Dear Friends,

Wish you all the Best on the Occasion of Azadi ka Amrit Mahotsav. As we celebrate 76th Independence Day we enter into the ‘Amrit Kal’ as mentioned by our Hon’ble Prime Minister.

The immortal words of Justice M.P. Thakkar in State of Gujrat v. Mohanlal Jitmalji Porwal & Ors. (1987) 2 SCC 364 while dealing with the issue of prosecutions for economic offenses:-

“The entire Community is aggrieved if the economic offenders who ruin the economy of the State are not brought to books. A murder may be committed in the heat of moment upon passions being aroused. An economic offence is committed with cool calculation and deliberate design with an eye on personal profit regardless of the consequence to the Community. A disregard for the interest of the Community can be manifested only at the cost of forfeiting the trust and faith of the Community in the system to administer justice in an even handed manner without fear of criticism from the quarters which view white collar crimes with a permissive eye unmindful of the damage done to the National Economy and National Interest”.

Economic offenses now are said to be a class unto themselves. Therefore, we see a large number of special acts being enacted for the purposes of punitive action which works as a deterrent also. One such law that has been in under attack in public discourse as well as in the Courts of Law is the Prevention of the Money Laundering Act, 2002 (PMLA). Being an Act that has been called both draconian as well as essential, the law has been not only in the news due to it’s alleged invocation against various high profile personalities, but also due to the Judgement of the Supreme Court in Vijay Madanlal Choudhary & Ors. v. UOI that has upheld various contentious as well as important aspects of the 2002 law which had been challenged as arbitrary and unconstitutional. In a detailed judgement spanning well over 500 pages, the Supreme Court has dealt with all the issues, Section wise and in detail before pronouncing authoritative findings upon the constitutional challenges raised.

Needless to say, erudite authors shall enlighten the readers with respect to various aspects of the judgement in the coming days while the lawyers will argue these matters threadbare before the High Courts. Even though the ambit of the Judgement is extremely wise as it covers some of the important aspects of almost the entire act, the Judgement shall perhaps be most cited during bail applications under the PMLA, having perhaps revived the infamous ‘twin conditions’ for grant of bail under the Act (a prima facie satisfaction from the Judge deciding the bail application that not only is the accused ‘not guilty’ of such an offense but also that the accused is not likely to commit any offense while on bail) that had been struck down in Nikesh Tarachand Shah v. UOI & Onr. (2018) 11 SCC 1.

A perusal of the Judgement shows that the Supreme Court has time and again relied upon the concepts of ‘reasonable nexus with purpose and object of the Act’ which is, as re-iterated time and again in the Judgement, not only to punish but also to prevent the evil of money laundering. The purposive interpretation test seems to alluded to time and again and more often than not in the backdrop of the PMLA, married off harmoniously with general rule of ‘literal interpretation’. The Court seems to have been very conscious of the fact, and rightly so, that the PMLA is a special act, enacted for a special purpose and also in line with the international commitments of our country. The financial action task force (FATF) recommendations are considered as well as international Anti-money laundering (AML) framework.

Though the judgement of the Court has received much flack from some quarters, the Supreme Court has not merely glossed over the issues. The safeguards in the Sections that may be considered arbitrary are recognised and discussed and a positive findings as to their adequacy have been arrived at. Though different people may have different opinions as to their adequacy, their existence cannot be denied. This is specially relevant for those challenges that had been made on the ground of manifest arbitrariness.

The observations of the Apex Court are very important and will have far eaching consequences with respect to a First Information Report (FIR), the officers of the Directorate who have not been held to be ‘police officers’ and the process envisaged by Section 50 of the Act has been held to be an ‘inquiry’ rather than an investigation and the statements recorded by the Authorities under the Act have been held to be not hit by the Right against being a witness against oneself (Article 20(3) as well as Article 21 of the Constitution of India. These observations are but the tip of the iceberg as the ‘conclusion’ to the Judgement itself summarises 21 broad points that have been decided by the Court. The Judgement has gone into the definition of Money Laundering and discussions recorded in the Judgement shall no doubt be relied upon and interpreted in Courts across the Country in the coming years.

More crucially, the Judgement shows that the ‘ghost’ of State of Gujrat v. Mohanlal Jitmalji Porwal & Ors. is far from exorcised and shows that even 25 years later, the Courts are reaffirming their commitment to grant Legislations that seeks to control and eradicate the evil of economic offenses a wide leeway to enable them to fulfil their intended objective.

In this issue of the Journal esteemed professionals have written articles on very important issues relevant for our date to day practice. I am grateful to all the authors who have contributed to this issue. I am thankful to my colleague Mr. Aditya Ajgoankar for helping me in the editorial work.

K. Gopal,


Comments are closed.