Holding

The Prevention of Money Laundering Act, 2002 is constitutionally valid and its provisions are reasonable restrictions in public interest, with the interpretation that Section 3 covers every process or activity connected with proceeds of crime and the twin conditions for bail are valid post-2018 amendment.

Summary

The Supreme Court upheld the constitutional validity of most provisions of the Prevention of Money Laundering Act, 2002 (PMLA), including the definition of money-laundering, attachment of property, search and seizure, arrest, bail conditions, and burden of proof. The Court interpreted Section 3 to have a wider reach, capturing every process or activity connected with proceeds of crime, and held that the word 'and' is to be read as 'or'. It upheld the twin conditions for bail under Section 45 as reasonable post-2018 amendment. The Court clarified that ECIR is not equivalent to FIR and that authorities under PMLA are not police officers, and statements recorded are not hit by Article 20(3). It rejected challenges that the provisions are arbitrary or violate fundamental rights. The Court also held that the inclusion of offences in the Schedule is a matter of legislative policy. The petitions and appeals were disposed of in terms of the judgment, with some matters delinked for other issues.

Issues considered

Whether the definition of money-laundering under Section 3 of PMLA is constitutionally valid?
Whether the twin conditions for bail under Section 45 of PMLA are constitutional?
Whether the provisions for attachment of property under Section 5 and Section 8 are valid?
Whether the search and seizure provisions under Sections 17 and 18 are valid?
Whether the power of arrest under Section 19 is valid?
Whether the burden of proof under Section 24 is valid?
Whether the trial by Special Court under Section 44 is valid?
Whether the summons power under Section 50 is valid?
Whether the penalty provisions under Section 63 are valid?
Whether ECIR can be equated with FIR?
Whether the authorities under PMLA are police officers?
Whether the Schedule to PMLA is overbroad?
Whether the amendments to PMLA via Finance Acts are valid?
Whether the provisions violate Articles 14, 20, and 21 of the Constitution?

Legislation cited

Code of Criminal Procedure, 1973s. 154, s. 157, s. 167, s. 173, s. 436A, s. 438, s. 439
Constitution of Indias. 14, s. 20, s. 21
Finance Act, 2018
Finance (No.2) Act, 2019
Indian Evidence Act, 1872s. 106, s. 25
Prevention of Money Laundering Act, 2002s. 17, s. 18, s. 19, s. 2(1)(na), s. 2(1)(u), s. 24, s. 3, s. 4, s. 44, s. 45, s. 5, s. 50, s. 63, s. 8, s. Schedule

Subjects

Prevention of Money Laundering Act, 2002Constitutional ValidityMoney Laundering OffenceBail ConditionsTwin ConditionsSearch and SeizureBurden of ProofECIRFIRPolice OfficerArticle 20(3)Article 21Article 14Special CourtAdjudicating AuthorityProceeds of CrimeScheduled OffenceAttachment of PropertyConfiscationAppellate TribunalFinance ActLegislative Policy

Judgment

382 [2022]REPORTS
SUPREME COURT 6 S.C.R. 382 [2022] 6 S.C.R.

A VIJAY MADANLAL CHOUDHARY & ORS.
v.
UNION OF INDIA & ORS.
(Special Leave Petition (Criminal) No. 4634 of 2014)
B JULY 27, 2022
[A. M. KHANWILKAR, DINESH MAHESHWARI AND
C. T. RAVIKUMAR, JJ.]
Prevention of Money Laundering Act, 2002 – s.2(1), Clause
C (na) – Expression “proceedings” therein – Held: The expression
“proceedings” occurring in Clause (na) of s.2(1) is contextual and
is required to be given expansive meaning to include inquiry
procedure followed by the Authorities of ED, the Adjudicating
Authority, and the Special Court.
D Prevention of Money Laundering Act, 2002 – s.2(1), Clause
(na) –Expression “investigation” therein – Held: The expression
“investigation” in Clause (na) of s.2(1) does not limit itself to the
matter of investigation concerning the offence under the Act and is
interchangeable with the function of “inquiry” to be undertaken
by the Authorities under the Act.
E
Prevention of Money Laundering Act, 2002 – s.2(1), Clause
(u), Explanation – Held: Explanation inserted to Clause (u) of s.2(1)
does not travel beyond the main provision predicating tracking and
reaching upto the property derived or obtained directly or indirectly
as a result of criminal activity relating to a scheduled offence.
F
Prevention of Money Laundering Act, 2002 – s.3 – Ambit of
– Held: s.3 has a wider reach and captures every process and
activity, direct or indirect, in dealing with the proceeds of crime and
is not limited to the happening of the final act of integration of
tainted property in the formal economy – Explanation inserted to
G s.3 by way of amendment of 2019 does not expand the purport of
s.3 but is only clarificatory in nature – The expression “and”
occurring in s.3 has to be construed as “or”, to give full play to the
said provision so as to include “every” process or activity indulged
into by anyone – The interpretation suggested, that only upon
H
382
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 383
INDIA & ORS.

projecting or claiming the property in question as untainted property A
that the offence of s.3 would be complete, is rejected.
Prevention of Money Laundering Act, 2002 – Prosecution on
notional basis or assumption – If permissible – Held: The Authorities
under the Act cannot prosecute any person on notional basis or on
the assumption that a scheduled offence has been committed, unless B
it is so registered with the jurisdictional police and/or pending
enquiry/trial including by way of criminal complaint before the
competent forum.
Prevention of Money Laundering Act, 2002 – s.5 – Validity
of – Held: s.5 is constitutionally valid – It provides for a balancing C
arrangement to secure the interests of the person as also ensures
that the proceeds of crime remain available to be dealt with in the
manner provided by the Act.
Prevention of Money Laundering Act, 2002 – s.8(4) –
Challenge to the validity of sub-section (4) of s.8 – Held: Is rejected D
subject to s.8 being invoked and operated in accordance with the
meaning assigned to it – Direction u/s.8(4) for taking possession of
the property in question before a formal order of confiscation is
passed merely on the basis of confirmation of provisional attachment
order, should be an exception and not a rule – That issue will have
to be considered on case-to-case basis. E

Prevention of Money Laundering Act, 2002 – s.17 – Challenge
to deletion of proviso to sub-section (1) of s.17 – Rejected – Held:
There are stringent safeguards provided in s.17 and Rules framed
thereunder – Moreover, the pre-condition in the proviso to Rule
3(2) of the 2005 Rules cannot be read into s.17 after its amendment. F
Prevention of Money Laundering Act, 2002 – s.18 – Challenge
to deletion of proviso to sub-section (1) of s.18 – Rejected – Held:
Safeguards are provided in s.18 – Amended provision does not suffer
from the vice of arbitrariness.
G
Prevention of Money Laundering Act, 2002 – s.19 – Challenge
to the constitutional validity of s.19 – Rejected – Held: There are
stringent safeguards provided in s.19 – The provision does not suffer
from the vice of arbitrariness.

H
384 SUPREME COURT REPORTS [2022] 6 S.C.R.

A Prevention of Money Laundering Act, 2002 – s.24 – Validity
– Held: s.24 has reasonable nexus with the purposes and objects
sought to be achieved by the Act and cannot be regarded as
manifestly arbitrary or unconstitutional.
Prevention of Money Laundering Act, 2002 – s.44 – Proviso
B in Clause (a) of sub-section (1) of s.44 – Held: Is to be regarded as
directory in nature and this provision is also read down to mean
that the Special Court may exercise judicial discretion on case-to-
case basis.
Prevention of Money Laundering Act, 2002 – s.44 – Challenge
C to – Held: No merit in the challenge to s.44 being arbitrary or
unconstitutional – However, the eventualities referred to in this
section shall be dealt with by the Court concerned and by the
Authority concerned in accordance with the interpretation given.
Prevention of Money Laundering Act, 2002 – s.45(1) –
D Release on bail – Twin conditions in s.45(1) – Held: Reasons which
weighed with this Court in Nikesh Tarachand Shah case for declaring
the twin conditions in s.45(1), as it stood at the relevant time, as
unconstitutional in no way obliterated the provision from the statute
book – It was open to the Parliament to cure the defect noted by
this Court so as to revive the same provision in the existing form.
E
Prevention of Money Laundering Act, 2002 – s.45 – Validity
– The provision in the form of s.45, as applicable post amendment
of 2018, is reasonable and has direct nexus with the purposes and
objects sought to be achieved by the 2002 Act and does not suffer
from the vice of arbitrariness or unreasonableness.
F
Prevention of Money Laundering Act, 2002 – s.45 –
Applicability – Prayer for bail – Held: As regards the prayer for
grant of bail, irrespective of the nature of proceedings, including
those under s.438 CrPC or even upon invoking the jurisdiction of
Constitutional Courts, the underlying principles and rigours of s.45
G may apply – Code of Criminal Procedure, 1973 – s.438.
Prevention of Money Laundering Act, 2002 – Invocation of
s.436A CrPC – Permissibility – Held: Beneficial provision of s.436A
CrPC could be invoked by the accused arrested for offence
punishable under the Act – CrPC – s.436A.
H
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 385
INDIA & ORS.

Prevention of Money Laundering Act, 2002 – s.50 – Process A
envisaged by s.50 – Held: Is in the nature of an inquiry against the
proceeds of crime and is not “investigation” in strict sense of the
term for initiating prosecution.
Prevention of Money Laundering Act, 2002 – s.48 –
Authorities under the Act (referred to in s.48) – Held: They are not B
police officers as such.
Prevention of Money Laundering Act, 2002 – Statements
recorded by Authorities under the Act – Held: They are not hit by
Art.20(3) or Art.21 of the Constitution – Constitution of India, 1950
– Arts. 20(3) and 21. C
Prevention of Money Laundering Act, 2002 – s.63 – Validity
– Held: s.63 providing for punishment regarding false information
or failure to give information does not suffer from any vice of
arbitrariness.
Prevention of Money Laundering Act, 2002 – Schedule to D
the Act – Inclusion or exclusion of any particular offence – Held:
The inclusion or exclusion of any particular offence in the Schedule
to the Act is a matter of legislative policy –The nature or class of
any predicate offence has no bearing on the validity of the Schedule
or any prescription thereunder. E
Prevention of Money Laundering Act, 2002 – s.48 –
Enforcement Case Information Report (ECIR) – Held: ECIR cannot
be equated with an FIR under CrPC – ECIR is an internal document
of the Enforcement Directorate (ED) – Fact that FIR in respect of
scheduled offence has not been recorded does not come in the way F
of the Authorities referred to in s.48 to commence inquiry/
investigation for initiating “civil action” of “provisional attachment”
of property being proceeds of crime – FIR.
Prevention of Money Laundering Act, 2002 – Enforcement
Case Information Report (ECIR) – Held: Supply of a copy of ECIR G
in every case to the person concerned is not mandatory, it is enough
if Enforcement Directorate (ED) at the time of arrest, discloses the
grounds of such arrest – However, when the arrested person is
produced before the Special Court, it is open to the Special Court
to look into the relevant records presented by the authorised
H
386 SUPREME COURT REPORTS [2022] 6 S.C.R.

A representative of ED for answering the issue of need for his/her
continued detention in connection with the offence of money-
laundering.
Prevention of Money Laundering Act, 2002 – Enforcement
Directorate (ED) Manual – Held: Even when ED manual is not to
B be published being an internal departmental document issued for
the guidance of the Authorities (ED officials), the department ought
to explore the desirability of placing information on its website which
may broadly outline the scope of the authority of the functionaries
under the Act and measures to be adopted by them as also the options/
remedies available to the person concerned before the Authority
C
and before the Special Court.
Prevention of Money Laundering Act, 2002 – Vacancies in
Appellate Tribunal – Executive to take corrective measures in this
regard expeditiously.
D Prevention of Money Laundering Act, 2002 – Argument about
proportionality of punishment with reference to the nature of
scheduled offence – Held: Is wholly unfounded.
Answering issues regarding the validity and interpretation
of the provisions of the 2002 Act, the Court
E
HELD:
(i) The question as to whether some of the amendments to
the Prevention of Money-laundering Act, 2002 could not have
been enacted by the Parliament by way of a Finance Act has not
F been examined in this judgment. The same is left open for being
examined along with or after the decision of the Larger Bench
(seven Judges) of this Court in the case of Rojer Mathew.
(ii) The expression “proceedings” occurring in Clause (na)
of Section 2(1) of the 2002 Act is contextual and is required to be
G given expansive meaning to include inquiry procedure followed
by the Authorities of ED, the Adjudicating Authority, and the
Special Court.
(iii) The expression “investigation” in Clause (na) of Section
2(1) of the 2002 Act does not limit itself to the matter of
H
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 387
INDIA & ORS.

investigation concerning the offence under the Act and is A
interchangeable with the function of “inquiry” to be undertaken
by the Authorities under the Act.
(iv) The Explanation inserted to Clause (u) of Section 2(1)
of the 2002 Act does not travel beyond the main provision
predicating tracking and reaching upto the property derived or B
obtained directly or indirectly as a result of criminal activity
relating to a scheduled offence.
(v) (a) Section 3 of the 2002 Act has a wider reach and
captures every process and activity, direct or indirect, in dealing
with the proceeds of crime and is not limited to the happening of C
the final act of integration of tainted property in the formal
economy. The Explanation inserted to Section 3 by way of
amendment of 2019 does not expand the purport of Section 3 but
is only clarificatory in nature. It clarifies the word “and” preceding
the expression projecting or claiming as “or”; and being a
clarificatory amendment, it would make no difference even if it is D
introduced by way of Finance Act or otherwise.
(b) Independent of the above, the expression “and”
occurring in Section 3 has to be construed as “or”, to give full
play to the said provision so as to include “every” process or
activity indulged into by anyone. Projecting or claiming the E
property as untainted property would constitute an offence of
money-laundering on its own, being an independent process or
activity.
(c) The interpretation suggested by the petitioners, that
only upon projecting or claiming the property in question as F
untainted property that the offence of Section 3 would be complete,
stands rejected.
(d) The offence under Section 3 of the 2002 Act is dependent
on illegal gain of property as a result of criminal activity relating
to a scheduled offence. It is concerning the process or activity G
connected with such property, which constitutes the offence of
money-laundering. The Authorities under the 2002 Act cannot
prosecute any person on notional basis or on the assumption that
a scheduled offence has been committed, unless it is so registered
with the jurisdictional police and/or pending enquiry/trial including H
388 SUPREME COURT REPORTS [2022] 6 S.C.R.

A by way of criminal complaint before the competent forum. If the
person is finally discharged/acquitted of the scheduled offence
or the criminal case against him is quashed by the Court of
competent jurisdiction, there can be no offence of money-
laundering against him or any one claiming such property being
the property linked to stated scheduled offence through him.
B
(vi) Section 5 of the 2002 Act is constitutionally valid. It
provides for a balancing arrangement to secure the interests of
the person as also ensures that the proceeds of crime remain
available to be dealt with in the manner provided by the 2002
Act. The procedural safeguards as delineated are effective
C measures to protect the interests of person concerned.
(vii) The challenge to the validity of sub-section (4) of
Section 8 of the 2002 Act is also rejected subject to Section 8
being invoked and operated in accordance with the meaning
assigned to it.
D
(viii) The challenge to deletion of proviso to sub-section
(1) of Section 17 of the 2002 Act stands rejected. There are
stringent safeguards provided in Section 17 and Rules framed
thereunder. Moreover, the pre-condition in the proviso to Rule
3(2) of the 2005 Rules cannot be read into Section 17 after its
E amendment. The Central Government may take necessary
corrective steps to obviate confusion caused in that regard.
(ix) The challenge to deletion of proviso to sub-section (1)
of Section 18 of the 2002 Act also stands rejected. There are
similar safeguards provided in Section 18. The amended provision
F does not suffer from the vice of arbitrariness.
(x) The challenge to the constitutional validity of Section
19 of the 2002 Act is also rejected. There are stringent safeguards
provided in Section 19. The provision does not suffer from the
vice of arbitrariness.
G
(xi) Section 24 of the 2002 Act has reasonable nexus with
the purposes and objects sought to be achieved by the 2002 Act
and cannot be regarded as manifestly arbitrary or unconstitutional.
(xii) (a) The proviso in Clause (a) of sub-section (1) of
Section 44 of the 2002 Act is to be regarded as directory in nature
H
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 389
INDIA & ORS.

and this provision is also read down to mean that the Special A
Court may exercise judicial discretion on case-to-case basis.
(b) There is no merit in the challenge to Section 44 being
arbitrary or unconstitutional. However, the eventualities referred
to in this section shall be dealt with by the Court concerned and
by the Authority concerned in accordance with the interpretation B
given.
(xiii) (a) The reasons which weighed with this Court in
Nikesh Tarachand Shah for declaring the twin conditions in Section
45(1) of the 2002 Act, as it stood at the relevant time, as
unconstitutional in no way obliterated the provision from the C
statute book; and it was open to the Parliament to cure the defect
noted by this Court so as to revive the same provision in the
existing form.
(b) This Court is unable to agree with the observations in
Nikesh Tarachand Shah distinguishing the enunciation of the D
Constitution Bench decision in Kartar Singh; and other
observations suggestive of doubting the perception of Parliament
in regard to the seriousness of the offence of money-laundering,
including about it posing serious threat to the sovereignty and
integrity of the country.
E
(c) The provision in the form of Section 45 of the 2002 Act,
as applicable post amendment of 2018, is reasonable and has direct
nexus with the purposes and objects sought to be achieved by
the 2002 Act and does not suffer from the vice of arbitrariness or
unreasonableness.
F
(d) As regards the prayer for grant of bail, irrespective of
the nature of proceedings, including those under Section 438 of
the 1973 Code or even upon invoking the jurisdiction of
Constitutional Courts, the underlying principles and rigours of
Section 45 may apply.
G
(xiv) The beneficial provision of Section 436A of the 1973
Code could be invoked by the accused arrested for offence
punishable under the 2002 Act.
(xv) (a) The process envisaged by Section 50 of the 2002
Act is in the nature of an inquiry against the proceeds of crime
H
390 SUPREME COURT REPORTS [2022] 6 S.C.R.

A and is not “investigation” in strict sense of the term for initiating
prosecution; and the Authorities under the 2002 Act (referred to
in Section 48), are not police officers as such.
(b) The statements recorded by the Authorities under the
2002 Act are not hit by Article 20(3) or Article 21 of the
B Constitution of India.
(xvi) Section 63 of the 2002 Act providing for punishment
regarding false information or failure to give information does
not suffer from any vice of arbitrariness.
(xvii) The inclusion or exclusion of any particular offence
C in the Schedule to the 2002 Act is a matter of legislative policy;
and the nature or class of any predicate offence has no bearing
on the validity of the Schedule or any prescription thereunder.
(xviii) (a) In view of special mechanism envisaged by the
2002 Act, ECIR cannot be equated with an FIR under the 1973
D Code. ECIR is an internal document of the ED and the fact that
FIR in respect of scheduled offence has not been recorded does
not come in the way of the Authorities referred to in Section 48
to commence inquiry/investigation for initiating “civil action” of
“provisional attachment” of property being proceeds of crime.
E (b) Supply of a copy of ECIR in every case to the person
concerned is not mandatory, it is enough if ED at the time of
arrest, discloses the grounds of such arrest.
(c) However, when the arrested person is produced before
the Special Court, it is open to the Special Court to look into the
F relevant records presented by the authorised representative of
ED for answering the issue of need for his/her continued detention
in connection with the offence of money-laundering.
(xix) Even when ED manual is not to be published being an
internal departmental document issued for the guidance of the
G Authorities (ED officials), the department ought to explore the
desirability of placing information on its website which may broadly
outline the scope of the authority of the functionaries under the
Act and measures to be adopted by them as also the options/
remedies available to the person concerned before the Authority
and before the Special Court.
H
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 391
INDIA & ORS.

(xx)The petitioners are justified in expressing serious A
concern bordering on causing injustice owing to the vacancies in
the Appellate Tribunal. It is deemed necessary to impress upon
the executive to take corrective measures in this regard
expeditiously.
(xxi) The argument about proportionality of punishment with B
reference to the nature of scheduled offence is wholly unfounded
and stands rejected.[Para 187][719-B-H; 720-A-H; 721-A-H; 722-
A-H; 723-A-C]
Nikesh Tarachand Shah v. Union of India & Anr. (2018)
11 SCC 1 : [2017] 12 SCR 358; Youth Bar Association C
of India v. Union of India & Anr. (2016) 9 SCC 473;
Court on its Own Motion v. State (2010) SCC OnLine
Del 4309; In re, v. State of Andhra Pradesh & Ors.
(2021) 10 SCC 598; Nitya Dharmananda & Anr. v.
Gopal Sheelum Reddy & Anr. (2018) 2 SCC 93 : [2017]
12 SCR 118; Lalita Kumari v. Government of Uttar D
Pradesh and Ors. (2014) 2 SCC 1 : [2013] 14
SCR 713; E. P. Royappa v. State of Tamil Nadu & Anr.
(1974) 4 SCC 3 : [1974] 2 SCR 348; S.G. Jaisinghani
v. Union of India and Ors. [1967] 2 SCR 703; K. P.
Varghese v. Income Tax Officer, Ernakulum & Anr. (1981) E
4 SCC 173 : [1982] 1 SCR 629; Union of India & Anr.
v. Martin Lottery Agencies Limited (2009) 12 SCC 209
: [2009] 7 SCR 946; P. Chidambaram v. Directorate of
Enforcement (2019) 9 SCC 24 : [2019] 12 SCR 172;
State of Punjab v. Barkat Ram [1962] 3 SCR 338; Raja
Ram Jaiswal v. State of Bihar AIR 1964 SC 828 : [1964] F
2 SCR 752; Nandini Satpathy v. P.L. Dani & Anr. (1978)
2 SCC 424 : [1978] 3 SCR 608; Tahsildar Singh &
Anr. v. State of U.P. AIR 1959 SC 1012 : [1959] 2 Suppl.
SCR 875; V. K. Mishra & Anr. v. State of Uttarakhand
& Anr. (2015) 9 SCC 588 : [2015] 8 SCR 1; G
Somasundaram alias Somu v. State represented by the
Deputy Commissioner of Police (2020) 7 SCC 722;
Balkishan A. Devidayal v. State of Maharashtra (1980)
4 SCC 600 : [1981] 1 SCR 175; Selvi & Ors. v. State of
Karnataka (2010) 7 SCC 263 : [2010] 5 SCR 381; State
H
392 SUPREME COURT REPORTS [2022] 6 S.C.R.

A of Bombay v. Kathi Kalu Oghad AIR 1961 SC 1808 :
[1962] 3 SCR 10; M.P. Sharma & Ors. v. Satish
Chandra, District Magistrate, Delhi & Ors. [1954] SCR
1077; Assistant Collector of Central Excise, Guntur v.
Ramdev Tobacco Company (1991) 2 SCC 119 : [1991]
1 SCR 126; Gudikanti Narasimhulu & Ors. v. Public
B
Prosecutor, High Court of Andhra Pradesh (1978) 1
SCC 240 : [1978] 2 SCR 371; Ranjitsing
Brahmajeetsing Sharma v. State of Maharashtra & Anr.
(2005) 5 SCC 294 : [2005] 3 SCR 345; Noor Aga v.
State of Punjab & Anr. (2008) 16 SCC 417 : [2008]
C 10 SCR 379; State of West Bengal & Ors. v. Committee
for Protection of Democratic Rights, West Bengal & Ors.
(2010) 3 SCC 571 : [2010] 2 SCR 979; Sakiri Vasu v.
State of Uttar Pradesh & Ors. (2008) 2 SCC 409 :
[2007] 12 SCR 1100; D. K. Basu v. State of W. B. (1997)
1 SCC 416 : [1996] 10 Suppl. SCR 284; Directorate
D
of Enforcement v. Deepak Mahajan & Anr. (1994) 3
SCC 440 : [1994] 1 SCR 445; Bidi Supply Co. v. Union
of India & Ors. AIR 1956 SC 479 : [1956] SCR 267;
Collector of Malabar & Anr. v. Erimmal Ebrahim Hajee
AIR 1957 SC 688 : [1957] SCR 970; G.J. Fernandes
E v. The State of Mysore & Ors. AIR 1967 SC 1753 :
[1967] 3 SCR 636; Bijoe Emmanuel & Ors. v. State of
Kerala & Ors. (1986) 3 SCC 615 : [1986] 3 SCR 518;
Subramanian Swamy v. Director, Central Bureau of
Investigation & Anr. (2014) 8 SCC 682 : [2014]
6 SCR 873; Saghir Ahmad v. State of U.P. & Ors. AIR
F
1954 SC 728 : [1955] 1 SCR 707; Deep Chand v. The
State of Uttar Pradesh & Ors. [1959] 2 Suppl. SCR 8;
Babu v. State of Kerala (2010) 9 SCC 189 : [2010]
9 SCR 1039; Satender Kumar Antil v. Central Bureau
of Investigation & Anr., (2021) 10 SCC 773; Ayya alias
G Ayub v. State of U.P. & Anr., (1989) 1 SCC 374 : [1988]
3 Suppl. SCR 967; Union of India v. K.A. Najeeb (2021)
3 SCC 713 : (2021) SCC Online SC 50; Krishna Lal
Chawla & Ors. v. State of Uttar Pradesh & Anr. (2021)
5 SCC 435; Shayara Bano v. Union of India & Ors.
(2017) 9 SCC 1 : [2017] 9 SCR 797; Joseph Shine v.
H
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 393
INDIA & ORS.

Union of India (2019) 3 SCC 39 : [2018] 11 SCR 765; A
Dwarka Prasad v. Dwarka Das Saraf (1976) 1 SCC
128 : [1976] 1 SCR 277; Satnam Singh & Ors. v.
Punjab & Haryana High Court and Ors. (1997) 3 SCC
353 : [1997] 1 SCR 1038; Anuradha Bhasin v. Union
of India & Ors. (2020) 3 SCC 637; Arnab Manoranjan
B
Goswami v. State of Maharashtra & Ors., (2021) 2 SCC
427; Kiran Prakash Kulkarni v. The Enforcement
Directorate and Anr. Order dated 11.4.2019 in S.L.P.
(Criminal) No. 1698 of 2019; Rojer Mathew v. South
Indian Bank Limited and Ors. (2020) 6 SCC 1 : [2019]
16 SCR 1; Barendra Kumar Ghosh v. The King Emperor, C
(1924) SCC OnLine PC 49 : AIR 1925 PC 1; Soni
Devrajbhai Babubhai v. State of Gujarat and Ors.
(1991) 4 SCC 298 : [1991] 3 SCR 812; Mahipal Singh
v. Central Bureau of Investigation & Anr. (2014) 11
SCC 282 : [2014] 4 SCR 529; Tech Mahindra Limited
D
v. Joint Director, Directorate of Enforcement, Hyderabad
& Ors. [WP No. 17525/2014 decided on 22.12.2014
by High Court of Andhra Pradesh]; Gadi Nagavekata
Satyanarayana v. Deputy Director Directorate of
Enforcement (2017) SCC Online ATPMLA 2; Arun
Kumar Mishra v. Directorate of Enforcement (2015) E
SCC OnLine Del 8658; M/s. Ajanta Merchants Pvt.
Ltd. v. Directorate of Enforcement (2015) SCC OnLine
Del 8659; M/s. Mahanivesh Oils & Foods Pvt. Ltd. v.
Directorate of Enforcement (2016) SCC OnLine Del
475; Mohd. Arif alias Ashfaq v. Registrar, Supreme
F
Court of India & Ors. (2014) 9 SCC 737 : [2014] 11
SCR 1009 ; Sunil Batra v. Delhi Administration & Ors.
(1978) 4 SCC 494 : [1979] 1 SCR 392; Mithu v. State
of Punjab (1983) 2 SCC 277 : [1983] 2 SCR 690;
Mohammed Ajmal Mohammad Amir Kasab alias Abu
Mujahid v. State of Maharashtra (2012) 9 SCC 1 : G
[2012] 8 SCR 295; Nahar Singh Yadav & Anr. v. Union
of India & Ors. (2011) 1 SCC 307 : [2010] 13
SCR 851; Hanumant Govind Nargundkar & Anr. v.
State of Madhya Pradesh, AIR 1952 SC 343 :
[1952] SCR 1091; Himanshu Singh Sabharwal v. State
H
394 SUPREME COURT REPORTS [2022] 6 S.C.R.

A of Madhya Pradesh & Ors. (2008) 3 SCC 602 : [2008]
4 SCR 783; State of Maharashtra v. Chief Information
Commissioner & Anr., (2018) SCC OnLine Bom 1199;
Vineet Narain & Ors. v. Union of India & Anr., (1998)
1 SCC 226 : [1997] 6 Suppl. SCR 595 ; Shashikant v.
Central Bureau of Investigation & Ors., (2007) 1 SCC
B
630 : [2006] 8 Suppl. SCR 474; Central Bureau of
Investigation v. Ashok Kumar Aggarwal, (2014) 14 SCC
295 : [2013] 14 SCR 983; State of Jharkhand through
SP, Central Bureau of Investigation v. Lalu Prasad Yadav
alias Lalu Prasad, (2017) 8 SCC 1 : [2017] 3 SCR 630;
C State of Rajasthan, Jaipur v. Balchandalia Baliay (1977)
4 SCC 308 : [1978] 1 SCR 535; Sanjay Chandra v.
Central Bureau of Investigation, (2012) 1 SCC 40 :
[2011] 13 SCR 309; State of Kerela v. Raneef (2011) 1
SCC 784 : [2011] 1 SCR 590; Romesh Chandra Mehta
v. State of West Bengal [1969] 2 SCR 461 : AIR 1970
D
SC 940; Balkishan A. Devidayal v. State of
Maharashtra (1980) 4 SCC 600 : [1981] 1 SCR 175;
Ramanlal Bhogilal Shah & Anr. v. D.K. Guha & Ors.
(1973) 1 SCC 696 : [1973] 3 SCR 438; Poolpandi &
Ors. v. Superintendent, Central Excise and Ors. (1992)
E 3 SCC 259 : [1992] 3 SCR 247; State of Gujarat v.
Shyamlal Mohanlal Choksi AIR 1965 SC 1251 : [1965]
2 SCR 457; Keshavan Madhava Menon v. The State of
Bombay AIR 1951 SC 128 : [1951] SCR 228; Ritesh
Agarwal & Anr. v. Securities and Exchange Board of
India & Ors. (2008) 8 SCC 205 : [2008] 8 SCR 553;
F
Harjit Singh v. State of Punjab (2011) 4 SCC 441 :
[2011] 5 SCR 691; Varinder Singh v. State of Punjab
& Anr. (2014) 3 SCC 151 : [2014] 1 SCR 496;
Commissioner of Income Tax (Central)-I, New Delhi v.
Vatika Township Private Limited (2015) 1 SCC 1 :
G [2014] 12 SCR 1037; Bihta Co-operative Development
and Cane Marketing Union Ltd. & Anr. v. Bank of Bihar
& Ors. AIR 1967 SC 389 : [1967] 1 SCR 848;
Dattatraya Govind Mahajan & Ors. v. State of
Maharashtra & Anr. (1977) 2 SCC 548 : [1977] 2 SCR
790; S. Sundaram Pillai & Ors. v. V. R. Pattabiraman &
H
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 395
INDIA & ORS.

Ors., (1985) 1 SCC 591 : [1985] 2 SCR 643; Jagan A
M. Seshadri v. State of T.N., (2002) 9 SCC 639; Hardev
Motor Transport v. State of M.P. & Ors. (2006) 8 SCC
613 : [2006] 7 Suppl. SCR 766; Obulapuram Mining
Company Pvt. Ltd. v. Joint Director, Directorate of
Enforcement, Government of India, ILR 2017 Kar 1846;
B
Ajay Kumar Gupta & Ors. v. Adjudicating Authority
(PMLA) & Ors. (2017) 2 LW (Cri) 252; State of Bihar
v. Deokaran Nenshi & Anr. (1972) 2 SCC 890 : [1973]
1 SCR 1004; Commissioner of Wealth Tax, Amritsar v.
Suresh Seth, (1981) 2 SCC 790 : [1981] 3 SCR 419;
Smt. Maya Rani Punj (Smt.) v. Commissioner of Income C
Tax, Delhi (1986) 1 SCC 445 : [1985] 3 Suppl.
SCR 827; A.R. Antulay v. R.S. Nayak & Anr. AIR 1988
SC 1531 : [1988] 1 Suppl. SCR 1 (para 59) : (1988) 2
SCC 602 : [1988] 1 Suppl. SCR 1; Directorate of
Enforcement v. Surajpal & Ors. (2018) SCC OnLine
D
Del 10472; Inspector of Police, CBI v. Assistant
Directorate, Directorate of Enforcement (PMLA) & Anr.
(2019) SCC OnLine Ker 4546; Sou. Vijaya Alias Baby
v. State of Maharashtra, (2003) 8 SCC 296 : [2003]
3 Suppl. SCR 340; State of Karnataka v. Madesha &
Ors. (2007) 7 SCC 35 : [2007] 8 SCR 757; In Re E
Kuttayan alias Nambi Thevar AIR 1960 Mad 9; Nagar
Palika Nigam v. Krishi Upaj Mandi Samiti & Ors., AIR
2009 SC 187 : [2008] 14 SCR 419; Rohitash Kumar &
Ors. v. Om Prakash Sharma & Ors., AIR 2013 SC 30 :
[2012] 13 SCR 47; Abdullah Ali Balsharaf & Anr. v.
F
Directorate of Enforcement & Ors. (2019) SCC Online
Del 6428; Seema Garg v. Deputy Director, Directorate
of Enforcement, (2020) SCC Online P&H 738; A.
Kamarunnisa Ghori v. The Chairperson, Prevention of
Money Laundering, Union of India, 2012 (4) CTC 608
: 2012 Writ LR 719; Mahendra Lal Jaini v. State of G
Uttar Pradesh & Ors., AIR 1963 SC 1019 : [1963]
1 Suppl. SCR 912; G. Mohan Rao v. State of Tamil
Nadu & Ors. (2021) SCC OnLine SC 440; State of
Gujarat & Anr. v. Shri Ambica Mills Ltd., Ahmedabad
& Anr. (1974) 4 SCC 656 : [1974] 3 SCR 760; State of
H
396 SUPREME COURT REPORTS [2022] 6 S.C.R.

A Manipur & Ors. v. Surajkumar Okram & Ors. (2022)
SCC OnLine SC 130; M.K. Ayoob & Ors. v.
Superintendent, Customs Intelligence Unit, Cochin &
Anr., 1984 Crl.L.J. 949; The Senior Intelligence Officer,
Directorate of Revenue, Madras v. M.K.S. Abu Bucker,
1990 Cri.L.J 704; A.R. Antulay v. Ramdas Sriniwas
B
Nayak & Anr. (1984) 2 SCC 500 : [1984] 2 SCR 914;
Om Prakash & Anr. v. Union of India & Anr. (2011) 14
SCC 1 : [2011] 14 SCR 240; Union of India v.
Thamisharasi & Ors. (1995) 4 SCC 190 : [1995] 3
SCR 905; Gorav Kathuria v. Union of India & Ors.
C (2016) SCC OnLine P&H 3428 D.K. Basu v. State of
W.B. (1997) 1 SCC 416 : [1996] 10 Suppl. SCR 284;
Union of India v. Ashok Kumar Sharma & Ors., (2020)
SCC OnLine SC 683; Canon India Private Limited v.
Commissioner of Customs, (2021) SCC OnLine SC 200;
Adjudicating Authority (PMLA) and Ors. v. Ajay Kumar
D
Gupta and Ors. Criminal Appeal Nos. 391-392/2018;
Attorney General for India & Ors. v. Amratlal
Prajivandas & Ors. (1994) 5 SCC 54 : [1994] 1 Suppl.
SCR 1; Sanjay Dutt v. State through C.B.I., Bombay
(1994) 6 SCC 86; The State of Bombay v. S.L. Apte &
E Anr. AIR 1961 SC 578 : [1961] 3 SCR 107; Thomas
Dana v. State of Punjab, AIR 1959 SC 375 : [1959]
1 Suppl. SCR 274; Hira H. Advani etc. v. State of
Maharashtra, (1969) 2 SCC 662; R. Dineshkumar alias
Deena v. State represented by Inspector of Police &
Ors. (2015) 7 SCC 497 : [2015] 5 SCR 605; Shri
F
Balaganesan Metals v. M.N. Shanmugham Chetty &
Ors. (1987) 2 SCC 707 : [1987] 2 SCR 1173;
M/s. Doypack Systems Pvt. Ltd. v. Union of India &
Ors. (1988) 2 SCC 299 : [1988] 2 SCR 962; Municipal
Corporation of Greater Bombay & Ors. v. Indian Oil
G Corporation Ltd. (1991) 2 Suppl. SCC 18 : [1990]
3 Suppl. SCR 365; Regional Director, Employees’ State
Insurance Corporation v. High Land Coffee Works of
P.F.X. Saldanha and Sons & Anr., (1991) 3 SCC 617 :
[1991] 3 SCR 307; Forest Range Officer & Ors. v.
P. Mohammed Ali & Ors., (1993) 3 Suppl. SCC 627 :
H
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 397
INDIA & ORS.

[1993] 3 SCR 497; Commercial Taxation Officer, A
Udaipur v. Rajasthan Taxchem Ltd., (2007) 3 SCC 124
: [2007] 1 SCR 855; Associated Indem Mechanical (P)
Ltd. v. W.B. Small Industries Development Corpn. Ltd.,
& Ors. (2007) 3 SCC 607 : [2007] 1 SCR 174; N.D.P.
Namboodripad (Dead) by LRs. v. Union of India & Ors.,
B
(2007) 4 SCC 502 : [2007] 3 SCR 769; Oswal Fats
and Oils Limited v. Additional Commissioner
(Administration), Bareilly Division, Bareilly & Ors.
(2010) 4 SCC 728 : [2010] 5 SCR 927; Mamta Surgical
Cotton Industries, Rajasthan v. Assistant Commissioner
(Anti-Evasion), Bhilwara, Rajasthan, (2014) 4 SCC 87 C
: [2014] 2 SCR 589; Rohit Tandon v. Directorate of
Enforcement (2018) 11 SCC 46 : [2017] 13 SCR 156;
Kartar Singh v. State of Punjab (1994) 3 SCC 569 :
[1994] 2 SCR 375; R. Sai Bharathi v. J. Jayalalitha &
Ors. (2004) 2 SCC 9 : [2003] 6 Suppl. SCR 85;
D
Subramanian Swamy v. Union of India, Ministry of Law
& Ors. (2016) 7 SCC 221 : [2016] 3 SCR 865; Sanjay
Dutt v. State through C.B.I., Bombay (II) (1994) 5 SCC
410 : [1994] 3 Suppl. SCR 263; Joint Directors of Mines
Safety v. M/s Tandur and Nayandgi Stone Quarries (P)
Ltd. (1987) 3 SCC 208 : [1987] 2 SCR 800; Regina v. E
Oakes 1959 (2) QB 350; Ishwar Singh Bindra & Ors.
v. The State of U.P. [1969] 1 SCR 219; Gujarat Urja
Vikas Nigam Ltd. v. Essar Power Ltd. (2008) 4 SCC
755 : [2008] 4 SCR 822; Pratap Singh v. State of
Jharkhand & Anr. (2005) 3 SCC 551 : [2005]
F
1 SCR 1019; National Legal Services Authority v. Union
of India & Ors. (2014) 5 SCC 438 : [2014] 5 SCR 119;
People’s Union for Civil Liberties v. Union of India &
Anr. (2005) 2 SCC 436 : [2005] 1 SCR 494; Githa
Hariharan & Anr. v. Reserve Bank of India & Anr.
(1999) 2 SCC 228 : [1999] 1 SCR 669; Rohtas v. State G
of Haryana & Anr. (1979) 4 SCC 229 : [1980] 1 SCR
151; Ajmer Singh & Ors. v. Union of India & Ors. (1987)
3 SCC 340 : [1987] 3 SCR 84; Usmanbhai Dawoodbhai
Memon & Ors. v. State of Gujarat (1988) 2 SCC 271 :
[1988] 3 SCR 225; Central Bureau of Investigation v.
H
398 SUPREME COURT REPORTS [2022] 6 S.C.R.

A State of Rajasthan & Ors. (1996) 9 SCC 735 : [1996]
3 Suppl. SCR 127; State (Union of India) v. Ram Saran
(2003) 12 SCC 578 : [2003] 6 Suppl. SCR 476;
Mahmadhusen Abdulrahim Kalota Shaikh (2) v. Union
of India & Ors. (2009) 2 SCC 1 : [2008] 14 SCR 889;
Gautam Kundu v. Directorate of Enforcement
B
(Prevention of Money-Laundering Act), Government of
India (2015) 16 SCC 1 : [2015] 15 SCR 499; Union of
India & Ors. v. Chandra Bhushan Yadav (2020) 2 SCC
747; Aswini Kumar Ghose & Anr. v. Arabinda Bose &
Anr. AIR 1952 SC 369 : [1953] SCR 1; Central Bank
C of India v. State of Kerala & Ors. (2009) 4 SCC 94 :
[ 2009] 3 SCR 735; Kishorebhai Khamanchand Goyal
v. State of Gujarat & Anr. (2003) 12 SCC 274 : [2003]
5 Suppl. SCR 1; Innoventive Industries Limited v. ICICI
Bank & Ors. (2018) 1 SCC 407 : [2017] 8 SCR 33;
Patna Improvement Trust v. Smt. Lakshmi Devi & Ors.
D
[1963] 2 Suppl. SCR 812; The South India Corporation
(P) Ltd. v. The Secretary, Board of Revenue, Trivandrum
& Anr. [1964] 4 SCR 280; Anandji Haridas and Co.
(P) Ltd. v. S.P. Kasture & Ors. AIR 1968 SC 565 : [1968]
1 SCR 661; Maharashtra State Board of Secondary and
E Higher Secondary Education & Anr. v. Paritosh
Bhupeshkumar Seth & Ors. (1984) 4 SCC 27 : [1985]
1 SCR 29; Ethiopian Airlines v. Ganesh Narain Saboo
(2011) 8 SCC 539 : [2011] 9 SCR 936; Bhagirath v.
Delhi Administration, (1985) 2 SCC 580 : [1985]
3 SCR 743; Eastern Coalfields Limited v. Sanjay
F
Transport Agency & Anr., (2009) 7 SCC 345 : [2009]
9 SCR 690; Hari Narayan Rai v. Union of India & Anr.
(2010) SCC OnLine Jhar 475; Karam Singh & Ors. v.
Union of India & Ors., (2015) SCC OnLine P&H
19739; Chhagan Chandrakant Bhujbal v. Union of
G India & Ors. (2016) SCC OnLine Bom 9938;
Vakamulla Chandrashekhar v. Enforcement Directorate
& Anr. (2017) SCC OnLine Del 12810; Virbhadra
Singh & Anr. v. Enforcement Directorate & Anr. (2017)
SCC OnLine Del 8930; Moin Akhtar Qureshi v. Union
of India & Ors. vide order dated 01.12.2017 in W.P.
H
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 399
INDIA & ORS.

(Crl.) No.2465/2017; Directorate of Enforcement v. A
Vakamulla Chandrashekhar Order dated 04.01.2018
in SLP (Crl.) Diary No. 36918/2017; Rajbhushan
Omprakash Dixit v. Union of India & Anr., Serious
Fraud Investigation Office v. Rahul Modi & Anr. (2019)
5 SCC 266 : [2019] 5 SCR 91; K.I. Pavunny v. Assistant
B
Collector (HQ), Central Excise Collectorate, Cochin
(1997) 3 SCC 721 : [1997] 1 SCR 797; Dalmia Cement
(Bharat) Limited & Anr. v. Assistant Director of
Enforcement Directorate (2016) SCC OnLine Hyd 64;
Zile Singh v. State of Haryana & Ors. (2004) 8 SCC 1
: [2004] 5 Suppl. SCR 272; Commissioner of Income C
Tax I, Ahmedabad v. Gold Coin Health Food Private
Limited (2008) 9 SCC 622 : [2008] 12 SCR 179;
Commissioner of Income Tax, Bhopal v. Shelly Products
& Anr. (2003) 5 SCC 461 : [2003] 1 Suppl. SCR 79;
Gurcharan Singh v. Directorate of Revenue Intelligence
D
(2008) 17 SCC 28; [2008] 5 SCR 856; Assistant
Electrical Engineer v. Satyendra Rai & Anr. (2014) 4
SCC 513; State Bank of India v. V. Ramakrishnan &
Anr. (2018) 17 SCC 394 : [2018] 10 SCR 974; Union
of India & Ors. v. Mudrika Singh (2021) SCC OnLine
SC 1173; Arnesh Kumar v. State of Bihar & Anr. (2014) E
8 SCC 273 : [2014] 8 SCR 128; Union of India v.
Padam Narain Aggarwal & Ors. (2008) 13 SCC 305 :
[2008] 14 SCR 179; Premium Granites & Anr. v. State
of T.N. & Ors. (1994) 2 SCC 691 : [1994] 1 SCR 579;
M/s. Sukhwinder Pal Bipan Kumar & Ors. v. State of
F
Punjab & Ors. (1982) 1 SCC 31 : [1982] 2 SCR 31;
Ahmed Noormohmed Bhatti v. State of Gujarat & Ors.
(2005) 3 SCC 647 : [2005] 2 SCR 879; Manzoor Ali
Khan v. Union of India & Ors. (2015) 2 SCC 33 :
[ 2014] 7 SCR 569 ; A.K. Roy v. Union of India & Ors.
(1982) 1 SCC 271 : [1982] 2 SCR 272; State of Gujarat G
v. Mohanlal Jitamalji Porwal & Anr. (1987) 2 SCC 364
: [1987] 2 SCR 677; Y.S. Jagan Mohan Reddy v. Central
Bureau of Investigation (2013) 7 SCC 439 : [2013]
3 SCR 547; Nimmagadda Prasad v. Central Bureau of
Investigation (2013) 7 SCC 466 : [2013] 3 SCR 493;
H
400 SUPREME COURT REPORTS [2022] 6 S.C.R.

A State of Bihar & Anr. v. Amit Kumar alias Bachcha Rai
(2017) 13 SCC 751 : [2017] 4 SCR 503; Mohd. Hanif
Quareshi & Ors. v. State of Bihar & Ors. AIR 1958 SC
731 : [1959] SCR 629; Talab Haji Hussain v. Madhukar
Purshottam Mondkar & Anr. [1958] SCR 1226; Kathi
Raning Rawat v. State of Saurashtra AIR 1952 SC 123:
B
[1952] SCR 435; Kedar Nath Bajoria & Anr. v. The
State of West Bengal AIR 1953 SC 404 : [1954] SCR
30; Special Reference No.1 of 1978 (1979) 1 SCC 380
: [1979] 2 SCR 476; Asbury Hospital v. Cass County
326 US 207 [1945]; Chiranjit Lal Chowdhuri v. The
C Union of India & Ors. [1950] SCR 869; The State of
Bombay & Anr. v. F.N. Balsara [1951] SCR 682;
Workmen of Meenakshi Mills Limited & Ors. v.
Meenakshi Mills Ltd. & Anr. (1992) 3 SCC 336; [1992]
3 SCR 409; Papnasam Labour Union v. Madura Coats
Ltd. & Anr. (1995) 1 SCC 501 : [1994] 6 Suppl. SCR
D
369; M.R.F. Ltd. v. Inspector Kerala Govt. & Ors. (1998)
8 SCC 227 : [1998] 2 Suppl. SCR 632; State of
Karnataka & Anr. v. Shri Ranganatha Reddy & Anr.
(1977) 4 SCC 471 : [1978] 1 SCR 641; State of Tamil
Nadu and Ors. v. L. Abu Kavur Bai and Ors.
E (1984) 1 SCC 515 : [1984] 1 SCR 725; Ranjitsing
Brahmajeetsing Sharma v. State of Maharashtra and
Anr. (2005) 5 SCC 294 : [2005] 3 SCR 345; Collector
of Customs, New Delhi v. Ahmadalieva Nodira (2004)
3 SCC 549 : [2004] 2 SCR 1092; Supdt., Narcotics
Control Bureau, Chennai v. R. Paulsamy (2000) 9 SCC
F
549; Union of India v. Gurcharan Singh (2003) 11 SCC
764; Union of India v. Abdulla (2004) 13 SCC 504;
Narcotics Control Bureau v. Karma Phuntsok & Ors.
(2005) 12 SCC 480; Chenna Boyanna Krishna Yadav
v. State of Maharashtra & Anr. (2007) 1 SCC 242 :
G [2006] 10 Suppl. SCR 381; N.R. Mon v. Mohd.
Nasimuddin (2008) 6 SCC 721 : [2008] 8 SCR 1159;
State of Maharashtra v. Bharat Shanti Lal Shah and
Ors. (2008) 13 SCC 5 : [2008] 12 SCR 1083; Union
of India v. Rattan Mallik alias Habul (2009) 2 SCC
624 : [2009] 1 SCR 533; The State of Maharashtra v.
H
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 401
INDIA & ORS.

Vishwanath Maranna Shetty (2012) 10 SCC 561 : A
[2012] 9 SCR 873; Union of India v. Niyazuddin Sk.
& Anr. (2018) 13 SCC 738 : [2017] 6 SCR 513; Satpal
Singh v. State of Punjab (2018) 13 SCC 813 : [2018]
3 SCR 739; National Investigation Agency v. Zahoor
Ahmad Shah Watali (2019) 5 SCC 1 : [2019]
B
5 SCR 1060; Serious Fraud Investigation Office v.
Nittin Johari & Anr. (2019) 9 SCC 165; Modern Dental
College and Research Centre & Ors. v. State of Madhya
Pradesh & Ors. (2016) 7 SCC 353 : [2016] 3 SCR 579;
Patel Gordhandas Hargovindas & Ors. v. The Municipal
Commissioner, Ahmedabad & Anr. AIR 1963 SC 1742 C
: [1964] 2 SCR 608; Shri Prithvi Cotton Mills Ltd. &
Anr. v. Broach Borough Municipality & Ors. (1969) 2
SCC 283 : [1970] 1 SCR 388; Bhubaneshwar Singh
& Anr. v. Union of India & Ors. (1994) 6 SCC 77 :
[1994] 1 Suppl. SCR 639; Comorin Match Industries
D
(P) Ltd. v. State of T.N. (1996) 4 SCC 281 : [1996]
1 Suppl. SCR 349; Indian Aluminium Co. & Ors. v. State
of Kerala & Ors. (1996) 7 SCC 637; Bakhtawar Trust
& Ors. v. M.D. Narayan & Ors. (2003) 5 SCC 298 :
[2003] 1 Suppl. SCR 1; State of Himachal Pradesh v.
Narain Singh (2009) 13 SCC 165 : [2009] 10 SCR 821; E
Goa Foundation & Anr. v. State of Goa & Anr. (2016) 6
SCC 602 : [2016] 1 SCR 1025; Cheviti Venkanna
Yadav v. State of Telangana & Ors. (2017) 1 SCC 283
: [2016] 7 SCR 689; Behram Khurshed Pesikaka v. The
State of Bombay [1955] 1 SCR 613; M.P.V.
F
Sundararamier & Co. v. The State of Andhra Pradesh
& Anr. [1958] SCR 1422; Jagannath, Etc. Etc. v.
Authorised Officer, Land Reforms & Ors. Etc. (1971) 2
SCC 893 : [1972] 1 SCR 105; Sushila Aggarwal & Ors.
v. State (NCT of Delhi) & Anr. (2020) 5 SCC 1 : [2020]
2 SCR 1; Municipal Corporation of Delhi v. Gurnam G
Kaur (1989) 1 SCC 101 : [1988] 2 Suppl. SCR 929;
Hema Mishra v. State of Uttar Pradesh & Ors. (2014) 4
SCC 453 : [2014] 1 SCR 465; Mohammed Dastagir v.
The State of Madras AIR 1960 SC 756 : [1960] 3 SCR
116; Raja Narayanlal Bansilal v. Maneck Phiroz Mistry
H
402 SUPREME COURT REPORTS [2022] 6 S.C.R.

