Stuti Rastogi

Section 50 of the Prevention of Money Laundering Act weighs heavy on the offender and fails to protect the fundamental right against self-incrimination. In this article, the author gives shape to this claim by showing how the mode of collecting evidence under the PMLA, and the admissibility of such evidence is in flagrant contravention of the privilege against self-incrimination which is more pronounced in other jurisdictions.

Introduction

The Enforcement Directorate (ED) issuing summons to yet another prominent minister, sparks curiosity over the wide powers of the Enforcement Directorate and the statutes concerned with the same. After the recent summoning of former Chief Minister of Jammu & Kashmir, Mehbooba Mufti, regarding a money laundering case – the PDP leader challenged the summon for being violative of the fundamental rights vesting in an accused: in the petition, Mufti challenged the validity of Section 50 of the Prevention of Money Laundering Act, 2002 (hereinafter ‘PMLA’) for being violative of Article 20(3) of the Constitution along with the Articles 14 and 21 in the same. 

Section 3 of PMLA defines money-laundering to be an act of participating, assisting, processing or possessing the proceeds of any crime relating to the predicate offences mentioned under the Schedule to the PMLA. The Schedule attracts offences from number of sundry statues such as the Indian Penal Code, the Narcotics Drugs and Psychotropic Substances Act, the Explosive Substances Act, the Unlawful Activities (Prevention) Act, the Arms Act, the Wildlife (Protection) Act, the Copyright Act, and the Antiquities and Arts Treasures Act, to name a few. The Act also mentions that the provisions of Criminal Procedure Code (hereinafter ‘CrPC’) shall be applicable as long as they are consistent with the provisions of the PMLA.

The impugned section, Section 50 of the PMLA, grants various powers to the authorities including Director, Additional Director, Joint Director, Deputy Director or Assistant Director, with respect to the investigation, summons, production of documents, examination on oath, etc. The Section states:

“Powers of authorities regarding summons, production of documents and to give evidence, etc.— (1.) The Director shall, for the purposes of Section 13, have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908) while trying a suit in respect of the following matters, namely:—

1. 1. 1. 1. 1. discovery and inspection;
            2. enforcing the attendance of any person, including any officer of a banking company or a financial institution or a company, and examining him on oath;
            3. compelling the production of records;
            4. receiving evidence on affidavits;
            5. issuing commissions for examination of witnesses and documents; and
            6. any other matter which may be prescribed.”

The persons summoned under the section are bound to attend the proceedings as directed by the officer. An officer may also retain the custody of any such person for a period not more than three months. The Act is contentious because it attacks the summoned person with a double-edged sword i.e. production of original records, documents and other evidence (self-incrimination) under Section 50 and punishment for perjury or silence under Section 63. A person interrogated under PMLA is bound to furnish the evidence even if it’s self-incriminatory in nature. Consequently, the right to silence laid down in Nandini Satpati v P.L.Dani is denied to a person summoned under the PMLA.  Therefore, the section has been a frequent target for its violation of Article 20(3) and Article 21, the right against self-incrimination and the right to life and personal liberty, respectively. 

The Procurement and Use of Evidence Collected under the PMLA

In English law, the principle of self-incrimination arose out of the case of John Lilburn, purporting that an accused shall not be put on oath to extract evidence out of him. The privilege against self-incrimination was based on the policy to encourage evidence in the courts of justice and also to protect the witness from any injury or needless annoyance as far as possible. In the same way, the fifth amendment of the USA provides immunity to self-incrimination. This applies to all kinds of disclosures or evidence provided by the witnesses as well as the parties in civil or criminal proceedings. It extends to cover unreasonable search and seizure such that any other evidence or documents so obtained in breach of this privilege were held to be inadmissible in the court of law.

In India, the test to see whether any piece of evidence is in breach of the this right, within the purview of Article 20(3), is comprised of three points essentially: firstly, that the person giving the statement or any other form of evidence is an accused; secondly, that such a statement had a bearing on the criminality of that individual and thirdly, that the accused was compelled to make that statement or give such evidence. For cases under the PMLA, it was held in the case of Yogesh Mittal v Enforcement Directorate that an Enforcement Case Information Report (hereinafter ‘ECIR’) is akin to a charge-sheet under Section 173 of the Code of Criminal Procedure (CrPC). Further, in Dinesh Dalmia v CBI  the Supreme Court held that-

“A charge-sheet is a final report within the meaning of sub-section (2) of Section 173 of the Code. It is filed so as to enable the court concerned to apply its mind as to whether cognizance of the offence thereupon should be taken or not. The report is ordinarily filed in the form prescribed therefore. One of the requirements for submission of a police report is whether any offence appears to have been committed and, if so, by whom.”

The Court, in the case of Satya Narain Musadi v State of Bihar, observed that a report under Section 173(2)is required as it signifies that the investigating officer has convincing information against a person, and that the Court may take cognizance of the same and begin with a formal investigation against the accused. Towards the same direction, in the case of SK Sinha v Videocon International Ltd., it was held that cognizance indicates the point when the matter is judicially noticed and proceedings with respect to the alleged offence may be commenced. In all the cases under the CrPC, the issuance of charge-sheet is tantamount to a step a higher authority is enabled to take cognizance of the offence, notwithstanding whether it does so. However, in the context of the PMLA – the issuance of summons itself appears to signify that cognizance of the alleged offence has been taken. Insofar as the PMLA corresponds to CrPC, an ECIR is equivalent to a charge-sheet and an issuance of summon for examination of the accused marks the beginning of  proceedings against the accused. 

