Chhattisgarh on Wednesday moved the Supreme Court, challenging the constitutional validity of the Prevention of Money Laundering Act (PMLA), 2002. It flagged “unbridled” powers of the Enforcement Directorate (ED), which is “torturing, abusing, and manhandling” officials in the garb of conducting an investigation.
It has requested the Supreme Court to intervene using its powers granted by the Constitution’s Article 131 which allows it to decide on inter-state or Centre-state disputes.
Chhattisgarh has thus become the first state to challenge the money laundering Act and its provisions. Earlier, private individuals and parties challenged the law on various grounds but the validity of the law was upheld by a three-judge Bench of the apex court last year. The plea was mentioned by Senior Advocate Mukul Rohatgi and Advocate Sumeer Sodhi, who appeared for Chhattisgarh.
The state has challenged the constitutionality of Sections 17 (search and seizure), 50 (which empowers an Enforcement Directorate officer to summon a person and record his/her statement), 63 (punishment for false information or failure to give information), and 71(the Act to have an overriding effect) of the PMLA, 2002.
It said Section 50 read with Section 63 of the PMLA violates the right of an individual against self-incrimination as ED is empowered to call upon any person to record his/her statements under Section 50 and the said person is bound to state the truth in the statement so recorded, otherwise he/she would be subjected to penal provisions under Section 63 of the Act.
The petition noted the state is conscious of the recent judgment of the SC in Vijay Madan Lal (Supra). It said that the judgment requires reconsideration by a larger Bench given the pivotal questions of “unrestricted” and “unbridled” powers of ED which violate fundamental jurisprudence of criminal law and procedure.
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The plea said on multiple occasions, the ED acted more than its powers in states that hold a political stance opposite to the one in power at the Centre. It said that such conduct amounts to a severe misappropriation and arbitrary use of power, which goes against the constitutional mandate, especially when investigative agencies are expected to be entirely independent and uninfluenced. The Bench said that the matter would be taken up for hearing on May 4.
The State said certain amendments have been carried out to the provisions of the PMLA by way of the Finance Acts of 2015, 2016, 2018, and 2019.
It also said the amendments to the PMLA through the route of the Finance Acts are liable to be struck down as being colourable uses of legislative power, violative of Article 110(1) of the Constitution.
Chhattisgarh submitted that several complaints are being received on behalf of officials of the state government, as well as residents of the state to the effect that ED is torturing, abusing, and manhandling them in the garb of conducting an inquiry/investigation.
Just a day earlier, Solicitor-General for India Tushar Mehta told the court that provisions of the Act complied with the global standards set by the Financial Action Task Force (FATF) and are part of the intergovernmental response to organised crime.
On the other hand, senior advocate and MP Kapil Sibal told the apex court on Monday that the Supreme Court’s July 2022 decision in Vijay Madanlal Choudhary needed a “relook”.