A & Anr. AIR 1961 SC 9 : [1961] 3 SCR 592; K. Joseph
Augusthi v. M.A. Narayanan AIR 1964 SC 1552 :
[1964] SCR 137; Collector of Customs, Madras v.
Kotumal Bhirumal Pihlajani & Ors. (1966) SCC OnLine
Mad 145; Laxman Padma Bhagat v. The State (1964)
SCC OnLine Bom 59; Calcutta Motor Cycle Co. v.
B
Collector of Customs & Ors. (1955) SCC OnLine Cal
275; Harbansingh Sardar Lenasingh & Anr. v. The State
of Maharashtra & Ors. (1972) 3 SCC 775; C. Sampath
Kumar v. Enforcement Officer, Enforcement Directorate,
Madras (1997) 8 SCC 358 : [1997] 4 Suppl. SCR 142;
C Aghnoo Nagesia v. State of Bihar AIR 1966 SC 119 :
[1966] 1 SCR 134; Central Bureau of Investigation v.
V.C. Shukla & Ors. (1998) 3 SCC 410 : [1998]
1 SCR 1153; Badaku Joti Svant v. State of Mysore AIR
1966 SC 1746 : [1966] 3 SCR 698; Illias v. The
Collector of Customs, Madras AIR 1970 SC 1065; State
D
of U.P. v. Durga Prasad (1975) 3 SCC 210 : [1975]
1 SCR 881; Commissioner of Income Tax, West Bengal
v. Calcutta Stock Exchange Association Ltd. AIR 1959
SC 763 : [1959] 2 Suppl. SCR 459; Lajpat Rai Sehgal
& Ors. v. State 1983 (5) DRJ 1 : 23 (1983) DLT 314;
E Narain Singh v. The State 1986 (10) DRJ 109 : 30
(1986) DLT 118; Pareena Swarup v. Union of India
(2008) 14 SCC 107 : [2008] 13 SCR 1217; Baleshwar
Rai & Ors. v. The State of Bihar [1963] 2 SCR 433;
Dipakbhai Jagdishchandra Patel v. State of Gujarat &
Anr. (2019) 16 SCC 547 : [2019] 6 SCR 701; Narendra
F
Singh & Anr. v. State of M.P. (2004) 10 SCC 699 :
[2004] 3 SCR 1148; Hiten P. Dalal v. Bratindranath
Banerjee (2001) 6 SCC 16 : [2001] 3 SCR 900; Krishna
Janardhan Bhat v. Dattatraya G. Hegde (2008) 4 SCC
54 : [2008] 1 SCR 605; Sucha Singh v. State of Punjab
G (2001) 4 SCC 375 : [2001] 2 SCR 644; P.N. Krishna
Lal & Ors. v. Govt. of Kerala & Anr. (1995) 2 Suppl.
SCC 187 : [1994] 5 Suppl. SCR 526; Mukesh Singh v.
State (Narcotic Branch of Delhi) (2020) 10 SCC 120;
Seema Silk & Sarees & Anr. v. Directorate of
Enforcement & Ors. (2008) 5 SCC 580 : [2008]
H
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 403
INDIA & ORS.

8 SCR 201; Transport Co. & Ors. v. State of U.P. & A
Ors. (1986) 2 SCC 486 : [1986] 1 SCR 939; Union of
India v. Prafulla Kumar Samal & Anr. (1979) 3 SCC 4
: [1979] 2 SCR 229; Dilawar Balu Kurane v. State of
Maharashtra, (2002) 2 SCC 135 : [2002] 1 SCR 75;
Yogesh alias Sachin Jagdish Joshi v. State of
B
Maharashtra, (2008) 10 SCC 394 : [2008]
6 SCR 1116; P. Vijayan v. State of Kerala & Anr., (2010)
2 SCC 398 : [2010] 2 SCR 78; Sajjan Kumar v. Central
Bureau of Investigation, (2010) 9 SCC 368 : [2010]
11 SCR 669; Sheoraj Singh Ahlawat and Ors. v. State
of Uttar Pradesh & Anr. (2013) 11 SCC 476 : [2012] C
10 SCR 1034; Sarbananda Sonowal v. Union of India
& Anr. (2005) 5 SCC 665 : [2005] 1 Suppl. SCR 472;
State of Madras v. A. Vaidyanatha Iyer, AIR 1958 SC
61; M. Narsinga Rao v. State of A.P. (2001) 1 SCC 691
: [2000] 5 Suppl. SCR 584; Madras Bar Association v.
D
Union of India & Anr. (2021) 7 SCC 369; Rao Shiv
Bahadur Singh & Anr. v. The State of Vindhya Pradesh
AIR 1953 SCC 394; Mohan Lal v. State of Rajasthan
(2015) 6 SCC 222 : [2015] 5 SCR 435; Gokak Patel
Volkart Ltd. v. Dundayya Gurushiddaiah Hiremath &
Ors. (1991) 2 SCC 141 : [1991] 1 SCR 396; E
Gunwantlal v. The State of Madhya Pradesh (1972) 2
SCC 194 : [1973] 1 SCR 508; H.N. Rishbud and Inder
Singh v. The State of Delhi [1955] 1 SCR 1150; Union
of India v. Prakash P. Hinduja & Anr. (2003) 6 SCC
195 : [2003] 1 Suppl. SCR 307; Manubhai Ratilal Patel
F
through Ushaben v. State of Gujarat & Ors. (2013) 1
SCC 314 : [2012] 8 SCR 993; State of West Bengal &
Ors. v. Swapan Kumar Guha & Ors. (1982) 1 SCC 561
: [1982] 3 SCR 121; Shri Gurbaksh Singh Sibbia &
Ors. v. State of Punjab (1980) 2 SCC 565 : [1980]
3 SCR 383; Superintendent of Police, CBI & Ors. v. G
Tapan Kumar Singh (2003) 6 SCC 175 : [2003]
3 SCR 485; Pooran Mal v. The Director of Inspection
(Investigation), New Delhi & Ors. (1974) 1 SCC 345 :
[1974] 2 SCR 704; R.S. Seth Gopikrishan Agarwal v.
R.N. Sen, Assistant Collector of Customs & Ors. [1967]
H
404 SUPREME COURT REPORTS [2022] 6 S.C.R.

A 2 SCR 340; State of Punjab v. Baldev Singh (1999) 6
SCC 172 : [1999] 3 SCR 977; Special Investigation
Circle-B, Meerut v. Messrs Seth Brothers & Ors. Etc.
(1969) 2 SCC 324 : [1970] 1 SCR 601; Dr. Partap
Singh & Anr. v. Director of Enforcement, Foreign
Exchange Regulation Act & Ors. (1985) 3 SCC 72 :
B
[1985] 3 SCR 969; Union of India & Anr. v.
Purushottam (2015) 3 SCC 779 : [2015] 1 SCR 849;
Raman Tech. & Process Engg. Co. & Anr. v. Solanki
Traders (2008) 2 SCC 302 : [2007] 12 SCR 409; Radha
Mohan Lakhotia, Indian National and Citizen v. Deputy
C Director, PMLA, Directorate of Enforcement, Ministry
of Finance, Department of Revenue (2010) SCC
OnLine Bom 1116; B. Rama Raju v. Union of India &
Ors. (2011) SCC OnLine AP 152; Alive Hospitality and
Food Private Limited v. Union of India & Ors. (2013)
SCC OnLine Guj 3909; K. Sowbaghya v. Union of
D
India & Ors. (2016) SCC OnLine Kar 282; Usha
Agarwal v. Union of India & Ors. (2017) SCC OnLine
Sikk 146; J. Sekar v. Union of India & Ors. (2018)
SCC OnLine Del 6523; Kamlapati Trivedi v. State of
West Bengal (1980) 2 SCC 91 : [1979] 2 SCR 717;
E Apparel Export Promotion Council v. A.K. Chopra
(1999) 1 SCC 759 : [1999] 1 SCR 117; State of W.B. v.
Mir Mohammad Omar & Ors. (2000) 8 SCC 382 :
[2000] 2 Suppl. SCR 712; Shambhu Nath Mehra v. The
State of Ajmer AIR 1956 SC 404 : [1956] SCR 199;
State (Through Central Bureau of Investigation) v.
F
Kalyan Singh (Former Chief Minister of Uttar Pradesh)
& Ors. (2017) 7 SCC 444 : [2017] 6 SCR 946; Ram
Jethmalani & Ors. v. Union of India & Ors. (2011) 8
SCC 1; The Asst. Director Enforcement Directorate v.
Dr. V.C. Mohan Criminal Appeal No.21 of 2022, decided
G on 4.1.2022; State rep. by the C.B.I. v. Anil Sharma,
(1997) 7 SCC 187 : [2011] 8 SCR 725; P.
Chidambaram v. Central Bureau of Investigation (2019)
SCC OnLine Del 9703; Hussainara Khatoon &
Ors.v. Home Secretary, State of Bihar, Patna (1980) 1
SCC 98 : [1979] 3 SCR 532; Supreme Court Legal Aid
H
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 405
INDIA & ORS.

Committee Representing Undertrial Prisoners v. Union A
of India & Ors. (1994) 6 SCC 731 : [1994] 4 Suppl.
SCR 386 – referred to.
Thakurain Balraj Kunwar & Anr. v. Rae Jagatpal Singh
(1904) SCC OnLine PC 9 : (1904) 1 All LJ 384;
Nalinakhya Bysack v. Shyam Sunder Haldar & Ors. B
AIR 1953 SC 148 : [1953] SCR 533; Chandroji Rao
v. Commissioner of Income Tax, M.P., Nagpur (1970) 2
SCC 23 : [1971] 1 SCR 422; Board of Muslim Wakfs,
Rajasthan v. Radha Kishan & Ors. (1979) 2 SCC 468 :
[1979] 2 SCR 148; Tara Prasad Singh & Ors. v. Union
of India & Ors. (1980) 4 SCC 179 : [1980] C
3 SCR 1042; Sakshi v. Union of India & Ors. (2004) 5
SCC 518 : [2004] 2 Suppl. SCR 723; Guntaiah & Ors.
v. Hambamma & Ors. (2005) 6 SCC 228 : [2005]
1 Suppl. SCR 770; C. Gupta v. Glaxo-Smithkline
Pharmaceuticals Ltd. (2007) 7 SCC 171 : [2007] D
7 SCR 800; D.R. Fraser & Co. Ltd. v. The Minister of
National Revenue (1948) SCC OnLine PC 65 : AIR
1949 PC 120; Tofan Singh v. State of Tamil Nadu (2020)
SCC OnLine SC 882; Ashok Munilal Jain & Anr. v.
Assistant Director, Directorate of Enforcement, (2018)
16 SCC 158; Divisional Forest Officer & Anr. v. G.V. E
Sudhakar Rao & Ors. (1985) 4 SCC 573 : [1985]
3 Suppl. SCR 680; Biswanath Bhattacharya v. Union
of India and Ors. (2014) 4 SCC 392 : [2014]
1 SCR 885; and Yogendra Kumar Jaiswal & Ors. v.
State of Bihar & Ors. (2016) 3 SCC 183 : [2015] F
14 SCR 1037 – held inapplicable.
Attygalle & Anr. v. The King AIR 1936 PC 169; United
States v. Anthony Salerno 107 S.Ct. 2095 (1987); United
States of America v. Renee Armstrong Sanders, 929 F.2d
1466 (10th Cir. 1991); United States of America v. Paul G
Johnson, 440 F.3d 1286, 1293 (11th Cir. 2006); United
States of America v Roger Faulkenberry, 614 F.3d 573
(6th Cir. 2010); The Impact of Cuellar on Concealment
Money Laundering Case Law, 18 J Bus L 255 (2015);
Regina v. Cuthbertson & Ors. [1981] A.C. 470;
H
406 SUPREME COURT REPORTS [2022] 6 S.C.R.

A Elizabeth Warburton v. James Loveland (1831) 2 Dow
& Cl 480; Bell, Attorney General v. Wolfish Schall v.
Martin 467 US 253 (1984); Gifford v. Kelson (1943)
51 Man. R 120; R v. Ahmad, [2012] 2 All ER 1137; R v.
James, [2012] 2 Cr App R (S) 253; Samuels v. McCurdy,
Sheriff (1925) SCC OnLine US SC 42; Chicago &
B
Alton Railroad Company v. Henry A. Tranbarger 238
U.S. 67; Seaford Court Estates Ld. v. Asher [1949] 2
K.B. 481; The Georgia Railroad and Banking Company
v. James M. Smith 128 US 174 (1888); and
Commissioner of Stamp Duties v. Atwill & Ors. (1973) 1
C All ER 576; Norton v. Shelby County 118 US 425
(1886) – referred to.
Case Law Reference
[2017] 12 SCR 358 referred to Para 1(a)
D (2021) 10 SCC 598 referred to Para 2(i)
[2017] 12 SCR 118 referred to Para 2(i)
[2013] 14 SCR 713 referred to Para 2(ii)
[1974] 2 SCR 348 referred to Para 2(ii)
E [1967] 2 SCR 703 referred to Para 2(iii)
[1982] 1 SCR 629 referred to Para 2(ix)
[2009] 7 SCR 946 referred to Para 2(ix)
[2019] 12 SCR 172 referred to Para 2(ix)
F (2018) 16 SCC 158 held inapplicable Para 2(xii)
[1962] 3 SCR 338 referred to Para 2(xiii)
[1964] 2 SCR 752 referred to Para 2(xiv)
[1978] 3 SCR 608 referred to Para (xvii)
G [1959] 2 Suppl. SCR 875 referred to Para 2(xvii)
[2015] 8 SCR 1 referred to Para 2(xvii)
(2020) 7 SCC 722 referred to Para 2(xvii)
[1981] 1 SCR 175 referred to Para 2(xix)
H
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 407
INDIA & ORS.

[2010] 5 SCR 381 referred to Para 2(xix) A
[1962] 3 SCR 10 referred to Para 2(xx)
[1954] SCR 1077 referred to Para 2(xx)
[1991] 1 SCR 126 referred to Para 2(xxii)
[1978] 2 SCR 371 referred to Para 3 B
[2005] 3 SCR 345 referred to Para 3
[2008] 10 SCR 379 referred to Para 3
[2010] 2 SCR 979 referred to Para 3
C
[2007] 12 SCR 1100 referred to Para 3
[1996] 10 Suppl. SCR 284 referred to Para 3(i)
[1994] 1 SCR 445 referred to Para 3(i)
[1956] SCR 267 referred to Para 3(i)
D
[1957] SCR 970 referred to Para 3(i)
[1967] 3 SCR 636 referred to Para 3(i)
[1986] 3 SCR 518 referred to Para 3(ii)
[2014] 6 SCR 873 referred to Para 3(ii)
E
[1955] 1 SCR 707 referred to Para 3(iii)
[1959] 2 Suppl. SCR 8 referred to Para 3(iii)
[2010] 9 SCR 1039 referred to Para 3(iii)
(2021) 10 SCC 773 referred to Para 3(iii) F
[1988] 3 Suppl. SCR 967 referred to Para 3(iii)
(2021) 3 SCC 713 referred to Para 3(iii)
(2021) 5 SCC 435 referred to Para 3(iii)
[2017] 9 SCR 797 referred to Para 3(iii) G
[2018] 11 SCR 765 referred to Para 3(iii)
[1976] 1 SCR 277 referred to Para 4(v)
[1997] 1 SCR 1038 referred to Para 4(v)
(2020) 3 SCC 637 referred to Para 4(vii) H
408 SUPREME COURT REPORTS [2022] 6 S.C.R.

A (2021) 2 SCC 427 referred to Para 4(viii)
[2019] 16 SCR 1 referred to Para 4(viii)
[1991] 3 SCR 812 referred to Para 6(i)
[2014] 4 SCR 529 referred to Para 6(i)
B [2014] 11 SCR referred to Para 8
[1979] 1 SCR 392 referred to Para 8
[1983] 2 SCR 690 referred to Para 8
[2012] 8 SCR 295 referred to Para 8
C
[2010] 13 SCR 851 referred to Para 8(i)
[1952] SCR 1091 referred to Para 8(ii)
[2008] 4 SCR 783 referred to Para 8(ii)
[1997] 6 Suppl. SCR 595 referred to Para 8(iii)
D
[2006] 8 Suppl. SCR 474 referred to Para 8(iii)
[2013] 14 SCR 983 referred to Para 8(iii)
[2017] 3 SCR 630 referred to Para 8(iii)
[1978] 1 SCR 535 referred to Para 8(iv)
E
[2011] 13 SCR 309 referred to Para 8(iv)
[2011] 1 SCR 590 referred to Para 8(iv)
[1969] 2 SCR 461 referred to Para 9

F [1981] 1 SCR 175 referred to Para 9
[1973] 3 SCR 438 referred to Para 9(i)
[1992] 3 SCR 247 referred to Para 9(i)
[1965] 2 SCR 457 referred to Para 9(i)
G [1951] SCR 228 referred to Para 10 (i)
[2008] 8 SCR 553 referred to Para10(i)
[2011] 5 SCR 691 referred to Para10(i)
[2014] 1 SCR 496 referred to Para10(i)
H [2014] 12 SCR 1037 referred to Para 10(i)
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 409
INDIA & ORS.

[1967] 1 SCR 848 referred to Para 10(ii) A
[1977] 2 SCR 790 referred to Para 10(ii)
[1985] 2 SCR 643 referred to Para 10(ii)
(2002) 9 SCC 639 referred to Para 10(ii)
[2006] 7 Suppl. SCR 766 referred to Para 10(ii) B
[1973] 1 SCR 1004 referred to Para 10(iii)
[1981] 3 SCR 419 referred to Para 10(iii)
[1985] 3 Suppl. SCR 827 referred to Para 10(iii)
C
[1988] 1 Suppl. SCR 1 referred to Para 11
[2003] 3 Suppl. SCR 340 referred to Para 11(ii)
[2007] 8 SCR 757 referred to Para 11(ii)
[2008] 14 SCR 419 referred to Para 12(i)
D
[2012] 13 SCR 47 referred to Para 12(i)
[1963] 1 Suppl. SCR 912 referred to Para 13
[1974] 3 SCR 760 referred to Para 13
[1984] 2 SCR 914 referred to Para 14(i)
E
[2011] 14 SCR 240 referred to Para 14(i)
[1995] 3 SCR 905 referred to Para 14(iii)
[1996] 10 Suppl. SCR 284 referred to Para 14(iv)
[1994] 1 Suppl. SCR 1 referred to Para 14(v) F
(1994) 6 SCC 86 referred to Para 15
[1961] 3 SCR 107 referred to Para 15
[1959] 1 Suppl. SCR 274 referred to Para 15
(1969) 2 SCC 662 referred to Para 15 G
[2015] 5 SCR 605 referred to Para 15 15
[1987] 2 SCR 1173 referred to Para 16(xxxiv)
[1988] 2 SCR 962 referred to Para 16(xxxv)
[1990] 3 Suppl. SCR 365 referred to Para 16(xxxv) H
410 SUPREME COURT REPORTS [2022] 6 S.C.R.

A [1991] 3 SCR 307 referred to Para 16(xxxv)
[1993] 3 SCR 497 referred to Para 16(xxxv)
[2007] 1 SCR 855 referred to Para 16(xxxv)
[2007] 1 SCR 174 referred to Para 16(xxxv)
B [2007] 3 SCR 769 referred to Para 16(xxxv)
[2010] 5 SCR 927 referred to Para 16(xxxv)
[2014] 2 SCR 589 referred to Para 16(xxxv)
[2017] 13 SCR 156 referred to Para 16(xxxvi)
C
[1994] 2 SCR 375 referred to Para 16(xxxvii)
[2003] 6 Suppl. SCR 85 referred to Para 16(xxxvii)
[2016] 3 SCR 865 referred to Para 16(xxxvii)
[1994] 3 Suppl. SCR 263 referred to Para 16(xxxviii)
D
[1987] 2 SCR 800 referred to Para 16(xxxviii)
[1969] 1 SCR 219 referred to Para 16(xxxviii)
[2008] 4 SCR 822 referred to Para 16(xxxviii)
[2005] 1 SCR 1019 referred to Para 16(xxxix)
E
[2014] 5 SCR 119 referred to Para 16(xxxix)
[2005] 1 SCR 494 referred to Para 16(xxxix)
[1999] 1 SCR 669 referred to Para 16(xxxix)

F [1980] 1 SCR 151 referred to Para 16(xli)
[1987] 3 SCR 84 referred to Para 16(xli)
[1988] 3 SCR 225 referred to Para 16(xli)
[1996] 3 Suppl. SCR 127 referred to Para 16(xli)
G [2003] 6 Suppl. SCR 476 referred to Para 16(xli)
[2008] 14 SCR 889 referred to Para 16(xli)
[2015] 15 SCR 499 referred to Para 16(xli)
(2020) 2 SCC 747 referred to Para 16(xli)
H [1953] SCR 1 referred to Para 16(xlii)
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 411
INDIA & ORS.

[2009] 3 SCR 735 referred to Para 16(xlii) A
[2003] 5 Suppl. SCR 1 referred to Para 16(xliii)
[2017] 8 SCR 33 referred to Para 16(xliv)
[1963] 2 Suppl. SCR 812 referred to Para 16(xliv)
[1964] 4 SCR 280 referred to Para 16(xliv) B
[1968] 1 SCR 661 referred to Para 16(xliv)
[1985] 1 SCR 29 referred to Para 16(xliv)
[2011] 9 SCR 936 referred to Para 16(xliv)
C
[1985] 3 SCR 743 referred to Para 16 (xlvii)
[2009] 9 SCR 690 referred to Para 16 (xlvii)
[2019] 5 SCR 91 referred to Para 16(xlvii)
[1997] 1 SCR 797 referred to Para 16(xlix)
D
[2004] 5 Suppl. SCR 272 referred to Para 16(li)
[2008] 12 SCR 179 referred to Para 16(li)
[2003] 1 Suppl. SCR 79 referred to Para 16 (lii)
[2008] 5 SCR 856 referred to Para 16 (lii)
E
(2014) 4 SCC 513 referred to Para 16 (lii)
[2018] 10 SCR 974 referred to Para 16 (lii)
[2014] 8 SCR 128 referred to Para 16(lv)
[2008] 14 SCR 179 referred to Para 16(lix) F
[1994] 1 SCR 579 referred to Para 16(lx)
[1982] 2 SCR 31 referred to Para 16(lx)
[2005] 2 SCR 879 referred to Para 16(lx)
[ 2014] 7 SCR 569 referred to Para 16(lx) G
[1982] 2 SCR 272 referred to Para 16(lxiii)
[1987] 2 SCR 677 referred to Para 16(lxiii)
[2013] 3 SCR 547 referred to Para 16(lxiii)
[2013] 3 SCR 493 referred to Para 16(lxiii) H
412 SUPREME COURT REPORTS [2022] 6 S.C.R.

A [2017] 4 SCR 503 referred to Para 16(lxiii)
[1959] SCR 629 referred to Para 16(lxiii)
[1958] SCR 1226 referred to Para 16(lxiv)
[1952] SCR 435 referred to Para 16(lxvii)
B [1954] SCR 30 referred to Para 16(lxvii)
[1979] 2 SCR 476 referred to Para 16(lxvii)
[1950] SCR 869 referred to Para 16(lxviii)
[1951] SCR 682 referred to Para 16(lxviii)
C
[1992] 3 SCR 409 referred to Para 16(lxix)
[1994] 6 Suppl. SCR 369 referred to Para 16(lxix)
[1998] 2 Suppl. SCR 632 referred to Para 16(lxix)
[1978] 1 SCR 641 referred to Para 16(lxix)
D
[1984] 1 SCR 725 referred to Para 16(lxix)
[2005] 3 SCR 345 referred to Para 16(lxx)
[2004] 2 SCR 1092 referred to Para 16(lxxi)
(2000) 9 SCC 549 referred to Para 16(lxxi)
E
(2004) 13 SCC 504 referred to Para 16(lxxi)
(2005) 12 SCC 480 referred to Para 16(lxxi)
[2006] 10 Suppl. SCR 381 referred to Para 16(lxxi)

F [2008] 8 SCR 1159 referred to Para 16(lxxi)
[2008] 12 SCR 1083 referred to Para 16(lxxi)
[2009] 1 SCR 533 referred to Para 16(lxxi)
[2012] 9 SCR 873 referred to Para 16(lxxi)
G [2017] 6 SCR 513 referred to Para 16(lxxi)
[2018] 3 SCR 739 referred to Para 16(lxxi)
[2019] 5 SCR 1060 referred to Para 16(lxxi)
(2019) 9 SCC 165 referred to Para 16(lxxi)
H [2016] 3 SCR 579 referred to Para 16(lxxii)
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 413
INDIA & ORS.

[1964] 2 SCR 608 referred to Para 16(lxxiv) A
[1970] 1 SCR 388 referred to Para 16(lxxiv)
[1994] 1 Suppl. SCR 639 referred to Para 16(lxxiv)
[1996] 1 Suppl. SCR 349 referred to Para 16(lxxiv)
(1996) 7 SCC 637 referred to Para 16(lxxiv) B
[2003] 1 Suppl. SCR 1 referred to Para 16(lxxiv)
[2009] 10 SCR 821 referred to Para 16(lxxiv)
[2016] 1 SCR 1025 referred to Para 16(lxxiv)
C
[ 2016] 7 SCR 689 referred to Para 16(lxxiv)
[1955] 1 SCR 613 referred to Para 16(lxxv)
[1958] SCR 1422 referred to Para 16(lxxv)
[1972] 1 SCR 105 referred to Para 16(lxxv)
D
[2020] 2 SCR 1 referred to Para 16(lxxvii)
[1988] 2 Suppl. SCR 929 referred to Para 16(lxxvii)
[2014] 1 SCR 465 referred to Para 6(lxxix)
[1960] 3 SCR 116 referred to Para 17(i)
E
[1961] 3 SCR 592 referred to Para 17(i)
[1964] 7 SCR 137 referred to Para 17(i)
(1972) 3 SCC 775 referred to Para 17(ii)
[1997] 4 Suppl. SCR 142 referred to Para 17(iv) F
[1966] 1 SCR 134 referred to Para 17(v)
[1998] 1 SCR 1153 referred to Para 17(v)
[1966] 3 SCR 698 referred to Para 17(ix)
AIR 1970 SC 1065 referred to Para 17(ix) G
[1975] 1 SCR 881 referred to Para 17(ix)
[1959] 2 Suppl. SCR 459 referred to Para 17(xi)
[2008] 13 SCR 1217 referred to Para 17(xii)
H
414 SUPREME COURT REPORTS [2022] 6 S.C.R.

A [1963] 2 SCR 433 referred to Para 17(xiv)
[2019] 6 SCR 701 referred to Para 17(xiv)
[2004] 3 SCR 1148 referred to Para 17(xxiv)
[2001] 3 SCR 900 referred to Para 17(xxiv)
B [2008] 1 SCR 605 referred to Para 17(xxiv)
[2001] 2 SCR 644 referred to Para 17(xxiv)
[1994] 5 Suppl. SCR 526 referred to Para 17(xxiv)
(2020) 10 SCC 120 referred to Para 17(xxiv)
C
[2008] 8 SCR 201 referred to Para 17(xxv)
[1986] 1 SCR 939 referred to Para 17(xxv)
[1979] 2 SCR 229 referred to Para 17(xxvii)
[2002] 1 SCR 75 referred to Para 17(xxvii)
D
[2008] 6 SCR 1116 referred to Para 17(xxvii)
[2010] 2 SCR 78 referred to Para 17(xxvii)
[2010] 11 SCR 669 referred to Para 17(xxvii)
[2012] 10 SCR 1034 referred to Para 17(xxvii)
E
[2005] 1 Suppl. SCR 472 referred to Para 17(xxviii)
AIR 1958 SC 61 referred to Para 17(xxx)
[2000] 5 Suppl. SCR 584 referred to Para 17(xxx)

F (2021) 7 SCC 369 referred to Para 17(xxxii)
AIR 1953 SCC 394 referred to Para 17(xxxiii)
[2015] 5 SCR 435 referred to Para 17(xxxv)
[1991] 1 SCR 396 referred to Para 17(xxxv)
G [1973] 1 SCR 508 referred to Para 17(xxxvi)
[1955] 1 SCR 1150 referred to Para 17(xxxvii)
[2003] 1 Suppl. SCR 307 referred to Para 17(xxxvii)
[2012] 8 SCR 993 referred to Para 17(xxxvii)
H
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 415
INDIA & ORS.

[1982] 3 SCR 121 referred to Para 17(xxxvii) A
[1980] 3 SCR 383 referred to Para 17 (xxxix)
[2003] 3 SCR 485 referred to Para 17 (xxxix)
[1974] 2 SCR 704 referred to Para 17(xl)
[1967] 2 SCR 340 referred to Para 17(xli) B
[1999] 3 SCR 977 referred to Para 17(xlii)
[1970] 1 SCR 601 referred to Para 17(xliv)
[1985] 3 SCR 969 referred to Para 17(xliv)
C
[2015] 1 SCR 849 referred to Para 17(xlvi)
[2007] 12 SCR 409 referred to Para17(liii)
[2014] 1 SCR 885 held inapplicable Para 17(lxi)
[1985] 3 Suppl. SCR 680 held inapplicable Para 17(lxi)
D
[1953] SCR 533 held inapplicable Para 17(lxi)
[2015] 14 SCR 1037 held inapplicable Para 17(lxi)
[1979] 2 SCR 717 referred to Para 17(lxvi)
[1999] 1 SCR 117 referred to Para 38
E
[1971] 1 SCR 422 held inapplicable Para 49
[1979] 2 SCR 148 held inapplicable Para 49
[1980] 3 SCR 1042 held inapplicable Para 49
[ 2004] 2 Suppl. SCR 723 held inapplicable Para 49 F
[2005] 1 Suppl. SCR 770 held inapplicable Para 49
[2007] 7 SCR 800 held inapplicable Para 49
[2000] 2 Suppl. SCR 712 referred to Para 95
[1956] SCR 199 referred to Para 95 G
[2017] 6 SCR 946 referred to Para 111
(2011) 8 SCC 1 referred to Para129
[2011] 8 SCR 725 referred to Para 138
H
416 SUPREME COURT REPORTS [2022] 6 S.C.R.

A [1979] 3 SCR 532 referred to Para 143
[1994] 4 Suppl. SCR 386 referred to Para 143
CRIMINAL APPELLATE JURISDICTION: Special Leave
Petition (Criminal) No. 4634 of 2014.
B From the Judgment and Order dated 30.04.2014 of the High Court
of Judicature at Bombay in Criminal Application No. 1132 of 2012.
With
SLP(C) NOS. 28394, 28922, 29273 OF 2011, SLP(CRL.) DIARY
NO. 41063 OF 2015, SLP(CRL.) NOS. 9987, 10018, 10019 OF 2015,
C SLP(CRL.) NO. 993 OF 2016, T.P. (CRL.) NOS. 150, 151-157 OF
2016, WP(CRL.) NO. 152 OF 2016, SLP(CRL.) NO. 11839 OF 2019,
SLP(CRL.) NOS. 2890, 5487 OF 2017, CRL. APPEAL NOS. 1269,
1270 OF 2017, 1271-1272 OF 2017, WP(CRL.) NO. 202 OF 2017,
SLP(CRL.) DIARY NOS. 9360, 9365, 17000, 17462, 20250, 22529 OF
D 2018, SLP(CRL.) NOS. 1534, 1701-1703, 1705, 2971, 4078, 5444, 6922,
7408, 8156, 11049 OF 2018, CRL. APPEAL NOS. 223, 391-392, 793-
794, 1114, 1115, 1210 OF 2018, WP (CRL.) NOS. 26, 33, 75, 117, 173,
175, 184, 226, 251, 309, 333, 336 OF 2018, TRANSFERRED CASE
(CRIMINAL) NOS. 3, 4, 5 OF 2018, TRANSFER PETITION (CIVIL)
NO. 1583 OF 2018, SLP(CRL.) NOS. 244, 3647, 4322-4324, 4546,
E 5153, 5350, 6834, 8111, 8174, 9541, 9652, 10627 OF 2019, W.P. (CRL.)
NOS. 9 , 16, 49, 118, 119, 122, 127, 139, 147, 173, 205, 212, 217, 239, 244,
253, 261, 263, 266, 267, 272, 273, 283, 285, 286, 287, 288, 289, 298, 299,
300, 303, 305, 306, 308, 309, 313, 326, 346, 365, 367 OF 2019, SLP(CRL.)
NOS. 647, 260, 618, 1732, 2023, 2814, 3366, 3474, 5536, 6128, 6172,
F 6303, 6456, 6660 OF 2020, W.P. (CRL.) NOS. 5, 9, 28, 35, 36, 39, 49, 52,
60, 61, 89, 90, 91, 93, 124, 137, 140, 142, 145, 169, 184, 221, 223, 228,
239, 240, 259, 267, 285, 286, 311, 329, 366, 380, 385, 387, 404, 410, 411,
429 OF 2020, W.P. (C) NO. 1401 OF 2020, SLP(CRL.) DIARY NOS.
8626, 31616, 11605 OF 2021, SLP(CRL.) NOS. 609, 734, 1031, 1072,
1073, 1107, 1355, 1440, 1403, 1586, 1855, 1920, 2050-2054, 2237, 2250,
G 2435, 2818, 3228, 3274, 3439, 3514, 3629, 3769, 3813, 3921, 4024, 4834,
5156, 5174, 5252, 5457, 5652, 5696-5697, 6189, 6338, 6847, 7021-7023,
8429 OF 2021, SLP(C) NOS. 8764-8767, 20310 OF 2021, TRANSFER
PETITION (CRIMINAL) No. 435 OF 2021, WP (C) No. 56 OF 2021,
WP (CRIMINAL) NOS. 4, 6, 11, 18, 19, 21, 27, 33, 40, 47, 66, 69, 144,
179, 199, 207, 239, 263, 268, 282, 301, 323, 359, 370, 303, 305, 453, 454,
H
475, 520, 532 OF OF 2021.
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 417
INDIA & ORS.

Tushar Mehta, SG, Suryaprakash V. Raju, Aman Lekhi, K M A
Nataraj, S.V. Raju, Ms.Aishwarya Bhati, Jayant Kr. Sud, Vikramjit
Banerjee, S. V. Raju, Sanjay Jain, ASGs, B.K. Satija, Samar Vijay Singh,
Ms.Ruchi Kohli, Vishal Mahajan, AAGs, Kapil Sibal, Dr. Abhishek Manu
Singhvi, Sidharth Luthra, Mukul Rohatgi, Vivek Reddy, Vikram Chaudhari,
Suryanarayana Singh, A. Mariarputham, Maninder Singh, S.B. Upadhyay, B
S. Niranjan Reddy, Siddharth Aggarwal, Pramod K. Dubey, Jagmohan
Bansal, Amit K Desai, Dr.Menaka Guruswamy, Aabad Ponda, Mahesh
Jethmalani, Vikas Singh, N. Hariharan, Sr. Advs., Mahesh Agarwal,
Anshuman Srivastava, Prasouk Jawin, Ms.Rabiya Thakur, Nishant Rao,
E.C. Agrawala, Arshdeep Singh Khurana, Prateek Chadha, Adit S. Pujari, C
Amit Bhandari, Akshat Gupta, Ms.Madhavi Agrawal, Ms.Ambika Mathur,
Shreedhar Kale, Raghav Tankha, Harsh Mittal, Mrs. Shally Bhasin, Balaji
Subramanian, Ms.Ishani Banerjee, SCV Vimal Pani, Ms.L Maheswari,
A. Lakshminarayanan, Tarun Dua, Anant Garg, Asif Ahmad, Adityaa
Raju, Suhaan Mukerji, Shri Singh, Aditya Dewan, Vishal Prasad,
D
Ms.Chitralekha Das, Nikhil Parikshith, Dewang Singh Chauhan, Abhishek
Manchanda, Chirag Madan, Ms.Shubhangini Jain, Sayandeep Pahari,
Ms.Padma Venkataraman, M/S. Plr Chambers And Co., Pratik Reddy,
Victor Das, Ms.Anwesha Padhi, Mohit Rai, Atul Agarwal, Sourabh
Kumar Mishra, Kumar Dushyant Singh, Keshavam Chaudhari, Amit K.
Nain, Harshit Sethi, Rishi Sehgal, Ms.Ria Khanna, Devanshu Yadav, E
Kapil Dahiya, Raktim Gogoi, Varun Shekhar, Kartikeya Singh, Samarth
Shandilya, Gautam Awasthi, Ms.Anzu K. Varkey, Nikhil Jain, Hemant
Shah, Sangram S. Saron, Vinod Kumar Jain, Satya Prakash, Ms. Pragati
Neekhra, Avadh Bihari Kaushik, Anand Dilip Dagga, Rajat Nair, Sairica
Raju, Ms.Sharadha Deshmukh, Neela Kedar Gokhale, Ritwiz Rishabh, F
Sharath Nambiyar, A k Sharma, Ms.Nisha Bagchi, Binu Tamta, Arvind
Kumar Sharma, K.M. Nataraj, Ms.Zoheb Hussain, Ms.Sairica Raju,
Ms.Shradha Deshmukh, Ms.Neela Kedar Gokhale, Sharath Nambiar,
Mukesh Kumar Maroria, Raj Bahadur Yadav, Anshuman Singh, Ankit
Bhatia, Arpit Goel, Om Prakash Shukla, Sanjay Kumar Tyagi, Kanu G
Agarwal, Zoheb Hossain, Ms. Aastha Mehta, Ms.Deepanwita Priyanka,
Ms.Archana Pathak Dave, Sughosh Subramanium, Ms.Swarupama
Chaturvedi, B. V. Balaram Das, G.S Makker, Avneesh Arputham,
M/S. Arputham Aruna And Co, Syed Abdul Haseeb, Adit Khorana,
Mayank Pandey, Deepbali Datta, Rajan Kr. Chourasia, Ms.Deepabali H
418 SUPREME COURT REPORTS [2022] 6 S.C.R.

A Duttai, M.K. Maroria, B. Vinodh Kanna, Vansaja Shukla, Gurmeet Singh
Makker, Ms.Monika Gusain, Varun Shankar, Lakshman RS, Atharva
Koppal, Divyanshu Jain, Arnav Narain, Pawan R. Upadhyay,
Mrs. Sharmila Upadhyay, Ms.Anisha Upadhyay, Sarvjit Pratap Singh,
Gaurav Prakash Pathak, Nishant Kumar, Raghenth Basant, Yogesh
B Raavi, Anirudh Reddy, Ms. Liz Mathew, Shishir Mathur, Shohit Chaudhry,
Mukul Singh, D.L. Chidnanad, Amit Sharma, Ms.Rukhimini Bobde, A.K.
Sharma, Vivek Jain, Ms.Suchitra Kumbhat, Prithveesh MK, Gurpreet
S. Parwanda, Nishanth Patil, Ms.Malvika Kala, Adarsh Aggarwal, Ajay
Aggarwal, Aman Garg, Mohinder Singh, Suresh Jhunthra, Rajan Narain,
C Ms.Deepabali Datta, S. Hari Haran, Ms.Sairica S Raju, Naveen
Malhotra, S. Mahesh Sahasranaman, Gopalkrishna Shenoy, Ms.Prapti
Allagh, Prateek K Chadha, Ms.Ayushi Rajput, Ms.Radhika Dhanotia,
Yash S. Vijay, Shaffi Mather, Parmatma Singh, Mayank Jain, Madhur
Jain, Ms. Neha Sharma, Ms.Binu Tamta, Dr. (Mrs.) Vipin Gupta, Neeraj
Kumar Sharma, Subhash Jadhav, Chandan Singh Shekhawat, Pranav
D
Sarthi, Ms.Natabrata Bhattacharya, Ms. Awantika Manohar, Ms.Natasha
Vinayak, Ms. Jaikriti S. Jadeja, Rajiv Shankar Dvivedi, Rishabh Jain,
Sushant Kr. Sarkar, Ms.Arti Dvivedi, Saurabh Mishra, Sunil Fernandes,
Swaroop Anand, Ms.Nupur Kumar, Prastut Dalvi, Nagendra R. Naik,
Pai Amit, Ms.Pankhuri Bhardwaj, Ms.Bhavana Duhoon, Ms. Christi Jain,
E Hitesh Jain, Ms.Gunjan Mangla, Chadan Singh Shekhawat, Nikhil Ahuja,
Tawanji Shukla, Ms. Malvika Kapila, Ms. Anjali Jha, Ms.Anjali Jha
Manish, Priyadarshi Manish, Ms.Divyanshee Singh, Shivam Sharma, Raj
Kishor Choudhary, Varun Raghavan, Shakeel Ahmed, Ms.Malvika
Raghavan, Satish Pandey, Salim Ansari, Rajesh Pandey, Akbar Ali, Vikas
F Gupta, S. K. Verma, Narender Hooda, Dr. Surender Singh Hooda,
Ms. Preeti Singh, Mrs. Malbika Sarkar, Devanshu Yadav, Dr. G.K. Sarkar,
Prashant Srivatav, Ayush Choudhary, Sameer Pandey, Omar Ahmed,
Malak Manish Bhatt, Ms. Neeha Nagpal, Aditya Gupta, Jaspal Singh,
Vijay Aggarwal, Mudit Jain, Yugant Sharma, Ms. Astha Sharma,
G Ms. Mantika Haryani, Ajit Sharma, Prithvees MK, Nishanth Patil,
Ms. Shubhika Saluja, Vivek Jain, Zulfiquar Memom, Mrinal Bharti, Parvez
Memom, Chirag Naik, Ms.Vaijayanti Sharma, Nirvikar Singh, Manish
Shekhari, Palash Bhatkoti, Nitin Sharma, Karan Bharihoke, Kunal Verma,
E. M. S. Anam, Vishnu Shanker, Ms. Ranjana Roy Gawai, Ms. Vasudha
Sen, Ujjawal Jain, Ms. Divya Roy, Sunil Kumar Jain, Fuzail Ahmad Ayyubi,
H
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 419
INDIA & ORS.

Irshad Ahmad, Shailesh Madiyal, Sudhanshu Prakash, Vaibhav Sabhrawal, A
Ms.Rakhi M., Ms.Neha Jain, Sruthi Iyer, Neha Jain, Ms.Kanishka Prasad,
Abbula kalam, Ibad Mushtaq, Ms.Akanksha Rai, Pawan Upadhyay,
S. S. Sastry, Rajender Vats, Vipul Srivastav, M/S. Unuc Legal Llp,
M/S. Ap & J Chambers, Bharadwaj S., Ranjit Kumar Sharma,
Mrs. Priya Puri, Arshdeep, Sharad Puri, Ranjay Dubey, Yati Sharma, B
G.Sivabalamurugan, Aljo K. Joseph, Ranjan Kumar, Mrs. Shelna K.,
Nikilesh Ramachandran, Manish Pratap Singh, Ms. Mahima Bhardwaj,
Vivek Narayan Sharma, Tushar Kumar, Rajeev Kumar Jha, Pranshu
Kaushal, Shubham Awasthi, Ajay Singh, Braj K. Mishara, Vijay Kumar,
Arun Raghavender, Ms.Bharti Tyagi, Shantanu M. Adkar, C
R. Lakshmishankar, S. Udaya Kumar Sagar, Ms.Bina Madhavan, Sanjay
Indukuri, R. Narayan Kumar, Ms.Akansha Mehra, M/S. Lawyer’s S
Knit & Co., Akshay Nagarajan, Rishi Malhotra, Ms.Sonia Dube, Shatadru
Chakraborty, Ms.Kanchan Yadav, Surbhi Anand, M/S. Legal Options,
Tanveer Ahmed Mir, Arjun Singh Bhati, Dhruv Gupta, Vaibhav Suri,
D
Prabhav Ralli, Ms.Urja Pandey, Amit Gupta, Akhilesh Dubey, Dharmesh
Joshi, Uttam Dubey, Hari Sankar Mahaptra, Bhavini Sribastava,
M/S. Mitter & Mitter Co., Gursharan S. Virk, Nakul Mohta, Ms. Misha
Rohatgi, Devansh Shrivastava, Johnson Subba, Deepak Prakash,
Abhishek A. Rastogi, Pratushpava Saha, Mahir Chablani, Rohit Ghosh,
Ms.Kanika Sharma, M/S. Khaitan & Co., M. T. George, Ms.Susy, Johns E
George, Ms. Rashi Bansal, Shekhar G Devasa, Manish Tiwari, Shashi
Bhushan Nagar, Ramesh Jadhav, M/S. Devasa & Co., Namit Saxena,
Awnish Maithani, Ms.Arushi Dhawan, M.K. Subramanian, Vinodh
Kanna B., Ritesh Patil, Shamik Shirishbhai Sanjanwala, Ms.Diksha Rai,
Ankit Agarwal, Prateek Bhardwaj, Mahfooz Ahsan Nazki, Polanki F
Gowtham, Shaik Mohamad Haneef, T. Vijaya Bhaskar Reddy, K.V. Girish
Chowdary, Ms. Rajeswari Mukherjee, Devendra Kumar Singh,
Karunakar Mahalik, Mrs. Anil Katiyar, Syed Ahmed Saud, Daanish
Ahmad Syed, Mohd. Parvez Dabas, Uzmi Jameel Husain, Aqib Baig,
Mohd. Shahib, Sunil Sarogi, M/S. Shakil Ahmad Syed, Dr.Sujay G
Kantawala, Azmat Hayat Amanullah, Nishant Awana, Sagar Chauhan,
Ms.Nitya Sharma, Devansh Malhotra, Sujit Sahoo, Aditya Talpade,
Divyesh Pratap Singh, Ms.Srishti Singh, Gautam Talukdar, A.P. Singh,
Shreyansh Rathi, M/S. M. V. Kini & Associates, Sarvesh Singh Baghel,
Mukhtar Alam, Ms.Natasha, B. Krishna Prasad, Balaji Srinivasan, M B
H
420 SUPREME COURT REPORTS [2022] 6 S.C.R.

A R S Raju, Mrs. Lakshmi Rao, Prateek Yadav, Mohammad Shahrukh,
Ms.Pallavi Sengupta, Ms.Garima Jain, Ms.Aakriti Priya, Suhail Ahmed,
V. Shyamohan, Ms.Jaspreet Gogia, Ms.Mandakini Singh, Karanvir Gogia,
Ms.Shivangi Singhal, Ms.Ashima Mandla, O. P. Gaggar, Ashoka Kumar
Thakur, Imran Khan, Anil K. Chopra, Shreeyash U. Lalit, Mahesh Kumar,
B Vishal Sharma, Ms.Devika Khanna, Mrs. V. D. Khanna, Aniruddha P.
Mayee, Chirag M. Shroff, Amandeep Mehta, Gaurav Malhotra, Samir
Ali Khan, Rahul Chitnis, Sachin Patil, Aaditya A. Pande, Geo Joseph,
Ms.Shwetal Shepal, V. N. Raghupathy, Nishe Rajen Shonker, Ms.Anu
K. Joy, Alim Anvar, Akash Kakade, Somanatha Padhan, Swetab Kumar,
C Sukhada Kakade, Dr.Monika Gusain, Dinesh Kumar Sabharwal, Sameer
Bhatnagar, Syed Mehdi Imam, V. Vasudevan, Aswathi M.K., Birj Kant
Mishra, Hitesh Kumar Sharma, S.K. Rajora, Akhileshwar Jha,
Ms.Maneesha Kongovi, R. Sudhinder, Ms.Prerana Amitabh,
Shivabhushan Hatti, Shashank Dixit, R Gopalakrishan, V. Vasudev,
Awasthi M.K., Gautam Khazanchi, Anshuman Sinha, Vijay Pande,
D
Ms.Jaikriti S Jadeja, Ms.Pragya Sharma, Vinay Prakash, Amit, Maneesh
Saxena, Vipin Kumar Saxena, Ms.Kajal Rani, Ms. Natasha Dalmia,
Anand Varma, Mayank Jain, Madhur Jain, A. Selvin Raja, Dhruv Gupta,
Prabhav Ralli, Ms.Kartika Sharma, Shreyansh Agrawal, Ms.Rooh-e-
Hina Dua, Rajive Bhalla, Rajiv Malhotra, Yajur Bhalla, Deepak Samota,
E Sumeir Ahuja, Shubham Bhalla, V. Purushothaman Reddy, Ms.Misha
Rohatgi Mohta, Johnson Subba, Somanath Padhan, Swetab Kumar,
Rishabh Jain, Jyoti Kumar Singh, Saurabh Mishra, Sachin Jolly, Akshay
Anand, Ms.Maneesha Kongovi, R Sudhinder, Ms.Prerana Amitabh,
Shivabhushan Hatti, R Gopalakrishnan, Vishal Gosain, Nagarkatti Kartik
F Uday, Ms.Deepika Kalia, Ms.Adya Rajkotia Luthra, Sandeep Sharma,
Sunny Choudhary, E. C. Agrawala, Raj Kamal, Abhimanyu Bhandari,
Ms.Kartika Sharma, Arav Pandit, Shreyansh Agrawal, Ms.Roohe Hina
Dua, Wills Mathews, Mathen Joseph, Devendra Kumar Tiwari, Paul
John Edison, Rakesh Garg, Ashish Gopal Garg, Ms.Shweta Garg,
G Navanjay Mahapatra, S.A. Haseeb, Adit Khorana, Ankur Chawla,
V.K.Biju, Ms.Ria Sachthey, Chetanya Singh, Amlendu Kumar Akhilesh
Kumar Jha, Abhay Pratap Singh, Shaji George, Ms.Vijay Laxmi, T. G.
Narayanan Nair, Ms. Shweta Garg, G. Prakash, D.Kumanan, Narender
Kumar Verma, Pranav Sachdeva, K. Paari Vendhan, Ms. Uma Devi.
H M, Advs. for the appearing parties.
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 421
INDIA & ORS.

The Judgment of the Court was delivered by A
A. M. KHANWILKAR, J.
Table of Contents

B

C

D

E

F

G

H
422 SUPREME COURT REPORTS [2022] 6 S.C.R.

