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Various statutes confer the power of recording statements to the investigating agencies. The investigating agencies can record statements of the accused and the witnesses, which are verified during the course of examination in chief and cross-examination of the parties. As a general rule, such statements recorded by the investigative agencies must be voluntary and should not have been taken under any undue influence or threat. Recently while upholding the validity of the PML Act, the Supreme Court has elaborated on the law governing statements made under PMLA. This piece of writing will discuss that in detail.
Table of Contents
With the rising instances of money laundering across the globe, many countries introduced stringent measures to curb this menace. India brought legislation that sought to prevent instances of money laundering. The Prevention of Money Laundering Act was enacted in response to India’s global commitment to prevent money laundering.
The major objectives of this Act were combatting the use of money to fund illegal activities, preventing money laundering, and providing for the confiscation of property derived from the offence of money laundering. The Act introduced certain strict punishments against those found guilty of money laundering. This included freezing or seizing properties, records, attachment of property, etc.
However, this legislation hasn’t been free of controversy as many have questioned its validity and significance. Claims of a low conviction rate further support this. This legislation was criticized as a draconian law that affected people’s personal liberty. Various Sections of the Act were termed unconstitutional by many as they claimed it was violative of the Constitution of India.
However, on July 27, 2022, the Apex Court of the country upheld the validity of various sections of the PML Act 2022. The Court called it unique and special legislation.
The following are the authorized officers who as per statute authorised to record statements under the Act-
Section 50 of the Prevention of Money Laundering Act confers the power to investigating authority to summon any person whose attendance the authority considers necessary to give evidence or to furnish any records during the investigation process.
This section further provides that summoned persons shall be bound to attend physically or through authorized agents, as the officer may direct. Such person shall be required to state the truth upon a subject for which they are examined or make statements and produce documents.
Section 11 (2) provides that the persons who have been directed by the adjudicating authority to attend in person or through authorized agents must make a truthful statement about the subject for which they are examined.
Apart from that, Section 16 enables the authority under the PML Act to record statements of persons who may be present where the Act of money laundering offence is carried out. Such place shall also include any other place wherein the person carrying out such activity states that his records are kept or the place where any part of his property relating to such activity is kept.
Section 18 of the PML Act allows the authority under the Act to record the statements of a person who has secreted about himself or in anything under his possession, control, record, or proceeds of crime that is relevant to any proceedings under the Act. Section 18 provides that the authority shall record such a person’s statement in respect of records or proceeds of crime found or seized by the authority during the search.
Further, Section 63 of the Act punishes a person in a case where such person doesn’t sign a statement that he makes during proceedings under the Act, which is required to be signed.
The Supreme Court in Vijay Madanlal Choudhary Vs Union of Indiahas elaborated on various aspects of the PML Act, including Section 50 of the Prevention of Money Laundering Act 2002.
Contentions raised against Section 50 of the PML Act
Supreme Court’s View Point
The Court said it will not preclude the prosecution from proceeding against the person.
Statements made under PMLA: Comparing with the NDPS Act
On comparison of provisions of PMLA relating to the recording of statements with the NDPS Act, the Supreme Court held that there is a stark distinction between the two. The Court pointed out that since the authorities under PMLA are not police officers, the statements recorded by the PML Act cannot be hit by the vice of Article 20(3) of the Constitution.
Section 63 of the Act
Under this section, penal consequences would ensue for giving false information if the person refuses to answer any question put to him by the authority or if he refuses to sign the statements made under PMLA. The Court has clarified that this provision is just an enabling provision that applies to situations stated there. It also pointed out that it is in the nature of consequences that ensue for not cooperating with the authorities during the proceedings.
The Court also stated that the power vested with the authority is analogous to the power exercised in a Civil Court under CPC while trying a suit related to matters mentioned in Section 50 of the PML Act. The Court said that it is in the nature of deeming provision allowing the authority to ensure prevention of the money laundering offence.
The Court opined that if any person makes misleading revelations in such inquiry, then the matter should be proceeded with in accordance with the law.
The Court held that Section 63 of the PML Act is the procedure established by law and suggested that to hold that such a provision be unreasonable or manifestly arbitrary would be unfathomable. The Court held that it has clear nexus with the purpose sought to be achieved by the PML Act 2002.
Supreme Court’s Conclusion
Based on the above premise, the Supreme Court made two significant conclusions pertaining to Statements made under PMLA-
In the PMLA verdict, the Supreme Court’s Bench cleared the air regarding the validity of the Act while also upholding the ED’s power under the Act. This also means that the investigation agency’s process, including recording statements made under PMLA, will continue to go unchecked. The margin of error for the person accused seems less under the Act. However, in order to ensure a fair trial and investigation, the principles of natural justice should be followed. The investigating agency should support its allegations against the accused with compelling shreds of evidence. The process of statements made under PMLA should be followed, keeping in mind the principles of natural justice.
Read our Article: Underlining the Scope of Investigation under PMLA
Ashish M. Shaji has done his graduation in law (BA. LLB) from CCS University. He has keen interests in doing extensive research and writing on legal subjects especially on corporate law. He is a creative thinker and has a great interest in exploring legal subjects.
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