debate.

* Interpretation of Section 3 of the PMLA: Section 3 of the law defines the offence of money laundering in terms of who is punishable. It states: “Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime and projecting it as untainted property shall be guilty of offence of money-laundering.”

The SC in its verdict, accepted the government’s submission that a drafting error had crept in, and said that the expression “and” should be read as “or” in Section 3. This reading would mean that projecting the property as untainted property would not be an added condition to concealment, possession, acquisition and use of such property. If the expression “and” is to be read as “or”, then projecting the property as an untainted property could be a separate criterion.

The petitioners seeking a review argue that this interpretation would expand the scope of the provision.

Shiv Sena MP Sanjay Raut has been accused of offences under the PMLA. (Express Photo/File)

* Retrospective application of the offence of money laundering: The PMLA is an offence to punish money laundering with an intent that a person must not be allowed to take benefit of the offence he commits. The Act limits itself to “proceeds of crime” which is property that is derived out of a scheduled offence committed earlier by the accused. A scheduled offence is an offence specifically listed in a Schedule attached to the PMLA.

However, several offences have been added to the Schedule since the PMLA was enacted in 2005. The key to defining what is money laundering is determining if that property is derived from a “scheduled offence”.

In its ruling, the SC said the offence of money laundering, i.e., enjoying the “proceeds of crime”, is a “continuous one”, and can be acted upon independent of when the scheduled offence was committed. This means holding property that is derived from an offence which may not have been a scheduled offence at the time of commission of the offence, will also be defined as money laundering.

The petitioners seeking review have argued that this is a retrospective reading of the law, and violates the fundamental right under Article 20(1) of the Constitution that guarantees that “no person shall be convicted of any offence except for violation of the law in force at the time of the commission of the act charged as an offence, nor be subjected to a penalty greater than that which might have been inflicted under the law in force at the time of the commission of the offence.”

* Enforcement Directorate distinct from “police”: The SC verdict upheld Section 50 of PMLA that empowers ED officials to record statements on oath from any person. This is admissible in court, unlike statements or confessions made to the police. The verdict held that officers of the ED are not “police officers”, and ‘investigations’ were “inquiries”. In line with this reading, the SC also said that the ED need not supply a copy of the Enforcement Case Information Report (ECIR) with an arrested person.

The petitioners have argued that SC has not taken into account certain obvious provisions which give penal powers to the ED while making this determination.

* Bail provisions: The SC verdict, citing a compelling interest in imposing stringent bail conditions for economic offences, upheld the bail provisions under PMLA that impose a reverse burden of proof on the accused.

The petitioners have argued that “in the absence of an FIR (or equivalent), Complaint (charge sheet), case diary (not maintained), and documents relied upon by the prosecution, no accused can present facts and submissions to persuade the Special Court to believe that he is not guilty of such offence”.