A PREFACE
1. In the present batch of petition(s)/appeal(s)/case(s), we are
called upon to deal with the pleas concerning validity and interpretation
of certain provisions of the Prevention of Money-Laundering Act, 2002 1
and the procedure followed by the Enforcement Directorate2 while
B inquiring into/investigating offences under the PMLA, being violative of
the constitutional mandate.
(a) It is relevant to mention at the outset that after the decision of
this Court in Nikesh Tarachand Shah vs. Union of India & Anr. 3, the
Parliament amended Section 45 of the 2002 Act vide Act 13 of 2018, so
C as to remove the defect noted in the said decision and to revive the
effect of twin conditions specified in Section 45 to offences under the
2002 Act. This amendment came to be challenged before different High
Courts including this Court by way of writ petitions. In some cases where
relief of bail was prayed, the efficacy of amended Section 45 of the
2002 Act was put in issue and answered by the concerned High Court.
D Those decision(s) have been assailed before this Court and the same is
forming part of this batch of cases. At the same time, separate writ
petitions have been filed to challenge several other provisions of the
2002 Act and all those cases have been tagged and heard together as
overlapping issues have been raised by the parties.
E (b) We have various other civil and criminal writ petitions, appeals,
special leave petitions, transferred petitions and transferred cases before
us, raising similar questions of law pertaining to constitutional validity
and interpretation of certain provisions of the other statutes including the
Customs Act, 19624, the Central Goods and Services Tax Act, 20175,
F the Companies Act, 20136, the Prevention of Corruption Act, 19887, the
Indian Penal Code, 18608 and the Code of Criminal Procedure, 19739
which are also under challenge. However, we are confining ourselves
only with challenge to the provisions of PMLA.
1
For short, “PMLA” or “the 2002 Act”
2
For short, “ED”
G 3
(2018) 11 SCC 1
4
For short, “1962 Act” or “the Customs Act”
5
For short, “CGST Act”
6
For short, “Companies Act”
7
For short, “PC Act”
8
For short, “IPC”
9
H For short, “Cr.P.C. or “the 1973 Code”
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 423
INDIA & ORS. [A. M. KHANWILKAR, J.]

(c) As aforementioned, besides challenge to constitutional validity A
and interpretation of provisions under the PMLA, there are special leave
petitions filed against various orders of High Courts/subordinate Courts
across the country, whereby prayer for grant of bail/quashing/discharge
stood rejected, as also, special leave petitions concerned with issues
other than constitutional validity and interpretation. Union of India has
B
also filed appeals/special leave petitions; and there are few transfer
petitions filed under Article 139A(1) of the Constitution of India.
(d) Instead of dealing with facts and issues in each case, we will
be confining ourselves to examining the challenge to the relevant
provisions of PMLA, being question of law raised by parties.
C
SUBMISSIONS OF THE PRIVATE PARTIES
2. Mr. Kapil Sibal, learned senior counsel appearing for the private
parties/petitioners in the concerned matter(s) submitted that the procedure
followed by the ED in registering the Enforcement Case Information
Report10 is opaque, arbitrary and violative of the constitutional rights of D
an accused. It was submitted that the procedure being followed under
the PMLA is draconian as it violates the basic tenets of the criminal
justice system and the rights enshrined in Part III of the Constitution of
India, in particular Articles 14, 20 and 21 thereof.
(i) A question was raised as to whether there can be a procedure E
in law, where penal proceedings can be started against an individual,
without informing him of the charges? It was contended that as per
present situation, the ED can arrest an individual on the basis of an
ECIR without informing him of its contents, which is per se arbitrary
and violative of the constitutional rights of an accused. The right of an
accused to get a copy of the First Information Report10A at an early F
stage and also the right to know the allegations as an inherent part of
Article 21. Reference was made to Youth Bar Association of India vs.
Union of India & Anr.11 in support of this plea. Further, as per law, the
agencies investigating crimes need to provide a list of all the documents
and materials seized to the accused in order to be consistent with the G

10
For short, “ECIR”
10A
For short, “FIR”
11
(2016) 9 SCC 473 (Para 11.1); and Court on its Own Motion vs. State, 2010 SCC
OnLine Del 4309 (Paras 39 & 54)
H
424 SUPREME COURT REPORTS [2022] 6 S.C.R.

A principles of transparency and openness12. It was also submitted that
under the Cr.P.C., every FIR registered by an officer under Section 154
thereof is to be forwarded to the jurisdictional Magistrate. However, this
procedure is not being followed in ECIR cases. Further, violation of
Section 157 of the Cr.P.C. was also alleged and it was submitted that
this has led to non-compliance with the procedure prescribed under the
B
law (Cr.P.C.) and the law laid down by this Court in catena of decisions.
It was vehemently argued that in some cases the ECIR is voluntarily
provided, while in others it is not, which is completely arbitrary and
discriminatory.
(ii) It was argued that as per definition of Section 3 of the PMLA,
C the accused can either directly or indirectly commit money-laundering if
he is connected by way of any process or activity with the proceeds of
crime and has projected or claimed such proceeds as untainted property.
In light of this, it was suggested that the investigation may shed some
light on such alleged proceeds of crime, for which, facts must first be
D collected and there should be a definitive determination whether such
proceeds of crime have actually been generated from the scheduled
offence. Thus, there must be at least a prima facie quantification to
ensure that the threshold of the PMLA is met and it cannot be urged that
the ECIR is an internal document. Therefore, in the absence of adherence
to the requirements of the Cr.P.C. and the procedure established by law,
E these are being violated blatantly13.
(iii) An anomalous situation is created where based on such ECIR,
the ED can summon accused persons and seek details of financial
transactions. The accused is summoned under Section 50 of the PMLA
to make such statements which are treated as admissible in evidence.
F Throughout the process, the accused might well be unaware of the
allegations against him. It is clear that Cr.P.C. has separate provisions
for summoning of the accused under Section 41A and for witnesses
under Section 160. The same distinction is absent under the PMLA.
Further, Chapter XII of the Cr.P.C. is not being followed by the ED and,
G as such, there are no governing principles of investigation, no legal criteria

12
Criminal Trials Guidelines Regarding Inadequacies and Deficiencies, In re, vs. State
of Andhra Pradesh & Ors., (2021) 10 SCC 598 (Para 11); also see: Nitya Dharmananda
& Anr. vs. Gopal Sheelum Reddy & Anr., (2018) 2 SCC 93 (Para 8).
13
Lalita Kumari vs. Government of Uttar Pradesh and Ors., (2014) 2 SCC 1 (Para
120.1)
H
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 425
INDIA & ORS. [A. M. KHANWILKAR, J.]

and guiding principles which are required to be followed. As such, the A
initiation of investigation by the ED, which can potentially curtail the
liberty of the individual, would suffer from the vice of Article 14 of the
Constitution of India14.
(iv) Mr. Sibal, while referring to the definition of “money-
laundering” under Section 3 of the PMLA, submitted that the ED must B
satisfy itself that the proceeds of crime have been projected as untainted
property for the registration of an ECIR or the application of the PMLA.
It has been vehemently argued that the offence of money-laundering
requires the proceeds of crime to be mandatorily ‘projected or claimed’
as ‘untainted property’. Meaning thereby that Section 3 is applicable
only to the generation of proceeds of crime, such proceeds being projected C
or claimed as untainted property. It is stated that the pertinent condition
of ‘and’ projecting or claiming cannot be ousted and made or interpreted
to be ‘or’ by the Explanation that has been brought about by way of the
amendment made vide Finance (No.2) Act, 2019. It has been submitted
that such an act would also be unconstitutional, as being enlarging the D
ambit of a principal section by way of adding an Explanation.
(v) It is also stated that the general practice is that the ED registers
an ECIR immediately upon an FIR of a predicate offence being
registered. The cause of action being entirely different from the predicate
offence, as such, can lead to a situation where there is no difference E
between the predicate offence and money-laundering. In support of the
said argument, reliance was placed on the Article 3 of the Vienna
Convention15, where words like “conversion or transfer of property”,
“for the purpose of concealing or disguising the illicit origin of the property
or of assisting any person who is involved in the commission of such an
offence or offences to evade the legal consequences of his actions”, F
have been used. It is urged that what was sought to be criminalised was
not the mere acquisition and use of proceeds of crime, but it was the
conversion or transfer for the purpose of either concealing or disguising
the illicit origin of the property to evade the legal consequences of one’s
actions. Reference was also made to the Preamble of the PMLA which G
14
E.P. Royappa vs. State of Tamil Nadu & Anr., (1974) 4 SCC 3; also see: S.G. Jaisinghani
vs. Union of India and Ors, (1967) 2 SCR 703 and Nikesh Tarachand Shah, (supra at
Footnote No.3) (Paras 21-23).
15
United Nations adopted and signed the Convention against Illicit Traffic in Narcotic
Drugs and Psychotropic Substances (hereinafter referred to as “Vienna Convention” or
“the 1988 Convention” or “the UN Drugs Convention”, as the case may be) H
426 SUPREME COURT REPORTS [2022] 6 S.C.R.

A refers to India’s global commitments to combat the menace of money-
laundering. Learned counsel has then referred to the definition of “money-
laundering” as per the Prevention of Money-Laundering Bill, 199916 to
show how upon reference to the Select Committee of the Rajya Sabha,
certain observations were made and, hence, the amendment was
effected, wherein the words “and projecting it as untainted property”
B
were added to the definition which was finally passed in the form of
PMLA. We have reproduced the relevant sections/provisions hereinbelow
at the appropriate place. Reliance has also been placed on the decision
of Nikesh Tarachand Shah17.
(vi) The safeguard provided by Section 173 of the Cr.P.C., it is
C argued, was present in the original enactment of 2002 (PMLA). The
same has now supposedly been whittled down by various amendments
over the years. It has been submitted that by way of amendments in
2009, proviso have been added to Sections 5 and 17, which have diluted
certain safeguards. Further, it is submitted that the safeguard under Section
D 17(1) has been totally done away with in the amendment made in 2019.
To further this argument, it has been suggested that the filing of
chargesheet in respect of a predicate offence was impliedly there in
Section 19 of the PMLA, since there is a requirement which cannot be
fulfilled sans an investigation, to record reasons to believe that ‘any
person has been guilty of an offence punishable under this Act’. In respect
E of Section 50, it is urged that though there is no threshold mentioned in
the Act, yet the persons concerned should be summoned only after the
registration of the ECIR. It is, thus, submitted that any attempt to prosecute
under the PMLA without prima facie recordings would be inconsistent
with the Act itself and violative of the fundamental rights.
F (vii) It is urged that the derivate Act cannot be more onerous
than the original. It is suggested that the proceeds of crime and the
predicate offence are entwined inextricably. Further, the punishment for
generation of the proceeds of crime cannot be disproportionate to the
punishment for the underlying predicate offence. The same analogy ought
G to apply to the procedural protections, such as those provided under
Section 41A of the Cr.P.C., which otherwise would be foul of the
constitutional protections under Article 21.

16
For short, “1999 Bill”
17
H Supra at Footnote No.3 (Para 11)
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 427
INDIA & ORS. [A. M. KHANWILKAR, J.]

(viii) Learned counsel has also challenged the aspect of the A
Schedule being overbroad and inconsistent with the PMLA and the
predicate offences. It is argued that even in the Statements of Objects
and Reasons of the 1999 Bill, it has been stated that the Act was brought
in to curb the laundering stemming from trade in narcotics and drug
related crimes. Reference is also made to the various conventions that
B
are part of the jurisprudence behind the PMLA18. It was to be seen in
light of organised crime, unlike its application today to less heinous crimes
such as theft. It is submitted that there was no intention or purpose to
cover offences under the PMLA so widely. It is also submitted that
there are certain offences which are less severe and heinous than money-
laundering itself and that the inclusion of such offences in the Schedule C
does not have a rational nexus with the objects and reasons of the PMLA
and the same is unreasonable, arbitrary and violative of Articles 14 and
21 of the Constitution of India.
(ix) It has been submitted that the PMLA cannot be a standalone
statute. To bolster this claim, reliance has been placed on speeches made D
by Ministers in the Parliament. Further reliance has been placed on K.P.
Varghese vs. Income Tax Officer, Ernakulum & Anr.19, Union of
India & Anr. vs. Martin Lottery Agencies Limited 20 and
P. Chidambaram vs. Directorate of Enforcement21.
(x) Our attention is also drawn to the provisions which have now E
been replaced in the statute. Prior to 2013 amendment, Section 8(5) of
the PMLA was to the following effect: -
“8. Adjudication—
….
F
(5) Whereon conclusion of a trial for any scheduled offence,
the person concerned is acquitted, the attachment of the

18
United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic
Substances, 1988 (for short, “Vienna Convention”); Basle Statement of Principles,
1989; Forty Recommendations of the Financial Action Task Force on Money Laundering, G
1990; Political Declaration and Global Program of Action adopted by the United Nations
General Assembly on 23.02.1990; and Resolution passed at the UN Special Session on
countering World Drug Problem Together – 8th to 10th June 1998.
19
(1981) 4 SCC 173 (Para 8)
20
(2009) 12 SCC 209 (Para 38)
21
(2019) 9 SCC 24 (Para 25) H
428 SUPREME COURT REPORTS [2022] 6 S.C.R.

A property or retention of the seized property or record under sub-
section (3) and net income, if any, shall cease to have effect.”
However, vide amendment in 2013, the words ‘trial for any
scheduled offence’ were replaced with the words ‘trial of an offence
under this Act’. It is urged that for the property to qualify as proceeds of
B crime, it must be connected in some way with the activity related to the
scheduled offence. Meaning thereby that if there is no scheduled offence,
there can be no property derived directly or indirectly; thus, an irrefutable
conclusion that a scheduled offence is a pre-requisite for generation of
proceeds of crime.
C (xi) It is further argued that an Explanation has been added to
Section 44(1)(d) of the PMLA by way of Finance (No. 2) Act, 2019,
which posits that a trial under the PMLA can proceed independent of
the trial of scheduled offence. It is submitted that the Explanation is
being given a mischievous interpretation when it ought to be read plainly
and simply. It is stated that the Explanation relates only to the Special
D Court and not the trial of the scheduled offence. It is submitted that a
Special Court can never convict a person under the PMLA without
returning a finding that a scheduled offence has been committed.
(xii) It is submitted that the application of Cr.P.C. is necessary
since it is a procedure established by law and there cannot be an
E investigation outside the purview of Section 154 or 155 of the Cr.P.C.
Reference is made to the constitutional safeguards of reasonability and
fairness. It is submitted that the Act itself, under Section 65, provides for
the applicability of the Cr.P.C.22 It is pointed out that several safeguards,
procedural in nature are being violated. To illustrate a few - non
F registration of FIR, lack of a case diary, restricted access to the ECIR,
violation of Section 161 of the Cr.P.C., Section 41A of the Cr.P.C., lack
of magisterial permission under Section 155 of the Cr.P.C. Such unguided
use of power to investigate and prosecute any person violates Articles
14 and 21 of the Constitution.

G (xiii) Another argument raised by the learned counsel is that the
ED officers are police officers. It is submitted that the determination of
the same depends on: (1) what is the object and purpose of the special
statute and (2) the nature of power exercised by such officers? The first
22
Ashok Munilal Jain & Anr. vs. Assistant Director, Directorate of Enforcement, (2018)
H 16 SCC 158 (Paras 3-5)
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 429
INDIA & ORS. [A. M. KHANWILKAR, J.]

argument in this regard is that if it can be shown that in order to achieve A
the objectives of the special statute - preventive and detection steps to
curb crime are permitted and coercive powers are vested, then such an
officer is a police officer. Further, such an officer is covered within the
ambit of Sections 25 and 26 of the Indian Evidence Act, 187223. In support
of the test to gauge the objective of the statute, reference has been
B
made to State of Punjab vs. Barkat Ram24, wherein it was held —a
customs officer is not a police officer within the meaning of Section 25
of the 1872 Act. It is also stated that police officers had to be construed
not in a narrow way but in a wide and popular sense. Reference is made
to Sections 17 and 18 of the Police Act, 1861 25, whereunder an
appointment of special police officers can be made. Thus, it is stated C
that it is not necessary to be enrolled under the 1861 Act, but if one is
invested with the same powers i.e., the powers for prevention and
detection of crime, one will be a police officer. Then, the PMLA is
distinguished from the 1962 Act, Sea Customs Act, 187826, Central Excise
Act, 194427 and the CGST Act. The dissenting opinion of Subba Rao, J.
D
in Barkat Ram28 is also relied upon. Thereafter, it is stated that PMLA,
being a purely penal statute, one needs to look at the Statement of Objects
and Reasons of the 1999 Bill and the Financial Action Task Force29
recommendations.
(xiv) Reliance was also placed on Raja Ram Jaiswal vs. State
of Bihar30. Further, it has been stated that even in Tofan Singh vs. E
State of Tamil Nadu31, the case of Raja Ram Jaiswal32 has been
relied upon and it is concluded that when a person is vested with the
powers of investigation, he is said to be a police officer, as he prevents
and detects crime. Further, the powers under Section 50 of the PMLA
for the purpose of investigation are in consonance with what has been F
23
For short, “the 1872 Act” or “the Evidence Act”
24
(1962) 3 SCR 338; Also see: Tofan Singh vs. State of Tamil Nadu, 2020 SCC OnLine
SC 882 (Para 88)
25
For short, “1861 Act”
26
For short, “1878 Act” or “the Sea Customs Act”
27
G
For short, “1944 Act” or “the Central Excise Act”
28
Supra at Footnote No.24
29
For short, “FATF” – an inter-governmental body, which is the global money laundering
and terrorist financing watchdog.
30
AIR 1964 SC 828
31
2020 SCC OnLine SC 882 (Para 88) (also at Footnote No.24)
32
Supra at Footnote No.30 H
430 SUPREME COURT REPORTS [2022] 6 S.C.R.

A held in Tofan Singh33 and establishes a direct relationship with the
prohibition under Section 25 of the 1872 Act. Another crucial point raised
is that most statutes where officers have not passed the muster of ‘police
officers’ in the eyes of law, contain the term “enquiry” in contrast with
the term “investigation” used in Section 50 of the PMLA. A parallel has
also been drawn between the definition of “investigation” under the
B
PMLA in Section 2(1)(na) and Section 2(h) of the Cr.P.C. Further, it is
urged that the test of power to file ‘chargesheet’ is not determinative of
being a police officer.
(xv) It is then urged that Section 44(1)(b) of the PMLA stipulates
that cognizance can be taken only on a complaint being made by the
C Authority under the PMLA. Whereas, in originally enacted Section
44(1)(b), both the conditions i.e., ‘filing of a police report’, as well as, ‘a
complaint made by an authority’ were covered. Learned counsel also
reminisces of the speech of the then Finance Minister on the Prevention
of Money-Laundering (Amendment) Bill, 200534 in the Lok Sabha on
D 06.05.2005. However, it was also conceded that the amendment of
Section 44(1)(b) of the PMLA removed the words, “upon perusal of
police report of the facts which constitute an offence under this Act or”.
Next amendment made was insertion of Section 45(1A) and Section
73(2)(ua), by which the right of police officers to investigate the offence
under Section 3 was restricted unless authorised by the Central
E Government by way of a general or special authorisation. Further
amendment was deletion of Section 45(1)(a) of the PMLA, making the
offence of money-laundering under the PMLA a non-cognizable offence.
Further, it is submitted that amendment to Section 44(1)(b) has been
made as a consequence for making the offence under the PMLA non-
F cognizable. It is stated that even today if investigation is done by a police
officer or another, he can only file a complaint and not a police report.
Therefore, the above-mentioned test is irrelevant and inapplicable.
Absurdity that arises is due to two investigations being conducted, one
by a police officer and the other by the authorities specified under Section
48. An additional point has been raised that the difference between a
G complaint under the PMLA and a chargesheet under the Cr.P.C. is only
a nomenclature norm and they are essentially the same thing. Thus,
basing the determination of whether one is a police officer or not, on the
nomenclature, is not proper.
33
Supra at Footnote No.31 (also at Footnote No.24)
H 34
For short, “2005 Amendment Bill”
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 431
INDIA & ORS. [A. M. KHANWILKAR, J.]

(xvi) In respect of interpretation and constitutionality of Section A
50 of the PMLA, our attention is drawn to Section 50(2) which pertains
to recording of statement of a person summoned during the course of an
investigation. In that, Section 50(3) posits that such person needs to
state the truth. Further, he has to sign such statement and suffer the
consequences for incorrect version under Section 63(2)(b); and the threat
B
of penalty under Section 63(2) or arrest under Section 19.
(xvii) It is urged that in comparison to the constitutional law, the
Cr.P.C. and the 1872 Act, the provisions under the PMLA are draconian
and, thus, violative of Articles 20(3) and 21 of the Constitution. Our
attention is drawn to Section 160 of the Cr.P.C. when person is summoned
as a witness or under Section 41A as an accused or a suspect. In either C
case, the statement is recorded as per Section 161 of the Cr.P.C.
Safeguards have been inserted by this Court in Nandini Satpathy vs.
P.L. Dani & Anr.35, while also the protection under Section 161(2) is
relied on. Thus, based on Sections 161 and 162, it is submitted that such
evidence is inadmissible in the trial of an offence, unless it is used only D
for the purpose of contradiction as stipulated in Section 145 of the 1872
Act. Further, it is stated that proof of contradiction is materially different
from and does not amount to the proof of the matter asserted36 and can
only be used to cast doubt or discredit the testimony of the witness who
is testifying before Court37. The legislative intent behind Section 162 of
the Cr.P.C. is also relied upon, as has been held in Tahsildar Singh & E
Anr. vs. State of U.P.38.
(xviii) It is, therefore, urged that the current practice of the ED is
such that it violates all these statutory and constitutional protections by
implicating an accused by procuring signed statements under threat of
legal penalty. The protection under Section 25 of the 1872 Act is also F
pressed into service.
(xix) To make good the point, learned counsel proceeded to
delineate the legislative history of Section 25 of the 1872 Act. He referred

35
G
(1978) 2 SCC 424
36
Tahsildar Singh & Anr. vs. State of U.P., AIR 1959 SC 1012 (paras 16-17, 42); Also
see: V.K. Mishra & Anr. vs. State of Uttarakhand & Anr., (2015) 9 SCC 588 (paras 15-
20)
37
Somasundaram alias Somu vs. State represented by the Deputy Commissioner of
Police, (2020) 7 SCC 722 (para 24)
38
AIR 1959 SC 1012 (also at Footnote No.36) H
432 SUPREME COURT REPORTS [2022] 6 S.C.R.

A to the first report of the Law Commission of India and the Cr.P.C.,
which was based on gross abuse of power by police officers for extracting
confessions.39 Further, this protection was transplanted into the 1872
Act40, where on the presumption that a confession made to a police
officer was obtained through force or coercion was fortified41. It was
pointed out that recommendations of three Law Commissions – 14th,
B
48th and 69th which advocated for allowance of such confessions to be
admissible, were vehemently rejected in the 185th Law Commission
Report. Thus, relying on Raja Ram Jaiswal42 where a substantial link
between Section 25 of the 1872 Act, police officer and confession has
been settled. Therefore, the present situation where prosecution can be
C mounted under Section 63 for failing to give such confessions is said to
be contrary to procedure established by law interlinked with the right to
a fair trial under Article 21. Reliance has also been placed on Selvi &
Ors. vs. State of Karnataka43, the 180th Law Commission Report and
Section 313 of the Cr.P.C. as being subsidiaries of right against self-
incrimination and right to silence, not being read against him.
D
(xx) Learned counsel then delineated on the preconditions for
protection of Article 20(3). First, the person standing in the character of
an accused, as laid down in State of Bombay vs. Kathi Kalu Oghad44,
has been referred to. In this regard, it is submitted that the term may be
given a wide connotation and an inclusion in the FIR, ECIR, chargesheet
E or complaint is not necessary and can be availed even by suspects at the
time of interrogation. It is urged that both the position of law stands
clarified in Nandini Satpathy45 and Selvi46 — even to the extent where
answering certain questions can incriminate a person in other offences
or where links are furnished in chain of evidence required for prosecution.
F It is then urged that the expression ‘shall be compelled’ is not restricted
to physical state, but also mental state of mind and it is argued that
nevertheless a broad interpretation must be given to the circumstances
in which a person can be so compelled for recording of statement.
Additionally, the term ‘to be a witness’ would take within its fold ‘to
G
39
185th Law Commission Report on the Indian Evidence Act, 1872 (2003)
40
See also: Barkat Ram (supra at Footnote No.24)
41
Balkishan A. Devidayal vs. State of Maharashtra, (1980) 4 SCC 600 (para 14)
42
Supra at Footnote No.30
43
(2010) 7 SCC 263 (paras 87-89)
44
AIR 1961 SC 1808
45
Supra at Footnote No.35
46
H Supra at Footnote No.43
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 433
INDIA & ORS. [A. M. KHANWILKAR, J.]

appear as a witness’ and it is said that it must encompass protection A
even outside Court in investigations conducted by authorities such as the
ED47. It was also argued that this protection should extend beyond
statements that are confession, such as incriminating statements which
would furnish a link in the chain of evidence against the person.
(xxi) It is submitted that the test which this Court ought to consider B
for determination of the vires of Section 50 of the PMLA is: whether a
police officer is in a position to compel a person to render a confession
giving incriminating statement against himself under threat of legal
sanction and arrest? It is further pointed out that the ED as a matter of
course records statement even when the accused person is in custody.
In some circumstances, a person is not even informed of the capacity in C
which he/she is being summoned. What makes it worse is the fact that
the ED claims the non-application of Chapter XII of the Cr.P.C. It does
not register FIR and keeps the ECIR as an internal document. All the
above-mentioned circumstances are said to render the questioning by
the ED, which might not be restricted to the offence of money-laundering D
alone, as a testimonial compulsion48. Hence, advocating the protection
of Article 20(3) of the Constitution, it is submitted that all safeguards and
protections are rendered illusionary.
(xxii) Finally, an argument is raised that Section 50 of the PMLA
is much worse than Section 67 of the Narcotic Drugs and Psychotropic E
Substance Act, 198549. Further, the NDPS Act is the underlying reason
for the PMLA and this Court in Tofan Singh50, in no uncertain terms,
has given protection in respect of confessional statement even in the
NDPS Act. The much harder and harsher punishment of death in the
NDPS Act is also contrasted against the PMLA. It is also submitted
that constitutional safeguards cannot be undermined by the usage of the F
term ‘judicial proceedings’. The term has been defined in Section 2(i) of
the Cr.P.C. which includes any proceeding in the course of which evidence

47
M.P. Sharma & Ors. vs. Satish Chandra, District Magistrate, Delhi & Ors., (1954)
SCR 1077 (para 10).
G
48
Even the applicability of Prevention of Money-Laundering (Forms, Search and Seizure
or Freezing and the Manner of Forwarding the Reasons and Material to the Adjudicating
Authority, Impounding and Custody of Records and the Period of Retention) Rules,
2005.
49
For short, “NDPS Act”
50
Supra at Footnote No.31 (also at Footnote No.24) H
434 SUPREME COURT REPORTS [2022] 6 S.C.R.

A is or may be legally ‘taken on oath’ 51. Section 50(1) has been
distinguished for being in respect of only Section 13 of the PMLA. It is
also submitted that the enforcement authority is not deemed to be a civil
Court; it can be easily concluded that an investigation done by the
enforcement authority is not a judicial proceeding and Section 50 of the
PMLA falls foul of the constitutional safeguards.
B
(xxiii) Pertinently, arguments have also been advanced in respect
of the implication of laws relating to money bills and their application to
the Amendment Acts to the PMLA. However, at the outset, we had
mentioned that this issue is not a part of the ongoing discourse in this
matter and we refrain from referring to the arguments raised in that
C regard.
3. Next submissions were advanced by Mr. Sidharth Luthra,
learned senior counsel on the same lines. He argued that the current
procedure envisaged under the PMLA is violative of Article 21 of the
Constitution of India. The procedure established by law has to be in the
D form of a statute or delegated legislation and pass the muster of the
constitutional protections.52 The Cr.P.C. has several safeguards in respect
of arrested investigation; they are also rooted in the Cr.P.C. of 1898.
They are reflective of the constitutional protections. The manual, circulars,
guidelines of the ED are executive in nature and as such, cannot be used
E for the curtailment of an individual liberty. Under the PMLA, there is no
visible sign of these protections against police’s power of search and
arrest; it is in stark contrast with the constitutional protections given also
the reverse presumption against innocence at stage of bail under Section
45 of the PMLA. Further, the destruction of the presumption of innocence
under Sections 22, 23 and 45 cannot even meet the test at the pre-
F complaint and pre-cognizance stage53 and the accused cannot escape
the rigors of custody as per Section 167 of the Cr.P.C. As such, these
conditions of reverse burden are in violation of Articles 14 and 21 of the
Constitution. Presumption of innocence even in the pre-constitutional
era has been a part of the right to a fair trial.54 After the Constitution
G 51
Assistant Collector of Central Excise, Guntur vs. Ramdev Tobacco Company, (1991)
2 SCC 119 (para 6)
52
Gudikanti Narasimhulu & Ors. vs. Public Prosecutor, High Court of Andhra Pradesh,
(1978) 1 SCC 240 (paras 1, 2, 10)
53
Ranjitsing Brahmajeetsing Sharma vs. State of Maharashtra & Anr., (2005) 5 SCC
294 (paras 10, 11 and 21).
54
H Attygalle & Anr. vs. The King, AIR 1936 PC 169
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 435
INDIA & ORS. [A. M. KHANWILKAR, J.]

came into existence, it has formed a part of a human right and procedure A
established by law.55 Lack of oversight in an investigation under the
PMLA is said to be in gross violation of justice, fairness and
reasonableness. It is also pointed out that while the predicate offence
might be investigated, protected under the garb of the Cr.P.C., the non-
application of such safeguards under the PMLA is wholly unjustified. 56
B
The procedure as envisaged under the PMLA, especially under Section
17, vests the executive with the supervisory power in an investigation.
The same is anathema to the rule of law and the magisterial supervision
of an investigation is an integral part and is a necessity for ensuring free
and fair investigation.57
(i) It is further submitted that not supplying of the ECIR to the C
accused is in gross violation of Article 21 of the Constitution, the ECIR
being equivalent to an FIR instituted by the ED. It contains the grounds
of arrest, details of the offences; and as such, without the knowledge of
the ingredients of such a document the ability of the accused to defend
himself at the stage of bail cannot be fully realized. It may also hamper D
the ability to prepare for the trial at a later stage58. Further, it is submitted
that even under the 1962 Act and the Foreign Exchange Regulation Act,
197359, Section 167 of the Cr.P.C. has been held to be applicable and
also found to be a human right60. Further, it is argued that there is no
rational basis for a search or a seizure to be reported to the Adjudicating
Authority, as they have no control. Further, the PMLA has two sets of E
processes for attachment and confiscation which is subject to final
determination. Hence, lack of judicial oversight is irrational, as attachment
is a step-in aid for final adjudication. In absence of safeguards and supply
of ECIR, a fair investigation is not a statutory obligation. This is contrary
to the Constitution and the Cr.P.C. Further, it is submitted that personal F
liberty under Article 21 cannot be curtailed as the ED manuals, circulars
and guidelines are administrative directions and cannot be regarded as
law under Article 13 of the Constitution. Such restrictions on personal
liberty based on administrative directions are neither reasonable
55
Noor Aga vs. State of Punjab & Anr., (2008) 16 SCC 417
56
G
State of West Bengal & Ors. vs. Committee for Protection of Democratic Rights, West
Bengal & Ors., (2010) 3 SCC 571 (Para 68)
57
Sakiri Vasu vs. State of Uttar Pradesh & Ors., (2008) 2 SCC 409 (paras 15-17)
58
Youth Bar Association of India (supra at Footnote No.11); Also see: D.K. Basu vs.
State of W.B., (1997) 1 SCC 416
59
For short, “FERA”
60
Directorate of Enforcement vs. Deepak Mahajan & Anr., (1994) 3 SCC 440 H
436 SUPREME COURT REPORTS [2022] 6 S.C.R.

A restrictions nor law under Articles 13 and 19(2) of the Constitution.
Reliance has been placed on a plethora of cases, such as Bidi Supply
Co. vs. Union of India & Ors.61, Collector of Malabar & Anr. vs.
Erimmal Ebrahim Hajee62, G.J. Fernandes vs. The State of Mysore
& Ors.63 and Bijoe Emmanuel & Ors. vs. State of Kerala & Ors.64 to
show that the inapplicability of Chapter XII of the Cr.P.C. cannot be
B
countenanced.
(ii) It is also argued that the PMLA has inadequate safeguards
for guaranteeing a fair investigation. For, there are no safeguards akin to
Sections 41 to 41D, 46, 49, 50, 51, 55, 55A, 58, 60A of the Cr.P.C.
Under Chapters V and VII of the PMLA, safeguards are limited to
C Sections 16 to 19 and 50. The onerous bail conditions under Section 45
are in the nature of jurisdiction of suspicion that is preventive detention
under Article 22(3) to 22(7), which in itself has various safeguards which
are absent in the PMLA. Further, post 2019 amendment, making money-
laundering a cognizable and non-bailable offence, there are no more
D checks and balances present against the exercise of discretion by the
ED. Magisterial oversight has been revoked; also, supervision envisaged
under Section 17 is that of the executive which is against the rule of law
and right of fair trial65. It is also stated that under the current scheme, an
accused will be subject to two different procedures which is under the
predicate offence and under the PMLA. To illustrate, Sections 410 and
E 411 of the IPC are scheduled offences overlapping with Sections 3 and
4 of the PMLA. However, the safeguards provided are nowhere uniform.
The same is unreasonable and manifestly arbitrary66. It is also to be
noted that the PMLA does not expressly exclude the application of
Chapter XII of the Cr.P.C. and as such, ambiguity must be interpreted in
F a way that protects fundamental rights of the people67.
(iii) The next leg of the argument is to the effect that subsequent
amendment cannot revive Section 45, which was struck down as

61
AIR 1956 SC 479 (para 9)
G 62
AIR 1957 SC 688 (paras 8,9)
63
AIR 1967 SC 1753 (para 12)
64
(1986) 3 SCC 615 (paras 9, 10, 13-19)
65
Sakiri Vasu (supra at Footnote No.57) (paras 15-17)
66
Subramanian Swamy vs. Director, Central Bureau of Investigation & Anr., (2014) 8
SCC 682 (paras 49, 70).
67
Tofan Singh (supra at Footnote Nos. 24 and 31) (para 4.10)
H
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 437
INDIA & ORS. [A. M. KHANWILKAR, J.]

unconstitutional by the decision in Nikesh Tarachand Shah68. The same A
could have not been revived by the 2018 and 2019 amendments. A
provision or a statute held to be unconstitutional must be considered
stillborn and void, and it cannot be brought back to life by a subsequent
amendment that seeks to remove the constitutional objection. It must be
imperatively re-enacted69. Further, even in arguendo, the twin conditions
B
are manifestly arbitrary as it is against the basic criminal law jurisprudence
of the right of presumption of innocence. This right has been recognized
under International Covenant on Civil and Political Rights 70, as well as,
by this Court in Babu vs. State of Kerala71. It is also contended that
subjecting an accused person not arrested during investigation to onerous
bail conditions under Section 45 is contrary to the decision of this Court72. C
It was urged that even other statutes have such twin conditions for bail
such as Terrorist and Disruptive Activities (Prevention) Act, 1987 73, the
Maharashtra Control of Organised Crime Act, 199974 and the NDPS
Act. However, it is pointed out that it has been held that such onerous
conditions were necessary only in certain kinds of cases - for example,
D
terrorist offences, which are clearly a distinct and incompatible offence
in the face of PMLA. Further, it is argued that even under the Unlawful
Activities (Prevention) Act, 196775, the Court has to examine only whether
the allegation is prima facie true while granting bail, but in case of PMLA,
the Court has to reach a finding that there are reasonable grounds for
believing that the accused is not guilty before granting bail. Thus, as E
soon as charges are framed, a person is disentitled to apply for bail as
prima facie case is made out, which helps in achieving the purpose of
preventive detention without procedure established by law76. Further,
these deep restrictive conditions even under the UAPA and the NDPS
Act are restricted only to parts of these Acts and not to the whole of
F
them. However, the same is not the case under the PMLA, as it is

68
Supra at Footnote No.3
69
Saghir Ahmad vs. State of U.P. & Ors., AIR 1954 SC 728 (para 23); Also see: Deep
Chand vs. The State of Uttar Pradesh & Ors., (1959) Supp. 2 SCR 8 (para 21)
70
For short, “ICCPR”
71
(2010) 9 SCC 189 (paras 27 and 28)
G
72
Satender Kumar Antil vs. Central Bureau of Investigation & Anr., (2021) 10 SCC 773
and clarificatory order dated 16.12.2021 in MA No. 1849/2021
73
For short, “TADA Act”
74
For short, “MCOCA”
75
For short, “UAPA”
76
Ayya alias Ayub vs. State of U.P. & Anr., (1989) 1 SCC 374 (paras 11-17) H
438 SUPREME COURT REPORTS [2022] 6 S.C.R.

A applicable to all predicate offences. Such an approach ignores crucial
distinctions such as nature, gravity and punishment of different offences
in the Schedule of PMLA and treats unequals as equals. This is in violation
of Article 14 of the Constitution of India. Reliance is also placed on
United States vs. Anthony Salerno77, where restrictive bail provisions
are permitted in pre-trial detention because of the presence of detailed
B
procedural safeguards. Still, it is argued, that such restrictive bail provisions
cannot oust the ability of Constitutional Court to grant bail on the ground
of violation of Part III of the Constitution78. Further, it has been held that
Magistrate must ensure that frivolous prosecution is weeded out.
Provisions such as Sections 21, 22, 23 and 45 of the PMLA reverse the
C burden and curtail the jurisdiction of the trial Court arbitrarily in violation
of the findings of this Court79. Thus, various counts that have been argued
herein point out that the PMLA suffers from manifest arbitrariness in
light of Shayara Bano vs. Union of India & Ors.80 and Joseph Shine
vs. Union of India81.
D 4. Next in line for submissions on behalf of private parties is
Dr. Abhishek Manu Singhvi, learned senior counsel. He firstly argued
the point of burden of proof under Section 24 of the PMLA. He has
pointed out that prior to amendment, the entire burden of proof right
from investigation till the judgment was on the accused. Even though
this has changed post 2013 amendment and some balance has been
E restored, it has not fully cured this section of its unconstitutional nature.
He has gone into the legislative history of the Act and stated that originally
the presumption was raised even prior to the trial and state of charge,
this was diluted by the amendment of 2013 thereafter the presumption
would only apply after the framing of charges.
F (i) Learned senior counsel submits that the wording of Section 24
refers to formal framing of charges under Section 211 of the Cr.P.C.
For this submission, he relies on the speech of the Minister introducing
the amendment in the Parliament. It has been stated that presumption is
raised in relation to the fact of money-laundering. Such a presumption
G cannot be raised in relation to an essential ingredient of an offence. The

77
107 S.Ct. 2095 (1987)
78
Union of India vs. K.A. Najeeb, (2021) 3 SCC 713 : 2021 SCC Online SC 50 (para 18)
79
Krishna Lal Chawla & Ors. vs. State of Uttar Pradesh & Anr., (2021) 5 SCC 435
80
(2017) 9 SCC 1 (paras 87, 101)
81
(2019) 3 SCC 39 (paras 61, 103, 105)
H
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 439
INDIA & ORS. [A. M. KHANWILKAR, J.]

commission of an offence, as such, cannot be presumed. In reference to A
Section 4 of the 1872 Act, distinction between sub-sections (a) and (b)
of Section 24 is highlighted, wherein the former states - ‘shall presume’
and the latter states - ‘may presume’.
(ii) It is urged that post amendment also there is no requirement
for the prosecution to prove any facts once the charges are framed. B
The entire burden of disproving the case, as set out in the complaint,
inverts onto the accused. It is, hence, contrary to the requirement of
proof of foundational facts, as is seen in other legislations. Such an
inversion is not present in any other statute. It is stated that even in the
NDPS Act, where no requirement of foundational facts was provided,
this Court has read such necessity into the Act. As for sub-section (b), it C
is pointed out that the ‘may presume’ provision eliminates the safeguards
of sub-section (a) and provides no guidance as to when a presumption is
to be invoked. The learned counsel also points the discrepancy that the
word ‘authority’ appearing in Section 24, which also appears in Section
48, is distinctive in nature and that Section 24 absurdly allows an D
investigator to presume the commission of an offence. This is clearly
arbitrary and de hors logic. In light of the same, the constitutional vires
of the section are challenged or a reading down to fulfil the constitutional
mandate is pressed for.
(iii) The next point of attack for Dr. Singhvi, learned senior counsel E
is the constitutionality of Sections 17 and 18. The absence of safeguards
in lieu of searches and seizures is canvassed. It has been pointed out
that such searches or seizures can take place even without an FIR having
been registered or a complaint being filed before a competent Court.
Foremost, the legislative history of these two Sections is pointed out. It
is shown that originally the search and seizure was to be conducted F
after the filing of a chargesheet or complaint in the predicate offence.
Thereafter, the protection was diluted by the 2009 amendment, wherein
it was provided that the search and seizure operations would take place
only after forwarding a report to the Magistrate under Section 157 of
the Cr.P.C. It was only in 2019 that these final safeguards were also G
completely removed by the Finance (No. 2) Act, 2019. The effect, it is
argued, is such that the ED has unfettered powers to commit searches
and seizures without any investigation having been done in the predicate
offence, and sometimes even without an FIR being registered. There
are no prerequisites or safeguards as the ED can now simply walk into
H
440 SUPREME COURT REPORTS [2022] 6 S.C.R.

A a premises. Even for non-cognizable offences, the ED need not wait for
the filing of a complaint before a Court. In this way, in the absence of
any credible information to investigate, the ED cannot be allowed to use
such uncanalized power. The magisterial oversight cannot be replaced
by the limited oversight of the Adjudicating Authority, as they have no
real control over the ED, especially in case of criminal investigations.
B
Thus, it is submitted that such lack of effective checks and balances is
unreasonable and violative of Articles 14 and 21 of the Constitution.
(iv) Our attention is also drawn to the Prevention of Money-
Laundering (Forms, Search and Seizure or Freezing and the Manner of
Forwarding the Reasons and Material to the Adjudicating Authority,
C Impounding and Custody of Records and the Period of Retention) Rules,
200582, and it is prayed that this Court must clarify that these rules are
not ultra vires Sections 17 and 18 of the PMLA. Pertinently, they relate
to the provisions of Cr.P.C. being applicable to searches under the Act.
(v) Next leg of submissions challenges the vires of the second
D proviso of Section 5(1), as it allows for attachment independent of the
existence of a predicate offence, given that such property might not
even be proceeds of crime. Though an emergency procedure, no
threshold had to be met and the first proviso has no application. It is also
submitted that the proviso cannot travel beyond the scope of the main
E provision. Our attention is drawn to the legislative history; it is stated
that the PMLA did not originally contain the second proviso. Attachment
was only to be done after filing of chargesheet in the predicate offence.
For the first time, in 2009, this proviso was added, to avoid frustration of
the proceedings. It is submitted that this proviso has no anchor to either
the scheduled offence or the proceeds of crime. It is at the mere
F satisfaction of the officer. In this way, it is submitted, attachment of
property of any person can be made, with no fetters. Our attention is
also drawn to the use of word ‘any’ for person and property and its
distinction from the term ‘proceeds of crime’, having a direct nexus with
the ambit of the main Section. It is argued that it is not to be mixed with
G any offence but only scheduled offences. The ED is alleged to employ
this language in attaching property purchased much before the
commission of scheduled offences, to the extent not having any nexus.
It is submitted that there has to be a link between the second proviso to

82
H For short, “Seizure Rules, 2005”
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 441
INDIA & ORS. [A. M. KHANWILKAR, J.]

the proceeds of crime and scheduled offence being investigated under a A
specific ECIR before the ED.83
(vi) Submissions with respect to Section 8 of the PMLA maintain
that Section 8(4) allows the ED to take possession of the attached
property at the stage of confirmation of provisional attachment made by
the Adjudicating Authority. It is submitted that this deprivation of a person’s B
right to property at such an early stage without the due process of law, is
unconstitutional. Further the period of attachment under Section 8(3)(a)
of the PMLA is also arbitrary and unreasonable. To make good the
point, the relevant legislative history is pointed out. The original enactment
where provisional attachment would continue during the pendency of
proceedings related to ‘any scheduled offence’. Thereafter in 2012, the C
same was changed to ‘any offence under the PMLA’, followed by 2018
amendment – ‘a period of ninety days during investigation of the offence
or during pendency of proceedings under the PMLA’, and finally by
2019 amendment the increase from ‘ninety days’ to ‘three hundred and
sixty-five days’. We are also taken through the elaborate process of D
attachment of property. Thereby, it is highlighted that the ED can take
possession of property after a single adjudicatory process, wherein there
is no oversight over the ED. It is stated that such alienation of property
without any proceedings having been brought before the Court is
undoubtedly an unconstitutional act. As for Section 8(3)(a) clarification
is sought in light of the confusion that it allows for a continuation of the E
confirmed provisional attachment for three hundred and sixty-five days
or during the pendency of proceedings under the PMLA. This might
lead to a reading where the ED has a period of three hundred and sixty-
five days to file its complaint.
(vii) Learned counsel then referred to the Prevention of Money- F
Laundering (Taking Possession of Attached or Frozen Properties
Confirmed by the Adjudicating Authority) Rules, 201384 wherein specific
challenge is raised against Rules 4(4), 5(3), 5(4) and 5(6). The main
ground of challenge is disproportionality, similar to the attachment issue,
transfer of attached shares and mutual funds, depressing of value of G
property, eviction of owners of a movable property, possession of
productive assets along with gross income, all monetary benefit is stated
83
Dwarka Prasad vs. Dwarka Das Saraf, (1976) 1 SCC 128, Also see: Satnam Singh
& Ors. vs. Punjab & Haryana High Court and Ors., (1997) 3 SCC 353
84
For short, “Taking Possession Rules, 2013” H
442 SUPREME COURT REPORTS [2022] 6 S.C.R.

A to be arbitrary, reasonable, absurd and disproportionate. Herein, it is
highlighted that various anomalies may crop up, such as taking of the
shares and the ED becoming the majority shareholder in corporations,
attachment of properties worth far more than the value of proceeds of
crime. Under Section 2(1)(zb), the expression “value” is defined as fair
market value on the date of acquisition and not fair market value on date
B
of attachment. Arguably, property bought years ago is thereby undervalued
by the ED. Attachment of immovable property and eviction in case of
unregistered leases is also challenged. To challenge this disproportionate
imposition and restrictions, reliance is placed on Shayara Bano85and
Anuradha Bhasin vs. Union of India & Ors.86.
C (viii) It is then urged by the learned counsel that Section 45(1) of
the PMLA, reverses the presumption of innocence at the stage of bail
as an accused. According to him, the accused at this stage can never
show that he is not guilty. It is also maintained that these are
disproportionate and excessive conditions for a bail. Reference is also
D made to Nikesh Tarachand Shah87 to the limited extent that the 2018
amendment has not removed invalidity, pointed out in the aforesaid
judgment of this Court. It is also stated that regardless of the amendment,
the twin condition is in violation of Article 21 of the Constitution by virtue
of the nature of the offence under PMLA. It is stated that presumption
of innocence is a cardinal principle of Indian criminal jurisprudence. 88
E Reference is also made to Kiran Prakash Kulkarni vs. The
Enforcement Directorate and Anr.89 Arguments have also been raised
against an amendment through a Money Bill being violative of Article
110 of the Constitution. The need for interpretation by Rojer Mathew
vs. South Indian Bank Limited and Ors.90 has also been asserted.
F The 2018 amendment is also challenged by referring to the notes on
Clauses of the Finance Bill, 2018. It is also pointed out that similar
amendments were proposed for the 1962 Act in the year 2012 and, yet,
the same were dropped at the insistence of members of the Parliament 91.

85
Supra at Footnote No.80 (paras 101-102)
G 86
2020 (3) SCC 637
87
Supra at Footnote No.3
88
Arnab Manoranjan Goswami vs. State of Maharashtra & Ors., (2021) 2 SCC 427
(para 70)
89
Order dated 11.4.2019 in S.L.P. (Criminal) No.1698 of 2019
90
(2020) 6 SCC 1
91
Speech of Shri. Arun Jaitley dated 26.3.2012 in the Rajya Sabha
H
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 443
INDIA & ORS. [A. M. KHANWILKAR, J.]

(ix) Further, given the maximum punishment of seven (7) years A
under PMLA, it was argued that it is disproportionate when comparing
the same to other offences under the IPC which are far more serious in
nature and are punishable with death. In light of the same, it is highly
questionable as to how such an onerous condition can be imposed on an
accused. It is also pointed out that several scheduled offences are bailable.
B
Further, the anomaly that at the time of arrest under Section 19 no
documents are provided in certain cases, has also been highlighted. It
was also stated that it is a near impossibility to get bail as under the
UAPA, TADA Act, or the Prevention of Terrorism Act, 200292.
5. Mr. Mukul Rohatgi, learned senior counsel was next to argue
on behalf of private parties. He urged that the Explanation to Section 44 C
is contrary to Section 3 read with Section 2(1)(u), hence, the same is
unsustainable and arbitrary in the eyes of law. Special emphasis was
laid on the expression “shall not be dependent upon any order by the
Trial Court in the scheduled offence”. It was argued that both trials may
be tried by the same Court. In such a case, Section 3 offence cannot be D
given pre-eminence, as that would run contrary to Section 3 and would
be manifestly arbitrary, given the fact that an acquittal in the scheduled
offence cannot lead to one being found guilty for the derivative offence
of money-laundering. A direct link between the proceeds of crime and
Section 3 offence was also highlighted. It was submitted that the Special
Court cannot continue with the trial for Section 3 offence once acquittal E
in the predicate offence takes place. Section 44 unmistakably provides
for the Special Court trial of money-laundering. It was pointed out that it
is normal that if one is acquitted for the predicate offence, the money-
laundering procedure could still go on. This is contrary to the definition
under Section 3, which states that money-laundering is inextricably linked F
to the predicate offence.
(i) It was also pointed out that the usual practice is of filing an
ECIR on the same day or right after the FIR has been filed by replicating
it almost verbatim. Canvassing for proper procedure and investigation
before filing of the ECIR and initiation of the process under the PMLA, G
reference was also made to other Acts, such as Smugglers and Foreign
Exchange Manipulators Act, 197693, FERA or Conservation of Foreign
Exchange and Prevention of Smuggling Activities Act, 197494 and the
92
For short, “POTA”
93
For short, “SAFEMA”
94
For short, “COFEPOSA” H
444 SUPREME COURT REPORTS [2022] 6 S.C.R.

