There are glaring omissions and inconsistencies in the PMLA 2002 which compel close examination. They relate to criminal misappropriation and criminal breach of trust, among other things

 

~By Aabad Ponda

The legislature seems to have failed to include offences related to criminal misappropriation punishable under Sections 403 and 404 of the Indian Penal Code (IPC) as well as offences of criminal breach of trust punishable under Sections 406 to 409 of the IPC while drafting the Schedule to the Prevention of Money Laundering Act (PMLA) 2002. The Schedule gets its importance from Sections 2(x) and 2(y) of the Act which define Schedule and Scheduled Offences, respectively.

A combined reading of these two sub-sections along with the main definition of proceeds of crime as defined under Section 2(u) and Section 3 of the Act clearly indicates that unless an offence falls under the Schedule of the Act, it gets excluded from the ambit of PMLA 2002.

In other words, in order to invoke the provisions of the Act, it is mandatory that there must be a Scheduled Offence—an offence falling under Parts A, B or C of the Schedule to the Act. This is clear from the definition of money laundering under Section 3 of the Act which requires that there has to be proceeds from the crime as defined under Section 2(u) and which, in turn, relates to a Scheduled Offence.

The offences related to criminal misappropriation and criminal breach of trust which are not mentioned in the Schedule to the PMLA Act, 2002, can allow criminals to escape from the clutches of the law. Moreover, as these are serious economic offences, there is absolutely no logic in excluding them from the Schedule. Also, it sends an unhealthy signal that people committing such crimes involving hundreds of crores of rupees can’t be booked under PMLA. And these include public servants and powerful politicians. It is time the legislative slip is seriously addressed at the earliest.

The offences referred to in the Schedule are, by and large, cognisable, or fall within the confines of the ones where a private complaint can be filed. The cognisable offences are investigated by filing an FIR. The investigation then culminates with the filing of a charge-sheet. In cases where no chargesheet is filed, the procedure is to file private complaints before the magistrate upon which cognisance is taken and process is issued.

However, there is another category of people against whom the magistrate issues process, so that the person gets arraigned as an accused and is summoned to answer the charge levelled against him/her.

Under Section 50 of the PMLA, 2002, the director, additional director, joint director, deputy director and assistant director have the power to summon any person to provide evidence or to produce records during the course of investigation or proceedings under the Act. All such persons so summoned are bound to attend in person, or be represented by authorised agents as directed, and shall be bound to state the truth on any subject they are being examined for or make statements and produce such documents as may be required. Further, every proceeding under Section 50 shall be deemed to be a judicial proceeding within the meaning of Sections 193 and 228 of the IPC which relates to punishment for giving false evidence in judicial proceedings and interrupting or insulting a public servant sitting in judicial proceedings. This is clear from a bare reading of Sections 50(2), 50(3) and 50(4)of the PMLA.

Section 50 comes into play when persons are already arraigned as an accused. No accused summoned under Section 50 can be compelled to answer questions relating to self-incriminating material or be punished for refusal.

The Supreme Court of India verdict in Ramanlal Bhogilal Shah And … vs D. K. Guha And Others reported in AIR 1973 SC 1196 is relevant here. In that case, when the person concerned was summoned after the registration of an FIR, a question arose about the applicability of Article 20(3) of the Constitution which protects the right against self-incrimination. It was held that even though an FIR was registered against the person summoned and the summons could not be quashed, he was still obliged to only appear and answer questions which did not incriminate him.

In blatant violation of the law, all persons under the PMLA Act are compelled to answer incriminating questions under threat of Sections 50(2) to 50(4). Summoning such people to answer only non-incriminating material is an exercise which is nothing but a waste of time from the point of view of the investigating agency.

On the contrary, compelling a person who stands as an accused to answer incriminating questions in the manner in which Section 50 of the PMLA Act is worded and interpreted by the authorities clearly violates Article 20(3) of the Constitution.

The Section should be amended to restrict the compulsion to non-accused persons who are only witnesses and clarify that in the case of persons accused of a Scheduled offence they need not answer incriminating questions. Form V under Rule 11 of the Prevention of Money Laundering Rules needs to be amended accordingly.

—The writer is an advocate, Bombay High Court, practicing on the criminal side