The next step after summon comprises examination and extraction of sensitive information from the accused. Under Section 50, the Act authorizes the officials of the ED to examine the alleged offenders on oath, compel them to produce records, receive evidence on affidavits etc. Section 66 of the PMLA prescribes that an official may furnish the drawn information to any other law enforcement agencies if, in his opinion, it is necessary in the favour of public interest. The information gathered in such examinations can not only be used as evidence for the purposes of the investigation under the PMLA, but also under other statutes mentioned in the Schedule annexed to the PMLA. Section 54 of the PMLA also authorizes officers from other departments such as the Income Tax Department, the Securities and Exchange Board of India, etc. to assist the ED authorities. It implies that once such evidence is obtained form an accused, it can be used by other authorities and the accused can be tried for other offences also. In the case of B. K. Singh, Enforcement Directorate v Surajpal, an ECIR was filed for an offence under Section 3 of the PMLA i.e. money-laundering. However, after the examination of witnesses, the prosecution could not prove the offence of money-laundering but the accused persons were convicted under the Wildlife (Protection) Act. Therefore, the Act grants enormous powers to the officers to try an accused under the PMLA as well as the other Scheduled offences through the same inquiry.

The Admissibility of Evidence Collected by the ED

Section 25 of the Evidence Act states that no confession shall be proved against the accused when made to a police officer. However, the PMLA manages to dodge the import of this rule of evidence qua Section 25 – by not considering ED officers to be police officers. Any special officer shall be considered a police officer only if explicitly vested with such powers under The Police Act, 1888. In the case of Vakamulla Chandrashekar v Enforcement Directorate, the Delhi High Court laid down that the authorities for the purpose of PMLA are not police officers. There are various statutory protections that are hindered by the current status of ED officers not being police officers. Section 132 of the Indian Evidence Act protects a witness from being compelled to give testimony.

In the case of Ibrahim v The Queen the Privy Council defined a statement to be “voluntary” if it has not been obtained by the accused under a fear of prejudice or hope or advantage, exercised or held out by a person in authority or by oppression. In the case of MP Sharma v Satish Chandra, the Supreme Court stated, that “a personal testimony shall depend upon his volition”. The case of Tofan Singh v State of Tamil Nadu provided for various safeguards vis-á-vis admissible confessions, including an exposition of the ‘right to remain silent’. Section 161(2) of the CrPC is symbolic of this right since it protects an accused from exposing himself to a criminal charge. However, the PMLA fails to protect the ‘right to be silent’ of the accused and instead prescribes for a punishment under Section 63, for giving false information or failing to give information. 

It is argued that the current status of ED officers is anomalous because they possess the powers in the nature of police officers such as the power to arrest under Section 19 among other analogous powers, but they are exempted from such a label. In Directorate of Enforcement v Deepak Mahajan the Apex Court went on to hold that ED officers have the power to seek remand of an accused in their custody during investigation. Now, within the legal premise, when such custody is granted to an officer, any statement recorded under a Special Act under oath by an officer should become inadmissible, as per Section 25 of the Evidence Act, thereby rendering the entire investigation null and void. In Toofan Singh the Supreme Court also opined that:

“We have also to keep in mind the crucial test to determine whether an officer is a police officer for the purpose of Section 25 of the Evidence Act viz. the “influence or authority” that an officer is capable of exercising over a person from whom a confession is obtained.”

The 152nd Law Commission of India Report also suggests that public officers who have the power to arrest and detain persons in custody shall be included within the scope of Section 25 and 26 of the Evidence Act. It is crucial that the legislature take into account the aforementioned factors and recognize this status of ED officers. Once the garb of special protection is removed, the evidence given to ED officers during the PMLA proceedings shall be rendered inadmissible.

Conclusion

The Supreme Court has held in a plethora of cases that a person interrogated during an investigation under Section 50 of PMLA shall not be considered “accused” within the meaning of Article 20 (3). It has also stated that the investigating officers shall not be considered police officers. The rationale behind the former opinion is that the Court believes that the stage of summon and consequent interrogation is a preliminary stage and the person need not be labelled as an accused or a witness. Regarding the latter, the apex court stated in the case of State of Punjab v Barkat Ram that the police officers are for the purpose of detection and punishment of crime unlike the investigating officers under the Special Acts.  

This article highlights the legal anomalies in Section 50 of the PMLA where the evidence obtained thereunder is used colourably for criminal prosecution for a number of other charges, under different statutes. Section 71 of the PMLA prevents the applicability of other legislations on the basis of inconsistency with the provisions of the PMLA. The Court has defended its disregard of constitutional liberties more on the basis of moral conviction than legal premise. The judgement of Vakamulla Chandrashekhar is indicative of the same which states that money laundering is a serious threat to the integrity and sovereignty of the nation.

The Act seems to be an attempt at obtaining compelled testimony under the guise of examination: this is far from the actual object and intent of Article 20(3). It is observed that the Indian interpretation of the privilege against self-incrimination is selective and in pursuance of the crime-control model. It seeks to directly target the crime and the criminals without balancing their individual rights and liberties. By contrast, English as well as American laws, give a wider scope for interpretation to the right against self-incrimination. Correspondingly, the authorities in India should rely on the due-process model and allow a wider connotation to the privilege against self-incrimination, so that they do not emasculate the principles of natural justice.

The author is a third year student at the Dr. Ram Manohar Lohiya National Law University.

Image Source: Bar&Bench