A 1962 Act, being Acts which would not subsist alone or by themselves
without the predicate offences95.
(ii) It was also argued that often the ED widens the investigation
beyond what is contained in the chargesheet. This is contrary to the
intentions of the Act. The true meaning of the definition under Section 3
B of the PMLA was proposed to be divided into three components of
predicate offence, proceeds of crime and projecting/claiming as untainted.
It was conceded that even abetment would form a part of the offence
and as a consequence, whoever attempts, assists, abets, incites - are all
covered by the same. For predicate offence and Section 3, it was stated
that if the former is gone, the latter cannot subsist.
C
(iii) Next argument raised pertained to the ambit and meaning of
Section 3. It was submitted that mere possession or concealment of
proceeds of crime will not constitute money-laundering and this was
bolstered by the phrase ‘projecting or claiming as untainted property’.
The “and” was stated to be a watertight compartment. The Finance
D Minister’s 2012 Rajya Sabha Speech was also relied upon to showcase
how “and projecting” was an essential element.
6. Mr. Amit Desai, learned senior counsel also advanced
submissions on behalf of private parties. He also took us through the
history of money-laundering, starting from the Conventions to the FATF
E and UN General Assembly Resolution96, which led to the 1999 Bill to
help combat and prevent money-laundering. He relies on the Statement
of Objects and Reasons of the Act97, followed by the initial ambit of
Sections 2(1)(p), 2(1)(u) and 3, which were amended by the 2013
amendment. It is stated that the Act presupposes the commission of a
F crime which is the predicate offence; hence the questions to be answered
by this Court are related to retrospectivity. Firstly - whether authorities
can proceed against an accused when commission of the predicate
95
Barendra Kumar Ghosh vs. The King Emperor, 1924 SCC OnLine PC 49 : AIR 1925
PC 1
96
Special Session of the United Nations held for ‘Countering World Drug Problem
G Together’ held in June 1998.
97
“objective was to enact a comprehensive legislation inter alia for preventing money
laundering and connected activities confiscation of proceeds of crime, setting up of
agencies and mechanisms for coordinating measures for combating money-laundering,
etc”. It was also indicated that the proposed Act was “an Act to prevent money-
laundering and to provide for confiscation of property derived from, or involved in,
H money-laundering and for matters connected therewith or incidental thereto”.
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 445
INDIA & ORS. [A. M. KHANWILKAR, J.]

offence predates the addition of the said offences to the Schedule of the A
PMLA? Secondly - whether the authorities can proceed against the
properties obtained or projected prior to the commission of an offence
under this Act? Thirdly - whether authorities can proceed when the
predicate offence and the projecting predate the commencement of this
Act? Fourthly - whether jurisdiction subsists under the Act when no
B
cognizance has been taken, the accused has been discharged or acquitted
or the offence compounded? Lastly, learned counsel also challenges the
rigors of the twin conditions for being incongruent with general bail
provisions under Sections 437 and 439 of the Cr.P.C. as being ultra
vires.
(i) Learned counsel refers to one of the cases in this batch, C
wherein the properties sought to be acquired by the ED were obtained
by the petitioner prior to 2009, while the commission of offence was in
2013 and Section 13 of the PC Act was inserted into the PMLA Schedule
for the first time in 2009. This, it is maintained cannot fit into the term
“proceeds of crime” under Section 2(1)(u), the same having been done D
prior to 2009. It has also been submitted that for the determination of
money-laundering under Section 3 or any other provision of the Act, the
relevant time has to be the time of the commission of the scheduled
offence. The rationale being that only the presence of a scheduled offence
can lead to the generation of proceeds of crime and, hence, in return the
offence of money-laundering can be committed. Thus, in a way it is E
suggested that the starting point for a conviction for Section 3 might be
the commission of a scheduled offence. The argument in respect of the
protections provided by the Constitution under Article 20(1), as per which
ingredients for an offence must exist on the day the crime is committed
or detected, have also been impressed in opposition of any retrospective F
or retroactive application of the Act. To bolster the arguments, reliance
has been placed on the decisions of this Court in Soni Devrajbhai
Babubhai vs. State of Gujarat and Ors.98, Mahipal Singh vs. Central
Bureau of Investigation & Anr.99, Tech Mahindra Limited vs. Joint
Director, Directorate of Enforcement, Hyderabad & Ors. 100, and
Gadi Nagavekata Satyanarayana vs. Deputy Director Directorate G
of Enforcement101 and that of Delhi High Court in Arun Kumar Mishra
98
(1991) 4 SCC 298 (also at Footnote No.131)
99
(2014) 11 SCC 282
100
WP No. 17525/2014 decided on 22.12.2014 by High Court of Andhra Pradesh
101
2017 SCC Online ATPMLA 2 H
446 SUPREME COURT REPORTS [2022] 6 S.C.R.

A vs. Directorate of Enforcement102, M/s. Ajanta Merchants Pvt. Ltd.
vs. Directorate of Enforcement103 and M/s. Mahanivesh Oils & Foods
Pvt. Ltd. vs. Directorate of Enforcement104.
(ii) The argument that to qualify for the offence of money-
laundering, the essential ingredient of ‘projection’ or ‘claiming’ it as
B ‘untainted property’ is imperative, has also been pressed into service. It
is also urged that proceeds of crime can only be generated from the
commission of a predicate offence and the commencement of
investigation arises only if a predicate offence has generated such
proceeds of crime only subsequent to the inclusion of the predicate
offence to the Schedule of the PMLA. Another point that has been
C highlighted is that the projecting, if done prior to the date of inclusion of
the offence to the Schedule, the same cannot be continuing and as such,
is stated to be stillborn for the purposes of the PMLA.
(iii) It is urged that for the purposes of bail, it is settled law
that offences punishable for less than seven years allows a person to be
D set free on bail. As such, the liberty as enunciated by Article 21 of the
Constitution cannot be defeated by such an Act. Thus, Section 45(2) of
the PMLA is contrary to general principles of bail and the Constitution
of India. It is also pointed out that Section 437 of the Cr.P.C. imposing
similar conditions as Section 45(2) restricts it to offences punishable
E with either life imprisonment or death. Under no condition can it be said
that the bail conditions under the PMLA, imposing maximum seven years,
are reasonable. Without prejudice to the aforementioned argument, it
was stated that Section 45(2) could only be applicable to bail applications
before the Special Court and the special powers under Section 439 Cr.P.C.
It was submitted that in light of the same, special powers be given to the
F Special Court under the PMLA, as these provisions, draconian in nature,
were contemplated only in Acts, such as TADA Act, POTA, MCOCA
& NDPS Act, since securing the presence was difficult in all of the
above. Further, unless Section 3 was to be restricted to organised crime
syndicate, which was in fact the real intent, the bail provisions are liable
G to be struck down.
102
2015 SCC OnLine Del 8658
103
2015 SCC OnLine Del 8659. The decision was assailed by ED before this Court in
SLP (Crl.) No. 18478/2015, wherein an order of Status-quo came to be passed.
104
2016 SCC OnLine Del 475. The judgement however was challenged by ED in LPA
before the Division Bench wherein it was held that the same shall not be treated as
H precedent.
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 447
INDIA & ORS. [A. M. KHANWILKAR, J.]

7. Mr. S. Niranjan Reddy, learned senior counsel contends that it A
is essential to first understand as to whether money-laundering is a
standalone offence or dependent on the scheduled offence? He points
out that the ED has maintained the former stance. It has been pointed
out that this view has been rejected by the High Courts of Delhi, Allahabad
and Telangana. On the contrary, the High Courts of Madras and Bombay
B
have accepted such a view. It has been added that the ED’s contention
is based on the Explanation added to Section 44(1)(d) by the 2019
amendment. Concededly, though there are certain exemptions in Section
8(7), it is contended, that the same are only for special circumstances.
Learned counsel then refers to the sequence of conducting the matters
and points out Sections 43(2) and 44(1), whereby the Special Court can C
try the scheduled offence, as well as, the money-laundering offence.
He points out that due to different findings of different High Courts,
certain questions have arisen as to the sequence of conducting the said
two cases. The High Courts of Jharkhand and Kerala have taken a
view that both matters can be tried simultaneously; there is no necessity
D
to hold back the trial of money-laundering until the scheduled offence
has been tried. It has been submitted that the High Court of Kerala finds
that the offence of money-laundering is dependent on the scheduled
offence. The High Court for the State Telangana, on the other hand,
finds money-laundering completely independent of the scheduled offence.
To drive the point home, attention is drawn towards Section 212 of the E
IPC, where the High Courts have taken a view that unless the original
offence is proved, the person harbouring the accused cannot be
sentenced. However, it is also pointed out that Section 212 can be tried
simultaneously with the original offence.
(i) Additionally, it has been submitted that Section 2(1)(u) and F
Section 3 of the PMLA have been given a very expansive meaning,
whereby people who do not have knowledge or have not participated,
being totally unrelated third parties, are also being roped in to the
investigations. The culpability has to be maintained. Wrong interpretation
is given to proceeds of crime to be any property even obtained or derived
indirectly. Persons who have not committed the scheduled offence G
deriving certain indirect benefits, even without knowledge, based on
Section 24 presumption are held to be guilty of laundering money.
(ii) Further, the question of retrospectivity has also been addressed,
whereby after the 2019 amendment, money-laundering is now said to be
H
448 SUPREME COURT REPORTS [2022] 6 S.C.R.

A a continuing offence connected with the proceeds of crime. It is urged
that the ED contends that prosecution or attachment can take place
irrespective of whether the alleged offence was committed even prior
to enactment in 2002, irrespective of the addition of the predicate offence
in the PMLA Schedule. It is submitted that there are various amendments
which are substantive in nature, being given retrospective effect, such
B
as Sections 2(1)(u), 3, 8, 24, 44, etc. It has also been brought to our
notice that prior to the 2013 amendment in the context of Section 8, the
High Court of Andhra Pradesh, the Madras High Court and the High
Court of Gujarat have held that attachment causes civil consequences
of confiscation. Meaning that in case a scheduled offence is committed
C prior to the enactment of the PMLA or inclusion of certain offences in
its Schedule, attachment or confiscation can go on. However, since then,
the amendment has brought about a new legal question. Today, the line
between civil and criminal consequences has changed, since Section 8
now is dependent upon one being held guilty for money-laundering.
Hence, it cannot be applied retrospectively for predicate offences or
D
scheduled offences committed prior to the PMLA enactment. Reference
has also been made to the finding of the Hyderabad High Court where
Section 8(5) being quasi criminal, has been found to be prospective.
8. Dr. Menaka Guruswamy, learned senior counsel urged that
substantive due process has replaced procedure established by law105.
E Learned counsel has also pointed out aspects of substantive due process
and the procedure of mandatory open Court review. In the context of
right of accused during interrogation, it was submitted that this Court
dealt with ‘due process’ rights in the Mohammed Ajmal Mohammad
Amir Kasab alias Abu Mujahid vs. State of Maharashtra106, where
F the use of Miranda rights has been rejected. Learned counsel has also
gone into the facts of the case, where it is stated that there has been a
six year long pre-trial procedure in both the predicate offence and
laundering offence with limited right of participation and a reverse burden
of proof.
G (i) It has also been argued that Section 50 infringes upon the right
to liberty of a person summoned under the Act and violates the right
against self-incrimination. The non-compliance with Section 53 is
105
Mohd. Arif alias Ashfaq vs. Registrar, Supreme Court of India & Ors., (2014) 9 SCC
737 (para 28); Also see: Sunil Batra vs. Delhi Administration & Ors., (1978) 4 SCC
494; Mithu vs. State of Punjab, (1983) 2 SCC 277.
H 106
(2012) 9 SCC 1
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 449
INDIA & ORS. [A. M. KHANWILKAR, J.]

penalized through Section 63 of the PMLA. The learned counsel has A
adopted the arguments made by other learned counsel in reference to
Tofan Singh107. It is argued that the use of the term “any person” without
exclusion of the accused under Section 50 is in violation of the due
process. No safeguards provided under the Cr.P.C. and the 1872 Act
are extended to person proceeded for PMLA offence. It is stated that
B
the stage at which a person is guaranteed the constitutional right under
Article 20(3), cannot be made malleable through legislation. It is stated
that even though the PMLA is a complaint-based procedure, by way of
Section 50, one cannot ignore the pre-complaint stage. As such, Section
50 must be rendered unconstitutional. Further, it is argued that the ED
practice is a perverse incentive structure for constitutional infringement C
where an accused is trapped and sweeping interrogations are conducted
aimed at justifying the summons issued. In respect of Section 44(1)(d), it
is stated that the right to a fair trial is taken away and this provision
irreversibly prejudices the accused in the trial adjudicating the predicate
offence.108
D
(ii) Further, the Explanation to Section 44(1)(d) requires the two
trials to be conducted before the Special Court, but as separate trials, is
said to render the requirement of a fair trial impossible. To bolster this
ground, it is said that when a judge receives evidence under Section 50
of the PMLA in case of money-laundering, he cannot remain an
independent authority when deciding the predicate offence based on the E
material placed before him. Thus, this paradoxical provision forms a
complete absurdity for a judge dealing with two different sets of rights
for the same accused regarding the connected facts. That is for every
predicate offence which would have otherwise been tried by a Magistrate,
the investigation by the ED will tend to influence the mind of the judge109. F
Further, reliance has also been placed on Suo Motu Writ (Crl.) No. 1 of
2017 in Re: To issue certain guidelines regarding inadequacies and
deficiencies in criminal trials110. The Court has incorporated the Draft
Rules of Criminal Practice, 2021 which have been circulated for adoption
G
107
Supra at Footnote No. 31 (also at Footnote No. 24)
108
Nahar Singh Yadav & Anr. vs. Union of India & Ors., (2011) 1 SCC 307
109
Hanumant Govind Nargundkar & Anr. vs. State of Madhya Pradesh, AIR 1952 SC
343 (para 10)
110
Criminal Trials Guidelines Regarding Inadequacies and Deficiencies, In re, vs. State
of Andhra Pradesh & Ors., (supra at Footnote No.12) H
450 SUPREME COURT REPORTS [2022] 6 S.C.R.

A by all High Courts. It is also argued that Section 44 takes away the right
of appeal from the predicate offences triable by the Magistrate’s Court111.
(iii) It is urged that the PMLA creates an overbroad frame with
no fetters on investigation. The refusal to provide a copy of the ECIR
creating an opacity surrounding the usage of the ED Manual is also
B under challenge. Section 4(b)(v) of the Right to Information Act, 2005 112
is pressed into service to showcase that every public authority is obligated
to publish within 120 days of enactment of the Act - the rules, regulations,
instructions, manuals and records held by it or its employees for discharge
of its functions. Contrary to the above-mentioned provisions, the ED
Manual is said to be a mystery for the general public. Reference is also
C made to the decision of the Bombay High Court, wherein the Maharashtra
Police was asked to provide a copy of the police manual in response to
an RTI application113. It is submitted that such non-disclosure of the ED
Manual is unsustainable in law. It makes the securing of pre-trial rights
of an accused difficult. Even the CBI manual which is based on a statutory
D provision of the Cr.P.C., has been found by this Court to be necessary
and to be adhered scrupulously by the CBI114.Similarly, other authorities,
such as the Central Vigilance Commission, Income Tax authorities,
authorities under the 1962 Act, police authorities, jail authorities, are all
governed by manual published by them. Thus, it is only the ED which
follows a distinct approach of non-disclosure.
E
(iv) It has also been argued that the Schedule of the PMLA renders
several bailable offences as non-bailable when this Court has repeatedly
held that bail is the rule and jail is the exception115. Predicate offences
which under their original act such as the Bonded Labour System
(Abolition) Act, 1976116, are bailable but on the application of the PMLA,
F
111
Himanshu Singh Sabharwal vs. State of Madhya Pradesh & Ors., (2008) 3 SCC 602
112
For short, “RTI Act”
113
State of Maharashtra vs. Chief Information Commissioner & Anr., 2018 SCC OnLine
Bom 1199
114
Vineet Narain & Ors. vs. Union of India & Anr., (1998) 1 SCC 226; Also see:
Shashikant vs. Central Bureau of Investigation & Ors., (2007) 1 SCC 630; Central
G Bureau of Investigation vs. Ashok Kumar Aggarwal, (2014) 14 SCC 295; and State of
Jharkhand through SP, Central Bureau of Investigation vs. Lalu Prasad Yadav alias
Lalu Prasad, (2017) 8 SCC 1.
115
State of Rajasthan, Jaipur vs. Balchand alia Baliay, (1977) 4 SCC 308; Also see:
Sanjay Chandra vs. Central Bureau of Investigation, (2012) 1 SCC 40; State of Kerela
vs. Raneef, (2011) 1 SCC 784 (para 15).
H 116
For short, “1976 Act”
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 451
INDIA & ORS. [A. M. KHANWILKAR, J.]

become non-bailable. The intention and provision of the underlying special A
Act, hence, becomes otiose by the overbroad provisions of the PMLA.
In another breath, it is argued that the attachment procedure under the
PMLA runs contrary to the provisions contained in the predicate offence.
It is also perplexing, as the underlying statute itself contain the procedure
to attach illegal proceeds of crime. Aid of the UAPA and Securities and
B
Exchange Board of India Act, 1992117 is taken to buttress that while
under the predicate offence, attachment can take place only after the
conviction, Section 5 of the PMLA enables attachment of property prior
to conviction. This creates two different standards and two different
criminal attachment proceedings for essentially the same offence. Even
the Cr.P.C. provides for depriving criminals of the fruit of the crimes and C
allows for the true owner of the property to be restored with the position
thereof by way of Section 452(5).
(v) The next point argued is in respect of the adjudicatory paralysis
in the Appellate Tribunal. It is submitted that it is one of the only
safeguards in this draconian law to provide an oversight to prevent abuse D
of mechanism of attachment. Even this oversight has been rendered
redundant since there has been no appointment of a chairperson or
members of the said Tribunal since 21.09.2019. Thus, making the Tribunal
redundant. Further, it is stated that taking the possession at the stage
when only a provisional attachment has been made, can cause great
hardship and financial ruin, amounting to virtually declaring a person E
guilty and is avoidable. Further, certain official data has been brought to
our attention to demonstrate the ineffectiveness of the unconstitutional
legislations, where raids have increased each financial year and, yet,
since 2005 the number of convictions till 2015-16 has remained zero
and, thereafter, reached a maximum of four in 2018-19. F
9. Then, Mr. Aabad Ponda, learned senior counsel contended that
without prejudice to all the submissions, Section 50(3) and Section
63(2)(a) and (c) of the PMLA, insofar as they relate to the accused
persons, are ultra vires being violative of Articles 20(3) and 21 of the
Constitution of India. He submitted that under the current scheme of the G
Act, a scheduled offence requires a prior FIR. A person so named in the
FIR would stand in the character of an accused person, and as such, he
cannot be compelled to incriminate himself or produce documents
incriminating himself under Section 50(3) of the PMLA. The next leg of
117
For short, “SEBI Act” H
452 SUPREME COURT REPORTS [2022] 6 S.C.R.

A the argument is to the extent that Section 63(2)(c), which mandatorily
penalises person for disobedience of Section 50, cannot be applicable to
an accused person given the constitutional protections of Articles 20(3)
and 21, whereby he has the right to exercise his fundamental right to
silence. We are also shown the analogous provisions similar to Section
50(3) and 50(4) of the PMLA in other statutes, such as Section 171A of
B
the 1878 Act, inserted by Section 12 of the Sea Customs (Amendment)
Act, 1955; Section 108 of the 1962 Act; Section 14 of the Central Excises
and Salt Act, 1944118 and Section 40 of the FERA. Learned counsel
further argued and distinguished custom officers and other above referred
officers from the ED officers to the effect that they only recover duty
C and do not investigate crimes like the ED officials. Even otherwise, it is
to be noted that even though Section 50 of the PMLA may appear to be
akin to summons issued under Section 18 of 1962 Act and other above-
mentioned statutes, however, there is a deep differentiation. For, when a
person is summoned under the above-mentioned Acts, such as the 1962
Act, he is not in the shoes of an accused. He only becomes an accused
D
once an FIR or complaint has been filed before a Magistrate. This,
however, he states, is not the case under the PMLA. To drive home the
point as to who stands in the character of an accused, reference has
been made to certain Constitution Bench decisions of this Court, which
have already been referred to by the previous learned counsel. To wit,
E Romesh Chandra Mehta vs. State of West Bengal119, Balkishan A.
Devidayal vs. State of Maharashtra 120 and Selvi121.
(i) Similarly, Mr. Ponda, learned senior counsel also relied on the
decision in Ramanlal Bhogilal Shah & Anr. vs. D.K. Guha & Ors.122
and pointed out that even in cases of FERA, a person stands in the
F character of an accused in a separate FIR for the same transaction. He
cannot be compelled to incriminate himself. He maintains that this is a
case wherein the ED itself had investigated the accused under the FERA.
It was found that even though ordinarily under the FERA a person is not
an accused, however, in this particular case, an FIR had been registered
against the said person and he, being an accused, could not be compelled
G
118
For short, “CESA 1944 Act”
119
(1969) 2 SCR 461 : AIR 1970 SC 940
120
(1980) 4 SCC 600 (also at Footnote No.41)
121
Supra at Footnote No.43
122
H (1973) 1 SCC 696 (paras 2, 3, 4, 5, 11, 12, 17, 18-25)
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 453
INDIA & ORS. [A. M. KHANWILKAR, J.]

to answer questions that would incriminate him. The same plea has also A
been upheld in Poolpandi & Ors. vs. Superintendent, Central Excise
and Ors.123. It was urged that an accused cannot be compelled to produce
any incriminating documents which he does not want to produce. Reliance
was placed on State of Gujarat vs. Shyamlal Mohanlal Choksi124.
Moreover, it is reiterated that the protection against self-incrimination
B
applies not only in Court proceedings, but also at the stage of
investigation125.
(ii) Further, it was urged that Section 2(1)(na) of the PMLA defines
“investigation”. As such, proceedings under Section 50 is clearly a part
of investigation for the collection of evidence. The summons under Section
50(2) is to give evidence or produce records during the course of C
investigation under the Act, thus, protected by Article 20(3). Section
50(4) of the PMLA also stipulates that they are judicial proceedings,
therefore, a person accused will be protected under Article 20(3). Section
63(2)(a) and 63(2)(c) inflict grave prejudice upon the accused, as he is
liable to be further prosecuted for the failure to give information and D
provide documents which will incriminate him. Our attention is also drawn
to the usual practice wherein persons are labelled as non-cooperative
during the proceedings which are judicial in nature and used as a pretext
to arrest or extend remand under the PMLA. It is a direct affront to
fundamental rights and a travesty of justice.
E
10. Mr. Siddharth Aggarwal, learned senior counsel, also appeared
for the private parties. His main opposition is to the retrospective
application of the PMLA. Certain questions are raised with respect to
whether prosecution for money-laundering is permissible if the commission
of scheduled offence and proceeds of crime takes place prior to the
PMLA coming into force; and, similarly, in a situation when it is committed F
prior to the offence being made part of the Schedule of the PMLA. It is
submitted that the prohibition against retrospective operation of substantial
criminal statutes is a constitutional imperative which needs to be given
its fullest interpretation in a purposive manner. He highlights the three
G
123
(1992) 3 SCC 259
124
AIR 1965 SC 1251 (and the Majority view from paras 23 onwards, relevant paras
32, 34 and 41)
125
Relied on Kathi Kalu Oghad (supra at Footnote No. 44), Nandini Satpathy (supra at
Footnote No.35), Selvi (supra at Footnote No.43) and Tofan Singh (supra at Footnote
Nos.24 and 31) H
454 SUPREME COURT REPORTS [2022] 6 S.C.R.

A situations where interpretation is warranted. One, where transactions
were concluded prior to the enforcement of PMLA; two, prior to the
offences being added to the Schedule of the PMLA; and three, whether
amendment is applied with retrospective effect couched in the guise of
an Explanation introduced by the 2019 amendment.
B (i) It is urged that no person can be convicted for criminal offence
unless it has been specifically given retrospective effect, given the
essential ingredient of ‘knowledge’ of the person for taking such an
action and exposing himself to criminal liability. In line with the protection
under Article 20(1) and the maxim of ‘nova constitutio futuris formam
imponere debet non praeteritis’126, judgments of this Court were relied
C to urge that the general rule is applicable when the purpose of the statute
in question is to affect vested rights/impose new burdens/impair existing
obligations127.
(ii) To make good the submission on retrospectivity, it is pointed
out that as per the definition, money-laundering is dependent on proceeds
D of crime, which in turn depends on criminal activity relating to a scheduled
offence. As such, it is stated that no proceeds of crime can exist to be
generated from a criminal activity unless the PMLA comes into force.
That too, it has to be connected to the date when the Schedule has
accepted the new predicate offence. It only means that property which
E is not “proceeds of crime”, cannot by virtue of PMLA, retrospectively
characterised as such in a true sense. Further, prior to the enactment of
the PMLA, there was no similar offence dealing in proceeds of crime or
economic advantages derived from criminal offences. He points out that
there were various enactments which dealt with the illegal fruits of criminal
activity. Thus, the PMLA cannot be added to the list of disabilities in law
F to illegal monies in a retrospective manner. He was critical about many
amendments taken place over the years and especially the fact that the
true import of Section 3 is being expanded by a mere addition of an
Explanation in 2019. As such the purport of the main, a much narrow

126
G Keshavan Madhava Menon vs. The State of Bombay, AIR 1951 SC 128 (para 15)
127
See : Soni Devrajbhai Babubhai (supra at Footnote No.98) (paras 8-10); Ritesh
Agarwal & Anr. vs. Securities and Exchange Board of India & Ors., (2008) 8 SCC 205
(para 25]; Harjit Singh vs. State of Punjab, (2011) 4 SCC 441 (paras 13-14); Varinder
Singh vs. State of Punjab & Anr., (2014) 3 SCC 151 (para 10); and Commissioner of
Income Tax (Central)-I, New Delhi vs. Vatika Township Private Limited, (2015) 1 SCC
1 (paras 27-31)
H
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 455
INDIA & ORS. [A. M. KHANWILKAR, J.]

provision, cannot be changed128. None of the amendments to Section 3 A
or changes in Schedule have a language bearing a retrospective effect.
Section 3 amendment was only “for removal of doubts” in contrast with
the amendment of Section 45 which was “deemed to have always meant”.
Several judgments of the High Courts, pending adjudication before this
Court, holding that the PMLA cannot be applied retrospectively, were
B
also referred129.
(iii) Additionally, the impact of insertion of Clause (ii) of the
Explanation to Section 3 vide the 2019 amendment, is also questioned.
It is stated that a continuing offence is not defined in any statute. Some
offences are described in a way that make it clear that the offending
activity is a continuing one, some illustrations are in Section 281 in the C
Cantonments Act, 2006130; Section 36(1)(iii)(d) in the Pharmacy Act,
1948131 and Sections 162(1) & 220(3) in the Companies Act. Hence, a
continuing offence is one which can be distinguished from an offence
which is committed once and for all. It is submitted that it is an offence
where until the obeying or compliance of rule or a requirement is D
effectuated, every subsequent non-compliance leads to the commission
of the offence again and again132. In case of money-laundering, it is
128
Bihta Co-operative Development and Cane Marketing Union Ltd. & Anr. vs. Bank of
Bihar & Ors., AIR 1967 SC 389 (paras 5 & 7-8]; Dattatraya Govind Mahajan & Ors.
vs. State of Maharashtra & Anr., (1977) 2 SCC 548 (para 9); S. Sundaram Pillai & Ors.
vs. V.R. Pattabiraman & Ors., (1985) 1 SCC 591 (paras 27 & 45-53); Jagan M. E
Seshadri vs. State of T.N., (2002) 9 SCC 639; and Hardev Motor Transport vs. State of
M.P. & Ors., (2006) 8 SCC 613 (para 31)
129
Tech Mahindra Ltd. (supra at Footnote No.100) (Telangana & AP High Court,
decided on 22.12.2014 – paras 12, 33, 65-67 & 68-71) read with Order dt. 08.12.2017
passed by this Court in SLP (Crl.) Diary No. 34143/2017; M/s. Ajanta Merchants Pvt.
Ltd. (supra at Footnote No.103 – paras 20-22 & 29); Arun Kumar Mishra (supra at F
Footnote No. 102 – paras 19-21 & 27-28); Mahanivesh Oils & Foods Pvt. Ltd. (supra
at Footnote no. 104 – paras 25-27, 33-35, 37 & 38-39]; Obulapuram Mining Company
Pvt. Ltd. vs. Joint Director, Directorate of Enforcement, Government of India, ILR
2017 Kar 1846 (paras 5 & 10-12); Ajay Kumar Gupta & Ors. vs. Adjudicating Authority
(PMLA) & Ors., (2017) 2 LW (Cri) 252 (paras 7, 10 & 13-22) and Madhu Koneru vs.
The Director of Enforcement, Crl. Pet.No. 4130/2019, decided on 02.06.2021 by the
High Court of Telangana (paras 31-32). G
130
For short, “2006 Act”
131
For short, “1948 Act”
132
State of Bihar vs. Deokaran Nenshi & Anr., (1972) 2 SCC 890 (para 5); Commissioner
of Wealth Tax, Amritsar vs. Suresh Seth, (1981) 2 SCC 790 (paras 11-17). [Note:
observations on ‘continuing offence’ affirmed by this Court in Smt. Maya Rani Punj
(Smt.) vs. Commissioner of Income Tax, Delhi, (1986) 1 SCC 445 (paras 15-20)] H
456 SUPREME COURT REPORTS [2022] 6 S.C.R.

A urged that there is a clear starting point and an end point to the same,
where the generation of proceeds of crime starts and ends in the
integration of proceeds of crime into the financial bloodstream as untainted
money. Thus, though it may take place over time but it cannot be
considered as a continuing offence. Further, for the purpose of substantive
interpretation, no reference can be made to the Explanation added by
B
the 2019 amendment, since it is a mere explanation which cannot widen
the ambit of the main section itself133.
11. Mr. Mahesh Jethmalani, learned senior counsel was next in
line to advance submissions on behalf of the private parties. He submitted
that Section 44(1)(a) of the PMLA is unconstitutional and violative of
C Articles 14 and 21 of the Constitution. He contends that there is no
nexus of the said Section with the object of the PMLA. This section
does not contemplate a joint trial of the offence under Section 3 and the
scheduled offence. Further, he interprets Section 44(1)(a) to mean that
the Special Court can only try the scheduled offence, but not together; it
D has to be separately tried as per the provisions of the Cr.P.C. It is also
said that the rationale behind this change is difficult to fathom. On the
other hand, it is pointed out that the accused’s right of being tried as per
the Cr.P.C., for scheduled offence is being violated, at least in respect of
37 out of 58 scheduled offences of the IPC noted in the Schedule to the
2002 Act, are triable exclusively by a Magistrate of the First Class or
E any Magistrate. In support of this argument, reliance has been placed on
A.R. Antulay vs. R.S. Nayak & Anr.134. It is submitted that the present
interpretation of this section leads to the violation of the right to be tried
by a Magistrate First Class, the right of a first appeal to Sessions Court
under Section 374(3) and the right of revision to the High Court under
F Section 401 of the Cr.P.C. from the appellate judgment of the Sessions
Court. This leads to a rather oppressive interpretation where an accused
who is not charged under the PMLA offence but only under the predicate
offence is also tried by the Special Court. This is also hit by the fact that
several of the scheduled offences within the PMLA are themselves part
of special statutes which prescribe that they shall be tried by the Special
G Court established under those special statutes exclusively. For example,
the PC Act, the NDPS Act and the National Investigation Agency Act,
2008135. Thus, in such a case the PMLA Special Court cannot have
133
M/s. Ajanta Merchants Pvt. Ltd. (supra at Footnote No.103) (para 37)
134
AIR 1988 SC 1531 (para 59): (1988) 2 SCC 602
H 135
For short, “NIA Act”
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 457
INDIA & ORS. [A. M. KHANWILKAR, J.]

power to try offences punishable under those Acts. The phrase ‘any A
scheduled offences’ as contemplated under Section 44(1)(a) of the PMLA
is in a manifest conflict with these three statutes and, hence, liable to be
struck down. Learned counsel also submits that the Section is a legal
absurdity as to how a Special Court could try a scheduled offence before
the commencement of the Act without which commencement of the
B
Special Court has no existence. It is also stated the discretion to choose
which issue or scheduled offence to try before the Special Court lies
only with the authority authorised to file a complaint under the PMLA,
which is a discretionary and unfettered arbitrary power.
(i) As regards Section 44(1)(c), it is urged that the same does not
mandate disclosure of any reason for filing the application. Further, such C
an application can be moved at any stage of the proceedings for the
inquiry or trial of a scheduled offence. Such a provision cannot be read
to allow committal at a stage when the trial is over and only the judgment
remains to be delivered. This tantamounts to authorising exercise of
administrative fiat in respect of subject matter, which is in fact a quasi- D
judicial act. Similarly, even the Magistrate is not obligated to state reasons
while deciding the application and as such his order, if not reasoned, will
be a nullity. The interpretation of the words ‘commit’ and ‘committed’ is
said to be misconceived under Section 44(1)(c). It is urged that the use
of the word ‘committal’ is inappropriate and the real intention of the
present Section is a mere transfer of the case to the PMLA Special E
Court. As such, it is submitted that the case be sent to the Special Court
which has already taken cognizance of the complaint under the PMLA
and not any other Special Court. Reliance has been placed on the decision
of the Delhi High Court in Directorate of Enforcement vs. Surajpal &
Ors.136 and on the other hand, the decision of the High Court of Kerala F
in Inspector of Police, CBI vs. Assistant Directorate, Directorate of
Enforcement (PMLA) & Anr.137, wherein it is observed that it is not
mandatory to make an application for committal to Special Court in every
case and, similarly, not mandatory for the Court to allow every such
application without application of mind and dehors the merits of the
case. Hence, the conflict of view between the two High Courts needs to G
be resolved.

136
2018 SCC OnLine Del 10472 (Paras 15-16)
137
2019 SCC OnLine Ker 4546 H
458 SUPREME COURT REPORTS [2022] 6 S.C.R.

A (ii) Referring to Section 45, it is argued that Sections 201 and 212
of the IPC provide for graded punishment or in line with the principle of
an accessory after the fact. Attention has been drawn to a few cases to
show that these Sections prescribe gradation of punishment depending
on the nature of offence which the principal offender has committed 138.
It is stated that Section 3 of the PMLA offence also is one kind of an
B
accessory after the fact offence. It is also maintained that in certain
cases the proceeds of crime or the scheduled offence may be committed
by some person and the laundering might be done by a completely
different person. In such a case, where money-laundering is not directly
connected with the scheduled offence, the laundering is merely an
C accessory after the fact. He submits that even though the offence of
money-laundering is a serious offence, however, the severest punishment
is only seven years. Thus, twin conditions under Section 45 are grossly
disproportionate and illogical for the crimes provided under the PMLA.
It is also stated that the equation of the bail provisions under the PMLA
cannot be made to the NDPS Act or UAPA. Further, even a serial
D
murderer who may be liable for capital punishment is not subjected to
such stringent condition, as under Section 45 of the PMLA. Irrespective
of the deleterious impact on the economy of a country, it does not shock
the conscience of the society as much as the conduct of the serial
murderer. Reliance is also placed upon Nikesh Tarachand Shah139 in
E support of the argument that even if the amendment to Section 45 (which
was struck down in the aforementioned case) saves the conditions from
the vices on which it was struck down, the vice of Article 21 persists
owing to the presumption of innocence having been turned on its head.
It is also said that the current provision has no compelling State interest
for tackling serious crime and we must be doubly sure to allow such
F
attack on the fundamental right of personal liberty.
(iii) As for Section 24 and the burden of proof which is reversed
within this Act, it is stated that Section 24(a) applies only after charges
have been framed by the Special Court. Section 24(b) refers to persons
not charged with the offence of money-laundering under Section 3 and
G it is further contended that Section 24(a) and (b) have no application to
proceedings for bail. Furthermore, it is stated that presumption of
138
Sou. Vijaya Alias Baby vs. State of Maharashtra, (2003) 8 SCC 296 (Para 6); Also
see: State of Karnataka vs. Madesha & Ors, (2007) 7 SCC 35 and In Re Kuttayan alias
Nambi Thevar, AIR 1960 Mad 9
139
H Supra at Footnote No.3
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 459
INDIA & ORS. [A. M. KHANWILKAR, J.]

innocence is a golden thread running through all criminal proceedings. A
This can apply only in cases of extremely serious offences on the ground
of compelling State interest. It is submitted that in such a case where the
maximum sentence is of seven years, such a provision is ultra vires
Article 21 of the Constitution. It is argued that in special statutes like
UAPA, MCOCA and the PC Act, the reverse burden of proof has only
B
been upheld due to the compelling State interest, such as security and
public order. Thus, it is agreed that in cases of narco terrorism,
underworld, gangs the undoubted evils may prosper; hence, Section 24(a)
can accordingly be read down so as to apply to cases of laundering
where the predicate offence seeks to punish nefarious activities.
12. Mr. Abhimanyu Bhandari, learned counsel also argued on behalf C
of private parties. His foremost challenge is to the interpretation of Section
3, post addition of the Explanation vide the 2019 amendment. He has
more or less reiterated the same arguments as advanced by the previous
learned counsel that by way of Explanation, the ingredient of offence
under Section 3 is sought to be altered by reading “and” as “or”. He has D
relied upon the reports and speeches of the Minister in the Parliament.
Additionally, he has placed reliance on the Vienna Convention and United
Nations Convention Against Transnational Organized Crime, 2000140,
which state that money-laundering is only committed if the ‘use’ and/or
‘concealment’ is ‘for the purposes of concealing or disguising the illicit
origin of the property’ or ‘helping any person who has been involved in E
the commission of the predicate offence to evade the legal consequences
of his/her action’141. Reliance is also placed on Nikesh Tarachand
Shah142, wherein it has been held that it is the concealing or disguising
by projecting tainted monies as untainted money and not their spending
that is prohibited. F
(i) Thus, exception is taken that the Explanation as added by the
2019 amendment has wholly changed the scope of the main provision
which is the definition. It is contrary to the concerns of the Select
Committee and subsequent to this Explanation, a person would now
commit the offence of money-laundering the minute proceeds of crime G
are generated. A similarity is drawn with Section 1956 of the United
States Code 143 where money-laundering is to conceal the illicit
140
For short, “Palermo Convention” or “the 2000 UN Convention”
141
See Article 6 of the Palermo Convention
142
Supra at Footnote No.3
143
Title 18 US Code S. 1956- Laundering of Monetary Instruments H
460 SUPREME COURT REPORTS [2022] 6 S.C.R.

A background of the source of the money. Further, reliance is also placed
on American decisions where the Circuit Courts have held that it is not
spending or using of proceeds of crime that amounts to the offence of
money-laundering, but laundering of such proceeds of crime 144. Further,
it has been stated that this Court in a catena of decisions, held that newly
added Explanations must be read so as to harmonise and clear of ambiguity
B
in the main Section and cannot be construed to widen the ambit of the
previous state of the Section145.
(ii) The next contention is regarding the definition of “proceeds of
crime” and use of value thereof, defined under Section 2(1)(u) of the
PMLA. It is argued that it can be categorised into three types namely:
C one - property derived or obtained, directly or indirectly, by any person
as a result of criminal activity relating to a scheduled offence; or, two -
the value of such property that is property derived or obtained, directly
or indirectly, by any person as a result of criminal activity relating to a
scheduled offence; and third - where such property is taken on field
D outside the country, then the property equivalent in value held within the
country or abroad.
(iii) It is submitted that by reason of the Explanation(s) added in
2019, it cannot be interpreted to include property not only derived or
obtained from the scheduled offence but also any property which may
E directly or indirectly be derived or obtained as a result of any criminal
activity relatable to the scheduled offence. Further, the Explanation to
the term “property”, also would now include property “used in the
commission of an offence”. To this, reference is made to Articles 1 and
5 of the Vienna Convention and Article 12 of the Palermo Convention to
show that if the criminal activity does not generate any proceeds, then
F there cannot be any ‘proceeds of crime’. Further, the ambit of property
also is said to have been enlarged disproportionately. As such, proceeds
of crime need to be generated from the scheduled offence alone and not
any criminal activity. To demonstrate the vice, various illustrations were
also pointed out to us. It is imperative that Courts can differentiate
G 144
United States of America vs. Renee Armstrong Sanders, 929 F.2d 1466 (10th Cir.
1991); United States of America vs. Paul Johnson, 440 F.3d 1286, 1293 (11th Cir.
2006); United States of America v Roger Faulkenberry, 614 F.3d 573 (6th Cir. 2010);
and Jennifer Wang, Yes, That is Money Laundering. Oh Wait, It’s Not: The Impact of
Cuellar on Concealment Money Laundering Case Law, 18 J Bus L 255 (2015).
145
Nagar Palika Nigam vs. Krishi Upaj Mandi Samiti & Ors., AIR 2009 SC 187 and
H Rohitash Kumar & Ors. vs. Om Prakash Sharma & Ors., AIR 2013 SC 30.
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 461
INDIA & ORS. [A. M. KHANWILKAR, J.]

between property being used to commit an offence and property derived A
from the commission of an offence, as is already accepted in other
common law countries146. Thus, it is submitted that such an amendment
by way of Explanation cannot expand the scope of a section. Reference
is also made to the fact that attachment of property of an equivalent
value where the actual proceeds are no longer available, is similar to
B
other Acts, such as the UAPA, the NDPS Act, the Prohibition of Benami
Property Transactions Act, 1988147 and the Fugitive Economic Offenders
Act, 2018148, all having similar definition of proceeds of crime. Objection
is taken to term “property equivalent in value”, where properties are
attached which have been derived from proceeds of crime even if they
are different from the original form when the proceeds were generated149. C
Further, for the interpretation of ‘value thereof’, it is said that a broader
interpretation would be contrary to Sections 8(5) and 8(6) of the PMLA.
Hence, by way of illustration, where the original proceeds of crime are
interchanged and mixed with legitimate money, it is argued that giving a
broad interpretation to ‘value thereof’ would be unreasonable 150.
D
(iv) In respect of Section 8, it is argued that the true meaning of
the words “take possession” of property under Section 8(4) should be
constructive possession instead of physical possession since it is highly
prejudicial for the accused during the pendency of the trial. Reliance is
placed on a decision that has been stayed by the Division Bench of the
Madras High Court which had originally held it to be symbolic possession E
instead of actual151. It is urged that Article 300A is not only a constitutional
right but also a human right. Further, confiscation is only subject to
conviction and such disposition in all practical sense, leads to a confiscation
prior to such conviction. Further, since there is no compensation in case
a person is eventually acquitted, this would be a disproportionate action. F
As such, the argument that one needs to be restrained from selling or
creating encumbrance is valid, the dispossession is not.

146
R v Ahmad, [2012] 2 All ER 1137; Also see: R v James, [2012] 2 Cr App R (S) 253
147
For short, “1988 Act”
148
For short, “2018 Act”
G
149
Abdullah Ali Balsharaf & Anr. vs. Directorate of Enforcement & Ors., 2019 SCC
Online Del 6428; and Seema Garg vs. Deputy Director, Directorate of Enforcement,
2020 SCC Online P&H 738
150
Seema Garg (supra at Footnote No.149 above)
151
A. Kamarunnisa Ghori vs. The Chairperson, Prevention of Money Laundering,
Union of India, 2012 (4) CTC 608 : 2012 Writ LR 719 H
462 SUPREME COURT REPORTS [2022] 6 S.C.R.

A 13. Mr. N. Hariharan, learned senior counsel, who argued next,
referred to Nikesh Tarachand Shah 152. Vide this decision, twin
conditions in Section 45(1)(ii) of the PMLA, came to be struck down
being violative of Articles 13(2), 14 and 21 of the Constitution. He submits
that post Constitution laws declared unconstitutional for violation of Part
III as void ab initio cannot be revived by amendments153, as such laws
B
are void since inception. Further, he relied upon State of Gujarat &
Anr. vs. Shri Ambica Mills Ltd., Ahmedabad & Anr.154, to contend
that Section 45(1) cannot survive on the statute books155. Reference
has also been made to G. Mohan Rao vs. State of Tamil Nadu &
Ors.156. In his argument, two situations evolving from the decision of
C Nikesh Tarachand Shah157 have been put forth. One, where only the
twin conditions were stuck down and the remaining provision remained
untouched. Second, where classification based on Part A of the Schedule
was also struck down in addition to striking down of the twin conditions.
The second situation is said to be even more damaging given that the
substitution by the Finance Act, 2018 is targeted only to this classification
D
of Part-A of the Schedule, since the Court in the reported decision found
this classification to be manifestly arbitrary, as it bore no rational relation
to the object of the Act. Hence, the substitution by the Finance Act,
2018 cannot be justified, as the substitution of this pre-existing term cannot
appear on the statute book due to the striking down. It also reminded
E that this submission was made without prejudice to the contention that
the twin conditions themselves need to be enacted separately since they
have been struck down. Further, even if the violation of Article 14 has
been cured, such amendments cannot go on to cure the defect of violation
of Article 21.
F 14. Mr. Vikram Chaudhari, learned senior counsel also representing
private parties, raised a challenge against the twin conditions of Section
45(1) which were held unconstitutional in Nikesh Tarachand Shah158.
Relying on the dictum of this Court in State of Manipur & Ors. vs.

152
Supra at Footnote No. 3
G 153
Deep Chand (supra at Footnote No.69); Saghir Ahmad (supra at Footnote No. 69)
and Mahendra Lal Jaini vs. State of Uttar Pradesh & Ors., AIR 1963 SC 1019
154
(1974) 4 SCC 656
155
Supra at Footnote No.154
156
2021 SCC OnLine SC 440
157
Supra at Footnote No. 3
H 158
Supra at Footnote No. 3
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 463
INDIA & ORS. [A. M. KHANWILKAR, J.]

Surajkumar Okram & Ors. 159 , he submitted that once held A
unconstitutional, a statute is obliterated entirely, as if it had never been
passed, non-est for all purposes. He has also relied on his own
interpretation of how Section 45(1) is to be read post Nikesh Tarachand
Shah160. He has also pointed out that despite this decision an editorial
error where bare acts, post the judgment, did not remove the offending
B
(void) provision. It is, therefore, submitted that issue is not whether twin
conditions under Section 45(1) would apply or not or of their constitutional
validity, but would be as to their existence. He also referred to Clauses
204 and 205 of the Bill which amended Section 45 in 2018.161 The intention
was to take steps to further delink the scheduled offence and money-
laundering offence, and to allow the Courts to apply lenient bail provisions, C
for sick and infirm. Further, the interpretation to the amendment sought
by the State is said to be ill-founded and untenable since there is no
reference to the pronouncement of Nikesh Tarachand Shah162 and
was for the purpose of delinking the scheduled offence and money-
laundering.
D
(i) In respect of the procedure found in Chapter XII of the Cr.P.C.
for the purposes of investigation, he relied upon Ashok Munilal Jain &
Anr. vs. Assistant Director, Directorate of Enforcement 163, wherein
it had been noted that Section 4(2) of the Cr.P.C. prescribes mandatory
application even in respect to special statutes unless expressly barred 164.
Thus, the dictum is that the provisions of the Cr.P.C. would be applicable E
to the extent in the absence of any contrary provision in the special Act
159
2022 SCC OnLine SC 130
160
Supra at Footnote No. 3
161
Which states that “(v) to amend section 45 of the Act relating to offences to be
cognizable and non-bailable and to amend sub-section (1) of section 45 to substitute the F
words “punishable for a term of imprisonment of more than three years under Part A of
the Schedule” by words “under this Act” so as to take a step further towards
delinking the Scheduled offence and money laundering offence. Further, it seeks
to amend the proviso in subsection (1) by inserting the words “or is accused either on
his own or along with other co-accused of money laundering a sum of less than Rupees
one crore”, after the words “sick or infirm” to allow the Court to apply lenient bail
G
provisions in case of money laundering offence is not grave in nature.”
(emphasis supplied)
162
Supra at Footnote No. 3
163
(2018) 16 SCC 158 (also at Footnote No.22)
164
M.K. Ayoob & Ors. vs. Superintendent, Customs Intelligence Unit, Cochin & Anr.,
1984 Crl.L.J. 949; and The Senior Intelligence Officer, Directorate of Revenue, Madras
vs. M.K.S. Abu Bucker, 1990 Cri.L.J 704. H
464 SUPREME COURT REPORTS [2022] 6 S.C.R.

A or any special provision excluding the jurisdiction or applicability of the
Cr.P.C. The point of admissibility of statement made to customs officers
and Section 25 of the 1872 Act is also touched again165. Relying upon
Om Prakash & Anr. vs. Union of India & Anr.166, it is argued that in
the absence of a procedure to investigate irrespective of cognizability,
no investigation can be permitted in law. And in respect of cognizable
B
offence, the investigation cannot go on without recording information
under Section 154 or 155 of the Cr.P.C., forwarding of report or FIR to
competent Magistrate under Section 157 of Cr.P.C., maintaining a
paginated case diary as under Section 172 of the Cr.P.C., as also, its
production before the Magistrate, as provided by Section 167.
C (ii) A passing reference is also made to the Railway Property
(Unlawful Possession) Act, 1966 167, whereby vide Section 6, the
application of Section 155 Cr.P.C. was excluded, but in the case of PMLA,
since there is no express departure from these provisions of the Cr.P.C.,
it being a non-cognizable offence, all these protections must come into
D play. In contradistinction, if it is found to be a cognizable offence, all
protections including under Sections 154, 157, 167 and 172 Cr.P.C., will
prevail.
(iii) Reliance was also placed on Union of India vs.
Thamisharasi & Ors. 168 with respect to the NDPS Act and the
E application of the provisions of the Cr.P.C. For our perusal, a comparative
chart had been presented to show the various provisions of the Cr.P.C.,
which are not displaced in the PMLA. Thus, it is urged that safeguards
of the Cr.P.C. were applicable being mandatory, to the extent of the
Magistrate being a part of all stages of investigation, commencement
and closure of investigation, maintenance of a case diary, adherence to
F Sections 154, 155 and 157, ability to pursue anticipatory bail, bail under
Sections 437 and 439, inherent jurisdiction under Section 482 and Article
226 of the Constitution and other records or information which helps to
curb fishing and roving enquiries.
(iv) Reliance is placed on the decision of Punjab & Haryana High
G Court at Chandigarh in Gorav Kathuria vs. Union of India & Ors.169,
165
A.R. Antulay vs. Ramdas Sriniwas Nayak & Anr. (1984) 2 SCC 500
166
(2011) 14 SCC 1
167
For short, “1966 Act”
168
(1995) 4 SCC 190
169
H 2016 SCC OnLine P&H 3428
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 465
INDIA & ORS. [A. M. KHANWILKAR, J.]

which has attained finality, as this Court has declined to interfere in the A
order of the High Court. Reliance is also placed on the decision of this
Court in D.K. Basu vs. State of W.B.170. It is urged that in a case under
the Drugs and Cosmetics Act, 1940171 where police officers could no
longer investigate, FIRs were made over to the Drug Inspectors. This is
indicative of the correct procedure to be followed, unless otherwise
B
provided, even investigation of offences under the special Acts will be
governed by Cr.P.C. alone.172
(v) It is then argued that an umbilical cord connection exists
between the scheduled offence and the money-laundering offence. The
Explanation of Section 44 is to disconnect the link between the two,
since the findings recorded in the trial of the scheduled offence would C
not have a bearing on the case under the PMLA. Again, reference is
made to Nikesh Tarachand Shah173. It is urged that the proceeds of
crime under Section 2(1)(u) are relatable to a specific scheduled or
predicate offence due to the insertion of the word ‘the’ instead of ‘any’
and, as such, the ambit cannot be broadened to ‘any’ scheduled or D
predicate offence174. He submits that certain conclusions are inevitable.
Before the ED starts investigation, there must be some commencement
under the scheduled or predicate offence. The trials for the specifically
connected proceeds of crime and scheduled or predicate offence must
be tried together. Finding showing no involvement of accused to the
proceeds of crime or criminal activity must cease the proceedings under E
the PMLA. Non-compliance of Section 44(1)(c) will vitiate the PMLA
proceedings. Further, it is submitted that the scope of money-laundering
is limited to projecting and claiming as untainted property, that too relatable
to the scheduled offence175. In light of the said argument, it is said that
the projecting of such proceeds of crime as untainted can be termed as F
a standalone offence. In furtherance of same, certain facts of the case
being Criminal Appeal Nos. 391-392/2018 titled Adjudicating Authority
(PMLA) and Ors. vs. Ajay Kumar Gupta and Ors., were also referred

170
(1997) 1 SCC 416 (also at Footnote No.58)
171
For short, “1940 Act” G
172
Union of India vs. Ashok Kumar Sharma & Ors., 2020 SCC OnLine SC 683
173
Supra at Footnote No. 3
174
Canon India Private Limited vs. Commissioner of Customs, 2021 SCC OnLine SC
200
175
Attorney General for India & Ors. vs. Amratlal Prajivandas & Ors., (1994) 5 SCC
54 H
466 SUPREME COURT REPORTS [2022] 6 S.C.R.

A to, where the FIR and scheduled offence are both prior to the coming
into force of the PMLA and, yet, an ECIR was filed in 2015 after a
delay of about 10 years.
15. Mr. Akshay Nagarajan was the last learned counsel to argue
on behalf of the private parties. He contended that even though the
B definitions under Section 3 read with Section 2(1)(u), two conjunctive
parts, are meant to cover scheduled offences, they are being used to
bring within its sweep even non-scheduled offences. He has contended
that the present definition of Section 3 is wide enough to take within its
sweep any non-scheduled offence due to the first part of the definition,
“acquisition, use, concealment, possession is capable”. However, this
C contrast is impermissible in law176. To buttress this plea, provision of
Section 71 of the IPC and Article 20(2) are invoked177. He has also
submitted that for the purpose of Section 50(3), any statement recorded
and deemed to be judicial proceeding, cannot be used in light of Section
132 of the 1872 Act178.
D SUBMISSIONS OF THE UNION OF INDIA
16. Mr. Tushar Mehta, learned Solicitor General led the arguments
on behalf of the Union of India, followed by Mr. S.V. Raju, learned
Additional Solicitor General.

E (i) At the outset, it is submitted by the learned Solicitor General
that as on date, around 4,700 cases are being investigated by the ED,
which is a small number as compared to annual registration of the cases
under the Money Laundering Act in UK (7,900), USA (1,532), China
(4,691), Austria (1,036), Hongkong (1,823), Belgium (1,862), Russia
(2,764). Further, only 2086 cases were taken up for investigation in last
F five years under the PMLA out of registration of approximately 33 lakh
FIRs relating to predicate offences by police and other enforcement
agencies.
(ii) It is asserted that the validity of the PMLA shall have to be
judged in the background of international development and obligation of
G
176
Sanjay Dutt vs. State through C.B.I., Bombay, (1994) 6 SCC 86
177
The State of Bombay vs. S.L. Apte & Anr., AIR 1961 SC 578; Also see: Thomas Dana
vs. State of Punjab, AIR 1959 SC 375
178
Hira H. Advani etc. vs. State of Maharashtra, (1969) 2 SCC 662, Also see: R.
Dineshkumar alias Deena vs. State represented by Inspector of Police & Ors., (2015)
H 7 SCC 497 (paragraphs 41-44)
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 467
INDIA & ORS. [A. M. KHANWILKAR, J.]

India to prevent money-laundering, as money-laundering impacts not A
only the country in which the predicate offence takes place, but also the
economy of other countries where “proceeds of crime” is laundered.
(iii) It is submitted that the object of the PMLA which affect the
economic fabric of the nation, is to prevent money-laundering, regulate
certain activities relatable to money-laundering, confiscate the “proceeds B
of crime” and the property derived therefrom and punish the offenders.
The development of international consensus towards the offence of
money-laundering has been highlighted. It is submitted that prior to 1988,
there was no concept of “proceeds of crime” and the same was
recognized for the first time in Regina vs. Cuthbertson & Ors.179 by
the House of Lords. England was one of the first countries to take C
legislative action against proceeds of crime on the recommendations of
the Hodgson Committee by enacting Drug Trafficking Offences Act,
1986 (later replaced by the Drug Trafficking Act, 1994) which
empowered the Courts to confiscate the proceeds of drug trafficking.
(iv) Later, the Vienna Convention imposed obligation on each D
participating country to criminalize offences related to drug trafficking
and money-laundering180, to which India is a party.
(v) It is submitted that the provisions of the Palermo Convention
were delineated to ensure that participating countries should have
appropriate legislation to prevent money-laundering and further, the E
Convention also placed obligation on the participating nations to utilize
relevant international anti-money laundering initiatives in establishing their
domestic regulatory and supervisory regimes.
(vi) Further, it is submitted that on 31.10.2003, the UN General
Assembly adopted United Nations Convention Against Corruption, whose F
Preamble recognized the importance of preventing, detecting and deterring
international transfers of illicitly acquired assets, and strengthening
international cooperation in asset recovery. The Convention mandated
the participating States to conduct enhanced scrutiny of accounts sought
or maintained by politically exposed persons and their associates and to G
implement measures to monitor the movement of cash and other
instruments across their borders so that a ‘paper trail’ be created which
could assist law enforcement authorities in investigating the transfers of
illicit assets.
179
[1981] A.C. 470
180
Article 3(1)(a)&(b) of the Vienna Convention, 1988 H
468 SUPREME COURT REPORTS [2022] 6 S.C.R.

A (vii) Thus, relying on the international Conventions, the Union of
India has submitted that it is the international obligations of the State to
not only recognize the crime of money-laundering but also to take steps
for preventing the same.
(viii) To highlight the role played by the FATF in combating the
B menace of money-laundering, the respondent has traced the origin of
FATF and stated its process of reviewing the compliance with its
recommendations by every State and the consequences of non-
compliance. It is submitted that the FATF was established by the Heads
of State or Government of the seven major industrial nations (Group of
Seven, G-7) joined by the President of the European Commission in a
C summit in Paris in July, 1989 which is famous for its ‘Forty
Recommendations’ to combat money-laundering and, hence, carry out
its own evaluation and enforcement on the issue of money-laundering
across the world. Thus, it acts as a dedicated body dealing with this
issue. It is submitted that FATF has recognized dynamic nature of money-
D laundering and thus attempted to respond to the money-laundering
techniques that are constantly evolving, by reviewing its recommendations.
Further, the FATF has adopted its Non-Cooperative Countries or
Territories (“NCCT”) initiative in a report issued on 14.2.2020, according
to which a 25 points criteria was recognized which is consistent with the
Forty Recommendations of the FATF and which identified ‘detrimental
E rules and practices’ in the international effort to combat laundering. It
thus established a review process to target delinquent countries and
territories where the anti-laundering regime is ineffective in practice
and to take steps against those countries. The steps which FATF may
take against a non-compliant nation include ‘conditioning, restricting,
F targeting or even prohibiting financial transactions with non-cooperative
jurisdictions’.
(ix) It is submitted that the measures against money-laundering
have evolved over the period of time. Further, FATF has taken preventive,
regulatory and monitoring steps through keeping a watch on suspicious
G or doubtful transactions by amending its Forty Recommendations in 2003
and 2012.
(x) It is further submitted that FATF assess the progress of its
members in complying with the FATF recommendations through
assessments performed annually by the individual members and through
H mutual evaluations which provides an in-depth description and analysis
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 469
INDIA & ORS. [A. M. KHANWILKAR, J.]

of a country’s system for preventing criminal abuse of the financial system, A
as well as, by focused recommendations to the country to further
strengthen its system.
(xi) It is submitted that upon evaluation, a country will be placed
immediately into enhanced follow-up if it does not comply with the FATF
technical and “big six” recommendations or has a low effectiveness B
outcome181.
(xii) It is further submitted that jurisdictions under monitoring then,
based on their commitments and compliances, are put in two types of list
viz., grey list and black list, which serve as a signal to the global financial
and banking system about heightened risks in transactions with the country C
in question which not only severely affect its international reputation but
also impose economic challenges, such as impacting the bond/credit
market of the country, impacting the banking and financial sector of the
country, affecting cross-border capital flows, especially for the trade
sector, documentary requirements for export and import payments, such
as letters of credit may become more challenging to fulfil, potentially D
raising costs and hampering business for companies engaged in trade,
adversely affecting the economy due to a lack of investment opportunities
which may further deteriorate the financial health of the country and the
country may also be deemed as a ‘high-risk country’.
(xiii) Further, the learned Solicitor General has relied on a report E
by the International Monetary Fund182 (IMF) - Anti-Money Laundering
and Combating the Financing of Terrorism (AML/CFT) Report on
the Effectiveness of the Program to state the potential economic effects
that may arise from such financial crimes, such as destabilizing capital
inflows and outflows, loss of access to international financial markets as F
a result of deterioration in the country’s reputation, difficulty in supervising
financial institutions, undermining of the stability of a country’s financial
system and adverse effect on growth of the country.
(xiv) The respondent has further relied on Council of Europe
Convention on Laundering, Search, Seizure and Confiscation of G
the Proceeds from Crime and on the Financing of Terrorism (2005)
181
(i) It has 8 or more Non-compliant NC/ Partially Compliant (PC) ratings for technical
compliance; (ii) It is rated NC/PC on any one or more of R.3, 5, 10, 11 and 20 “big six”
recommendations; or (iii) It has a low level of effectiveness for 4 or more of the 11
effectiveness outcomes.
182
For short, “IMF” H
470 SUPREME COURT REPORTS [2022] 6 S.C.R.

A to state that nations are free to choose the definition of ‘predicate
offences’ for money-laundering purposes from the list of offences given
under the Convention, for example, by providing a list of those offences,
a category offences, or by reference to offences that have a maximum
term of imprisonment of one year or more (or, for states that have
minimum thresholds for offences, those with imprisonment of a minimum
B
of six months) and to take measures which are preventive in nature.
(xv) To illustrate the global development of the approach against
money-laundering, 1991 Money Laundering Directive (‘First Directive’)
adopted by the European Union is cited which imposed obligations on
credit institutions and financial institutions in relation to customer
C identification and record-keeping, internal controls and training of staff
and mandatory reporting of suspicious transactions. The Second Directive
(2001) widened the number of institutions that fell within the scope of
reporting obligations and also expanded the range of predicate offences
for the purpose of money-laundering. EU Third Directive (2005) was
D directed to bring the EU legislation into line with the revisions to the
FATF Recommendations and further expanded the range of institutions
within its scope to include life insurance intermediaries and widened the
definition of high value dealers to capture those who accept cash payments
of €15,000 or more. A definition of ‘serious crimes’ was included that
constituted ‘predicate offences’, including all offences punishable by a
E maximum sentence of one year or more, or a minimum sentence of six
months or more (in jurisdictions where minimum sentences are applied),
as well as other specified offences including serious fraud and corruption.
It is submitted that the EU Fourth Directive on Money Laundering (2015)
aimed to improve the regulatory European framework after taking into
F account new FATF recommendations published in 2012.
(xvi) It is further submitted that the purpose of December 1988
Statement on Prevention of Criminal Use of the Banking System for the
Purpose of Money-Laundering issued by the Basel Committee was to
ensure that banks are not used to hide or launder funds acquired through
G criminal activities.
(xvii) To emphasize on the role of international cooperation to
combat money-laundering, it has been stated that the Financial Intelligence
Unit created by the Egmont Group, which is an international forum to
combat money-laundering, should serve as a national centre for receiving,
H
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 471
INDIA & ORS. [A. M. KHANWILKAR, J.]

analyzing and disseminating suspicious transaction reports, and should A
have access on a timely basis to the financial, administrative and law
enforcement information that it requires to properly undertake its functions
as per the revised FATF Recommendations.
(xviii) The Union of India has further traced the origin of the
term “money-laundering” and stated that the term arose in United States B
in 1920s, which was used by the American Police Officers with reference
to the ownership and use of launderettes by mafia groups as the
launderettes gave them a means of giving a legitimate appearance to
money derived from criminal activities. The profits gained through these
launderettes were thus termed ‘laundered’. Further, the term ‘money-
laundering’ was first used with a legal meaning in an American judgment C
of 1982 concerning the confiscation of laundered Columbian drug
proceeds.
(xix) It is further submitted that the goal of money-laundering is
to conceal the predicate offences and to ensure that the criminals ‘enjoy’
their proceeds. Further, the money-laundering takes place through ‘a D
complex process often using the latest technology, of sanitizing money in
such a manner that its true nature, source or use is concealed, thereby
creating an apparent justification for controlling or possessing the laundered
money’ in a number of intermediate steps.
(xx) It is stated that the reasons for fighting money-laundering, E
firstly, is to enable law enforcement authorities to confiscate the proceeds
of predicate criminal activities so as to undermine organized crime by
taking away the incentive for these criminal activities relatable to offences.
Secondly, to apprehend high level criminals as they themselves stay aloof
from criminal activities but do come into contact with the proceeds of F
these activities, thereby creating a ‘paper trail’. Thirdly, to prevent
criminals from destabilizing the national economy because of its corruptive
influence on financial markets and the reduction of the public’s confidence
in the international financial system and lastly to deter the money
launderers from impacting the growth rate of the world economies.
G
(xxi) It is stated that the principal sources of illegal proceeds are
collar crimes (tax, fraud, corporate crimes, embezzlement and intellectual
property crimes), drug related crimes and smuggling of goods, evasion
of excise duties, corruption and bribery (and the embezzlement of public
funds).
H
472 SUPREME COURT REPORTS [2022] 6 S.C.R.

A (xxii) To show the global impact of money-laundering, it is
submitted that the IMF and the FATF have estimated that the scale of
money-laundering transactions is between 2% and 5% of the global GDP.
It is also stated that the United Nations has recently put the figure of
money-laundering at USD 2.1 trillion or 3.6% of global GDP. Thus, the
operation of money-laundering has international dimension. It is submitted
B
that measures being taken at the national level would be inadequate,
which made it necessary to establish effective international co-operation
mechanisms to allow national authorities to co-operate in the prevention
and prosecution of money-laundering and in international ‘proceeds-
hunting’.
C (xxiii) Further, it is submitted that the measures to combat money-
laundering have evolved from post facto criminalization to preventive
approach with its stress on the reporting obligations. The definition of
“money-laundering” is now no more restricted to the elements of projection
and untainted property.
D (xxiv) It is stated that India, and its version of the PMLA, is
‘merely a cog in this international vehicle’ and as India is a signatory to
these treaties, therefore, is bound legally and morally, to adopt the best
global practices and respond to the changing needs of the times. It is,
therefore, submitted that the constitutionality of the PMLA has to be
E adjudicated from the stand point of the country’s obligations and evolving
responsibilities internationally.
(xxv) The learned Solicitor General invited our attention to the
introduction to the PMLA. Making reference to the Statement of Objects
and Reasons of the Act, he submits that the Act was enacted with the
F intent of establishing a strict and stringent framework to address the
global menace of money-laundering. Refuting the private parties’ attempt
to classify the Act as being a purely penal statute, he submits that the
PMLA is an amorphous or hybrid statute, which has regulatory, preventive
and penal aspects. Learned Solicitor General then walked us through
the various provisions of the PMLA, and submitted that categorizing the
G Act as being merely penal in nature, would not only defeat the purpose
of the Act, but would also be against the express provisions enshrined
therein.
(xxvi) It is further submitted by the Union of India that the PMLA
is a complete Code in itself, and establishes a specific separate procedure
H
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 473
INDIA & ORS. [A. M. KHANWILKAR, J.]

to the extent necessary and to be followed in proceedings under the Act. A
Laying down a brief summary of the legislative scheme of the Act, the
respondent submits that there has been a conscious legislative departure
from conventional penal law in India. Considering the peculiar nature of
money-laundering – which requires prevention, regulation and prosecution,
a completely different scheme is framed by the Legislature. The new
B
scheme introduced for dealing with the money-laundering is as a part of
India’s global responsibility in international law. While complying with
the mandate of FATF, the Legislature has very consciously ensured that
the Act becomes compliant with the Constitution of India. Referring to
the rules formulated under the PMLA, it is also submitted that the scheme
of the Act and rules framed thereunder prescribe an elaborate procedure C
to ensure complete confidentiality, and place sufficient inbuilt checks
and balances to prevent potential abuse.
(xxvii) The respondent then sheds some light on the offences
being investigated by the Directorate of Enforcement. It is submitted
that the number of cases taken up for investigation each year has risen D
from 111 cases in 2015-16 to 981 in 2020-21. Comparing the number of
cases registered annually under money-laundering legislations, it is
submitted that the low registration of cases in India is due to the robust
mechanism for risk-based selection of cases for investigation. The ED
is focusing its attention on cases involving high value of proceeds of
crime and cases involving serious predicate offence involving terror E
financing, narcotics, corruption, offence involving national security, etc.
To that effect, it is highlighted that attachment proceedings concerning
some of the fugitives, who are facing action, were done and assets worth
Rs.19,111.20 crores out of a total fraud of Rs.22,585.83 crores were
attached. Furthermore, the investigation in 57 cases of terror and Naxal F
financing has resulted in identification of proceeds of crime worth over
Rs.1,249 crores and attachment of proceeds of crime of Rs.982 crores
(256 properties) and filing of 37 prosecution complaints and conviction
of two terrorists under PMLA. Lastly, it is stated that the quantum of
proceeds of crime involved in the bunch cases under the PMLA which
are under consideration in these matters is Rs.67,104 crores. G

(xxviii) Having laid down the basic scheme of the PMLA, learned
Solicitor General proceeded to discuss the definition of “money-
laundering” as per Section 3 of the Act. Tracing its origin, it is submitted
that the term “money-laundering” finds its initial definition in Article
H
474 SUPREME COURT REPORTS [2022] 6 S.C.R.

A 3.1(b)(i)(ii) and (c)(i) of the Vienna Convention. However, the Vienna
Convention limited the predicate offences to drug trafficking offences,
and, consequently, led to the adoption of an expansive definition covering
the widest range of predicate offences under the Palermo Convention.
Building upon the definitions contained in the Vienna Convention and the
Palermo Convention, the FATF recommended member countries to
B
expand the predicate offences to include serious crimes. The same was
made binding on the member countries by way of Recommendation No.
1 and Recommendation No. 3 of the FATF. Subsequent to its enactment,
the PMLA became subject to evaluation by the FATF based on the
Forty Recommendations formulated by the FATF. In 2010, the FATF
C adopted the ‘Mutual Evaluation of the Anti-Money Laundering (AML)
and Combating the Financing of Terrorism (CFT) Regime of India
Report’183. As per Recommendation No. 1 of the Mutual Evaluation
Report, the concealment, possession, disposition and use of proceeds of
crime were not criminalized by PMLA, and India was, thus, held to be
not fully compliant. Thus, with a view to address the legal deficiency as
D
pointed out by FATF and to make it globally compliant, the Prevention of
Money-Laundering (Amendment) Act, 2012 amended Section 3 to include
these activities. In support of his argument, learned Solicitor General
draws our attention to the Statement of Object and Reasons of Prevention
of Money Laundering (Amendment) Bill, 2011184, and the parliamentary
E debates surrounding the amendment.
(xxix) Summing up the recommendations of the FATF, it is clarified
by the learned Solicitor General that even in an act of mere concealment,
mere possession or mere use of “proceeds of crime” or “activity”
connected with the proceeds of crime, per se, is an offence. In other
F words, if a person conceals the proceeds of crime, keeps it in his
possession or uses it, he is guilty of money-laundering irrespective of as
to whether he is projecting it as untainted or not. This is for the simple
reason that if a person conceals something (proceeds of crime), it is an
act committed knowingly and, thus, the question of that person projecting
that very thing either as tainted or untainted does not arise.
G
(xxx) It is further explained that the anomaly resulting from an
erroneous drafting was successfully explained during the 2013 review
of FATF by categorically contending that all expressions following the
183
For short, “Mutual Evaluation Report”
184
For short, “2011 Bill”
H
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 475
INDIA & ORS. [A. M. KHANWILKAR, J.]

term “including” are mere illustrative and independently constitute an A
offence of money-laundering without being dependent upon each other.
Thus, so long as a person knowingly becomes a party or is actually
involved in any process or activity connected with proceeds of crime,
such a person is guilty of money-laundering.
(xxxi) In order to lend further credibility to the sanctity of the B
FATF Mutual Evaluation Report and the recommendations contained
therein, the learned Solicitor General took us through the numerous
amendments incorporated in the PMLA by way of the 2012 Amendment
Act which was largely based on the recommendation of the FATF.
Special emphasis is laid on the amendments carried out in Sections 5
and 8 of the Act pursuant to FATF recommendations. It is further submitted C
that apart from the PMLA, corresponding amendments to the UAPA,
the NDPS Act and the Companies Act have been also made as a sequel
to the FATF recommendation during the Mutual Evaluation of India.
(xxxii) Learned Solicitor General submitted that the interpretation
put forth by the other side, would effectively result in granting the accused D
a license to commit the offence of money-laundering and thereafter
either conceal the proceeds of crime, or keep them in his possession, or
use them and thereby wriggle out of the legislative intent of preventing
money-laundering by raising a plea that the same were never claimed/
projected as being untainted property. Reliance is placed on Seaford E
Court Estates Ld. vs. Asher185, to point out that principles of statutory
interpretation dictate that any interpretation which leads to mischief should
be avoided and the statute should be so construed that the legislative
intent is not defeated. It is submitted that the limitations of traditional
approach to crime and in fact, highlights the importance of the evolved
approach of anti-money laundering laws in the nature of the PMLA. F
Thus, the definition of “money-laundering” as it exists, passes the muster,
both under Articles 14 and 21 of the Constitution of India.
(xxxiii) It is further submitted that the Explanation to Section 3
inserted vide Finance (No.2) Act, 2019, is merely clarificatory in nature
and elucidates the legislative intent behind the provision. Reliance is placed G
on the background/justification of the amendments to PMLA as contained
in the debate on the Finance Bill, 2019186.

185
[1949] 2 K.B. 481.
186
For short, “2019 Bill” H
476 SUPREME COURT REPORTS [2022] 6 S.C.R.

A (xxxiv) Strong emphasis is laid on the use of the word ‘any’ in
the phrase ‘any process or activity’. A careful reading of Section 3 of
the PMLA clearly provides that any process or activity which itself has
a wider meaning also includes the process or activity of concealment,
possession, acquisition, use and/or projecting, claiming it as untainted
property. Placing reliance on Shri Balaganesan Metals vs. M.N.
B
Shanmugham Chetty & Ors.187, it is submitted that all or every type/
species of process or activity connected with proceeds of crime shall be
included while interpreting the nature of process or activities connected
with the proceeds of crime.
(xxxv) It is further submitted that all and any activities relating to
C proceeds of crime including solitary – possession, concealment, use or
acquisition, constitute and offence of money-laundering, independent of
the final projection. It is submitted that such an interpretation is necessary
to effectively implement the Act in its true spirit. It is submitted that
considering the definition prevailing in India, it is necessary that any and
D all of the activity or process occurring in the definition after the word
‘including’ is considered to be merely illustrative and not restrictive.
Reliance is placed on catena of judgements188 to show that the use of
the term ‘including’ is not restrictive, but rather further enlarges the
scope of the definition.
E (xxxvi) Depending upon the facts of the case, he submits that it
is quite likely that accused of money-laundering may fall in more than
one of the above categories. Therefore, the focus of investigation should
be on identification of all the process or activity connected with proceeds
of crime including the specific processes and activities, which have been
included as illustrations in Section 3. Reliance is placed on Rohit Tandon
F
187
(1987) 2 SCC 707
188
M/s. Doypack Systems Pvt. Ltd. vs. Union of India & Ors., (1988) 2 SCC 299;
Municipal Corporation of Greater Bombay & Ors. vs. Indian Oil Corporation Ltd.,
1991 Supp (2) SCC 18; Regional Director, Employees’ State Insurance Corporation vs.
High Land Coffee Works of P.F.X. Saldanha and Sons & Anr., (1991) 3 SCC 617; Forest
G Range Officer & Ors. vs. P. Mohammed Ali & Ors., 1993 Supp (3) SCC 627; Commercial
Taxation Officer, Udaipur vs. Rajasthan Taxchem Ltd., (2007) 3 SCC 124; Associated
Indem Mechanical (P) Ltd. vs. W.B. Small Industries Development Corpn. Ltd., & Ors.
(2007) 3 SCC 607; N.D.P. Namboodripad (Dead) by LRs. vs. Union of India & Ors.,
(2007) 4 SCC 502; Oswal Fats and Oils Limited vs. Additional Commissioner
(Administration), Bareilly Division, Bareilly & Ors. (2010) 4 SCC 728; and Mamta
Surgical Cotton Industries, Rajasthan vs. Assistant Commissioner (Anti-Evasion),
H Bhilwara, Rajasthan, (2014) 4 SCC 87.
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 477
INDIA & ORS. [A. M. KHANWILKAR, J.]

vs. Directorate of Enforcement189, to bring forth the interplay between A
various aspects of Section 3 of the PMLA.
(xxxvii) The learned Solicitor General has also cited other
authorities including the observations made by this Court in Kartar Singh
vs. State of Punjab190, R. Sai Bharathi vs. J. Jayalalitha & Ors.191
and Subramanian Swamy vs. Union of India, Ministry of Law & B
Ors.192, to show that it is the sole prerogative of the Legislature to define
a “crime”, and it is this definition that should be at the center of any
challenge to a criminal provision.
(xxxviii) It is urged that the ‘projection’ of proceeds of crime
cannot be held as a mandatory requirement under Section 3 of the Act; C
otherwise, it will become impossible to punish a person for the offence
of money-laundering who “knowingly assists” or who is “knowingly a
party” or who is “actually involved” in any process or activity connected
with the proceeds of crime. It is, therefore, submitted that the correct
interpretation of the word “and” should be “or” as it was always intended
by the legislature. Further, it is stated that any interpretation contrary to D
this will render the provision meaningless. To bolster this argument,
reliance is placed on the decision of this Court in Sanjay Dutt vs. State
through C.B.I., Bombay (II)193. In that case the Court held that the
word ‘and’ should be interpreted as ‘or’ and the words “arms and
ammunition” should not be read conjunctively; otherwise, the object of E
the Act will be defeated. Therefore, on a similar line, it is argued that
mere concealment or use or possession of the proceeds of crime would
amount to an offence of money-laundering and any other interpretation
of the Section would be contrary to the India’s international obligation
and FATF recommendations. It is submitted that such interpretation of
the word “and” would not amount to judicial legislation, as such exercise F
is only done to give effect to the legislative intent by correcting ‘faultiness
of expression’194. He has relied on Joint Directors of Mines Safety vs.
M/s Tandur and Nayandgi Stone Quarries (P) Ltd. 195 to contend that
189
(2018) 11 SCC 46
190
(1994) 3 SCC 569 G
191
(2004) 2 SCC 9
192
(2016) 7 SCC 221
193
(1994) 5 SCC 410
194
Regina vs. Oakes 1959 (2) QB 350, Ishwar Singh Bindra & Ors. vs. The State of
U.P., (1969) 1 SCR 219 and Gujarat Urja Vikas Nigam Ltd. vs. Essar Power Ltd.,
(2008) 4 SCC 755
195
(1987) 3 SCC 208 H
478 SUPREME COURT REPORTS [2022] 6 S.C.R.

A the word “and” was interpreted as “or” by the Court to give effect to
the legislative intent of the Mines Act, 1952196.
(xxxix) Emphasis is also laid on the application of international
law while interpreting domestic law and it is stated that the domestic
Courts are under an obligation to give due regard to the international
B Conventions for construing domestic laws197. The learned Solicitor
General has further placed reliance on People’s Union for Civil Liberties
vs. Union of India & Anr.198 and Githa Hariharan & Anr. vs. Reserve
Bank of India & Anr.199 to submit that the international Treaties and
Conventions may be relied on by the domestic Courts so as to give
effect to the international law, if such law is not inconsistent with any
C domestic law.
(xl) While referring to Sections 4 and 5 of the Cr.P.C., it is urged
that Cr.P.C is a generic procedural law with no universal application
over any other special criminal or penal legislations. It is stated that the
Legislature is competent to provide a different procedure than that of
D Cr.P.C, provided that the special procedure has adequate constitutional
safeguards. Therefore, it is submitted that the Parliament has provided a
distinct procedure under the PMLA which is also manifested from Sections
65 and 71 of the PMLA. It is stated that due to the peculiar nature of the
offence of money-laundering, the Legislature in its wisdom has provided
E a special procedure for investigation and trial of the offence under the
Act. However, it is submitted that where the application of Cr.P.C is not
expressly or by necessary implication excluded, the provisions of Cr.P.C
will apply in light of Section 65 of PMLA as well.
(xli) It is argued that the PMLA is a complete Code in itself,
F which creates a new offence and provides separate machinery to the
extent necessary for dealing with it. Therefore, the provisions of PMLA
would override the provisions of the Cr.P.C. in relation to such express
dispensation in view of Section 71 of this (PMLA) Act. In support of
this argument, reliance is placed on Rohtas vs. State of Haryana &
Anr.200, Ajmer Singh & Ors. vs. Union of India & Ors.201, Usmanbhai
G 196
For short, “Mines Act”
197
Pratap Singh vs. State of Jharkhand & Anr., (2005) 3 SCC 551 and National Legal
Services Authority vs. Union of India & Ors., (2014) 5 SCC 438
198
(2005) 2 SCC 436
199
(1999) 2 SCC 228
200
(1979) 4 SCC 229
H 201
(1987) 3 SCC 340
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 479
INDIA & ORS. [A. M. KHANWILKAR, J.]

Dawoodbhai Memon & Ors. vs. State of Gujarat 202, Central Bureau A
of Investigation vs. State of Rajasthan & Ors.203, State (Union of
India) vs. Ram Saran204, Mahmadhusen Abdulrahim Kalota Shaikh
(2) vs. Union of India & Ors.205, Lalita Kumari vs. Govt. of Uttar
Pradesh & Ors.206, Gautam Kundu vs. Directorate of Enforcement
(Prevention of Money-Laundering Act), Government of India 207 and
B
Union of India & Ors. vs. Chandra Bhushan Yadav208.
(xlii) Next, it is argued that wording of Section 71 must be given
effect to. It is asserted that the insertion of a non-obstante clause in a
statute has the effect of overriding anything inconsistent or repugnant
thereto209. It is stated that this Court in Deep Chand vs. The State of
Uttar Pradesh & Ors.210 laid down some tests for determining whether C
any inconsistency or repugnancy exists between two statutes. The Court
held that it has to be seen whether the provisions are in direct conflict
with each other; whether the legislative intent was to lay down an
exhaustive Code on the subject matter and thereby replace the previous
law and whether the two legislations operate in the same field. D
(xliii) It is argued that when a statute has expressly provided a
repealing section then the maxim ‘est exclusio alterius’ (the express
intention of one person or thing is the exclusion of another) will apply,
thereby application of existing statute is excluded in case of any
inconsistency between the two211. E
(xliv) Reliance has also been placed on Innoventive Industries
Limited vs. ICICI Bank & Ors.212, wherein in respect of a similar
provision in the Insolvency and Bankruptcy Code, 2016213, it was held
that the provisions of the stated Code ought to be given primacy over
other statutes. It is, therefore, submitted that the procedure under the F
202
(1988) 2 SCC 271
203
(1996) 9 SCC 735
204
(2003) 12 SCC 578
205
(2009) 2 SCC 1
206
(2014) 2 SCC 1 (also at Footnote No.13)
207
(2015) 16 SCC 1 G
208
(2020) 2 SCC 747
209
Aswini Kumar Ghose & Anr. vs. Arabinda Bose & Anr, AIR 1952 SC 369 and
Central Bank of India vs. State of Kerala & Ors., (2009) 4 SCC 94
210
(1959) Supp. 2 SCR 8 : AIR 1959 SC 648 (also at Footnote No.69)
211
Kishorebhai Khamanchand Goyal vs. State of Gujarat & Anr., (2003) 12 SCC 274
212
(2018) 1 SCC 407
213
For short, “IBC” H
480 SUPREME COURT REPORTS [2022] 6 S.C.R.

A Cr.P.C to the extent of inconsistent proviso in PMLA, stands excluded
by way of Section 71 of the Act by necessary implication. The doctrine
of ‘generalia specialibus non derogant’, has also been invoked, which
means that general law yields to special law. Reliance is placed on the
decision of House of Lords in Elizabeth Warburton vs. James
Loveland214. It is submitted that the said decision has been followed in
B
Patna Improvement Trust vs. Smt. Lakshmi Devi & Ors.215, The
South India Corporation (P) Ltd. vs. The Secretary, Board of
Revenue, Trivandrum & Anr.216, Anandji Haridas and Co. (P) Ltd.
vs. S.P. Kasture & Ors.217, Maharashtra State Board of Secondary
and Higher Secondary Education & Anr. vs. Paritosh
C Bhupeshkumar Seth & Ors.218, Usmanbhai Dawoodbhai Memon219
and Ethiopian Airlines vs. Ganesh Narain Saboo220.
(xlv) It is then submitted that the controversies regarding offence
under the Act being cognizable or non-cognizable is irrelevant because
the definitions of the cognizable offence under Section 2(c) and non-
D cognizable offence under Section 2(l) of the Cr.P.C. are clearly
inapplicable in the case of ED officers who are not police officers 221, as
these two definitions only apply to “police officer”. Secondly, the
application of these two definitions is restricted to the offences mentioned
under the First Schedule of the Cr.P.C. and the offence under the Act
(PMLA) is clearly not an offence specified therein. It is submitted that
E even under Part II of the First Schedule, the offence under the Act
would be cognizable. Further, the purpose of categorizing an offence on
the basis of cognizable and non-cognizable offence is to indicate whether
a police officer can arrest a person without warrant. The Act under
Section 19 confers unequivocal power of arrest without warrant.
F Therefore, the question as to whether an offence of money-laundering
is cognizable or non-cognizable, is irrelevant.
(xlvi) It is submitted that from the very inception of the PMLA,
the offences were made cognizable under Section 45 of the Act.
However, the word ‘cognizable’ was causing unnecessary confusion, as
G
214
(1831) 2 Dow & Cl 480
215
1963 (Supp.) 2 SCR 812
216
(1964) 4 SCR 280
217
AIR 1968 SC 565
218
(1984) 4 SCC 27
219
Supra at Footnote No.202
H 220
(2011) 8 SCC 539
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 481
INDIA & ORS. [A. M. KHANWILKAR, J.]

it seemed that offence being cognizable, the jurisdictional police officers A
are also empowered to investigate the offence and submit chargesheet
after the investigation. Although such confusion had no basis as only the
ED officers have been empowered to conduct investigation, who are
not police officers under the Act, and after the investigation only a
complaint could be filed by him before the Special Court. To remove this
B
anomaly, the word ‘cognizable’ was deleted and the definition of
investigation was inserted under Section 2(1)(na) of the Act. In this
regard, the learned Solicitor General has cited relevant extracts of speech
of then Finance Minister while introducing 2019 amendment.
(xlvii) It is submitted that the Legislature had no intention to make
the offence under the PMLA to be non-cognizable which is manifest C
from the unamended marginal note222 of Sections 19 and 45 of the Act.
It is further stated that Section 19 of the PMLA has a special purpose
with regard to the peculiar nature of the offence. It is then submitted
that the Legislature has deliberately avoided the provision of registration
of FIR, supplying the copy of FIR to the Magistrate and requiring the D
authorities to obtain arrest warrant because due to the nature of offence,
there are high chances that the accused may eliminate the traces of
offence if he had any prior notice of the investigation. The same view
has been taken by the Jharkhand High Court in Hari Narayan Rai vs.
Union of India & Anr.223, Punjab & Haryana High Court at Chandigarh
in Karam Singh & Ors. vs. Union of India & Ors.224, Bombay High E
Court in Chhagan Chandrakant Bhujbal vs. Union of India & Ors.225,
Delhi High Court in Vakamulla Chandrashekhar vs. Enforcement
Directorate & Anr. 226, Virbhadra Singh & Anr. vs. Enforcement
Directorate & Anr.227, Moin Akhtar Qureshi vs. Union of India &
Ors.228 and this Court in Directorate of Enforcement vs. Vakamulla F
Chandrashekhar229. However, in W.P. (Crl.) No. 363 of 2018 and Crl.
M.A. No. 2151 of 2018 i.e., Rajbhushan Omprakash Dixit vs. Union
221
Romesh Chandra Mehta (supra at Footnote No.119)
222
Bhagirath vs. Delhi Administration, (1985) 2 SCC 580 and Eastern Coalfields Limited
vs. Sanjay Transport Agency & Anr., (2009) 7 SCC 345
223
G
2010 SCC OnLine Jhar 475
224
2015 SCC OnLine P&H 19739
225
2016 SCC OnLine Bom 9938
226
2017 SCC OnLine Del 12810
227
2017 SCC OnLine Del 8930
228
vide order dated 01.12.2017 in W.P. (Crl.) No.2465/2017
229
Order dated 04.01.2018 in SLP (Crl.) Diary No. 36918/2017 H
482 SUPREME COURT REPORTS [2022] 6 S.C.R.

A of India & Anr., the Division Bench of the High Court took a different
view and referred the matter to a larger bench. It is submitted that the
said order is contrary to the decisions of this Court in Serious Fraud
Investigation Office vs. Rahul Modi & Anr.230 and of the High Courts.
(xlviii) Further, the binary created by the private parties of an
B offence being cognizable or non-cognizable is immaterial in the case of
PMLA, which is a Code in itself and provides a special procedure for
investigation. It is argued that the compartmentalization of the offence
under the Act is pointless because if the offence is held to be cognizable,
then it will be mandatory to register an FIR. However, under the scheme
of the PMLA, only an ECIR is registered, which cannot be equated with
C an FIR and it is only for administrative convenience for identification of
each case.
(xlix) It is argued that the decision of this Court in K.I. Pavunny
vs. Assistant Collector (HQ), Central Excise Collectorate, Cochin 231,
squarely applies to the present case, wherein it had been held that Chapter
D XII of the Cr.P.C will not apply during the investigations under the 1962
Act.
(l) It is submitted that various High Courts have already answered
the question under consideration and held that the offence under the Act
is cognizable, so far as power of arrest without warrant is concerned
E and the ECIR registered under the Act cannot be equated with an FIR. 232
Strong reliance has been placed upon the decisions in Virbhadra Singh233
and Dalmia Cement (Bharat) Limited & Anr. vs. Assistant Director
of Enforcement Directorate234.
(li) It is submitted that the nature of the amendment can only be
F inferred from the scheme of the Act prior to the amendment and
subsequent to the amendment, and it is the substance rather than the
form which determines the nature of the Act. To lend support to his
submissions, learned Solicitor General has relied on Zile Singh vs. State

G
230
(2019) 5 SCC 266
231
(1997) 3 SCC 721
232
Karam Singh (supra at Footnote No.224) and Chhagan Chandrakant Bhujbal (supra
at Footnote No.225)
233
Supra at Footnote No.227
234
H 2016 SCC OnLine Hyd 64
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 483
INDIA & ORS. [A. M. KHANWILKAR, J.]

of Haryana & Ors. 235 and Commissioner of Income Tax I, A
Ahmedabad vs. Gold Coin Health Food Private Limited236.
(lii) It is argued that the amendment of Section 45 only clarifies
that the offence under the Act is cognizable in nature so far as the
power of arrest without warrant is concerned. It is further submitted
that the amendment being clarificatory in nature would operate B
retrospectively. To bolster this argument, reliance has been placed on
Commissioner of Income Tax, Bhopal vs. Shelly Products & Anr.237,
Gurcharan Singh vs. Directorate of Revenue Intelligence 238,
Assistant Electrical Engineer vs. Satyendra Rai & Anr. 239 ,
Commissioner of Income Tax (Central)-I, New Delhi vs. Vatika
Township Private Limited 240 , State Bank of India vs. V. C
Ramakrishnan & Anr.241, and Union of India & Ors. vs. Mudrika
Singh 242.
(liii) It is then submitted that there are adequate safeguards under
Section 19 of the PMLA, which makes the provision Constitution-
compliant. It is submitted that firstly, the power of arrest under Section D
19 can be exercised only by a Director, Deputy Director, Assistant
Director or any other police officer authorized in this behalf by the Central
Government as opposed to Cr.P.C., where the power of arrest can be
exercised by any police officer without a warrant even on the basis of
reasonable suspicion, as per Section 41 of the Cr.P.C. The Director, E
who is the head of ED, is appointed by a neutral process mentioned
under Section 25 of Central Vigilance Commission Act, 2003 243.
Therefore, only persons of particular rank who are appointed by statute
have the power to arrest any person under Section 19 of the PMLA.
Secondly, there must be material in possession with the Authority before
the power of arrest can be exercised as opposed to Cr.P.C which gives F
the power of arrest to any police officer and the officer can arrest any
person merely on the basis of a complaint, credible information or

235
(2004) 8 SCC 1
236
(2008) 9 SCC 622
237
(2003) 5 SCC 461
G
238
(2008) 17 SCC 28
239
(2014) 4 SCC 513
240
(2015) 1 SCC 1 (also at Footnote No.127)
241
(2018) 17 SCC 394
242
2021 SCC OnLine SC 1173
243
For short, “CVC Act” H
484 SUPREME COURT REPORTS [2022] 6 S.C.R.

A reasonable suspicion against such person. Thirdly, there should be reason
to believe that the person being arrested is guilty of the offence punishable
under PMLA in contrast to the provision in Cr.P.C., which mainly requires
reasonable apprehension/suspicion of commission of offence. Also, such
reasons to believe must be reduced in writing. Fifthly, as per the
constitutional mandate of Article 22(1), the person arrested is required
B
to be informed of the grounds of his arrest. It is submitted that the
argument of the other side that the accused or arrested persons are not
even informed of the case against them, is contrary to the plain language
of the Act, as the Act itself mandates that the person arrested is to be
informed of the ground of his arrest. Sixthly, the Authority arresting the
C person is required to forward a copy of the order of arrest and material
in its possession to the Adjudicatory Authority in a sealed envelope, which
is required to be retained for a period of ten (10) years as per the
Prevention of Money Laundering [the Forms and Manner of Forwarding
a Copy of Order of Arrest of a Person along with the Material to the
Adjudicating Authority and its Period of Retention] Rules, 2005.
D
Seventhly, it is stated that the person arrested is required to be produced
before the Special Court or the Magistrate within twenty-four hours of
his arrest. Thus, the competent Court can look at the material in
possession of the Director and the reasons formed by him to believe that
the person is guilty of the offence under the PMLA, so as to satisfy
E itself of the legality of his arrest.
(liv) It is submitted that as there is nothing contrary in the PMLA
to Section 167 of Cr.P.C., therefore, the provisions of remand under
Section 167 Cr.P.C. would also apply and any further detention of the
arrested person would only be allowed by the competent Court and, for
F the same reasons, Chapter V of the Cr.P.C. would also apply in case of
arrest made under the PMLA.
(lv) Further, it is submitted that the guidelines issued in Arnesh
Kumar vs. State of Bihar & Anr.244 will have no application for the
purpose of arrest under PMLA. The guidelines in the said decision were
G issued to avoid misuse of the provision of arrest, while in the case of the
PMLA, there is already a higher threshold specified for arresting any
person. Therefore, there is no possibility of arbitrary arrest under the
PMLA. Whereas, since the decision to arrest is taken by high official

244
H (2014) 8 SCC 273
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 485
INDIA & ORS. [A. M. KHANWILKAR, J.]

after complying with threshold requirements in law, there will be A
presumption that he has acted bona fide.
(lvi) It is stated that considering the nature and gravity of the
offence, the serving of notice to a person as prescribed under Section
41A of Cr.P.C. would materially interfere with fair investigation being
done by high official bestowed with such responsibility and make the B
investigation redundant.
(lvii) Further, it is submitted that the contention of the private
parties that the power under Section 19 of PMLA can only be invoked
after a complaint is filed, is devoid of any merits. It is submitted that in a
complaint case under the PMLA, a complaint is similar to the police C
report filed under Section 173 of the Cr.P.C, which makes the arrest a
part of investigation which would always be prior to filing of the complaint
under Section 44 or further complaint as contemplated in Explanation in
Section 44. Further, the proviso to Section 44(1)(b) which provides for
filing of a closure report before the Special Court, if after investigation
no offence of money-laundering is made out, makes it absolutely clear D
that the complaint is to be filed after the conclusion of investigation.
(lviii) It is submitted that Section 19 of PMLA is pari materia to
Section 35 of the FERA and Section 103 of the 1962 Act and their
validity has been upheld by this Court. Reliance is placed on Romesh
Chandra Mehta245 to urge that the filing of complaint, after the E
investigation, is not a necessary prerequisite before arresting the person.
(lix) Reliance is then placed on the decision of this Court in Union
of India vs. Padam Narain Aggarwal & Ors.246, wherein the Court
examined the power to arrest under Section 104 of 1962 Act. Relying on
the decision, it was stated that the power to arrest is statutory in character F
and cannot be interfered with and can only be exercised on objective
considerations free from whims, caprice or fancy of the officer. The
law takes due care to ensure individual freedom and liberty by laying
down norms and providing safeguards so that the authorities may not
misuse such power. It is submitted that the requirement of “reason to G
believe” and “recording of such reasons in writing” prevent arbitrariness
and makes the provision compliant with Article 14. This is reinforced
from the fact that only 313 arrests have been made under the PMLA in
17 years of operations of the PMLA.
245
Supra at Footnote No.119
246
(2008) 13 SCC 305 H
486 SUPREME COURT REPORTS [2022] 6 S.C.R.

A (lx) Canadian judgment in Gifford vs. Kelson247 was also relied
on to state that “reason to believe” conveys conviction of the mind founded
on evidence regarding the existence of a fact or the doing of an act,
therefore, is of a higher standard than mere suspicion. Reliance has
been further placed on Premium Granites & Anr. vs. State of T.N. &
Ors.248 to urge that the requirement of giving reasons for exercise of the
B
power by itself excludes chances of arbitrariness. The learned Solicitor
General has further relied on the decision in M/s. Sukhwinder Pal Bipan
Kumar & Ors. vs. State of Punjab & Ors.249 to state that there is a
presumption that the discretion will not be abused where the discretion
is vested with a high-ranking officer. Lastly, reliance was placed on
C Ahmed Noormohmed Bhatti vs. State of Gujarat & Ors. 250 and
Manzoor Ali Khan vs. Union of India & Ors. 251 to urge that mere
possibility of abuse by the authority, which is vested with the discretion
to exercise the power, cannot be a ground to render the provision
unconstitutional.
D (lxi) It is then submitted that the quantum of punishment cannot
be the sole basis for determining the gravity of offence. The Legislature
has several statutory mechanisms to bring about deterrence effect so as
to prevent the commission of an offence and the quantum of punishment
is only one such mechanism. It is further submitted that a stringent
condition of bail is relatable to the object of creating a deterrent effect
E on persons who may commit the offence of money-laundering which is
also manifest in the Preamble of the Act. To give effect to the international
standards of preventing money-laundering prescribed by FATF and other
international treaties, stringent bail conditions are necessary and the
Legislature has provided enough safeguards under Section 19 so as to
F balance the rights of the accused and to protect the interest of the
investigation as well. It is urged that the legislative policy of the country
has consistently treated money-laundering as a serious offence affecting
the microeconomic strength of the country. Further, it is stated that the
twin conditions under Section 45 of the PMLA are reasonable from the
stand point of the accused and his rights under Article 21 of the
G Constitution, which provides an objective criteria and intelligible differentia,
247
(1943) 51 Man. R 120
248
(1994) 2 SCC 691
249
(1982) 1 SCC 31
250
(2005) 3 SCC 647
251
H (2015) 2 SCC 33
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 487
INDIA & ORS. [A. M. KHANWILKAR, J.]

hence, does not violate Article 14 of the Constitution. Further it is submitted A
that there are only some issues on which the international community is
building consensus and money-laundering is one of them, others being
terrorism, drug related offences and organized crime and the twin
conditions are provided in all three categories of laws by the Legislature.
(lxii) Relying on international Conventions, such as Vienna B
Convention, Palermo Convention and FATF Recommendations, it is urged
that the same concern has been expressed by the global community,
which is reflected in all the above-mentioned Conventions. It is further
submitted that Section 45 of the PMLA fulfils the mandate of international
Conventions as the implementation of the PMLA is monitored
internationally and is linked to India’s international obligations. C

(lxiii) It is submitted that in furtherance of the legitimate State
interest, departure from ordinary criminal procedure has been made under
the PMLA. Reliance has been placed on A.K. Roy vs. Union of India
& Ors.252 to urge that that ‘the liberty of the individual has to be
subordinated, within reasonable bounds, to the good of the people’. D
Further, the twin conditions are not novel or draconian in nature as they
are also present in other numerous special enactments for the welfare
of the people and they not only provide deterrent effect but also tackle
the offence of money-laundering. It is submitted that this Court in Nikesh
Tarachand Shah253 has not reckoned this crucial aspect. It is submitted E
that the length of punishment is not the only indicator of the gravity of
the offence and private parties have wrongly argued that the twin
conditions cannot be made applicable in a legislation which carry a
punishment of only seven (7) years. Gravity of offence is to be judged
on a totality of factors, especially keeping in mind the background in
which the offence came to be recognized by the Legislature in the specific F
international context. To buttress this submission, the learned Solicitor
General has relied on State of Gujarat vs. Mohanlal Jitamalji Porwal
& Anr. 254 , Y.S. Jagan Mohan Reddy vs. Central Bureau of
Investigation 255 , Nimmagadda Prasad vs. Central Bureau of
Investigation256, Gautam Kundu257, and State of Bihar & Anr. vs. G
252
(1982) 1 SCC 271
253
Supra at Footnote No. 3
254
(1987) 2 SCC 364
255
(2013) 7 SCC 439
256
(2013) 7 SCC 466
257
Supra at Footnote No.207 H
488 SUPREME COURT REPORTS [2022] 6 S.C.R.

A Amit Kumar alias Bachcha Rai258. Further, reliance has been placed
on Mohd. Hanif Quareshi & Ors. vs. State of Bihar & Ors.259 to
state that the seriousness of an offence and its impact on society is the
subject matter of legislative wisdom and Legislature understands and
correctly appreciates the needs of its own people.
B (lxiv) It is submitted that persons involved in the offence of money-
laundering are influential, intelligent and resourceful and the crime is
committed with full pre-meditation, which ensures that the offence is
not detected and even if it is detected, investigation agency cannot trace
the evidence. Further, it is stated that the offence is committed with the
help of advanced technology so as to conceal the transaction, which
C makes the stringent bail conditions justified. Twin conditions of bail under
Section 45 protect the interests of the accused as well as that of the
prosecution. Reliance has been placed on Talab Haji Hussain vs.
Madhukar Purshottam Mondkar & Anr.260, to state that the fair trial
must not only be fair to the accused but also be fair to the prosecution,
D so that a person guilty of the offence may not be acquitted.
(lxv) It is submitted that in case of offence of money-laundering,
mere routine conditions which ensure presence of the accused during
trial or protect the evidence, are not enough because of the trans-border
nature of the offence of money-laundering and influence which may be
E exercised by the accused. An accused can anonymously remove the
money trail using the technology, which is available today so as to make
the investigation infructuous. Therefore, even deposit of the passport of
the accused may not deter the accused from fleeing the course of justice
or to eliminate the evidence.

F (lxvi) It is submitted that economic offences constitute a class
apart and need to be visited with different approach in the matter of bail.
Further, the fact that the economic offences are considered as a different
class of offences, recognizes the grave and serious nature of the offence
with deep rooted conspiracy, as they involve huge loss of public funds,
thus, affecting the economy of the country as a whole. It is submitted
G that the Court while granting bail must keep in mind the nature of
accusations, the nature of evidence in support thereof, the severity of
the punishment which conviction will entail, the character of the accused,
258
(2017) 13 SCC 751
259
AIR 1958 SC 731
H 260
(1958) SCR 1226
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 489
INDIA & ORS. [A. M. KHANWILKAR, J.]

circumstances which are peculiar to the accused, reasonable possibility A
of securing the presence of the accused, reasonable apprehension of
the witnesses being tampered with and the larger interests of the public/
State. It is submitted that granting or refusal to grant bail depends on the
nature of offence, needs of investigation, status of the accused and other
factors. The Legislature, being aware of the need of the day, is competent
B
to provide a special procedure for grant of bail. It would be wrong to say
that the Court has unfettered discretion in granting or refusal to grant
the bail. It is true that the Court exercises discretion while granting or
refusing bail, but that exercise of power has to be within the legislative
framework. It is stated that the requirement of the Court being satisfied
that the “accused is not guilty of an offence” is not a novel legislative C
device. Section 437 of Cr.P.C. also imposes a similar condition261.
Moreover, the twin conditions have been provided for by the Parliament
in numerous other enactments as well. It is submitted that the Parliament
is competent to classify offences and offenders in different categories.
The Parliament has classified the offence of money-laundering as a
D
separate class of offence from ordinary criminal laws. The said
classification was necessary because the PMLA was framed in a specific
international context, providing for separate and special architecture for
investigation.
(lxvii) The offence of money-laundering is a new offence created
by the PMLA, which has a high threshold of arrest as given under Section E
19, which itself justifies high threshold for grant of bail. Nature of the
offence being peculiar, makes manner of investigation far more difficult
than in ordinary penal offences. The PMLA is a complete Code in itself,
which creates a separate machinery to tackle the social menace, having
adequate safeguards. It is submitted that Legislature has on numerous F
occasions made departures from the ordinary penal and procedural laws
as and when the situation arrived. The classification of the offence on
261
437. When bail may be taken in case of non- bailable offence.— (1) When any
person accused of, or suspected of, the commission of any non-bailable offence is
arrested or detained without warrant by an officer in charge of a police station or
appears or is brought before a Court other than the High Court or Court of Session, he
G
may be released on bail, but—
(i) such person shall not be so released if there appear reasonable grounds for
believing that he has been guilty of an offence punishable with death or
imprisonment for life;
…..
(emphasis supplied) H
490 SUPREME COURT REPORTS [2022] 6 S.C.R.

A the basis of public policy and underlying purpose of the Act cannot be
said to be unreasonable or arbitrary. Therefore, the Parliament is fully
competent to deal with special type of cases by providing a distinct and
different procedure which in the circumstances, cannot be said to be
unreasonable. Therefore, it is submitted that a different standard for bail
can be provided in an offence which serves a special purpose. To buttress
B
these submissions, reliance has been placed on Kathi Raning Rawat
vs. State of Saurashtra262, Kedar Nath Bajoria & Anr. vs. The State
of West Bengal 263, Special Reference No.1 of 1978264 and Kartar
Singh 265.
(lxviii) Further reliance has been placed on Asbury Hospital vs.
C Cass County266, Chiranjit Lal Chowdhuri vs. The Union of India &
Ors.267 and The State of Bombay & Anr. vs. F.N. Balsara268 to urge
that ‘the principle of equality does not mean that every law must have
universal application for all persons who are not by nature, attainment or
circumstances in the same position and the varying needs of different
D classes of persons often require separate treatment’. Therefore, the
State has power to classify persons on the basis of intelligible differentia
and object which the legislation seeks to achieve. It is submitted that the
classification of the offence of PMLA and the stringent conditions of
bail under Section 45 are, therefore, not arbitrary and are based on
intelligible differentia in line with the object of the Act which is to bring
E about deterrence effect.
(lxix) Learned Solicitor General has further relied on Articles 38,
39(b), 39(c) and 51(b) & 51(c) of the Constitution to state that the
objective of the Act is to fulfil the mandate of the Constitution, enshrined
in the Directive Principles of State Policy. Reliance has been further
F placed on Workmen of Meenakshi Mills Limited & Ors. vs.
Meenakshi Mills Ltd. & Anr. 269, Papnasam Labour Union vs.
Madura Coats Ltd. & Anr.270 and M.R.F. Ltd. vs. Inspector Kerala

262
AIR 1952 SC 123
263
AIR 1953 SC 404
G 264
(1979) 1 SCC 380
265
Supra at Footnote No.190
266
326 US 207 [1945]
267
(1950) SCR 869
268
(1951) SCR 682
269
(1992) 3 SCC 336
270
H (1995) 1 SCC 501
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 491
INDIA & ORS. [A. M. KHANWILKAR, J.]

Govt. & Ors.271 to state that the Parliament can impose restriction which A
has the effect of promoting or effectuating a directive principle and such
restriction can be safely presumed to be a reasonable restriction in public
interest. Reliance has also been placed on State of Karnataka & Anr.
vs. Shri Ranganatha Reddy & Anr.272 and State of Tamil Nadu and
Ors. vs. L. Abu Kavur Bai and Ors.273, to state that the Article 39(b)
B
of the Constitution shall be given a broad meaning.
(lxx) It is submitted that the mandatory twin conditions of bail
contained in Section 45 of the PMLA prescribe a reasonable restriction
which has a reasonable nexus with the object sought to be achieved viz.,
creating deterrence from committing the offence of money-laundering
and, therefore, cannot be treated as arbitrary or unreasonable or violative C
of Article 14 or 21 of the Constitution. Reliance has been placed on
Kartar Singh274 and Ranjitsing Brahmajeetsing Sharma vs. State of
Maharashtra and Anr.275, wherein the similar twin conditions were
upheld by this Court in TADA Act and MCOCA respectively, to contend
that the twin conditions provided under PMLA are not unreasonable so D
as to violate Article 21 of the Constitution.
(lxxi) It is submitted that the limitations on the grant of bail is in
addition to those provided under Cr.P.C. Reliance has also been placed
on Collector of Customs, New Delhi vs. Ahmadalieva Nodira276 to
urge that the satisfaction contemplated under Section 45 regarding the E
accused being not guilty has to be based upon “reasonable grounds”,
which means something more than prima facie grounds. Further reliance
has been placed on Supdt., Narcotics Control Bureau, Chennai vs.
R. Paulsamy 277 , Union of India vs. Gurcharan Singh 278 ,
Ahmadalieva Nodira279, Union of India vs. Abdulla280, Ranjitsing
Brahmajeetsing Sharma281, Narcotics Control Bureau vs. Karma F

271
(1998) 8 SCC 227
272
(1977) 4 SCC 471
273
(1984) 1 SCC 515
274
Supra at Footnote No.190
275
(2005) 5 SCC 294 (also at Footnote No.53)
G
276
(2004) 3 SCC 549
277
(2000) 9 SCC 549
278
(2003) 11 SCC 764
279
Supra at Footnote No.276
280
(2004) 13 SCC 504
281
Supra at Footnote No.275 (also at Footnote No.53) H
492 SUPREME COURT REPORTS [2022] 6 S.C.R.

A Phuntsok & Ors.282, Chenna Boyanna Krishna Yadav vs. State of
Maharashtra & Anr.283, N.R. Mon vs. Mohd. Nasimuddin284, State
of Maharashtra vs. Bharat Shanti Lal Shah and Ors.285, Union of
India vs. Rattan Mallik alias Habul286, The State of Maharashtra
vs. Vishwanath Maranna Shetty287, Union of India vs. Niyazuddin
Sk. & Anr. 288 , Satpal Singh vs. State of Punjab 289, National
B
Investigation Agency vs. Zahoor Ahmad Shah Watali290 and Serious
Fraud Investigation Office vs. Nittin Johari & Anr.291 to urge that
the twin conditions with regard to the grant of bail are mandatory in
nature, as has already been held by the Courts in aforementioned cases.
(lxxii) Reliance has also been placed on Modern Dental College
C and Research Centre & Ors. vs. State of Madhya Pradesh & Ors.292
to urge that the reasonability of a statute should be seen from the point
of view of general public and not from the point of view of a person on
whom the restrictions are imposed. Reliance has also been placed on
Bell, Attorney General vs. Wolfish293 to argue that detention of a person
D does not mean that he has been punished by the government. Decision
in Schall vs. Martin294, to state that the legislative intent must be looked
at in order to determine whether the restriction on liberty constitutes
‘impermissible punishment or permissible regulation’.
(lxxiii) Learned Solicitor General has argued that the decision in
E Nikesh Tarachand Shah 295 was based on the fact that the twin
conditions of bail, as per the unamended provision, would apply to cases
of bail in respect of both the predicate offence and also the offence of
money-laundering. It is submitted that the reasons due to which the Court
in Nikesh Tarachand Shah 296 held the twin conditions to be
282
(2005) 12 SCC 480
F 283
(2007) 1 SCC 242
284
(2008) 6 SCC 721
285
(2008) 13 SCC 5
286
(2009) 2 SCC 624
287
(2012) 10 SCC 561
288
(2018) 13 SCC 738
289
G (2018) 13 SCC 813
290
(2019) 5 SCC 1
291
(2019) 9 SCC 165
292
(2016) 7 SCC 353
293
441 US 520 (1979)
294
467 US 253 (1984)
295
Supra at Footnote No. 3
H 296
Supra at Footnote No. 3
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 493
INDIA & ORS. [A. M. KHANWILKAR, J.]

unconstitutional, are firstly because the unamended provision had a A
classification which was based on sentencing of the scheduled offence,
and secondly, because the applicability of the twin conditions was
restricted only to a particular class of offences within the PMLA i.e.,
offences punishable for a term of imprisonment of more than three (3)
years under Part A of the Schedule and not to all the offences under the
B
PMLA. It is stated that both the above defects have been removed by
the amendment post Nikesh Tarachand Shah297. Therefore, the basis
and the element of arbitrariness, as pointed out by the Court in Nikesh
Tarachand Shah298, has been taken away by the Parliament so as to
cure the defect.
(lxxiv) It is submitted that, concededly, a law which is struck C
down by the Court due to legislative incompetence can never be made
operative by the logic of curing the defect. However, if a law has been
struck down by the Court as being violative of Part III of the Constitution,
then the Legislature has the power to cure the reason or defect which
persuaded the Constitutional Court to hold it to be violative of Part III of D
the Constitution and, thereafter, the provision will be back in its full force,
as the declaration by the Constitutional Court of the provision being
unconstitutional mainly results in making the provision inoperative and
unenforceable while the provision remains on the statute book. To buttress
this submission reliance has been placed on Patel Gordhandas
Hargovindas & Ors. vs. The Municipal Commissioner, Ahmedabad E
& Anr.299, Shri Prithvi Cotton Mills Ltd. & Anr. vs. Broach Borough
Municipality & Ors.300, Bhubaneshwar Singh & Anr. vs. Union of
India & Ors.301, Comorin Match Industries (P) Ltd. vs. State of
T.N.302, Indian Aluminium Co. & Ors. vs. State of Kerala & Ors.303,
Bakhtawar Trust & Ors. vs. M.D. Narayan & Ors. 304, State of F
Himachal Pradesh vs. Narain Singh305, Goa Foundation & Anr. vs.
State of Goa & Anr. 306 and Cheviti Venkanna Yadav vs. State of
Telangana & Ors.307.
297
Supra at Footnote No. 3
298
Supra at Footnote No. 3
299
AIR 1963 SC 1742 G
300
(1969) 2 SCC 283
301
(1994) 6 SCC 77
302
(1996) 4 SCC 281
303
(1996) 7 SCC 637
304
(2003) 5 SCC 298
305
(2009) 13 SCC 165
306
(2016) 6 SCC 602
307
(2017) 1 SCC 283
H
494 SUPREME COURT REPORTS [2022] 6 S.C.R.

A (lxxv) It is further submitted that the judgment of this Court in
Nikesh Tarachand Shah308 is per incuriam, as the Court failed to
take note of the judgment of a larger Bench in Rohit Tandon309, which
clearly indicated the mandatory nature and reasonability of twin
conditions. Reliance has been placed on Behram Khurshed Pesikaka
vs. The State of Bombay310, M.P.V. Sundararamier & Co. vs. The
B
State of Andhra Pradesh & Anr.311 and F.N. Balsara312 to state that a
law which is not within the competence of the Legislature is a nullity.
However, a law which is within the competence of the Legislature but
repugnant to the constitutional prohibitions, is only unenforceable and if
the prohibitions are removed, then the law will become effective without
C any need of re-enactment of the provision. It is submitted that the Court
in Deep Chand313 was concerned with the doctrine of eclipse and the
observation of the Court that such eclipse cannot operate retrospectively
and cannot save the validity of the law, was said in a different context.
Further reference has been laid on Jagannath, etc. etc. vs. Authorised
Officer, Land Reforms & Ors. etc.314, to submit that the Court in this
D
case negated a similar argument made on the basis of Deep Chand315.
It is submitted that the contentions of the private parties based on the
decision in State of Manipur316 are totally misconceived, as the Court
in that case neither had the intent nor had the occasion to decide the
issue of taking away the basis after declaration of unconstitutionality.
E (lxxvi) It is, thus, submitted that the law laid down in Nikesh
Tarachand Shah317 is per incuriam. For, it failed to take notice of the
international background of the PMLA. Further, the judgment completely
ignores the fact that economic offences form separate class and the
twin conditions for money-laundering is a reasonable classification. The
F Court had no occasion to consider the question of ‘legitimate State
interest’ in providing for twin conditions for a separate class of offences.

308
Supra at Footnote No.3
309
Supra at Footnote No.189
310
G (1955) 1 SCR 613
311
(1958) SCR 1422
312
Supra at Footnote No.268
313
Supra at Footnote No.210 (also at Footnote No.69)
314
(1971) 2 SCC 893
315
Supra at Footnote No.210 (also at Footnote No.69)
316
Supra at Footnote No.159
H 317
Supra at Footnote No.3
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 495
INDIA & ORS. [A. M. KHANWILKAR, J.]

(lxxvii) Further, it is submitted that the Court was in error to A
make distinction between anticipatory bail and regular bail and wrongly
restricted the operation of Section 45 to post-arrest bail. It is stated that
if it is held that the twin conditions under Section 45 are only applicable
to regular bail and not to anticipatory bail, then the provision may not
stand the scrutiny on the touchstone of Article 14 of the Constitution.
B
Thus, the finding of the Court in paragraph 42 of the reported decision
needs to be overruled. It is submitted that there is no conceptual difference
between anticipatory bail and regular bail and to substantiate this
argument, reliance has been placed on the Sushila Aggarwal & Ors.
vs. State (NCT of Delhi) & Anr.318. It is urged that the observation of
this Court in Nikesh Tarachand Shah319 about non-applicability of the C
twin conditions for bail in case of anticipatory bail should be considered
as an obiter dicta. Reliance has been placed on Municipal Corporation
of Delhi vs. Gurnam Kaur320 to state that the casual expressions of a
Judge in the judgment carry no weight at all.
(lxxviii) It is further submitted that the interpretation of the Court D
in Nikesh Tarachand Shah321 is erroneous, because it ignores the non-
obstante clause under Section 45 which ousts the applicability of Section
438 Cr.P.C. The words ‘anticipatory bail’ are not used separately in the
Cr.P.C and pre-arrest bail is mainly a species of bail in the Cr.P.C.
Therefore, it is submitted that Section 45 of the PMLA and the conditions
mentioned therein govern the entire subject of bail under PMLA. It is E
further submitted that even the Constitutional Courts should be loath to
ignore the express mandate of the statute which imposes stringent
conditions of bail on a person accused of an offence under the PMLA.
(lxxix) Further it is argued that the reliance of the private parties
on the decision in Hema Mishra vs. State of Uttar Pradesh & Ors.322 F
is completely misplaced, as the Court in that case was dealing with the
situation wherein the provision concerning anticipatory bail had been
deleted by a local State enactment, and even in that case, the Court held
that the power under Article 226 of the Constitution to grant anticipatory
bail ought to be exercised in extremely rare circumstances. Therefore, G
the said judgment has no applicability in the present case.
318
(2020) 5 SCC 1
319
Supra at Footnote No. 3
320
(1989) 1 SCC 101
321
Supra at Footnote No. 3
322
(2014) 4 SCC 453 H
496 SUPREME COURT REPORTS [2022] 6 S.C.R.

A (lxxx) It is submitted that the argument of the private parties
which was based on the Section 44(2) of the PMLA, that the twin
conditions in Section 45 are applicable only to the Special Court and not
to the High Court, is totally erroneous. Clarification under Section 44
was required, as similar provision in special enactments have been
interpreted to oust the maintainability of bail application directly to the
B
High Court323. Thus, Section 44 mainly deals with the issue of jurisdiction.
Further, it is submitted that if the twin conditions for bail are held to be
applicable only when the application of bail is filed in the Special Court
and not when the application for bail is filed before the High Court, then
such interpretation would completely render the provision arbitrary.
C 17. At the outset, it is submitted by Mr S.V. Raju, Additional Solicitor
General of India that for attracting Article 20(3) of the Constitution,
three things should be established. Firstly, the person should be accused
of an offence; secondly, such a person should be compelled to make the
statement; and thirdly, such compulsion should be for the purpose of
D being a witness against himself. Unless all these three ingredients exist,
the protection of Article 20(3) cannot be attracted.
(i) With regard to the requirement of “person accused of an
offence”, it is submitted that there has to be a formal accusation against
such person, which should either be in the form of FIR or a complaint
E filed before the Court. It is urged that for Article 20(3) of the Constitution
to apply, the concerned person should be an accused at the time when
the statement was made by him and not because the person concerned
is accused of offence at the time of trial. Therefore, the thrust of the
plea is that a statement recorded under Section 50(2) of the PMLA
would not violate Article 20(3) of the Constitution, if the person making
F the statement is not an accused of or named in money-laundering offence
at the time when the statement under Section 50(2) was made. Reliance
has been placed on M.P. Sharma & Ors. vs. Satish Chandra, District
Magistrate & Ors.324 to state that ‘formal accusation’ relating to the
commission of the offence is a pre-requisite condition for the applicability
G of Article 20(3). Reliance has also been placed on Mohammed Dastagir
vs. The State of Madras325, wherein a Constitution Bench of this Court
observed that Article 20(3) would be available only to those persons
against whom FIR has been registered. Therefore, it is contended that
323
Usmanbhai Dawoodbhai Memon (supra at Footnote No.202)
324
(1954) SCR 1077 (also at Footnote No.47)
H 325
AIR 1960 SC 756
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 497
INDIA & ORS. [A. M. KHANWILKAR, J.]

necessity of a formal accusation can only be met by the registration of A
an FIR or submission of a complaint against the concerned person, in
order to make him an accused for the purpose of Article 20(3) of the
Constitution. Further reliance has been made on Kathi Kalu Oghad326,
wherein an eleven-Judge Bench of this Court held that the person who
made the statement must stand in the character of accused at the time
B
when the statement was made in order to attract Article 20(3). The
decision of five-Judge Bench of this Court in Raja Narayanlal Bansilal
vs. Maneck Phiroz Mistry & Anr.327 has also been relied upon. It is
urged that the examination of a person cannot be regarded as proceeding
started against him, as it is only after gathering information against a
person through examination, it may be concluded that there is a C
commission of an offence or not. Accusation of an offence is, therefore,
a condition precedent for the application of Article 20(3) of the
Constitution328. Reliance has also been placed on Romesh Chandra
Mehta329 to state that lodging of an FIR or a complaint is the essential
requirement of formal accusation, as a person stands in the character of
D
an accused only when a FIR is lodged against him in respect of an
offence or when a complaint is made against him relating to the
commission of an offence. It is stated that the Court in Romesh Chandra
Mehta330 has further approved the view of the Madras High Court in
Collector of Customs, Madras vs. Kotumal Bhirumal Pihlajani &
Ors.331, wherein the Court held that when the statements are recorded E
by customs officers under Section 108 of 1962 Act, the maker of the
statement do not stand in the position of an accused. Similar view of the
Bombay High Court in the case of Laxman Padma Bhagat vs. The
State332 was also approved and the contrary view of the Calcutta High
Court in Calcutta Motor Cycle Co. vs. Collector of Customs & Ors.333
F
was held to be incorrect.
(ii) Reliance has been placed on Harbansingh Sardar Lenasingh
& Anr. vs. The State of Maharashtra & Ors.334 to state that a statement
326
Supra at Footnote No.44
327
AIR 1961 SC 29 G
328
K. Joseph Augusthi vs. M.A. Narayanan, AIR 1964 SC 1552
329
Supra at Footnote No.119
330
Supra at Footnote No.119
331
1966 SCC OnLine Mad 145
332
1964 SCC OnLine Bom 59
333
1955 SCC OnLine Cal 275
334
(1972) 3 SCC 775 H
498 SUPREME COURT REPORTS [2022] 6 S.C.R.

A recorded by a customs officer under Section 108 of the 1962 Act is
admissible evidence and is not hit by Section 25 of 1872 Act or Article
20(3) of the Constitution, as the same has been concluded by the decision
of this Court in Romesh Chandra Mehta335. It is further submitted that
the Court in Nandini Satpathy336 was not concerned with Article 20(3)
of the Constitution and accepted the view of this Court in Romesh
B
Chandra Mehta337 as correct. Therefore, it is submitted that at the
stage of recording of statements under Section 50(2) of the PMLA, only
information is being collected for deciding as to whether the attachment
of the property has to take place and at that stage there is no accusation
against any person. Reliance has also been placed on Balkishan A.
C Devidayal338 and Poolpandi339 to state that only a person against whom
any formal accusation of the commission of an offence has been made,
can be a person accused of an offence within the meaning of Article
20(3)340 of the Constitution, which may be specifically made against him
in an FIR or a formal document resulting in the prosecution in Court.
Further, reliance has been made on Poolpandi341 to state that the ratio
D
of Romesh Chandra Mehta 342 cannot be ignored because of
observations made in Nandini Satpathy343. Therefore, it is submitted
that when statements under Section 50(2) of the PMLA are made by a
person, then at that stage such person does not stand in the character of
an accused, as there is no formal accusation against him by way of a
E complaint or an FIR and thus, there is no violation of Article 20(3) of the
Constitution.
(iii) With regard to the issue of ‘compulsion’, it is submitted that
this issue will arise only when the person concerned is held to be ‘accused’
of an offence. Reliance has been further placed on M.P. Sharma344 and
F Nandini Satpathy345 to state that compelled testimony can be ‘procured

335
Supra at Footnote No.119
336
Supra at Footnote No.35
337
Supra at Footnote No.119
338
Supra at Footnote Nos.120 (also at Footnote No.41)
339
Supra at Footnote No.123
G 340
K.I. Pavunny (supra at Footnote No.231) and Tofan Singh (supra at Footnote Nos.24
and 31)
341
Supra at Footnote No.123
342
Supra at Footnote No.119
343
Supra at Footnote No.35
344
Supra at Footnote No.324 (also at Footnote No.47)
345
H Supra at Footnote No.35
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 499
INDIA & ORS. [A. M. KHANWILKAR, J.]

not merely by physical threats or violence but by psychic torture, A
atmospheric pressure, environmental coercion, tiring interrogative
prolixity, overbearing and intimidatory methods and the like, not legal
penalty’. Therefore, it is submitted that ‘compulsion’ is a question of
fact, to be decided at the stage of trial and cannot be generalized and
decided in the present case.
B
(iv) Relying on the case of Nandini Satpathy346 and C. Sampath
Kumar vs. Enforcement Officer, Enforcement Directorate,
Madras347, it is submitted that the legal penalties imposed on a person
on his refusal to answer truthfully, cannot be regarded as a compulsion
within the meaning of Article 20(3) of the Constitution. Therefore, it is
submitted that the contentions of the private parties that provisions C
contained in Sections 50(3), 50(4) and 63(2) amount to legal compulsion
violating the fundamental right under Article 20(3) of the Constitution, is
devoid of any merit.
(v) With regard to the issue of ‘being a witness against oneself’,
it is submitted that the witness can be classified into four types – (i) D
relevant yet innocent; (ii) relevant and may have no incriminatory force;
(iii) incriminatory without being confessional; and (iv) confessional.
Relying on the case of Nandini Satpathy348, it is submitted that Article
20(3) applies to confessions and self-incriminations, but leaves untouched
other relevant facts. Therefore, unless there is an admission of an offence E
in clear terms, the statement even if it is gravely incriminatory in nature,
will not amount to a confession349. It is further submitted that apart from
above four categories of witnesses, there can be two other categories,
namely, a witness who makes an admission not amounting to confession
and a witness whose statement comprises both exculpatory and
inculpatory statements. Reliance has been placed on the case of Central F
Bureau of Investigation vs. V.C. Shukla & Ors.350, to state that a
statement made by an accused is admissible in evidence under Section
21 of the 1872 Act, if it falls short of a confession. It is, therefore,
submitted that the question whether a statement is a confession or not, is
essentially a question of fact, which cannot be decided in the present G
case.
346
Supra at Footnote No.35
347
(1997) 8 SCC 358
348
Supra at Footnote No.35
349
Aghnoo Nagesia vs. State of Bihar, AIR 1966 SC 119
350
(1998) 3 SCC 410 H
500 SUPREME COURT REPORTS [2022] 6 S.C.R.

A (vi) The respondent has further relied on the judgment of Andhra
Pradesh High Court in Dalmia Cement (Bharat) Limited351, wherein
it was held that an ECIR cannot be equated with an FIR. Therefore, the
person against whom the summons has been issued under Section 50(2)
read with Section 50(3), is not a person accused of an offence. Hence,
Section 50 does not violate Article 20(3) of the Constitution. Reliance
B
has been placed on the decision of the Delhi High Court in Virbhadra
Singh352 to state that mere registration of an ECIR would not render
any person an accused of the offence of money-laundering. Reliance
has also been placed on Vakamulla Chandrashekhar353, wherein it is
stated that a Division Bench of the Delhi High Court held that the person
C against whom summons has been issued under Section 50 of the PMLA
cannot be construed as person accused of an offence, unless a complaint
is filed before the Special Court.
(vii) Replying to the submissions of Mr. Aabad Ponda, learned
senior counsel, it is submitted by the learned Additional Solicitor General
D that in Ramanlal Bhogilal Shah354, there was already an FIR registered
against the accused under the FERA Act, therefore, he stood in the
character of accused person. Whereas, in the case of PMLA, the FIR
is registered for the predicate offence and not for the offence of money-
laundering. Therefore, the ratio of Ramanlal Bhogilal Shah355 cannot
be applied in the present case as the two offences - predicate offence
E and the offence of money-laundering are different.
(viii) With regard to Section 25 of the 1872 Act, it is submitted
that for the bar contained under Section 25 of the 1872 Act to apply,
three things need to be established – (i) confession; (ii) such concession
is made to a police officer; and (iii) the person should be an accused. It
F is submitted that the officers who record statements under Section 50 of
the PMLA are not police officers; therefore, Section 25 of the 1872 Act
will not apply in case the statement is made to ED officers. It is stated
that the statements recorded by police under Section 161 of the Cr.P.C.
are different than the statement recorded by the ED officer under Section
G 50(2) of the PMLA. As such, statements are treated as ‘evidence’ in
the proceedings under the Act. It is further stated that Section 108 of the
351
Supra at Footnote No.234
352
Supra at Footnote No.227
353
Supra at Footnote No.226
354
Supra at Footnote No.122
355
H Supra at Footnote No.122
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 501
INDIA & ORS. [A. M. KHANWILKAR, J.]

1962 Act is pari materia to Section 50 of the PMLA and the statements A
recorded therein are considered as evidence. Reliance has been placed
on Tofan Singh356, wherein it was held that Section 67 of the NDPS
Act is different from Section 108 of the 1962 Act, insofar as the statements
made therein are evidence as opposed to Section 67 of the NDPS Act.
Therefore, it is stated that the same reasoning will apply in this case and
B
as the statements recorded under Section 50(2) are considered as
evidence, the ED officer cannot be termed as ‘police officer’.
(ix) Further, reliance has been placed on Section 45(1A) of the
PMLA to submit that the Section bars investigation of an offence by
police officers into the offence of money-laundering and if the ED officers
are held to be police officers, then they would become incompetent to C
investigate the offence of money-laundering under the PMLA. It is
submitted that in various decisions of this Court, it has been held that the
officers who are not empowered to file a chargesheet are not police
officers. To buttress this submission, the reliance has been placed on
Badaku Joti Svant vs. State of Mysore 357 , Romesh Chandra D
Mehta358, Illias vs. The Collector of Customs, Madras359, State of
U.P. vs. Durga Prasad360 and Balkishan A. Devidayal361.
(x) It is urged that as the officers of the ED are not empowered
to file a chargesheet and consequently, they cannot be regarded as police
officer. After investigation, the ED officers can only file a complaint E
before the Special Court under Section 44(1)(b) of the PMLA. Further,
it is stated that as per the definition of “complaint” under Section 2(d) of
the Cr.P.C., a ‘police report’ cannot be regarded as a ‘complaint’, as
they are both mutually exclusive terms. It is further submitted that a
police officer cannot submit a complaint and an ED officer cannot file a
chargesheet. Otherwise, Section 155(4) and Section 155(2) would be F
rendered otiose, as in a case falling under Section 155(4) of the Cr.P.C.,
if the police officer after investigation forms an opinion that only non-
cognizable case is made out, then in such a situation he is required to file
a police report in view of provision of Section 155(4), but due to the
operation of Section 2(d), the same will be treated as a complaint and G
356
Supra at Footnote No.31 (also at Footnote No.24)
357
AIR 1966 SC 1746
358
Supra at Footnote No.119
359
AIR 1970 SC 1065
360
(1975) 3 SCC 210
361
Supra at Footnote No.120 (also at Footnote No.41) H
502 SUPREME COURT REPORTS [2022] 6 S.C.R.

A the police officer would be treated as a complainant. Also, in a case
where Magistrate orders the police officer to investigate a non-cognizable
offence under Section 155(2) of the Cr.P.C., then in view of operation of
Section 155(3) of the Cr.P.C., the police officer would necessarily file a
chargesheet. However, due to the operation of Section 2(d), the
chargesheet will be treated as a complaint and he will be treated as a
B
complainant. It is submitted that in case where a police officer investigates
a non-cognizable offence, the Legislature has, by way of a deeming
fiction, treated the chargesheet as a ‘complaint’, whereas no such fiction
applies in the case of officer investigating a PMLA offence, as he can
only file a complaint which does not require any fiction or deeming
C provision. Therefore, even in case of non-cognizable offence, the police
officer is only empowered to file a police report, whereas in case of the
PMLA offence, the ED officers are only required to file a complaint
which is not to be treated as a chargesheet, otherwise the Legislature
would have provided for a reverse deeming fiction of treating the
complaint as a chargesheet.
D
(xi) Reliance has been placed on Commissioner of Income Tax,
West Bengal vs. Calcutta Stock Exchange Association Ltd.362 to state
that the word “deemed” shows that the Legislature was deliberately
using the fiction of treating something as something else. Reliance has
been placed on the decision of the Delhi High Court in Lajpat Rai Sehgal
E & Ors. vs. State363, to state that after investigation of non-cognizable
offence the police officer has to submit a report which is deemed to be
a complaint. Reliance has also been placed on the decision of the Delhi
High Court in Narain Singh vs. The State364, wherein a similar view
has been taken. It is submitted that this Court in several cases, has held
F that the function of police officers are prevention and detection of a
crime. Reliance has been placed on the decision in Barkat Ram365 to
urge that the primary function of police officers is to maintain law and
order. The Authority empowered to investigate the offence in above
mentioned case was not concerned with the maintenance of law and
order and detection and prevention of crime, but with some other function
G such as collection and levy of duty on goods or detection and prevention
of smuggling of goods. Notwithstanding the fact that some incidental
362
AIR 1959 SC 763
363
1983 (5) DRJ 1 : 23 (1983) DLT 314
364
1986 (10) DRJ 109 : 30 (1986) DLT 118
H 365
Supra at Footnote No.24
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 503
INDIA & ORS. [A. M. KHANWILKAR, J.]

powers of search, seizure, arrest and investigation of an offence are A
also conferred on such officer, he cannot be termed as a police officer
as his primary function is to detect and prevent smuggling of goods so as
to protect the state exchequer. Therefore, it is submitted that the dominant
purpose is to be seen. In case of the PMLA, the dominant purpose is
prevention of money-laundering, attachment and confiscation of property
B
involved in money-laundering, whereas all other matters with which the
ED officers are involved, are only incidental matters. Therefore, as
submitted, the ED officers cannot be termed as police officers. The
Preamble of the Act and Statement of Objects and Reasons of the Act
have been relied upon to state that the officers of the ED are primarily
concerned with the prevention of money-laundering and for confiscation C
of property derived from or involved in money-laundering.
(xii) Reliance has been placed on Pareena Swarup vs. Union of
India366 to state that the object of the PMLA is to bring the proceeds of
crime back into the economy. Reliance has also been placed on the
decision of the Delhi High Court in Vakamulla Chandrashekhar367 to D
state that the offence of money-laundering has both, civil and criminal
consequences and the Act empowers the Adjudicating Authority with
the powers of civil Court, so as to adjudicate on the issue of whether any
property is involved in money-laundering and to attach and ultimately
confiscate such property.
E
(xiii) Relying on Section 50(4), it is stated that ED officers act
judicially under Section 50(2), whereas a police officer recording a
statement under Section 161 of the Cr.P.C. does not act judicially. To
substantiate the argument, reliance has been placed on Balkishan A.
Devidayal 368.
F
(xiv) It is further stated that the proceedings under the PMLA
are judicial proceedings, similar to the proceedings under the 1962 Act
under Section 108. Therefore, on a parity of reasoning, the ED officials
are not police officers, as held in Balkishan A. Devidayal369. It is further
submitted that under Section 63(2) of the PMLA, the ED officials are
empowered to impose penalty which is a judicial function, whereas the G
police officials have no such power. It is also submitted that the
366
(2008) 14 SCC 107
367
Supra at Footnote No.226
368
Supra at Footnote Nos.120 (also at Footnote No.41)
369
Supra at Footnote Nos.120 (also at Footnote No.41) H
504 SUPREME COURT REPORTS [2022] 6 S.C.R.

A contentions of the private parties that the statement recorded under Section
50(2) will have to comply with the requirements of Section 162 of the
Cr.P.C., is devoid of any substance, as the statements recorded under
Section 50(2) of the PMLA are not statements recorded under Section
161 of the Cr.P.C. Under Section 50(2) of PMLA, the ED officer is not
a police officer as he is acting judicially under the provision. The statement
B
recorded under Section 50(2) is treated as evidence, whereas such is
not the case with the statement recorded under Section 161 of the Cr.P.C.
Statements under Section 50(2) are required to be signed, whereas such
is not the case with statements recorded under Section 161 of the Cr.P.C.
Further, the investigation under the PMLA is different from the
C investigation under the Cr.P.C. It is then submitted that as the statements
given under Section 50 of the PMLA are required to be signed and are
given in the judicial proceeding within the meaning of Sections 193 and
228 of the IPC, therefore, the presumption under Section 80 of the 1872
Act will apply and it shall be presumed that the document is genuine and
the circumstances under which it was taken are true and such evidence,
D
statement or confession was duly taken. Whereas, Section 80 of the
1872 Act cannot have any application under the statements made under
Section 161 of the Cr.P.C. To buttress the submission, reliance was placed
on the decisions of this Court in Baleshwar Rai & Ors. vs. The State
of Bihar370 and Dipakbhai Jagdishchandra Patel vs. State of Gujarat
E & Anr.371. Even by applying Section 65 of the PMLA, it is stated that
the bar of Section 162 of the Cr.P.C. cannot be applied to statements
made under Section 50(2) of the PMLA because of the inconsistencies
shown above. Further, if the Legislature had intended to apply Section
162 of the Cr.P.C., then it would have done so in the Act itself, as it has
been done under the Bihar and Orissa Excise Act, 1915372.
F
(xv) It is submitted that the ratio of Tofan Singh373, where it was
held that the statement recorded under Section 67 of the NDPS Act
cannot be used as a confessional statement for the trial of an offence
under the NDPS Act, will not apply to Section 50(2) of the PMLA. It is
also submitted that the provisions of the PMLA are materially different
G from that of the NDPS Act. In the case of NDPS Act, a regular police
officer, as well as, a designated officer, both are permitted to investigate
370
(1963) 2 SCR 433
371
(2019) 16 SCC 547
372
For short, “1915 Act”
373
H Supra at Footnote No.31 (also at Footnote No.24)
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 505
INDIA & ORS. [A. M. KHANWILKAR, J.]

the offence under the NDPS Act. Whereas, in the case of the PMLA, A
there is a bar contained in Section 45(1A) of the PMLA which prohibits
a police officer from investigating the offence under the PMLA. In the
NDPS Act, because of such provision, Sections 161 to 164 of the Cr.P.C.,
as also Section 25 of the 1872 Act, would be applicable making the
recorded statement inadmissible, in case the statements are recorded by
B
a police officer. However, if the same investigation is conducted by a
designated officer other than the police officer, then such provisions will
not apply, making the procedure discriminatory and in violation of Article
14 of the Constitution, which is not the case under the PMLA.
(xvi) It is submitted that in case of the NDPS Act, there is no
provision of further investigation by the designated officer. However, if C
the investigation is made by a police officer, then in that case he has the
power to further investigate under Section 173(8) of the Cr.P.C. Such
inconsistency does not occur in the case of the PMLA, as in this case,
because of the bar contained in Section 45(1A), the police officers are
not entitled to investigate the offence of money-laundering. And further, D
the Explanation (ii) to Section 44 of the PMLA contemplates filing of
subsequent complaint in case any further investigation is conducted.
(xvii) Another anomaly noted by this Court in Tofan Singh374 is
that when such designated officer is investigating the offence under the
NDPS Act, then he has no power to file closure report. However, there E
is no such anomaly present in the PMLA Act because the investigating
authority can file a closure report under the proviso to Section 44(1)(b)
of the PMLA.
(xviii) It is further submitted that in Tofan Singh375, it was held
that if the statement recorded under Section 67 of the NDPS Act is held F
to be admissible in all situations, then it will render Section 53A of the
NDPS Act otiose, whereas the PMLA does not contain any provision
similar to Section 53A of the NDPS Act.
(xix) Further, in the case of the NDPS Act, prevention, detection
and punishment of crime was not held to be ancillary function of the G
Act. However, in the case of the PMLA, the main purpose is prevention
of money-laundering and confiscation of property derived from or involved
in money-laundering.
374
Supra at Footnote No.31 (also at Footnote No.24)
375
Supra at Footnote No.31 (also at Footnote No.24) H
506 SUPREME COURT REPORTS [2022] 6 S.C.R.

A (xx) Further, the PMLA does not contain any provision which
invest the power of an officer in-charge of a police station, including the
power to file a chargesheet, in the investigating officer as contained in
the NDPS Act. Moreover, in case of the NDPS Act, the investigating
authority is required to file a chargesheet. However, in case of the PMLA,
cognizance is taken on a complaint.
B
(xxi) Lastly, it is contended that Section 50 of the PMLA is almost
identical to Section 108 of the 1962 Act. Therefore, the statements made
under Section 50 are evidence as opposed to Section 67 of the NDPS
Act. Hence, Section 50(2) of the PMLA cannot be read down as done
in Tofan Singh376, in case of Section 67 of the NDPS Act.
C
(xxii) The respondent has demonstrated the legislative history of
Section 24 of the PMLA and cited Recommendation 3 of the FATF
(2003)/ Recommendation 4 of FATF (2012) to state that the FATF had
stipulated that the burden of proving the lawful origin of the property
shall be on the accused. In view of the FATF recommendations and the
D recommendations of the Standing Committee of Finance (2011-12),
comprehensive amendments were made to the provisions of the PMLA.
It is submitted that the Standing Committee of Finance recommended
that there should be adequate safeguards for persons not charged with
the offence of money-laundering; therefore Section 24 was amended in
E its present form. It is submitted that the concerns of the Standing
Committee have been incorporated under the provision by using the word
“may” in case of any other person and the word “shall” in case of a
person charged with the offence of money-laundering under Section 24
of the PMLA. Therefore, it would be wrong to say that the provision is
not constitutionally valid, as the provision itself contains safeguard for
F the person not charged with the offence of money-laundering.
(xxiii) It is submitted that in criminal trials the standard of proof is
beyond reasonable doubt. However, such rule of evidence is neither
found in Section 101 nor in Section 3 of the 1872 Act, which defines the
word “proved”. Therefore, it cannot be said that this principle is a principle
G of universal application and, therefore, Legislature in appropriate classes
of legislations would be competent to take departure from this principle.
It is submitted that when Legislature enacts a provision which states
that the burden of proof is shifted to the accused then what is actually

376
H Supra at Footnote No.31 (also at Footnote No.24)
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 507
INDIA & ORS. [A. M. KHANWILKAR, J.]

done is that standard of proof beyond reasonable doubt is lowered. It is A
submitted that Professor Glanville Williams in his book - The Proof of
Guilt has also criticized the doctrine of proving the guilt of the accused
beyond reasonable doubt. It is stated that this principle generally entails
the acquittal of the guilty person which frustrate the investigation of the
police, as a result of which they may resort to improper methods of
B
obtaining convictions, also the law and order gets into the turmoil.
(xxiv) Respondent admits that the principle of innocence is a
human right and forms the basis of criminal jurisprudence377. Reliance
has been placed on Hiten P. Dalal vs. Bratindranath Banerjee378,
which dealt with an offence under Section 138 of the Negotiable
Instruments Act, 1881379 and considered the effect of presumption raised C
under Section 139 thereof, to urge that the presumptions are rule of
evidence and do not conflict with the presumption of innocence. The
prosecution is obliged to prove the case against the accused beyond
reasonable doubt. However, such obligation may be discharged with the
help of presumptions of law or fact unless the accused rebut the D
presumption by showing the reasonable possibility of non-existence of
the presumed fact. It is stated that there is a need to balance the rights
of the accused with the interest of the society. Reliance is placed on
Krishna Janardhan Bhat vs. Dattatraya G. Hegde380 to urge that the
nature of offence, seriousness and gravity thereof may be taken into
consideration in interdicting the presumption of innocence. Reliance has E
also been placed on Sucha Singh vs. State of Punjab381 to state that
departure from traditional rule relating to the burden of proof is imperative;
otherwise, the offenders in serious offences would be the major
beneficiaries and the society would be the casualty. It is submitted that
the PMLA is an Act which tackles a social evil and does require departure F
from normal criminal jurisprudence. Reliance has been placed on P.N.
Krishna Lal & Ors. vs. Govt. of Kerala & Anr.382 to state that the
purpose of law should be taken into consideration while interpreting the
law. It is submitted that sometimes harsh remedies are required, which
takes a departure from normal criminal jurisprudence to tackle new and
G
377
Narendra Singh & Anr. vs. State of M.P., (2004) 10 SCC 699
378
(2001) 6 SCC 16
379
For short, “1881 Act”
380
(2008) 4 SCC 54
381
(2001) 4 SCC 375
382
1995 Supp (2) SCC 187 H
508 SUPREME COURT REPORTS [2022] 6 S.C.R.

A emerging situations. Further reliance has been placed on the 47th Report
of the Law Commission, 1972, which observed that special efforts are
necessary to eliminate the effect of socio-economic offences and
stringent provisions are essential to safeguard the national wealth and
welfare. It is submitted that the PMLA seeks to achieve the goal of
deterrence and also confiscation of proceeds of crime and, therefore,
B
the provision is in line with the 47th Law Commission report. It is pointed
out that even the general statutes such as the IPC and the 1872 Act also
provide for the reverse burden of proof383. It is, therefore, submitted
that the shifting of burden of proof which is nothing but a departure from
ordinary criminal jurisprudence of proving the case beyond reasonable
C doubt, is not only contained in the special statutes, which tends to prevent
serious crime against the society at large, but is also contained in the
provisions of the IPC and the 1872 Act. Thus, it cannot be said that
presumption of innocence is a constitutional guarantee.
(xxv) It is submitted that to give effect to the object of the NDPS
D Act, the Court in Noor Aga vs. State of Punjab & Anr.384, upheld the
constitutional validity of Sections 35 and 54 of the NDPS Act, which
provides presumption against the accused and reverse burden of proof.
Reliance has also been placed on Seema Silk & Sarees & Anr. vs.
Directorate of Enforcement & Ors.385, wherein the Court upheld the
challenge to the constitutional validity of Section 18 of the FERA, which
E provides for reverse burden of proof, to state that a legal provision does
not become unconstitutional merely because it provides for reverse burden
of proof. Further Reliance is placed on Sodhi Transport Co. & Ors. vs.
State of U.P. & Ors.386 to state that a rebuttable presumption, which is
a rule of evidence, cannot be said to be unconstitutional because the
F person concerned has the opportunity to displace the presumption by
leading evidence. It is submitted that Section 24 of the PMLA also
provides for rebuttable presumption and, therefore, the accused has the
opportunity to lead evidence so as to displace the presumption against
him. Thus, it cannot be said that Section 24 is unreasonable, arbitrary or
unconstitutional.
G
(xxvi) With regard to Section 24(a) of the PMLA, it is submitted
that two conditions are required to be satisfied for the presumption under
383
Mukesh Singh vs. State (Narcotic Branch of Delhi), (2020) 10 SCC 120
384
(2008) 16 SCC 417 (also at Footnote No.55)
385
(2008) 5 SCC 580
386
H (1986) 2 SCC 486
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 509
INDIA & ORS. [A. M. KHANWILKAR, J.]

Section 24(a) to apply. Firstly, person should be ‘charged’ with the offence A
of money-laundering and secondly, there should be ‘proceeds of crime’.
It is only when both the conditions are satisfied, it can be said that the
presumption will operate against the accused.
(xxvii) Reliance has been placed on Union of India vs. Prafulla
Kumar Samal & Anr.387 to state that for framing of charges, a prima B
facie case against the accused has to be made out by the prosecution388,
which means that a grave suspicion should be there against the accused.
Therefore, the requirement of framing of charges against the accused
under Section 3 of the PMLA itself acts as a safeguard against the
arbitrary exercise of the provision. Secondly, it is stated that the existence
of proceeds of crime will be the foundational fact under Section 24(a) of C
the Act. It is further submitted by the learned Additional Solicitor General
that even when the presumption against the accused is applied then also
the accused will have the opportunity to rebut the same by leading
evidence or by replying adequately under Section 313 of the Cr.P.C. or
by cross examining the prosecution witness. D
(xxviii) A comparison is drawn between Section 24 of the PMLA
and Section 106 of the 1872 Act to submit that similar results would
appear even if the provision like Section 24(a) of the PMLA was not
there because of Section 106 of the 1872 Act. By way of an illustration,
it has been explained that the results of Section 106 and Section 24(a) E
would be the same in a case where money is lying in a house where
incidentally a person is found, then the burden of proving that the person
has nothing to do with the proceeds of crime is on that person itself
because of Section 106 of the 1872 Act, which states that when any fact
is especially within the knowledge of any person, the burden of proving
that fact is upon him. Reliance has been placed on the Sarbananda F
Sonowal vs. Union of India & Anr.389, wherein it was held that the
facts regarding date of birth, place of birth, name of parents, place of
citizenship and birth, are all facts within the special personal knowledge
of the concerned person and it will be impossible for the State to lead
387
(1979) 3 SCC 4
G
388
Dilawar Balu Kurane vs. State of Maharashtra, (2002) 2 SCC 135, Yogesh alias
Sachin Jagdish Joshi vs. State of Maharashtra, (2008) 10 SCC 394, P. Vijayan vs. State
of Kerala & Anr., (2010) 2 SCC 398, Sajjan Kumar vs. Central Bureau of Investigation,
(2010) 9 SCC 368, Sheoraj Singh Ahlawat and Ors. vs. State of Uttar Pradesh & Anr.,
(2013) 11 SCC 476 and Dipakbhai Jagdishchandra Patel (supra at Footnote No.371)
389
(2005) 5 SCC 665 H
510 SUPREME COURT REPORTS [2022] 6 S.C.R.

A evidence on aforesaid points. Therefore, any fact which would be
impossible for the prosecution to establish, as is specially and exceptionally
within the exclusive knowledge of the accused, would have to be proved
by the accused himself. Therefore, it is submitted that the shifting of
burden of proof under Section 24(a) of the PMLA is not violative of
Article 14 or 21 of the Constitution of India.
B
(xxix) It is further pointed out that the contentions of the private
parties that the Court in Noor Aga390 and Tofan Singh391 has read into
Section 54 of the NDPS Act the requirement of proving foundational
fact of possession, is wholly incorrect and misplaced, as it would be
clear from the bare language of Section 54 itself that the possession is
C the foundational fact which has to be established and only then the
presumption under Section 54 of the NDPS Act will apply.
(xxx) With regard to Section 24(b) of the PMLA, it is submitted
that it applies to a person who is not charged with the offence of money-
laundering and uses the word ‘may’ instead of ‘shall’. It is submitted
D that presumptions falling under the category of ‘may presume’ does not
make it obligatory on the Court to regard such fact as proved and it is
the discretion of the Court to either regard such fact as proved or may
call proof of it. Whereas, presumptions falling under the category of
‘shall presume’ are mandatory in nature, also known as legal
E presumptions, and the Court has to regard such fact as proved unless
and until it is disproved392. It is, therefore, submitted that presumption
contained under Section 24(b) is discretionary in nature. It is submitted
that the presumption under Section 24(b) can be raised at the stage of
bail and other proceedings, prior to the stage of framing of charges. As
before granting bail under the PMLA, the Court has to be satisfied that
F the accused is not guilty of the offence; therefore, the Court may resort
to Section 24(b) in exercise of its discretion.
(xxxi) Further, it is submitted that the word “Authority” under the
PMLA refers to the Adjudicating Authority and not authority under Section
48 of the PMLA. It is further submitted that the arguments of the private
G parties that Section 24(b) of the PMLA is draconian in nature, is wholly
incorrect, as the presumption is discretionary in nature. Foundational
390
Supra at Footnote No.384 (also at Footnote No.55)
391
Supra at Footnote No.31 (also at Footnote No.24)
392
State of Madras vs. A. Vaidyanatha Iyer, AIR 1958 SC 61 and M. Narsinga Rao vs.
H State of A.P., (2001) 1 SCC 691
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 511
INDIA & ORS. [A. M. KHANWILKAR, J.]

fact of proceeds of crime is condition precedent to the application of the A
provision and the presumptions can only be raised before the Court or
Adjudicating Authority.
(xxxii) Further, while relying on the decision in Pareena
Swarup393 and Madras Bar Association vs. Union of India & Anr.394
and Section 6 of the PMLA, it is stated that Adjudicating Authority is an B
independent Authority, without prejudice to the fact that the functions of
Authority is civil in nature and standard of proof would be preponderance
of probabilities and not proof beyond reasonable doubt in a proceeding
before it.
(xxxiii) Repelling the challenge under Article 20(1) of the C
Constitution with regard to the retrospective applicability of the Act, it is
submitted that the Act does not punish or seek to punish a person for any
act committed prior to the PMLA or prior to the addition of the concerned
offence in the Schedule to the PMLA coming into force. It is submitted
that Article 20(1) of the Constitution prohibits the making of an ex post
facto criminal law i.e., making an act a crime for the first time and D
making that law retrospective. It also prohibits infliction of a penalty
greater than that which might have been inflicted under the law in force
when the act was committed. Reference has been made to Rao Shiv
Bahadur Singh & Anr. vs. The State of Vindhya Pradesh395 to urge
that what is prohibited under Article 20(1) is only the conviction or E
sentence and not trial thereof. It has been further emphasized that the
expression ‘law in force’ used in Article 20(1), refers to the law in fact
in existence and in operation at the time of the commission of the offence,
as distinct from the law “deemed” to have become operative by virtue
of the power of Legislature to pass retrospective law.
F
(xxxiv) In light of the said principles, it is submitted that an offence
might be either a ‘single act’ i.e., an offence which is terminated by a
single act, or a ‘continuing offence’ i.e., an act which does not terminate
by a single act, but rather continues to subsist over a period of time. It is
submitted that the offence of money-laundering, as described under
Section 3 of the PMLA, in a given case would be a continuing offence, G
and, thus, cannot be labelled as having retrospective operation. It is
submitted that the objective of the PMLA is not to punish the accused
393
Supra at Footnote No.366
394
(2021) 7 SCC 369
395
AIR 1953 SCC 394 H
512 SUPREME COURT REPORTS [2022] 6 S.C.R.

A for the scheduled offence, but rather for the independent offence of
money-laundering committed under Section 3 of the Act. The argument
proceeds that an Act cannot be said to be retrospective just because a
part of the requisites for its action is drawn from a time antecedent to its
passing396.
B (xxxv) The respondent has placed reliance on Mohan Lal vs.
State of Rajasthan397. In this case, theft of 10 kgs of opium had taken
place prior to the coming into force of the NDPS Act, but opium was
subsequently recovered after the commencement of the NDPS Act.
Inter alia, the conviction under the NDPS Act was challenged on the
ground that there can be ex post facto application of the NDPS Act.
C This Court, while upholding the conviction and rejecting the plea of Article
20(1), observed that what is punishable is the possession of the prohibited
article on or after a particular date when the statute was enacted, making
the offence punishable or enhancing the punishment. It is, thus, submitted
that in the case of an offence under the PMLA, the date of coming into
D force of the PMLA i.e., 01.07.2005 or the date when the predicate
offence was committed, is irrelevant if the PMLA offence is committed
on a date subsequent to both the above date. Similarly, reliance is also
placed on the decisions of the Supreme Court of the United States in
Samuels vs. McCurdy, Sheriff398 and Chicago & Alton Railroad
Company vs. Henry A. Tranbarger399 to restate the aforementioned
E principles of law. Additionally, our attention was drawn to the provisions
governing period of limitation, namely Sections 469400 and 472401 of the
396
The State of Maharashtra vs. Vishnu Ramchandra, (1961) 2 SCR 26 and Sajjan
Singh vs. The State of Punjab, (1964) 4 SCR 630
397
(2015) 6 SCC 222.
398
1925 SCC OnLine US SC 42.
F 399
238 U.S. 67.
400
469. Commencement of the period of limitation.—(1) The period of limitation,
in relation to an offender, shall commence,—
(a) on the date of the offence; or
(b) where the commission of the offence was not known to the person aggrieved by the
offence or to any police officer, the first day on which such offence comes to the
knowledge of such person or to any police officer, whichever is earlier; or
G (c) where it is not known by whom the offence was committed, the first day on which
the identity of the offender is known to the person aggrieved by the offence or to the
police officer making investigation into the offence, whichever is earlier.
(2) In computing the said period, the day from which such period is to be computed
shall be excluded.
401
472. Continuing offence.—In the case of a continuing offence, a fresh period of
limitation shall begin to run at every moment of the time during which the offence
H continues.
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 513
INDIA & ORS. [A. M. KHANWILKAR, J.]

Cr.P.C. It is submitted that as per Section 469, in case of a single act, the A
date of commencement of the limitation period is the date on which the
offence was committed. However, the position is different for a
continuing offence, in as much as, the date of commencement of the
limitation period in such a case would be the date on which the continuing
offence ended402. Reliance has been placed on Gokak Patel Volkart
B
Ltd. vs. Dundayya Gurushiddaiah Hiremath & Ors.403, wherein this
Court while dealing with Section 630 of the Companies Act, held that
the offence of wrongful possession is recurring and continues until the
wrongful possession is put to an end. This Court further held that such
an offence is committed over a span of time and the last act of the
offence will control or amount to the commencement of the period of C
limitation. Thus, the offences involving possession are continuing in nature,
and the period of limitation for such offences would start from the date
of cessation of the possession.
(xxxvi) It is then submitted that the concept of possession is
central to the offence of money-laundering. Inasmuch as, all the six D
activities recognized under Section 3 of the Act involve an element of
possession of proceeds of crime. He further goes on to state that such
possession need not necessarily be actual physical possession, but also
may be legal or constructive possession. To this effect, reliance is placed
on Gunwantlal vs. The State of Madhya Pradesh404, wherein the
concept of constructive possession was recognized by this Court. Strong E
emphasis has been laid on Section 2(1)(fa)405 of the Act, which defines
the term “beneficial owner”, to urge that the concept of constructive
possession is recognized under the Act as well. It is submitted that
possession of proceeds of crime being key to the offence of money, all
activities having an element of possession after 01.07.2005 shall fall F
within the ambit of the Act irrespective of the date on which the scheduled
offence was committed. For, the offence of money-laundering is a
continuing offence, the cause of action for which renews with every

402
Section 472 of the Cr.P.C.
403
(1991) 2 SCC 141.
G
404
(1972) 2 SCC 194.
405
2. Definitions.—(1) In this Act, unless the context otherwise requires,—
…..
(fa) “beneficial owner” means an individual who ultimately owns or controls a client of
a reporting entity or the person on whose behalf a transaction is being conducted and
includes a person who exercises ultimate effective control over a juridical person. H
514 SUPREME COURT REPORTS [2022] 6 S.C.R.

A day of possession. Thus, it is submitted that the argument of the private
parties claiming protection of Article 20(1) is devoid of merit.
(xxxvii) At the outset, it is submitted that an ECIR under the
PMLA is not required be registered like an FIR under Section 154, Cr.P.C.
It is further submitted that as per the scheme of the Cr.P.C., a police
B officer is mandatorily required to register an FIR under Section 154
upon receipt of information regarding commission of a cognizable offence.
However, the PMLA contains no such provision regarding receipt of
information or registration406. To lend support to his arguments, the
learned Additional Solicitor General points out certain differences between
investigation under the Cr.P.C. and the PMLA. Firstly, the nature of
C “investigation”, as envisaged under Section 2(h)407 of the Cr.P.C. is
different from that under the PMLA, as defined under Section 2(1)(na)408
of the PMLA, insofar as the investigation under the Cr.P.C. is a
proceeding for collection of evidence. Therefore, any proceeding that
does not amount to collection of evidence, cannot amount to investigation,
D and only upon the registration of the FIR, can the police officer start
investigation. Secondly, it is submitted that an investigation under the
Cr.P.C. is ordinarily required to be conducted by a police officer, or any
person so authorized by a Magistrate. In contrast, Section 45(1A)409 of
the PMLA explicitly bars investigation by a police officer, save for cases
when the officer is specifically authorized by the Central Government.
E Thirdly, investigation under the Cr.P.C. necessarily needs to be for purpose
406
Lalita Kumari (supra at Footnote Nos.13 and 206)
407
2. Definitions.—(1) In this Code, unless the context otherwise requires,—
…..
(h) “investigation” includes all the proceedings under this Code for the collection of
evidence conducted by a police officer or by any person (other than a Magistrate) who
F is authorised by a Magistrate in this behalf;
408
2. Definitions.—(1) In this Act, unless the context otherwise requires,—
…..
(na) “investigation” includes all the proceedings under this Act conducted by the Director
or by an authority authorised by the Central Government under this Act for the collection
of evidence;]
409
G 45. Offences to be cognizable and non-bailable.—(1) Notwithstanding anything
contained in the Code of Criminal Procedure, 1973 (2 of 1974), no person accused of an
offence under this Act shall be released on bail or on his own bond unless—
…..
(1A) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2
of 1974), or any other provision of this Act, no police officer shall investigate into an
offence under this Act unless specifically authorised, by the Central Government by a
H general or special order, and, subject to such conditions as may be prescribed.
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 515
INDIA & ORS. [A. M. KHANWILKAR, J.]

of collecting evidence in relation to cognizable offences for which an A
FIR under Section 154 has been registered 410. On the contrary,
investigation i.e., collection of evidence under the PMLA need not
necessarily be in relation to the cognizable offence of money-laundering,
but it can also be for the purposes of attachment, confiscation, formulation
of reasons to conduct search or seizure under Section 17, or personal
B
search under Section 18, etc. This further implies that unlike the
procedure under the Cr.P.C., where the registration of an FIR is a
condition precedent to initiation of investigation411, in such cases, the
investigation can commence even prior to the receipt of information
pertaining to commission of money-laundering. In this regard, the learned
Additional Solicitor General draws our attention to Section 17(1)(iv) and C
Section 5(1) of the PMLA which empower the Director to collect
evidence by way of search and seizure, and attachment of property
respectively. It is submitted that this power to investigate, conferred
upon the Director by these provisions, is based on a ‘reason to believe’
that a person may be in possession of property related to crime 412 or
D
proceeds of crime413, and can be exercised at a stage preceding the
receipt of information regarding commission of a cognizable offence.
(xxxviii) It is then submitted that the provisions of the Cr.P.C.
have limited applicability to the proceedings under the PMLA. According
to Section 65 of the PMLA, the provisions of the Cr.P.C. shall apply to
arrest, search and seizure, attachment, confiscation, investigation, E
prosecution and all other proceedings under the Act, so long as the same
are not inconsistent with the provisions of the Act. It is the case of the
respondents that registration of an FIR does not amount to collection of
evidence, and, thus, is outside the purview of “investigation”, as defined
under Section 2(1)(na) of the PMLA. Consequently, it is submitted that F
since the registration of an FIR does not fall into any of seven categories
contemplated under Section 65, Section 154 of the Cr.P.C. will not apply
to proceedings under the PMLA.

410
H.N. Rishbud and Inder Singh vs. The State of Delhi, (1955) 1 SCR 1150; Union of
G
India vs. Prakash P. Hinduja & Anr., (2003) 6 SCC 195; and Manubhai Ratilal Patel
through Ushaben vs. State of Gujarat & Ors., (2013) 1 SCC 314
411
State of West Bengal & Ors. vs. Swapan Kumar Guha & Ors., (1982) 1 SCC 561 and
Shashikant (supra at Footnote No.114).
412
Section 17(1)(iv) of the PMLA
413
Section 5(1)(a) of the PMLA H
516 SUPREME COURT REPORTS [2022] 6 S.C.R.

A (xxxix) As regards the provision of a copy of the ECIR to the
accused, it is submitted that unlike an FIR which is a statutory mandate,
an ECIR is an internal document and, thus, need not be supplied to the
accused. In response to the argument of the private parties that the
failure to supply a copy of the ECIR prejudices the rights of an accused,
it is stated that revealing a copy of the ECIR would defeat the purpose
B
of the Act and would frustrate recovery provisions like attachment of
property. The learned Additional Solicitor General also refutes the
submission of the private parties that a copy of the ECIR would be
useful for grant of anticipatory bail. It is submitted that in cases of offences
under the IPC, anticipatory bail can be applied for even prior to the
C registration of an FIR414. Moreover, it is often the case that the FIR is
registered against unknown persons, and the FIR, therefore, cannot be
said to be an encyclopaedia of all the facts415.
(xl) Next, learned Additional Solicitor General made submissions
on the challenge to constitutionality of Sections 17 and 18 of the PMLA
D (i.e., the provisions relating to the power of search and seizure). According
to him, Section 17 in itself contains sufficient safeguards. Reference is
made to Section 17(1), to highlight that only the Director or any other
officer not below the rank of Deputy Director, who are high ranking
officials, can authorise a search and that too only on the basis of a reason
to believe of the existence of conditions laid down therein. It is submitted
E that the vesting of the power to authorise a search and seizure under
Section 17 with the highest responsible authority prevents misuse of the
provision. Reliance is placed on Pooran Mal vs. The Director of
Inspection (Investigation), New Delhi & Ors.416, to that effect. This
is yet bolstered by the mandate of having to record the reasons to believe
F in writing. It is further pointed out that in terms of Section 17(2), the
officer conducting the search shall forward a copy of the reasons recorded
and material in his possession to the Adjudicating Authority in a sealed
envelope immediately after the search and seizure. It is submitted that
this safeguard ensures that the reasons so recorded upon a search and
seizure and the material in the possession of the concerned officer is not
G tampered with. It is also submitted that in terms of Section 17(4), the
Authority seizing the records or property shall, within a period of thirty
414
Shri Gurbaksh Singh Sibbia & Ors. vs. State of Punjab, (1980) 2 SCC 565; Deepak
Mahajan (supra at Footnote No.60); and Sushila Aggarwal (supra at Footnote No.318)
415
Superintendent of Police, CBI & Ors. vs. Tapan Kumar Singh, (2003) 6 SCC 175
416
H (1974) 1 SCC 345.
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 517
INDIA & ORS. [A. M. KHANWILKAR, J.]

days from the date of such seizure, file an application with the Adjudicating A
Authority for the retention of the said records. Pursuant to such
application, the Adjudicating Authority, in terms of Section 8, then issues
a show cause notice to the concerned person whose records or property
are seized. Thus, the concerned person is given ample opportunity to be
heard and show cause as to why such records or property should not be
B
retained.
(xli) Emphasis is laid on Section 62 of the PMLA, which provides
for a punishment of imprisonment of up to a period of two years or a fine
up to fifty thousand rupees or both for a vexatious search made without
recording reasons in writing. It is submitted that providing a punishment
for a vexatious search is sufficient safeguard against the arbitrary exercise C
of power of search by the concerned Authority417.
(xlii) He then went on to illustrate various safeguards contained
in Section 18 of the Act. It is submitted that in terms of Section 18(2),
the Authority shall forward a copy of the reasons recorded to the
Adjudicating Authority in a sealed envelope to ensure that the records of D
search and seizure are not tampered with. Other safeguards include the
right of the person to be searched to be taken to a Gazetted Officer or
Magistrate before the search, if such person so requires418; and the
right of the person to be searched to be released if there are no reasonable
grounds for search are found after the person is taken to a Gazetted E
Officer or Magistrate419. The PMLA also mandates the Authority to
call at least two witnesses before a search and conduct the search before
such witnesses.420 The Authority seizing any property during the search
of a person is mandated to prepare a list of the record or the property
seized and get the same signed by the witnesses421. A female shall be
searched only by a female422. Similar to the mandate of Section 17(4), F
the provisions of Section 18(10) also provide the concerned person whose
records or property are seized, an opportunity to show cause as to why
such records or property should not be retained.
417
R.S. Seth Gopikrishan Agarwal vs. R.N. Sen, Assistant Collector of Customs & Ors.,
G
(1967) 2 SCR 340.
418
Section 18(3). The inherent value of such a right has been recognised by this Court
in State of Punjab vs. Baldev Singh, (1999) 6 SCC 172
419
Section 18(5) of the PMLA
420
Section 18(6) of the PMLA
421
Section 18(7) of the PMLA
422
Section 18(8) of the PMLA H
518 SUPREME COURT REPORTS [2022] 6 S.C.R.

A (xliii) Lack of safeguards in the Cr.P.C. are also highlighted. With
respect to seizures, it is submitted that the same is governed by Section
102 of the Cr.P.C., and empowers a police officer to seize any property
upon a mere suspicion. This is in stark contrast to Section 17(1) of the
PMLA which permits seizure only when there is a reason to believe,
and such reason is recorded in writing. With respect to search, it is
B
submitted that Section 165 of the Cr.P.C. practically permits any officer
above the rank of Constable to exercise such power, as opposed to
Section 17 of the PMLA, which confers such power only upon the
Director or any other officer not below the rank of Deputy Director.
(xliv) In an attempt to establish that the power of search and
C seizure is not arbitrary, our attention has been drawn to the decisions of
this Court in Pooran Mal 423 ; Income-Tax Officer, Special
Investigation Circle-B, Meerut vs. Messrs Seth Brothers & Ors.
etc.424 and Dr. Partap Singh & Anr. vs. Director of Enforcement,
Foreign Exchange Regulation Act & Ors.425 The learned Additional
D Solicitor General further defends the power of the Authority to search
the place of a person without an FIR. It is submitted that the PMLA
serves a two-fold purpose of not only being penal, but also preventive in
nature. In order to avoid a situation where the property involved in money-
laundering disappears or is disposed of before an FIR is filed in respect
of predicate offence, the PMLA empowers seizure without an FIR.
E Attention is invited to Section 17(1)(iv) of the PMLA, which uses the
phrase ‘related to crime’, and it is submitted that the use of these words
show that the Authority is empowered to seize such properties without
an FIR in order to ascertain whether such properties pertain to a scheduled
offence or whether such properties are proceeds of crime. The argument
F of the private parties that the Authority under the PMLA cannot conduct
a search on the same day without conducting any investigation, is also
rebutted by the learned Additional Solicitor General. It is submitted that
in light of the mandate to record the reasons to conduct the search/
seizure in writing, such an apprehension is ill-founded. Rather, a party
aggrieved by the sufficiency or lack of such reasons, always has the
G option to agitate the same before the Adjudicating Authority, when an
application for the retention of the records seized or frozen is filed.

423
Supra at Footnote No.416
424
(1969) 2 SCC 324
425
H (1985) 3 SCC 72
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 519
INDIA & ORS. [A. M. KHANWILKAR, J.]

(xlv) Lastly, it is submitted that by virtue of Section 65 of the A
PMLA, the provisions of the Cr.P.C. relating to search and seizure cannot
be applied to proceedings under the Act. Section 65 of the PMLA states
that the provisions of Cr.P.C. shall apply subject to the condition that the
same are not inconsistent with those of the PMLA. It is submitted that
the provisions contained in Sections 17 and 18 are self-contained with
B
adequate safeguards, and will override the provisions of the Cr.P.C. which
are at variance.
(xlvi) In reply to the challenge of the private parties to the
applicability of the proviso to Rule 3 of the Seizure Rules, 2005, learned
Additional Solicitor General submits that the rules framed under a statute
cannot be ultra vires the statute. Prior to the amendment of Section 17, C
the proviso to the Section required that a report be forwarded to the
Magistrate under Section 157 of the Cr.P.C. prior to the conduct of a
search under Section 17. After the amendment, the proviso was removed,
but a similar proviso continues to exists under Rule 3 of the
aforementioned rules. Placing reliance on Union of India & Anr. vs. D
Purushottam426, it is submitted that rules must be interpreted in a manner
which would be in harmony with the parent statute, and, therefore, even
though the rules are unamended, the proviso to Rule 3 cannot be read
into the Act and is ultra vires the Act.
(xlvii) The respondent has highlighted the legislative history of E
Sections 5 and 8 of the PMLA. It is submitted that sub-section (1) of
Section 5 has been amended four times in the years 2009, 2013, 2015
and 2018 respectively. It is stated that Section 5(1) was amended vide
Prevention of Money-Laundering (Amendment) Act, 2009 and second
proviso was inserted for the first time which made the provision for
‘immediate attachment’ of the property involved in money-laundering. F

(xlviii) It was observed in the Mutual Evaluation Report of the
FATF and the Asia Pacific Group that the confiscation of criminal
proceeds depends on conviction of the accused under the scheduled
offence, which gives rise to an apprehension of confiscation proceedings
becoming infructuous if the accused dies during the pendency of criminal G
proceedings. This technical irregularity has a negative impact on the
effectiveness of the confiscation regime; therefore, FATF recommended
corrective steps to remove this irregularity. Accordingly, Sections 5 and
8 were amended on the recommendation of FATF, as pointed out above.
426
(2015) 3 SCC 779. H
520 SUPREME COURT REPORTS [2022] 6 S.C.R.

A (xlix) It is submitted that in the Fifty Sixth Report of the Standing
Committee on Finance relating to the 2011 Bill published by the Lok
Sabha Secretariat on 08.05.2012, it was proposed to delete the
requirement of framing of charge under the scheduled offence against a
person before a property can be attached from such person, as in a
given case a property may come to rest with someone who has nothing
B
to do with the scheduled offence or even with the offence of money-
laundering.
(l) It was further proposed to make confiscation of property
independent of conviction of an accused under the scheduled offence,
as in a given case money-laundering may be done by a person who has
C not committed the scheduled offence or property may come to rest with
someone who has not committed any offence. Therefore, to avoid such
situations, Section 8(5) was proposed to be amended so as to provide for
attachment and confiscation of the proceeds of crime independent of
conviction, so long as the predicate offence and the offence of money-
D laundering have taken place and the property in question is involved in
money-laundering. The Parliament acting on such recommendations
amended sub-section (1) of Section 5 vide Prevention of Money-
Laundering (Amendment) Act, 2012 and deleted the requirement that
attachment can be made only qua the person who has been charged for
committing the scheduled offence. Further, Section 8(3)(a) of the PMLA
E was also amended to provide that on confirmation, the attachment would
continue during the pendency of proceedings related to an offence under
the PMLA or under the corresponding law of any other country.
Therefore, it is averred that Sections 5 and 8 of the PMLA, as they now
stand, enable the attachment and dispossession of the persons from the
F proceeds of crime without being dependent on the proceedings of the
scheduled offence, in consonance with the recommendations of the FATF
and global standards.
(li) Further to show the link between second proviso to Section 5
and the scheduled offence, it is submitted that the prerequisite for the
G application of ‘emergency attachment’ provision under second proviso
to Section 5 of the PMLA is that the Authority concerned must have
some material in its possession showing that such property is involved in
money-laundering, which clearly establishes the link of second proviso
with the scheduled offence. Relying on sub-section (5) of Section 8, it is
averred that the properties which can be confiscated are properties
H
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 521
INDIA & ORS. [A. M. KHANWILKAR, J.]

involved in money-laundering and also the properties used for the A
commission of the offence of money-laundering. It is submitted that the
ambit of sub-section (1) of Section 5 is very wide, which not only covers
persons who are involved in the commission of scheduled offence, but
also any person in possession of the proceeds of crime, who need not be
the person accused of PMLA offence or who is being tried for the
B
scheduled offence. It is further submitted that it would not be correct to
say that ‘any property’ of ‘any person’ can be attached by invoking the
second proviso to Section 5, as the proviso only deals with the property
which is involved in money-laundering. Further, it is stated that the person
whose property is sought to be attached may not be charged under the
scheduled offence. Therefore, it is urged that the scheme of second C
proviso is consistent with Section 5(1) of PMLA. It is also submitted
that under the second proviso the Parliament has provided various
safeguards in the form of conditions that have to be satisfied before the
power under the proviso can be invoked. It is stated that firstly, the
power of provisional attachment can only be exercised by a high-ranking
D
officer; secondly, such officer has to record the ‘reasons to believe’ that
the property is proceeds of crime or involved in money-laundering and
lastly, he should be satisfied that if the property is not attached
immediately, the confiscation proceedings under the PMLA will get
frustrated. Further, it is submitted that such belief must be formed on the
basis of material in the possession of the officer. It is then submitted that E
the expression ‘property involved in money-laundering’ under the second
proviso to Section 5 is wide enough to cover the proceeds of crime as
well. Therefore, it is submitted that only the property that is involved in
the money-laundering can be attached under the second proviso and not
‘any property’. It is urged that the ambit of second proviso to Section 5
F
is wider than that of main provision of Section 5 itself, as second proviso
enables the attachment of ‘any property involved in money-laundering’,
whereas the main provision only allows the attachment of ‘proceeds of
crime’.
(lii) It is contended that although the function of a proviso is to
add something or to carve out an exception on a subject not covered by G
the main Section, however, in many cases, Courts have treated even a
proviso as ‘a substantive provision conferring substantive powers’ 427. It

427
The Georgia Railroad and Banking Company vs. James M. Smith, 128 US 174
(1888) and Commissioner of Stamp Duties vs. Atwill & Ors., (1973) 1 All ER 576
H
522 SUPREME COURT REPORTS [2022] 6 S.C.R.

A is further submitted that even Section 8(5), on the conclusion of the trial,
not only permits confiscation of property involved in money-laundering
but also the property used for the commission of the offence of money-
laundering. Therefore, such interpretation of the second proviso to
Section 5 of the PMLA is consistent with the entire scheme of the Act.
B (liii) Learned Additional Solicitor General has further refuted the
argument of the private parties that the attachment of property equivalent
in value of the proceeds of crime can only be done if the proceeds of
crime are situated outside India. It is stated that it is manifest from the
definition of “proceeds of crime” under Section 2(1)(u) of the PMLA
that the proceeds of crime would not only cover the concerned property,
C but also the value of such property. It is further submitted that the
attachment of property under second proviso is in consonance with the
object of the PMLA. Reliance has been placed on Attorney General
for India & Ors. vs. Amratlal Prajivandas & Ors.428, wherein the
Court upheld the constitutionality of definition of “illegally acquired
D property” and application of SAFEMA to the relatives and associates of
detenues. Further, Order 38 Rule 5 of the Code of Civil Procedure,
1908429 has also been relied upon to state that the attachment of property
can also be done before judgment, so as to secure the subject matter of
the suit during the pendency of the suit430. It is submitted that the object
of Section 5(1) is similar to that of Order 38 Rule 5 which is to secure
E the properties from getting disposed of before the confiscation of such
property.
(liv) The respondent has further highlighted the procedural
safeguards given under second proviso to Section 5(1) of the PMLA. It
is submitted that the Authority under the Act will have to first apply its
F mind to the materials on record and record its reasons to believe in
writing before taking any further action. Secondly, the Authority must be
satisfied that if property will not be immediately attached, the confiscation
proceedings might get frustrated. Thirdly, it is stated that order under
Section 5(1) is only a provisional order which is valid only for 180 days,
G subject to the confirmation of Adjudicating Authority. Fourthly, a copy of
the order of provisional attachment is to be forwarded to the Adjudicating
Authority in a sealed envelope. Fifthly, the Authority is mandated to file
428
(1994) 5 SCC 54 (also at Footnote No.175)
429
For short, “CPC” or “1908 Code”
430
H Raman Tech. & Process Engg. Co. & Anr. vs. Solanki Traders, (2008) 2 SCC 302
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 523
INDIA & ORS. [A. M. KHANWILKAR, J.]

a complaint before the Adjudicating Authority within 30 days of the order A
of the provisional attachment. Sixthly, it is stated that the life of a
provisional attachment order is 180 days or the date when the Adjudicating
Authority makes an order under Section 8(2) PMLA, whichever is earlier.
Seventhly, a show cause notice is served on the aggrieved person, calling
upon such person to indicate the sources of his income, earning or assets
B
or by means of which he has acquired the property attached under Section
5(1) PMLA. Therefore, it is submitted that the PMLA ensures that the
principles of natural justice do not get violated. Eighthly, the noticee will
have the opportunity to produce evidence on which he relies before the
Adjudicating Authority. Ninthly, it is stated that due procedure is followed
by the Adjudicating Authority which hear both the parties before passing C
any order
(lv) Further, under Section 8(6) of the PMLA, the Special Court
is empowered to release the property if after the conclusion of the trial
it is found that no offence of money-laundering has taken place or the
property is not involved in money-laundering. D
(lvi) Next, learned Additional Solicitor General highlights the
provisions for challenging the orders passed by the Adjudicating Authority.
It is submitted that the order passed by the Adjudicating Authority is
subject to appeal before the Appellate Tribunal. Also, the order passed
by the Tribunal is appealable under Section 42 of the PMLA before the E
High Court on any question of fact or question of law. Therefore, it is
submitted that the ED cannot attach any property on its whims and
fancies. Further, PMLA ensures ample judicial scrutiny of the order of
attachment.
(lvii) It is submitted that even a third party has the right to challenge F
the provisional attachment order under Section 8(2) of the PMLA and if
the Adjudicating Authority is satisfied that the property is not involved in
money-laundering and the claim of the third party is legitimate one, then
it may release such property from attachment. Reliance has been placed
on Radha Mohan Lakhotia, Indian National and Citizen vs. Deputy
Director, PMLA, Directorate of Enforcement, Ministry of Finance, G
Department of Revenue431 to state that the Bombay High Court has
even before the amendment of Section 5(1), held that a provisional
attachment order can even be passed against the person who is not
named as an accused in the commission of scheduled offence. Further it
431
2010 SCC OnLine Bom 1116 H
524 SUPREME COURT REPORTS [2022] 6 S.C.R.

A is stated that the High Courts in the following cases, while relying on
Radha Mohan Lakhotia432, have upheld the validity of Section 5(1) of
the PMLA: B. Rama Raju vs. Union of India & Ors. 433, Alive
Hospitality and Food Private Limited vs. Union of India & Ors. 434,
K. Sowbaghya vs. Union of India & Ors.435, Usha Agarwal vs. Union
of India & Ors.436 and J. Sekar vs. Union of India & Ors.437.
B
(lviii) With regard to the constitutional validity of Section 8, it is
submitted that ‘no person has a right to enjoy the fruits of a property
which is the product of crime’.
(lix) It is submitted that the possession of the property involved in
C money-laundering can be validly taken before the conviction of a person
for the offence of money-laundering, as the non-conviction-based asset
forfeiture model, also known as civil forfeiture legislation, is prevalent
even in countries such as United States of America, Italy, Ireland, South
Africa, UK, Australia and certain provinces of Canada. Further, it is
stated that the confiscation of property without conviction under Section
D 8(4) is in consonance with the Recommendation No.3 of FATF (2003)/
Recommendation No.4 of FATF (2012).
(lx) It is further submitted that non-conviction-based attachment
and taking possession of property cannot be considered as unconstitutional,
since such property can only be confiscated upon conclusion of trial
E leading to conviction, as provided under Section 8(5) of the PMLA. It is
averred that the judicial oversight of Adjudicating Authority is an adequate
safeguard provided under the Act.
(lxi) The respondent has relied on Biswanath Bhattacharya vs.
Union of India and Ors.438 to urge that the sovereign would be
F completely justified in confiscating a property which is obtained by a
person through illegal means439. It is further submitted that the Taking
Possession Rules, 2013 provides that before eviction of a person from

432
Supra at Footnote No.431
433
2011 SCC OnLine AP 152
G 434
2013 SCC OnLine Guj 3909
435
2016 SCC OnLine Kar 282
436
2017 SCC OnLine Sikk 146
437
2018 SCC OnLine Del 6523
438
(2014) 4 SCC 392
439
Divisional Forest Officer & Anr. vs. G.V. Sudhakar Rao & Ors., (1985) 4 SCC 573
H and Yogendra Kumar Jaiswal & Ors. vs. State of Bihar & Ors., (2016) 3 SCC 183
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 525
INDIA & ORS. [A. M. KHANWILKAR, J.]

the concerned property a notice of 10 days’ time has to be served upon A
him, which is an adequate safeguard provided under the Act as it enables
the aggrieved person to take a suitable action under Section 26 of the
PMLA.
(lxii) It is further pointed out that before the confirmation of the
attachment order, any person having an interest in the property have the B
opportunity of being heard by the Adjudicating Authority. Therefore, it is
submitted that the power conferred by Section 8(4) of the PMLA to
dispossess a person in possession of ‘proceeds of crime’ or ‘the property
involved in money-laundering’ even before the conviction is perfectly
valid, reasonable and justified.
C
(lxiii) To counter the argument of the private parties that the
attachment of the property will lapse if no proceedings is initiated under
the Act by way of filing a complaint before the Special Court before the
expiry of three hundred and sixty-five days of the attachment, it is
submitted that the period of attachment under Section 8(3) of the PMLA
will be three hundred and sixty-five days or during the pendency of ‘any D
proceedings’ which includes any proceeding including of bail, quashing
etc.
(lxiv) It is submitted that the expression ‘pendency of proceedings’
relating to an offence under the PMLA before a Court is broad enough
to mean any pending proceedings relating to an offence under the Act440. E
Therefore, it is stated that even if for some reason a complaint has not
been filed after three hundred and sixty-five days from the date of
attachment then such attachment should not lapse.
(lxv) It is submitted that when a provisional attachment order is
finally confirmed, then no person can claim any right, title or interest to F
the proceeds of crime or property involved in money-laundering.
Therefore, only on a conclusion of trial under the Act and upon a finding
by the Special Court that the offence of money-laundering has not taken
place or the property is not involved in money-laundering, an order for
release of such property can be made. G
(lxvi) Further, it is stated a person may file frivolous litigations so
as to prolong the proceedings. Therefore, Section 8(3)(a) requires a
broad construction so as to deny the money launderer from enjoying the

440
Kamlapati Trivedi vs. State of West Bengal, (1980) 2 SCC 91 H
526 SUPREME COURT REPORTS [2022] 6 S.C.R.

A proceeds of crime. It is stated that the object of the Act is also manifest
from Section 8(7) where even after the death of the accused the proceeds
of crime or property involved in money-laundering can be confiscated
upon an order of the Special Court. Therefore, for the abovementioned
reasons, it is stated that the expression “during the pendency of the
proceedings” requires a broad construction.
B
CONSIDERATION
18. We have heard Mr. Kapil Sibal, Dr. Abhishek Manu Singhvi,
Mr. Sidharth Luthra, Mr. Mukul Rohatgi, Mr. Vikram Chaudhari,
Mr. Amit Desai, Mr. S. Niranjan Reddy, Ms. Menaka Guruswami,
C Mr. Siddharth Aggarwal, Mr. Aabad Ponda, Mr. N. Hariharan and
Mr. Mahesh Jethmalani, learned senior counsel appearing for private
parties and Mr. Tushar Mehta, learned Solicitor General of India and
Mr. S.V. Raju, learned Additional Solicitor General of India, appearing
for the Union of India.
D THE 2002 ACT
19. The Act was enacted to address the urgent need to have a
comprehensive legislation inter alia for preventing money-laundering,
attachment of proceeds of crime, adjudication and confiscation thereof
including vesting of it in the Central Government, setting up of agencies
E and mechanisms for coordinating measures for combating money-
laundering and also to prosecute the persons indulging in the process or
activity connected with the proceeds of crime. This need was felt world
over owing to the serious threat to the financial systems of the countries,
including to their integrity and sovereignty because of money-laundering.
The international community deliberated over the dispensation to be
F provided to address the serious threat posed by the process and activities
connected with the proceeds of crime and integrating it with formal
financial systems of the countries. The issues were debated threadbare
in the United Nation Convention Against Illicit Traffic in Narcotic Drugs
and Psychotropic Substances, Basle Statement of Principles enunciated
G in 1989, the FATF established at the summit of seven major industrial
nations held in Paris from 14th to 16th July, 1989, the Political Declaration
and Noble Programme of Action adopted by United Nations General
Assembly vide its Resolution No.S-17/2 of 23.2.1990, the United Nations
in the Special Session on countering World Drug Problem Together
concluded on the 8th to the 10th June, 1998, urging the State parties to
H
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 527
INDIA & ORS. [A. M. KHANWILKAR, J.]

enact a comprehensive legislation. This is evident from the introduction A
and Statement of Objects and Reasons accompanying the Bill which
became the 2002 Act. The same reads thus:
“INTRODUCTION
Money-laundering poses a serious threat not only to
the financial systems of countries, but also to their integrity B
and sovereignty. To obviate such threats international community
has taken some initiatives. It has been felt that to prevent money-
laundering and connected activities a comprehensive legislation is
urgently needed. To achieve this objective the Prevention of
Money-laundering Bill, 1998 was introduced in the Parliament. C
The Bill was referred to the Standing Committee on Finance, which
presented its report on 4th March, 1999 to the Lok Sabha. The
Central Government broadly accepted the recommendation of the
Standing Committee and incorporated them in the said Bill along
with some other desired changes.
D
STATEMENT OF OBJECTS AND REASONS
It is being realised, world over, that money-laundering
poses a serious threat not only to the financial systems of
countries, but also to their integrity and sovereignty. Some
of the initiatives taken by the international community to obviate E
such threat are outlined below:—
(a) the United Nations Convention Against Illicit Traffic
in Narcotic Drugs and Psychotropic Substances, to which
India is a party, calls for prevention of laundering of
proceeds of drug crimes and other connected activities F
and confiscation of proceeds derived from such offence.
(b) the Basle Statement of Principles, enunciated in 1989,
outlined basic policies and procedures that banks should
follow in order to assist the law enforcement agencies in
tackling the problem of money-laundering.
G
(c) the Financial Action Task Force established at the
summit of seven major industrial nations, held in Paris
from 14th to 16th July, 1989, to examine the problem of
money-laundering has made forty recommendations,
which provide the foundation material for comprehensive
H
528 SUPREME COURT REPORTS [2022] 6 S.C.R.

A legislation to combat the problem of money-laundering.
The recommendations were classified under various
heads. Some of the important heads are—
(i) declaration of laundering of monies carried through
serious crimes a criminal offence;
B (ii) to work out modalities of disclosure by financial
institutions regarding reportable transactions;
(iii) confiscation of the proceeds of crime;
(iv) declaring money-laundering to be an extraditable
offence; and
C (v) promoting international co-operation in
investigation of money-laundering.
(d) the Political Declaration and Global Programme of
Action adopted by United Nations General Assembly by
its Resolution No. S-17/2 of 23rd February, 1990, inter
D alia, calls upon the member States to develop mechanism
to prevent financial institutions from being used for
laundering of drug related money and enactment of
legislation to prevent such laundering.
(e) the United Nations in the Special Session on
countering World Drug Problem Together concluded on
E
the 8th to the 10th June, 1998 has made another
declaration regarding the need to combat money-
laundering. India is a signatory to this declaration.
2. In view of an urgent need for the enactment or a comprehensive
legislation inter alia for preventing money-laundering and
F connected activities confiscation of proceeds of crime, setting up
of agencies and mechanisms for coordinating measures for
combating money-laundering, etc., the Prevention of Money-
Laundering Bill, 1998 was introduced in the Lok Sabha on the 4th
August, 1998. The Bill was referred to the Standing Committee
G on Finance, which presented its report on the 4th March, 1999 to
the Lok Sabha. The recommendations of the Standing Committee
accepted by the Central Government are that (a) the expressions
“banking company” and “person” may be defined; (b) in Part I of
the Schedule under Indian Penal Code the word offence under
section 477A relating to falsification of accounts should be omitted;
H (c) ‘knowingly’ be inserted in clause 3(b) relating to the definition
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 529
INDIA & ORS. [A. M. KHANWILKAR, J.]

of money-laundering; (d) the banking companies financial A
institutions and intermediaries should be required to furnish
information of transactions to the Director instead of Commissioner
of Income-tax (e) the banking companies should also be brought
within the ambit of clause II relating to obligations of financial
institutions and intermediaries; (f) a definite time-limit of 24 hours
B
should be provided for producing a person about to be searched
or arrested person before the Gazetted Officer or Magistrate; (g)
the words “unless otherwise proved to the satisfaction of the
authority concerned” may be inserted in clause 22 relating to
presumption on inter-connected transactions; (h) vacancy in the
office of the Chairperson of an Appellate Tribunal, by reason of C
his death, resignation or otherwise, the senior-most member shall
act as the Chairperson till the date on which a new Chairperson
appointed in accordance with the provisions of this Act to fill the
vacancy, enters upon his office; (i) the appellant before the
Appellate Tribunal may be authorised to engage any authorised
D
representative as defined under section 288 of the Income-tax
Act, 1961, (j) the punishment for vexatious search and for false
information may be enhanced from three months imprisonment to
two years imprisonment, or fine of rupees ten thousand to fine of
rupees fifty thousand or both; (k) the word ‘good faith’ may be
incorporated in the clause relating to Bar of legal proceedings. E
The Central Government have broadly accepted the above
recommendations and made provisions of the said
recommendations in the Bill.
3. In addition to above recommendations of the standing committee
the Central Government proposes to (a) relax the conditions F
prescribed for grant of bail so that the Court may grant bail to a
person who is below sixteen years of age, or woman, or sick or
infirm, (b) levy of fine for default of non-compliance of the issue
of summons, etc. (c) make provisions for having reciprocal
arrangement for assistance in certain matters and procedure for
attachment and confiscation of property so as to facilitate the G
transfer of funds involved in money-laundering kept outside the
country and extradition of the accused persons from abroad.
4. The Bill seeks to achieve the above objects.”
(emphasis supplied)
H
530 SUPREME COURT REPORTS [2022] 6 S.C.R.

A Notably, before coming into force of the 2002 Act, various other
legislations were already in vogue to deal with attachment and
confiscation/forfeiture of the proceeds of crime linked to concerned
offences and yet another added recently in 2016, such as:
a) The Forfeiture Act, 1857 [Repealed in 1922];
B b) The Criminal Law Amendment Ordinance, 1944;
c) The Unlawful Activities (Prevention) Act, 1967 [Chapter V
(inserted in 2013)];
d) The Wild Life (Protection) Act, 1972 [Chapter VIA inserted in
C 2003];
e) The Code of Criminal Procedure, 1973 [Chapter XXXIV –
Disposal of Property];
f) The Smugglers and Foreign Exchange Manipulators (Forfeiture
of Property) Act, 1976;
D
g) The Narcotic Drugs and Psychotropic Substances Act, 1985
[Chapter VA inserted in 1989];
h) The Prevention of Corruption Act, 1988 [Section 5(6)];
i) The Maharashtra Control of Organised Crime Act, 1999
E [Section 20] [While this is a State law, it has been adopted by
several States, or has served as a model law for other States];
and
j) The Anti-Hijacking Act, 2016 [Section 19].
As aforesaid, notwithstanding the existing dispensation to deal
F with proceeds of crime, the Parliament enacted the Act as a result of
international commitment to sternly deal with the menace of money-
laundering of proceeds of crime having transnational consequences and
on the financial systems of the countries. The Prevention of Money-
laundering Bill was passed by both the Houses of Parliament and received
G the assent of President on 17.1.2003. It came into force on 1.7.2005
titled “The Prevention of Money-Laundering Act, 2002 (15 of 2003)”.
20. The broad framework of the 2002 Act is that it consists of ten
chapters. Chapter I deals with the short title, extent and commencement
and definitions. Chapter II deals with offence of money-laundering.
Chapter III deals with the mechanism of attachment, adjudication and
H
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 531
INDIA & ORS. [A. M. KHANWILKAR, J.]

confiscation. Chapter IV deals with obligations of the banking companies, A
financial institutions and intermediaries. Chapter V is in respect of steps
and safeguards to be taken for issuing summons, carrying out searches
and seizures including power to arrest, presumptions and burden of proof.
Chapter VI deals with the matters concerning Appellate Tribunal. Chapter
VII deals with matters concerning Special Courts, Chapter VIII is
B
regarding the Authorities under the Act and their jurisdiction and powers.
Chapter IX deals with reciprocal arrangement for assistance in certain
matters and procedure for attachment and confiscation of property.
Chapter X deals with miscellaneous and incidental matters. In terms of
Section 73 in this Chapter, the Central Government has made rules for
carrying out the provisions of the Act. The said rules deal with different C
aspects namely:
a) The Prevention of Money-laundering (the Manner of
Forwarding a Copy of the Order of Provisional Attachment
of Property along with the Material, and Copy of the
Reasons along with the Material in respect of Survey, to D
the Adjudicating Authority and its period of Retention) Rules,
2005;
b) The Prevention of Money-laundering (Receipt and
Management of Confiscated Properties) Rules, 2005;
c) The Prevention of Money-laundering (Maintenance of E
Records) Rules, 2005 as amended by (Fifth Amendment)
Rules, 2019;
d) The Prevention of Money-laundering (Forms, Search and
Seizure or Freezing & the Manner of Forwarding the
Reasons and Material to the Adjudicating Authority, F
Impounding and Custody of Records and the Period of
Retention) Rules, 2005;
e) The Prevention of Money-laundering (the Forms and the
Manner of Forwarding a Copy of Order of Arrest of a
Person along with the Material to the Adjudicating Authority G
and its Period of Retention) Rules, 2005;
f) The Prevention of Money-laundering (the Manner of
Forwarding a Copy of the Order of Retention of Seized
Property along with the Material to the Adjudicating
Authority and the period of its Retention) Rules, 2005; H
532 SUPREME COURT REPORTS [2022] 6 S.C.R.

A g) The Prevention of Money-laundering (Manner of Receiving
the Records Authenticated Outside India) Rules, 2005;
h) The Prevention of Money-laundering (Appeal) Rules, 2005;
i) The Prevention of Money-laundering (Appointment and
Conditions of Service of Chairperson and Members of
B Adjudicating Authorities) Rules, 2007;
j) The Adjudicating Authority (Procedure) Regulations, 2013;
k) The Prevention of Money-laundering (Issuance of
Provisional Attachment Order) Rules, 2013;
C l) The Prevention of Money-laundering (Taking Possession
of Attached or Frozen Properties Confirmed by the
Adjudicating Authority) Rules, 2013;
m) The Prevention of Money-laundering (Restoration of
Property) Rules, 2016 as amended by (Amendment) Rules,
D 2019.
We may further note that the 2002 Act has been amended from
time to time to address the exigencies and for the need to strengthen the
mechanisms as per the recommendations made by the international body
to address the scourge of laundering of proceeds of crime affecting the
E financial systems and also integrity and sovereignty of the country. The
list of amending Acts is as follows:
a) The Prevention of Money-Laundering (Amendment) Act,
2005 (20 of 2005) (w.e.f. 1-7-2005);
b) The Prevention of Money-Laundering (Amendment) Act,
F 2009 (21 of 2009) (w.e.f. 1-6-2009);
c) The Prevention of Money-Laundering (Amendment) Act,
2012 (2 of 2013) (w.e.f. 15-2-2013);
d) The Finance Act, 2015 (20 of 2015) (w.e.f. 14-5-2015);
G e) The Black Money (Undisclosed Foreign Income and Assets)
and Imposition of Tax Act, 2015 (22 of 2015) (w.e.f. 1-7-
2015);
f) The Finance Act, 2016 (28 of 2016) (w.e.f. 1-6-2016);

H
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 533
INDIA & ORS. [A. M. KHANWILKAR, J.]

g) The Finance Act, 2018 (13 of 2018) (w.e.f. 19-4-2018); A
h) The Prevention of Corruption (Amendment) Act, 2018 (16
of 2018) (w.e.f. 26-7-2018);
i) The Finance Act, 2019 (7 of 2019) (w.e.f. 20-3-2019);
j) The Aadhaar and other Laws (Amendment) Act, 2019 (14 B
of 2019) (w.e.f. 25-7-2019); and
k) The Finance (No.2) Act, 2019 (23 of 2019) (w.e.f. 1-8-
2019).
21. The petitioners have questioned the amendments brought about
by the Parliament by taking recourse to Finance Bill/Money Bill. At the C
outset, it was made clear to all concerned that the said ground of challenge
will not be examined in the present proceedings as it is pending for
consideration before the Larger Bench of this Court (seven Judges) in
view of the reference order passed in Rojer Mathew441. We are
conscious of the fact that if that ground of challenge is to be accepted, it D
may go to the root of the matter and amendments effected vide Finance
Act would become unconstitutional or ineffective. Despite that, it had
become necessary to answer the other contentions which may otherwise
require consideration in the event of the principal ground of challenge is
answered against the petitioners. In any case, until the larger Bench
decides that issue authoritatively, the authorities and the Adjudicating E
Authority as well as the Courts are obliged to give effect to the amended
provisions. Resultantly, the other issues raised in this batch of cases
being recurring and as are involved in large number of cases to be dealt
with by the authorities and the Adjudicating Authority under the Act and
the concerned Courts on daily basis, including the Constitutional Courts, F
it has become necessary to answer the other grounds of challenge in the
meantime. On that understanding, we proceeded with the hearing of the
batch of cases before us to deal with the other challenges regarding the
concerned provision(s) being otherwise unconstitutional and ultra vires.
22. We do not deem it necessary to deal with the factual matrix
G
involved in the concerned case. For, after answering the issues regarding
the validity as dealt with herein, including interpretation of the concerned
provision(s), the petitioners can be relegated to pursue their other remedies
(such as for bail, quashing, discharge, etc.), before the appropriate forum.
441
Supra at Footnote No.90 H
534 SUPREME COURT REPORTS [2022] 6 S.C.R.

A PREAMBLE OF THE 2002 ACT
23. The Preamble of the 2002 Act reads thus:
“An Act to prevent money-laundering and to provide
for confiscation of property derived from, or involved in,
money-laundering and for matters connected therewith or
B incidental thereto.
WHEREAS the Political Declaration and Global
Programme of Action, annexed to the resolution S-17/2 was
adopted by the General Assembly of the United Nations at its
seventeenth special session on the twenty-third day of February,
C 1990;
AND WHEREAS the Political Declaration adopted by the
Special Session of the United Nations General Assembly held on
8th to 10th June, 1998 calls upon the Member States to adopt
national money-laundering legislation and programme;
D
AND WHEREAS it is considered necessary to implement
the aforesaid resolution and the Declaration.”
Even the Preamble of the Act reinforces the background in which the
Act has been enacted by the Parliament being commitment of the country
to the international community. It is crystal clear from the Preamble that
E
the Act has been enacted to prevent money-laundering and to provide
for confiscation of property derived from or involved in money-laundering
and for matters connected therewith or incidental thereto. It is neither a
pure regulatory legislation nor a pure penal legislation. It is amalgam of
several facets essential to address the scourge of money-laundering as
F such. In one sense, it is a sui generis legislation.
24. As aforesaid, it is a comprehensive legislation dealing with all
the related issues concerning prevention of money-laundering, attachment
of proceeds of crime, adjudication and confiscation thereof including
vesting of it in the Central Government, setting up of agencies and
G mechanisms for coordinating measures for combating money-laundering
and also to prosecute the persons indulging in the process or activity
connected with the proceeds of crime. While considering the challenge
to the relevant provision(s) of the 2002 Act, we cannot be oblivious to
the objects and reasons for enacting such a special legislation and the
seriousness of the issues to be dealt with thereunder including having
H
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 535
INDIA & ORS. [A. M. KHANWILKAR, J.]

transnational implications. Every provision in the 2002 Act will have to A
be given its due significance while keeping in mind the legislative intent
for providing a special mechanism to deal with the scrouge of money-
laundering recognised world over and with the need to deal with it sternly.
DEFINITION CLAUSE
25. Section 2 defines some of the expressions used in the relevant B
provision(s) of the 2002 Act. We may usefully refer to some of the
expressions defined in this section having bearing on the matters in issue,
namely (as amended from time to time) –
“2. Definitions.—(1) In this Act, unless the context otherwise
requires,— C

(a) “Adjudicating Authority” means an Adjudicating Authority
appointed under sub-section (1) of section 6;
(b) “Appellate Tribunal” means the Appellate Tribunal 442[referred
to in] section 25; D
(c) “Assistant Director” means an Assistant Director appointed
under sub-section (1) of section 49;
(d) “attachment” means prohibition of transfer, conversion,
disposition or movement of property by an order issued under
Chapter III; E
*** *** ***
(j) “Deputy Director” means a Deputy Director appointed under
sub-section (1) of section 49;
(k) “Director” or “Additional Director” or “Joint Director” means F
a Director or Additional Director or Joint Director, as the case
may be, appointed under sub-section (1) of section 49;
*** *** ***
443
[(na)”investigation” includes all the proceedings under this Act
conducted by the Director or by an authority authorised by the G
Central Government under this Act for the collection of evidence];
*** *** ***

442
Subs. by Act 28 of 2016, sec. 232(a), for “established under” (w.e.f. 1-6-2016)
443
Ins. by Act 20 of 2005, sec. 2 (w.e.f. 1-7-2005) H
536 SUPREME COURT REPORTS [2022] 6 S.C.R.

A (p) “money-laundering” has the meaning assigned to it in section
3;
*** *** ***
(t) “prescribed” means prescribed by rules made under this Act;
B (u) “proceeds of crime” means any property derived or obtained,
directly or indirectly, by any person as a result of criminal activity
relating to a scheduled offence or the value of any such property
444
[or where such property is taken or held outside the country,
then the property equivalent in value held within the country] 445[or
C abroad];
446
[Explanation.—For the removal of doubts, it is hereby
clarified that “proceeds of crime” include property not only derived
or obtained from the scheduled offence but also any property
which may directly or indirectly be derived or obtained as a result
D of any criminal activity relatable to the scheduled offence;]
(v) “property” means any property or assets of every description,
whether corporeal or incorporeal, movable or immovable, tangible
or intangible and includes deeds and instruments evidencing title
to, or interest in, such property or assets, wherever located;
E
447
[Explanation.—For the removal of doubts, it is hereby
clarified that the term “property” includes property of any kind
used in the commission of an offence under this Act or any of the
scheduled offences];

F *** *** ***
(x) “Schedule” means the Schedule to this Act;
(y) “scheduled offence” means—
(i) the offences specified under Part A of the Schedule; or
G

444
Ins. by the Finance Act, 2015 (20 of 2015), sec. 145(i) (w.e.f. 14-5-2015).
445
Ins. by Act 13 of 2018, sec. 208(a) (w.e.f. 19-4-2018, vide G.S.R. 383(E), dated 19 th
April, 2018)
446
Ins. by the Finance (No.2) Act, 2019, sec. 192(iii) (w.e.f. 1-8-2019)
H 447
Ins. by Act 2 of 2013, sec. 2(x) (w.e.f. 15-2-2013, vide S.O. 343(E), dated 8.2.2013).
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 537
INDIA & ORS. [A. M. KHANWILKAR, J.]

448
[(ii) the offences specified under Part B of the Schedule if A
the total value involved in such offences is 449[one crore rupees]
or more; or]
450
[(iii) the offences specified under Part C of the Schedule;]
(z) “Special Court” means a Court of Session designated as Special
Court under sub-section (1) of section 43; B

(za) “transfer” includes sale, purchase, mortgage, pledge, gift, loan
or any other form of transfer of right, title, possession or lien;
(zb) “value” means the fair market value of any property on the
date of its acquisition by any person, or if such date cannot be C
determined, the date on which such property is possessed by such
person”
26. We would now elaborate upon the meaning of “investigation”
in Clause (na) of Section 2(1). It includes all proceedings under the Act
conducted by the Director or an authority authorised by the Central D
Government under this Act for collection of evidence. The expression
“all the proceedings under this Act” unquestionably refers to the action
of attachment, adjudication and confiscation, as well as actions undertaken
by the designated authorities mentioned in Chapter VIII of the Act, under
Chapter V of the Act, and for facilitating the adjudication by the
Adjudicating Authority referred to in Chapter III to adjudicate the matters E
in issue, including until the filing of the complaint by the authority authorised
in that behalf before the Special Courts constituted under Chapter VII
of the Act. The expression “proceedings”, therefore, need not be given
a narrow meaning only to limit it to proceedings before the Court or
before the Adjudicating Authority as is contended but must be understood F
contextually. This is reinforced from the scheme of the Act as it recognises
that the statement recorded by the Director in the course of inquiry, to
be deemed to be judicial proceedings in terms of Section 50(4) of the
2002 Act. Needless to underscore that the authorities referred to in
Section 48 of the Act are distinct from the Adjudicating Authority referred
448
Subs. by Act 21 of 2009, sec. 2(vi), for sub-clause (ii) (w.e.f. 1-6-2009). Sub-clause
G
(ii), before substitution, stood as under:
“(ii) “the offences specified under Part B of the Schedule if the total value
involved in such offence is thirty lakh rupees or more;”
449
Subs. by the Finance Act, 2015 (20 of 2015), sec. 145(ii), for “thirty lakh rupees”
(w.e.f. 14.5.2015)
450
Subs. by Act 21 of 2009 (see Footnote No.448) H
538 SUPREME COURT REPORTS [2022] 6 S.C.R.

A to in Section 6 of the 2002 Act. The Adjudicating Authority referred to in
Section 6 is entrusted with the task of adjudicating the matters in issue
for confirmation of the provisional attachment order issued under Section
5 of the 2002 Act, passed by the Authority referred to in Section 48 of
the Act. The confirmation of provisional attachment order is done by the
Adjudicating Authority under Section 8 of the 2002 Act, and if confirmed,
B
the property in question is ordered to be confiscated and then it would
vest in the Central Government as per Section 9 of the 2002 Act subject
to the outcome of the trial of the offence under the 2002 Act (i.e., Section
3 of offence of money-laundering punishable under Section 4). Suffice it
to observe that the expression “proceedings” must be given expansive
C meaning to include actions of the authorities (i.e., Section 48) and of the
Adjudicating Authority (i.e., Section 6), including before the Special Court
(i.e., Section 43).
27. The task of the Director or an authority authorised by the
Central Government under the 2002 Act for the collection of evidence is
D the intrinsic process of adjudication proceedings. In that, the evidence
so collected by the authorities is placed before the Adjudicating Authority
for determination of the issue as to whether the provisional attachment
order issued under Section 5 deserves to be confirmed and to direct
confiscation of the property in question. The expression “investigation”,
therefore, must be regarded as interchangeable with the function of
E “inquiry” to be undertaken by the authorities for submitting such evidence
before the Adjudicating Authority.
28. In other words, merely because the expression used is
“investigation” — which is similar to the one noted in Section 2(h) of the
1973 Code, it does not limit itself to matter of investigation concerning
F the offence under the Act and Section 3 in particular. It is a different
matter that the material collected during the inquiry by the authorities is
utilised to bolster the allegation in the complaint to be filed against the
person from whom the property has been recovered, being the proceeds
of crime. Further, the expression “investigation” used in the 2002 Act is
G interchangeable with the function of “inquiry” to be undertaken by the
Authorities under the Act, including collection of evidence for being
presented to the Adjudicating Authority for its consideration for
confirmation of provisional attachment order. We need to keep in mind
that the expanse of the provisions of the 2002 Act is of prevention of
money-laundering, attachment of proceeds of crime, adjudication and
H
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 539
INDIA & ORS. [A. M. KHANWILKAR, J.]

confiscation thereof, including vesting of it in the Central Government A
and also setting up of agency and mechanism for coordinating measures
for combating money-laundering.
29. Coming to the next relevant definition is expression “money-
laundering”, it has the meaning assigned to it in Section 3 of the Act. We
would dilate on this aspect while dealing with the purport of Section 3 of B
the Act a little later.
30. The other relevant definition is “proceeds of crime” in Section
2(1)(u) of the 2002 Act. This definition is common to all actions under
the Act, namely, attachment, adjudication and confiscation being civil in
nature as well as prosecution or criminal action. The original provision C
prior to amendment vide Finance Act, 2015 and Finance (No.2) Act,
2019, took within its sweep any property (mentioned in Section 2(1)(v)
of the Act) derived or obtained, directly or indirectly, by any person “as
a result of” criminal activity “relating to” a scheduled offence (mentioned
in Section 2(1)(y) read with Schedule to the Act) or the value of any
such property. Vide Finance Act, 2015, it further included such property D
(being proceeds of crime) which is taken or held outside the country,
then the property equivalent in value held within the country and by
further amendment vide Act 13 of 2018, it also added property which is
abroad. By further amendment vide Finance (No.2) Act, 2019, Explanation
has been added which is obviously a clarificatory amendment. That is E
evident from the plain language of the inserted Explanation itself. The
fact that it also includes any property which may, directly or indirectly,
be derived as a result of any criminal activity relatable to scheduled
offence does not transcend beyond the original provision. In that, the
word “relating to” (associated with/has to do with) used in the main
provision is a present participle of word “relate” and the word “relatable” F
is only an adjective. The thrust of the original provision itself is to indicate
that any property is derived or obtained, directly or indirectly, as a result
of criminal activity concerning the scheduled offence, the same be
regarded as proceeds of crime. In other words, property in whatever
form mentioned in Section 2(1)(v), is or can be linked to criminal activity G
relating to or relatable to scheduled offence, must be regarded as proceeds
of crime for the purpose of the 2002 Act. It must follow that the
Explanation inserted in 2019 is merely clarificatory and restatement of
the position emerging from the principal provision [i.e., Section 2(1)(u)].

H
540 SUPREME COURT REPORTS [2022] 6 S.C.R.

A 31. The “proceeds of crime” being the core of the ingredients
constituting the offence of money-laundering, that expression needs to
be construed strictly. In that, all properties recovered or attached by the
investigating agency in connection with the criminal activity relating to
a scheduled offence under the general law cannot be regarded as
proceeds of crime. There may be cases where the property involved in
B
the commission of scheduled offence attached by the investigating agency
dealing with that offence, cannot be wholly or partly regarded as proceeds
of crime within the meaning of Section 2(1)(u) of the 2002 Act — so
long as the whole or some portion of the property has been derived or
obtained by any person “as a result of” criminal activity relating to the
C stated scheduled offence. To be proceeds of crime, therefore, the property
must be derived or obtained, directly or indirectly, “as a result of” criminal
activity relating to a scheduled offence. To put it differently, the vehicle
used in commission of scheduled offence may be attached as property
in the concerned case (crime), it may still not be proceeds of crime
within the meaning of Section 2(1)(u) of the 2002 Act. Similarly,
D
possession of unaccounted property acquired by legal means may be
actionable for tax violation and yet, will not be regarded as proceeds of
crime unless the concerned tax legislation prescribes such violation as
an offence and such offence is included in the Schedule of the 2002 Act.
For being regarded as proceeds of crime, the property associated with
E the scheduled offence must have been derived or obtained by a person
“as a result of” criminal activity relating to the concerned scheduled
offence. This distinction must be borne in mind while reckoning any
property referred to in the scheduled offence as proceeds of crime for
the purpose of the 2002 Act. Dealing with proceeds of crime by way of
any process or activity constitutes offence of money-laundering under
F
Section 3 of the Act.
32. Be it noted that the definition clause includes any property
derived or obtained “indirectly” as well. This would include property
derived or obtained from the sale proceeds or in a given case in lieu of or
in exchange of the “property” which had been directly derived or obtained
G as a result of criminal activity relating to a scheduled offence. In the
context of Explanation added in 2019 to the definition of expression
“proceeds of crime”, it would inevitably include other property which
may not have been derived or obtained as a result of any criminal activity
relatable to the scheduled offence. As noticed from the definition, it
H essentially refers to “any property” including abroad derived or obtained
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 541
INDIA & ORS. [A. M. KHANWILKAR, J.]

directly or indirectly. The Explanation added in 2019 in no way travels A
beyond that intent of tracking and reaching upto the property derived or
obtained directly or indirectly as a result of criminal activity relating to a
scheduled offence. Therefore, the Explanation is in the nature of
clarification and not to increase the width of the main definition “proceeds
of crime”. The definition of “property” also contains Explanation which
B
is for the removal of doubts and to clarify that the term property includes
property of any kind used in the commission of an offence under the
2002 Act or any of the scheduled offences. In the earlier part of this
judgment, we have already noted that every crime property need not be
termed as proceeds of crime but the converse may be true. Additionally,
some other property is purchased or derived from the proceeds of crime C
even such subsequently acquired property must be regarded as tainted
property and actionable under the Act. For, it would become property
for the purpose of taking action under the 2002 Act which is being used
in the commission of offence of money-laundering. Such purposive
interpretation would be necessary to uphold the purposes and objects
D
for enactment of 2002 Act.
33. Tersely put, it is only such property which is derived or obtained,
directly or indirectly, as a result of criminal activity relating to a scheduled
offence can be regarded as proceeds of crime. The authorities under
the 2002 Act cannot resort to action against any person for money-
laundering on an assumption that the property recovered by them must E
be proceeds of crime and that a scheduled offence has been committed,
unless the same is registered with the jurisdictional police or pending
inquiry by way of complaint before the competent forum. For, the
expression “derived or obtained” is indicative of criminal activity relating
to a scheduled offence already accomplished. Similarly, in the event the F
person named in the criminal activity relating to a scheduled offence is
finally absolved by a Court of competent jurisdiction owing to an order
of discharge, acquittal or because of quashing of the criminal case
(scheduled offence) against him/her, there can be no action for money-
laundering against such a person or person claiming through him in relation
to the property linked to the stated scheduled offence. This interpretation G
alone can be countenanced on the basis of the provisions of the 2002
Act, in particular Section 2(1)(u) read with Section 3. Taking any other
view would be rewriting of these provisions and disregarding the express
language of definition clause “proceeds of crime”, as it obtains as of
now. H
542 SUPREME COURT REPORTS [2022] 6 S.C.R.

A 34. By and large the debate today is restricted to the discrepancy
between the word ‘and’, which features in the original definition, against
the ‘or’ in the newly inserted Explanation in Section 3. While the stand
of the Government is that there is no requirement under Section 3 to
project or claim the proceeds of crime as untainted property. The
petitioners have claimed that said interpretation will be unconstitutional.
B
For, the requirement is that not only does a predicate crime need to be
committed, it in turn needs to generate proceeds of crime and it must
also then be projected as untainted property to qualify for the crime of
money-laundering. The general scheme of the law of this land is that
any law which is questioned is presumed to be unblemished and within
C the confines of the Constitutional principles so laid down within the
Constitution. Yet, as the arguments, challenges laid against the
interpretation of the impugned section are so many we find it necessary
to see how India embarked on the framing of the definition of “money-
laundering” under Section 3 of the 2002 Act. Thereafter, we will see
how the Parliament over the years responded to changes and suggestions
D
from the outside world, notably the FATF. Thus, in seriatim we endeavour
to see the international Conventions which led to the evolution of money-
laundering, based on which the Government decided to enact the law,
followed by the FATF recommendations which have led to the
amendments, then the debates in the Parliament of India followed by the
E law of the land as laid down by this Court.
35. For untying the knot, how money-laundering evolved — it is
trite to refer to the tenets that have been laid down in what are commonly
referred to as the Palermo and Vienna Conventions. The first step ever
taken towards ridding the world of money-laundering were made in the
F Vienna Convention, 1988 wherein under Articles 3.1(b)(i),(ii),(c)(i) to
(iv), 3.2 and 3.3, it was held as follows:
“Article 3
OFFENCES AND SANCTIONS

G 1. Each Party shall adopt such measures as may be necessary to
establish as criminal offences under its domestic law, when
committed intentionally:
a)(i) to (v) ….
b) i) The conversion or transfer of property, knowing that
H such property is derived from any offence or offences
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 543
INDIA & ORS. [A. M. KHANWILKAR, J.]

established in accordance with subparagraph a) of this paragraph, A
or from an act of participation in such offence or offences,
for the purpose of concealing or disguising the illicit origin
of the property or of assisting any person who is involved in
the commission of such an offence or offences to evade the legal
consequences of his actions;
B
ii) The concealment or disguise of the true nature, source,
location, disposition, movement, rights with respect to, or
ownership of property, knowing that such property is
derived from an offence or offences established in accordance
with subparagraph a) of this paragraph or from an act of
participation in such an offence or offences; C

c) Subject to its constitutional principles and the basic
concepts of its legal system:
i) The acquisition, possession or use of property, knowing, at
the time of receipt, that such property was derived from an D
offence or offences established in accordance with subparagraph
a) of this paragraph or from an act of participation in such offence
or offences;
ii) The possession of equipment or materials or substances
listed in Table I and Table II, knowing that they are being or E
are to be used in or for the illicit cultivation, production or
iii) Publicly inciting or inducing others, by any means, to
commit any of the offences established in accordance with
this article or to use narcotic drugs or psychotropic substances
illicitly; F
iv) Participation in, association or conspiracy to commit,
attempts to commit and aiding, abetting, facilitating and counselling
the commission of any of the offences established in accordance
with this article.
2. Subject to its constitutional principles and the basic G
concepts of its legal system, each Party shall adopt such measures
as may be necessary to establish as a criminal offence under its
domestic law, when committed intentionally, the possession,
purchase or cultivation of narcotic drugs or psychotropic substances
for personal consumption contrary to the provisions of the 1961
H
544 SUPREME COURT REPORTS [2022] 6 S.C.R.

A Convention, the 1961 Convention as amended or the 1971
Convention.
3. Knowledge, intent or purpose required as an element of
an offence set forth in paragraph 1 of this article may be inferred
from objective factual circumstances.”
B (emphasis supplied)
Similarly, the next important Convention which bolstered the fight
against money-laundering was the Palermo Convention wherein in Annex
I it is stated that:

C “Article 2. Use of terms
(a) to (d) …..
(e) “Proceeds of crime” shall mean any property derived from or
obtained, directly or indirectly, through the commission of an
offence;
D
…….
(h) “Predicate offence” shall mean any offence as a result of
which proceeds have been generated that may become the subject
of an offence as defined in article 6 of this Convention;
E ………
*** *** ***
Article 6. Criminalization of the laundering of proceeds of crime
1. Each State Party shall adopt, in accordance with fundamental
F principles of its domestic law, such legislative and other
measures as may be necessary to establish as criminal offences,
when committed intentionally:
(a) (i) The conversion or transfer of property, knowing that
such property is the proceeds of crime, for the purpose of
concealing or disguising the illicit origin of the property or
G
of helping any person who is involved in the commission of
the predicate offence to evade the legal consequences of
his or her action;
(ii) The concealment or disguise of the true nature, source,
location, disposition, movement or ownership of or rights with
H
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 545
INDIA & ORS. [A. M. KHANWILKAR, J.]

respect to property, knowing that such property is the A
proceeds of crime;
(b) Subject to the basic concepts of its legal system:
(i) The acquisition, possession or use of property, knowing, at the
time of receipt, that such property is the proceeds of crime;
B
(ii) Participation in, association with or conspiracy to commit,
attempts to commit and aiding, abetting, facilitating and counselling
the commission of any of the offences established in accordance
with this article.
2. For purposes of implementing or applying paragraph 1 of C
this article:
(a) Each State Party shall seek to apply paragraph 1 of this
article to the widest range of predicate offences;
(b) Each State Party shall include as predicate offences all
serious crime as defined in article 2 of this Convention and the D
offences established in accordance with articles 5, 8 and 23 of
this Convention. In the case of States Parties whose
legislation sets out a list of specific predicate offences, they
shall, at a minimum, include in such list a comprehensive
range of offences associated with organized criminal groups;
E
(c) For the purposes of subparagraph (b), predicate offences shall
include offences committed both within and outside the jurisdiction
of the State Party in question. However, offences committed
outside the jurisdiction of a State Party shall constitute predicate
offences only when the relevant conduct is a criminal offence
F
under the domestic law of the State where it is committed and
would be a criminal offence under the domestic law of the State
Party implementing or applying this article had it been committed
there;
(d) Each State Party shall furnish copies of its laws that give
effect to this article and of any subsequent changes to such laws G
or a description thereof to the Secretary-General of the United
Nations;
(e) If required by fundamental principles of the domestic law of
a State Party, it may be provided that the offences set forth in
H
546 SUPREME COURT REPORTS [2022] 6 S.C.R.

A paragraph 1 of this article do not apply to the persons who
committed the predicate offence;
(f) Knowledge, intent or purpose required as an element of
an offence set forth in paragraph 1 of this article may be
inferred from objective factual circumstances.”
B (emphasis supplied)
Thus, it is clear from a bare reading of two very initial international
Conventions attempting to establish a world order to curb money-
laundering, gave a very wide interpretation to the concept of money-
laundering. There has been a consensus that acquisition, possession,
C use, concealing or disguising the illicit origin of illegitimately obtained
money to evade legal consequences would be money-laundering. Further,
concealing and disguising too were clearly a part of money-laundering
and as such there was no bar or understating that pointed to the fact that
there was a need to project the monies as untainted. This was obviously
D subject to the fundamental principles of the domestic law of the countries.
However, the growth of the jurisprudence in this law did not stop or end
there. As we progressed into a world equipped with the internet and into
a digital age, criminals found new ways to launder and the law found
new ways to tackle them. In the meanwhile, the FATF was established
and it started working towards a goal of preventing money-laundering.
E It has since its inception been aimed towards reducing cross border and
intra State money-laundering activities. In this endeavour, it has made
many concerted efforts to study, understand, develop and mutually
evaluate the state of the compliance in countries towards reducing money-
laundering. Today, as we will see, many of the amendments in the 2002
F Act are in response to the recommendations of the FATF. Thereafter,
forty recommendations dated 20.6.2003, were made by the FATF which
had led to much deliberations go on to show that all endeavours were to
be Vienna and Palermo Conventions compliant. During the evolution of
the jurisprudence on money-laundering, it was found that India was in
fact lacking in some aspects of curbing money-laundering. Hence, the
G recommendations were made to India time and again. It is pertinent also
to reproduce the Mutual Evaluation of the Anti-Money Laundering
(AML) and Combating the Financing of Terrorism (CFT) regime of
India as adopted on 24.06.2010 in its recommendations, as it has been
shown that it is based on these observations that the amendment have
H been made, herein it has been observed thus:
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 547
INDIA & ORS. [A. M. KHANWILKAR, J.]

“Recommendation 1 A
….
Consistency with the United Nations Conventions
137. The Vienna and Palermo Conventions require countries
to establish a criminal offence for the following knowing/ B
intentional acts: conversion or transfer of proceeds for
specific purposes; concealment or disguise of the true
nature, source, location, disposition, movement or
ownership of or rights with respect to proceeds; and -
subject to the fundamental/constitutional principles or basic
concepts of the country‘s legal system - the sole acquisition, C
possession or use of proceeds (Art. 3(1)(b)&(c) of the
Vienna Convention; and Art. 6(1) of the Palermo
Convention against Transnational Organised Crime – the
TOC Convention).
138. Section 8A of the NDPS Act offence is an almost faithful D
transposition of the Vienna Convention ML provisions. The PMLA
takes a different approach by using a terminology that by its broad
wording is intended to generally correspond with the criminal
activity targeted by both the Vienna and Palermo Conventions.
139. As said, the PMLA (s.3) provides that money laundering is E
committed where someone “directly or indirectly attempts to
indulge, knowingly assists or knowingly is a party or is actually
involved in any process or activity connected with the proceeds
of crime and projecting it as untainted property”. The section 3
mens rea threshold is lower than the Art. 6.1(a) of the TOC F
Convention in that no specific purpose or intention is required.
The substantive element of “projecting it as untainted
property” carries the notion of knowing disguise, as
required by the Conventions, but does not appear to cover
all concealment activity, such as the physical hiding of the
assets. G
……
Recommendation 2
Scope of liability
H
548 SUPREME COURT REPORTS [2022] 6 S.C.R.

A ……
Implementation and effectiveness
164. When the PMLA was enacted on 1 July 2005 implementing
the Palermo TOC Convention, it was already clear that the scope
of the law was too restrictive to withstand the test of the relevant
B international standards. With the extension of the list of predicate
offences under Schedule A and B, and the addition of Schedule C
offences since 1 June 2009, India has made a serious effort to
bring the ML criminalisation of the PMLA in line with the
FATF criteria in this respect. It did not do away with all
C shortcomings, however.
165. Firstly, it is not clear why the legislator abandoned the
NDPS Act approach to define the ML activity by simply
incorporating the relevant Convention language in the
domestic law. With the section 3 of the PMLA money laundering
D provision, a newly defined ML offence was introduced differing
from the comprehensive qualification of section 8A of the NDPS
Act that was not repealed, resulting in the coexistence of two
divergent drug related ML offences.
166. The new definition of the ML offence in section 3 of the
E PMLA tries to capture all requisite mental and physical elements
of the Convention’s ML provision in one overarching sentence.
The mens rea element is the “knowledge” standard as minimally
required by the Conventions. Section 3 of the PMLA does not
require a specific intention or purpose, and as such its
threshold is lower than that of Art. 6.1(a)(i) of the TOC
F Convention. The provision however falls short on the
following actus reus aspects:
a. The physical element in all cases includes the
substantive condition of “projecting (the proceeds of
crime) as untainted property”, so although the broad
G formulation of “any process or activity” covers any
conduct involving criminal proceeds, such conduct is
only criminalised as money laundering when the property
is concurrently projected as untainted. While this
“projection” circumstance may correspond with the
notion of “disguise” as in Art. 6.1(a)(ii) of the TOC
H
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 549
INDIA & ORS. [A. M. KHANWILKAR, J.]

Convention, it does not cover acts of physical A
concealment without any “projecting” (such as deposit
in a safe), even if – as was argued - this act is seen as an
attempt to “project”, quod non.
b. With the imposition of the “projecting” condition the
PMLA offence does not extend to the activity of sole B
“acquisition, possession or use” of criminal proceeds
as stated in Article 6(1)(b)(i) of the TOC Convention,
although this would not be contrary to the basic concepts
of the Indian legal system. Only the offences of “holding”
drug proceeds (NDPS Act s.68C) or “proceeds of
terrorism” (UAPA s.21) are unconditional and may be C
considered to cover “possession” situations in these
specific circumstances. Also, the sections 410 and 411
IPC “receiving” offence may cover acts of “acquisition”,
but these provisions fall short in respect of the scope of
predicate offences, as they only apply to stolen (or D
equivalent451) property.
*** *** ***
Table 2: Recommended Action Plan to Improve the AML/CFT
System
E

F

G

451
“Stolen” p roperty includes property derived from extortion, robbery,
misappropriation or breach of trust (IPC s.410) H
550 SUPREME COURT REPORTS [2022] 6 S.C.R.

A

B

C

D

E (emphasis supplied)
Thus, it is clear that certain recommendations were made by the
FATF concerning the definition of money-laundering. It is also clear from
public records that India has time and again, since the inception of the
Act, made active efforts to follow and evolve its own laws in line with
F the mandates and recommendations of the FATF. Furthermore, it is
noteworthy that even in other jurisdictions; the above-mentioned definition
has gained a more holistic approach which is not per se the same as the
colloquial term, “money launder” or simply turning black money into
white. In the UK and Spain, possession of criminal proceeds is covered
under money-laundering, similarly by way of interpretation, the same is
G the case in Germany and Italy452. Following these recommendations,
amendments were brought about in India. This in turn led to debates as
can be seen from the following speeches which were made in the
Parliament. We first note the speech of the then Finance Minister made
452
National and International Anti-Money Laundering Law, Benjamin vogel and Jean-
H Baptiste Maillart, Max Planck Institute, 2020 ed. Pg. 798.
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 551
INDIA & ORS. [A. M. KHANWILKAR, J.]

on 02.12.1999 in the Lok Sabha at the time of introducing the 1999 Bill, A
it is as follows:
“………The Foreign Exchange Regulation Act, 1973 primarily
made compensatory transactions (known as Havala) illegal. The
basic aim was to ensure that no one contravenes the exchange
control regulations through unofficial channels. The emphasis was, B
therefore, on violation of foreign exchange regulations rather than
on “money-laundering”. Money-laundering, that is the
cleansing of proceeds of crimes such as extortion, treason,
drug trafficking, gun running etc. poses a serious threat to
the integrity and sovereignty of a country and also to its
financial systems. This threat to the nation and its economy C
has been recognised the world over and several UN and
other international conventions have called upon member
countries to take legislative and other preventive measures
to combat the menace of money-laundering. As India is a
signatory to some of these conventions, a committee was D
set up to examine and suggest a draft legislation for this
purpose. Based on their report, a separate legislation has been
introduced with stringent penal provisions. At the same time, there
is a need to consolidate and amend the law relating to foreign
exchange consistent with the liberalisation policies pursued during
the last eight years. While the provisions of Foreign Exchange E
Management Bill make foreign exchange contraventions civil
wrongs, the offences under the prevention of Money-Laundering
Bill have been made criminal and will attract stringent punishment.
….
F
The point I am making is that we have picked up certain
offences which are heinous, as I said in the beginning, which
are of very serious nature. We are bringing this legislation
on money- laundering so that receipts from those crimes
and properties acquired as a result thereof, are dealt with
under this Act. At the present moment, we have no legislation G
which will deal exclusively with this particular subject. So, we are
bringing this Bill.”
(emphasis supplied)

H
552 SUPREME COURT REPORTS [2022] 6 S.C.R.

A This speech, thus, set the tone for the years to come in our fight
against money-laundering. This law was enacted in 2002 yet brought
into force in 2005. Later, a speech was made by the then Finance Minister,
who had introduced the Prevention of Money Laundering (Amendment)
Bill, 2012 in the Rajya Sabha on 17.12.2012
B “SHRI P. CHIDAMBARAM: Mr. Deputy Chairman, Sir, I am
grateful to the hon. Members, especially ten hon. Members who
have spoken on this Bill and supported the Bill. Naturally, some
questions will arise; they have arisen. It is my duty to clarify those
matters. Sir, firstly, we must remember that money-
laundering is a very technically-defined offence. It is not
C the way we understand ‘money-laundering’ in a colloquial
sense. It is a technically-defined offence. It postulates that
there must be a predicate offence and it is dealing with the
proceeds of a crime. That is the offence of money-laundering.
It is more than simply converting black-money into white
D or white money into black. That is an offence under the Income
Tax Act. There must be a crime as defined in the Schedule. As a
result of that crime, there must be certain proceeds — It could be
cash; it could be property. And anyone who directly or indirectly
indulges or assists or is involved in any process or activity
connected with the proceeds of crime and projects it as
E untainted property is guilty of offence of money-laundering.
So, it is a very technical offence. The predicate offences
are all listed in the Schedule. Unless there is a predicate
offence, there cannot be an offence of money-laundering.
Initially the thinking was unless a person was convicted of
F the predicate offence, you cannot convict him of money-
laundering. But that thinking is evolved now. The Financial
Action Task Force has now come around to the view that if
the predicate offence has thrown up certain proceeds and
you dealt with those proceeds, you could be found guilty of
offence of money-laundering. What we are trying to do is to
G bring this law on lines of laws that are commended by FATF
and all countries have obliged to bring their laws on the
same lines. I just want to point to some of my friends that this
Bill was passed in 2002. In 2002, we felt that these provisions are
sufficient. In the working of the law, we found that the provisions
H have certain problems. We amended it in 2005. We amended it in
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 553
INDIA & ORS. [A. M. KHANWILKAR, J.]

2009. We still find that there are some problems. The FATF has A
pointed out some problems. And, we are amending it in
2012. It is not finding fault with anyone. All I am trying to
say is that this is an evolutionary process. Laws will evolve
in this way, and we are amending it again in 2012.”
(emphasis supplied) B
36. It is seen that there is clear inclination to follow the
recommendations of the FATF, made from time to time. Yet, before we
move forward, we must note other statements that were made before
the latest amendment was made. In the Statement RE: Amendment/
Background/Justification for amendments to the 2002 Act – Pg 226 235 C
of the Debate on the Finance Bill, 2019 it was noted that:
“….
4. It has been experienced that certain doubts are also
raised as regards definition of ‘Offence of money laundering’
included in section 3 of the Act of 2002. It is observed that D
the legislative intent and object of the Act of 2002 is wrongly
construed as if all the activities as mentioned therein are
required to be present together to constitute the offence
of Money Laundering. The intention of the legislature had
always been that a person shall be held to be guilty of offence E
of money-laundering if he is found to have directly or
indirectly attempted to indulge or knowingly assisted or
knowingly is a party or is actually involved in any one or
more of the process of activity included in section 3 of the
Act of 2002. It is also observed that the original intention
of the legislature is wrongly construed to interpret as if the F
offence of money laundering is a one time instantaneous
offence and finishes with its concealment or possession or
acquisition or use of projecting it as untainted property or
claiming it as untainted property. The intention of the
legislature had always been that a person will be held to be G
guilty of offence of money-laundering and will be punished
as long as person is enjoying the “proceeds of crime” by
its concealment or possession or acquisition or use or
projecting it as untainted property or claiming it as untainted
property or in any manner whatsoever. Accordingly, an
H
554 SUPREME COURT REPORTS [2022] 6 S.C.R.

A Explanation is proposed to be inserted in section 3 of the
Act of 2002 to clarify the above legislative intent.”
(emphasis supplied)
Thereafter, the following statement was made on two different
occasions453:
B
“SHRIMATI NIRMALA SITHARAMAN: The other
amendments are into the PMLA, the Act relating to black money.
On that, I would like to assure the Members regarding the kind of
amendments. In fact, I would like to mention, well before that, the
number of amendments, which are coming through for the PMLA,
C which is of 2002 vintage. Eight are being proposed by us. Of the
eight, six are only explanations to the existing clause. The clause
itself is not being changed. We are only coming with explanations.
These explanations are being brought into the Act because
of pleading in the courts by some of those who are accused
D and because of some kind of a confusion or a grey area or
an ambiguity which might exist. Therefore, the amendment
is not amendment of the clause itself. It is more explaining
the clause. …
*** *** ***
E SHRIMATI NIRMALA SITHARAMAN: More important is the
amendment to the PMLA; The Prevention of Money Laundering
Act. There are, one or two, a couple of amendments which are
being made to the PMLA, which I just want to elaborate a bit so
that the hon. Members know what is that we are doing to the
F PMLA. They are all explanatory changes that we are bringing in.
Of the eight different changes that we are bringing into the PMLA,
six relate to explanatory notes because we find that in the courts,
many of those offenders under the PMLA–if there are two cases
happening–try to club both the cases although they may be
materially different and seek of a bail. Therefore, what happens
G is, a case which has a different procedural matter is also clubbed
together with the case which is not procedural and at the end of
the day, the law does not get invoked in its true letter and spirit.
So, such changes in the definition and explanatory matters
453
Seventeenth Series, Vol. III, First Session, 2019/1941 (Saka) No. 24, Thursday, July
H 18, 2019 / Ashadha 27, 1941 (Saka)
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 555
INDIA & ORS. [A. M. KHANWILKAR, J.]

have been done in the PMLA. One little proviso which was A
not really relevant has been removed and another which is
being brought in again is more to make it clearer so that
PMLA, when invoked, becomes far more effective. So,
these are the points on the PMLA-related matters.”454
(emphasis supplied) B
It is seen that even though there were multiple arguments in respect
of the definition of Section 3455, yet we chose to implement the said
definition in a particular way. Later it was realised by the Government
and the Parliament that with the passage of time and the development of
anti-money laundering jurisprudence world over, certain changes were C
to be made in the definition of money-laundering. We do not find it prudent
or necessary to run into arguments of application of international law, as
it is clear that the intentions of the successive Governments have been
the same since day one of signing the international Conventions. It is
only in light of this perception and understanding of the legislation that
we have been implementing the recommendations of the FATF. D
However, we note that there has been a constant flow of thought from
the FATF recommendations, directly into our polity, which has pushed
the money-laundering legislation forward. Thus, there can be no doubt
as to the bona fides of the Legislature in implementing an understating
of Section 3 that will help not only stop but prevent money-laundering by E
nipping it in the bud.
SECTION 3 OF THE 2002 ACT
37. Coming to Section 3 of the 2002 Act, the same defines the
offence of money-laundering. The expression “money-laundering”,
ordinarily, means the process or activity of placement, layering and finally F
integrating the tainted property in the formal economy of the country.
However, Section 3 has a wider reach. The offence, as defined, captures
every process and activity in dealing with the proceeds of crime, directly
or indirectly, and not limited to the happening of the final act of integration
of tainted property in the formal economy to constitute an act of money- G
laundering. This is amply clear from the original provision, which has

454
GOVERNMENT BILLS — Contd. The Appropriation (No. 2) Bill, 2019 And The
Finance (No. 2) Bill, 2019 [23 July, 2019]
455
See debate of 25 July, 2002- RAJYA SABHA; available at: https://rsdebate.nic.in/
bitstream/123456789/100942/1/PD_196_25072002_9_p237_p288_21.pdf H
556 SUPREME COURT REPORTS [2022] 6 S.C.R.

A been further clarified by insertion of Explanation vide Finance (No.2)
Act, 2019. Section 3, as amended, reads thus:
“3. Offence of money-laundering.—Whosoever directly or
indirectly attempts to indulge or knowingly assists or knowingly is
a party or is actually involved in any process or activity connected
B with the 456[proceeds of crime including its concealment,
possession, acquisition or use and projecting or claiming] it as
untainted property shall be guilty of offence of money-laundering.
457
[Explanation.—For the removal of doubts, it is hereby
clarified that,—
C (i) a person shall be guilty of offence of money-laundering
if such person is found to have directly or indirectly
attempted to indulge or knowingly assisted or knowingly is
a party or is actually involved in one or more of the following
processes or activities connected with proceeds of crime,
D namely:—
(a) concealment; or
(b) possession; or
(c) acquisition; or
E (d) use; or
(e) projecting as untainted property; or
(f) claiming as untainted property,
in any manner whatsoever;
F (ii) the process or activity connected with proceeds of crime
is a continuing activity and continues till such time a person
is directly or indirectly enjoying the proceeds of crime by
its concealment or possession or acquisition or use or
projecting it as untainted property or claiming it as untainted
G property in any manner whatsoever.]”
This section was first amended vide Act 2 of 2013. The expression
“proceeds of crime and projecting” was substituted by expression
456
Subs. by Act 2 of 2013, sec. 3, for “proceeds of crime and projecting” (w.e.f. 15-2-
2013, vide S.O. 343(E), dated 8-2-2013)
457
H Ins. by the Finance (No.2) Act, 2019, sec. 193 (w.e.f. 1-8-2019)
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 557
INDIA & ORS. [A. M. KHANWILKAR, J.]

“proceeds of crime including its concealment, possession, acquisition or A
use and projecting or claiming”. We are not so much concerned with
this change introduced vide Act 2 of 2013. In other words, the provision
as it stood prior to amendment vide Finance (No.2) Act, 2019 remained
as it is. Upon breaking-up of this provision, it would clearly indicate that
— it is an offence of money-laundering, in the event of direct or indirect
B
attempt to indulge or knowingly assist or being knowingly party or being
actually involved in “any process or activity” connected with the proceeds
of crime. The latter part of the provision is only an elaboration of the
different process or activity connected with the proceeds of crime, such
as its concealment, possession, acquisition, use, or projecting it as
untainted property or claiming it to be as untainted property. This position C
stands clarified by way of Explanation inserted in 2019. If the argument
of the petitioners is to be accepted, that projecting or claiming the property
as untainted property is the quintessential ingredient of the offence of
money-laundering, that would whittle down the sweep of Section 3.
Whereas, the expression “including” is a pointer to the preceding part of
D
the section which refers to the essential ingredient of “process or activity”
connected with the proceeds of crime. The Explanation inserted by way
of amendment of 2019, therefore, has clarified the word “and” preceding
the expression “projecting or claiming” as “or”. That being only
clarificatory, whether introduced by way of Finance Bill or otherwise,
would make no difference to the main original provision as it existed E
prior to 2019 amendment. Indeed, there has been some debate in the
Parliament about the need to retain the clause of projecting or claiming
the property as untainted property. However, the Explanation inserted
by way of amendment of 2019 was only to restate the stand taken by
India in the proceedings before the FATF, as recorded in its 8th Follow-
F
Up Report Mutual Evaluation of India June 2013 under heading “Core
Recommendations”. This stand had to be taken by India notwithstanding
the amendment of 2013 vide Act 2 of 2013 (w.e.f. 15.2.2013) and
explanation offered by the then Minister of Finance during his address in
the Parliament on 17.12.2012 as noted above458. Suffice it to note that
the municipal law (Act of 2002) had been amended from time to time to G
incorporate the concerns and recommendations noted by the international
body. We may usefully refer to the Core Recommendations of the FATF
concerning India of June 2013, which reads thus:

458
See paragraph 35 of this judgment H
558 SUPREME COURT REPORTS [2022] 6 S.C.R.

A “Core Recommendations

B

C

D

E

F

G
(emphasis supplied)
38. To put it differently, the section as it stood prior to 2019 had
itself incorporated the expression “including”, which is indicative of
reference made to the different process or activity connected with the
H
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 559
INDIA & ORS. [A. M. KHANWILKAR, J.]

proceeds of crime. Thus, the principal provision (as also the Explanation) A
predicates that if a person is found to be directly or indirectly involved in
any process or activity connected with the proceeds of crime must be
held guilty of offence of money-laundering. If the interpretation set forth
by the petitioners was to be accepted, it would follow that it is only upon
projecting or claiming the property in question as untainted property, the
B
offence would be complete. This would undermine the efficacy of the
legislative intent behind Section 3 of the Act and also will be in disregard
of the view expressed by the FATF in connection with the occurrence of
the word “and” preceding the expression “projecting or claiming” therein.
This Court in Pratap Singh vs. State of Jharkhand & Anr. 459,
enunciated that the international treaties, covenants and conventions C
although may not be a part of municipal law, the same be referred to and
followed by the Courts having regard to the fact that India is a party to
the said treaties. This Court went on to observe that the Constitution of
India and other ongoing statutes have been read consistently with the
rules of international law. It is also observed that the Constitution of
D
India and the enactments made by Parliament must necessarily be
understood in the context of the present-day scenario and having regard
to the international treaties and convention as our constitution takes note
of the institutions of the world community which had been created. In
Apparel Export Promotion Council vs. A.K. Chopra460, the Court
observed that domestic Courts are under an obligation to give due regard E
to the international conventions and norms for construing the domestic
laws, more so, when there is no inconsistency between them and there
is a void in domestic law. This view has been restated in Githa
Hariharan461, as also in People’s Union for Civil Liberties462, and
National Legal Services Authority vs. Union of India & Ors.463.
F
39. In the Core Recommendations of the FATF referred to above,
the same clearly mention that the word “and” in Section 3 of the 2002
Act would not be fully in line with the Vienna and Palermo Conventions.
This doubt has been ably responded and elucidated by India to the
international body by referring to the jurisprudence as evolved in India to
interpret the word “and” as “or” in the context of the legislative intent G

459
(2005) 3 SCC 551 (also at Footnote No.197)
460
(1999) 1 SCC 759
461
Supra at Footnote No.199
462
Supra at Footnote No.198
463
(2014) 5 SCC 438 (also at Footnote No.197) H
560 SUPREME COURT REPORTS [2022] 6 S.C.R.

A — to reckon any (every) process or activity connected with the proceeds
of crime constituting offence of money-laundering. To buttress the stand
taken by India before the FATF, reliance has been justly placed on reported
decisions of this Court amongst other Sanjay Dutt464, which had occasion
to deal with the expression “arms and ammunition” occurring in Section
5 of the TADA Act. The Court noted that if it is to be read conjunctively
B
because of word “and”, the object of prohibiting unauthorised possession
of the forbidden arms and ammunition would be easily frustrated by the
simple device of one person carrying the forbidden arms and his
accomplice carrying its ammunition so that neither is covered under
Section 5 when any one of them carrying more would be so liable. The
C principle underlying this analysis by the Constitution Bench must apply
proprio vigore to the interpretation of Section 3 of the 2002 Act. To the
same end, this Court in the case of Ishwar Singh Bindra & Ors. vs.
The State of U.P.465, Joint Director of Mines Safety466 and Gujarat
Urja Vikas Nigam Ltd. vs. Essar Power Ltd.467, interpreted the word
“and” in the concerned legislation(s) as word “or” to give full effect to
D
the legislative intent.
40. The Explanation as inserted in 2019, therefore, does not entail
in expanding the purport of Section 3 as it stood prior to 2019, but is only
clarificatory in nature. Inasmuch as Section 3 is widely worded with a
view to not only investigate the offence of money-laundering but also to
E prevent and regulate that offence. This provision plainly indicates that
any (every) process or activity connected with the proceeds of crime
results in offence of money-laundering. Projecting or claiming the
proceeds of crime as untainted property, in itself, is an attempt to indulge
in or being involved in money-laundering, just as knowingly concealing,
F possessing, acquiring or using of proceeds of crime, directly or indirectly.
This is reinforced by the statement presented along with the Finance
Bill, 2019 before the Parliament on 18.7.2019 as noted above468.
41. Independent of the above, we have no hesitation in construing
the expression “and” in Section 3 as “or”, to give full play to the said
G provision so as to include “every” process or activity indulged into by
anyone, including projecting or claiming the property as untainted property
464
Supra at Footnote No.193
465
(1969) 1 SCR 219 (also at Footnote No.194)
466
Supra at Footnote No.195
467
(2008) 4 SCC 755 (also at Footnote No.194)
468
H See paragraph 36 of this judgment
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 561
INDIA & ORS. [A. M. KHANWILKAR, J.]

to constitute an offence of money-laundering on its own. The act of A
projecting or claiming proceeds of crime to be untainted property
presupposes that the person is in possession of or is using the same
(proceeds of crime), also an independent activity constituting offence of
money-laundering. In other words, it is not open to read the different
activities conjunctively because of the word “and”. If that interpretation
B
is accepted, the effectiveness of Section 3 of the 2002 Act can be easily
frustrated by the simple device of one person possessing proceeds of
crime and his accomplice would indulge in projecting or claiming it to be
untainted property so that neither is covered under Section 3 of the 2002
Act.
42. From the bare language of Section 3 of the 2002 Act, it is C
amply clear that the offence of money-laundering is an independent
offence regarding the process or activity connected with the proceeds
of crime which had been derived or obtained as a result of criminal
activity relating to or in relation to a scheduled offence. The process or
activity can be in any form — be it one of concealment, possession, D
acquisition, use of proceeds of crime as much as projecting it as untainted
property or claiming it to be so. Thus, involvement in any one of such
process or activity connected with the proceeds of crime would constitute
offence of money-laundering. This offence otherwise has nothing to do
with the criminal activity relating to a scheduled offence — except the
proceeds of crime derived or obtained as a result of that crime. E

43. Needless to mention that such process or activity can be
indulged in only after the property is derived or obtained as a result of
criminal activity (a scheduled offence). It would be an offence of money-
laundering to indulge in or to assist or being party to the process or
activity connected with the proceeds of crime; and such process or activity F
in a given fact situation may be a continuing offence, irrespective of the
date and time of commission of the scheduled offence. In other words,
the criminal activity may have been committed before the same had
been notified as scheduled offence for the purpose of the 2002 Act, but
if a person has indulged in or continues to indulge directly or indirectly in G
dealing with proceeds of crime, derived or obtained from such criminal
activity even after it has been notified as scheduled offence, may be
liable to be prosecuted for offence of money-laundering under the 2002
Act — for continuing to possess or conceal the proceeds of crime (fully
or in part) or retaining possession thereof or uses it in trenches until fully
H
562 SUPREME COURT REPORTS [2022] 6 S.C.R.

A exhausted. The offence of money-laundering is not dependent on or
linked to the date on which the scheduled offence or if we may say so
the predicate offence has been committed. The relevant date is the date
on which the person indulges in the process or activity connected with
such proceeds of crime. These ingredients are intrinsic in the original
provision (Section 3, as amended until 2013 and were in force till
B
31.7.2019); and the same has been merely explained and clarified by
way of Explanation vide Finance (No.2) Act, 2019. Thus understood,
inclusion of Clause (ii) in Explanation inserted in 2019 is of no
consequence as it does not alter or enlarge the scope of Section 3 at all.
44. As mentioned earlier, the rudimentary understanding of
C ‘money-laundering’ is that there are three generally accepted stages to
money-laundering, they are:
(a) Placement: which is to move the funds from direct association
of the crime.

D (b) Layering: which is disguising the trail to foil pursuit.
(c) Integration: which is making the money available to the criminal
from what seem to be legitimate sources.
45. It is common experience world over that money-laundering
can be a threat to the good functioning of a financial system. However,
E it is also the most suitable mode for the criminals to deal in such money.
It is the means of livelihood of drug dealers, terrorist, white collar criminals
and so on. Tainted money breeds discontent in any society and in turn
leads to more crime and civil unrest. Thus, the onus on the Government
and the people to identify and seize such money is heavy. If there are
F any proactive steps towards such a cause, we cannot but facilitate the
good steps. However, passions aside we must first balance the law to be
able to save the basic tenets of the fundamental rights and laws of this
country. After all, condemning an innocent man is a bigger misfortune
than letting a criminal go.
46. On a bare reading of Section 3, we find no difficulty in
G
encapsulating the true ambit, given the various arguments advanced.
Thus, in the conspectus of things it must follow that the interpretation
put forth by the respondent will further the purposes and objectives behind
the 2002 Act and also adequately address the recommendations and
doubts of the international body whilst keeping in mind the constitutional
H limits. It would, therefore, be just to sustain the argument that the
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 563
INDIA & ORS. [A. M. KHANWILKAR, J.]

amendment by way of the Explanation has been brought about only to A
clarify the already present words, “any” and “including” which manifests
the true meaning of the definition and clarifies the mist around its true
nature.
47. We may profitably advert to the judgment in Seaford Court
Estates ld.469, which states: B
“The question for decision in this case is whether we are at liberty
to extend the ordinary meaning of “burden” so as to include a
contingent burden of the kind I have described. Now this court
has already held that this sub-section is to be liberally construed
so as to give effect to the governing principles embodied in the C
legislation (Winchester Court Ld. v. Miller470); and I think we
should do the same. Whenever a statute comes up for
consideration it must be remembered that it is not within
human powers to foresee the manifold sets of facts which
may arise, and, even if it were, it is not possible to provide
for them in terms free from all ambiguity. The English D
language is not an instrument of mathematical precision.
Our literature would be much the poorer if it were. This is
where the draftsmen of Acts of Parliament have often been
unfairly criticized. A judge, believing himself to be fettered
by the supposed rule that he must look to the language and E
nothing else, laments that the draftsmen have not provided
for this or that, or have been guilty of some or other
ambiguity. It would certainly save the judges trouble if Acts
of Parliament were drafted with divine prescience and
perfect clarity. In the absence of it, when a defect appears a
judge cannot simply fold his hands and blame the draftsman. F
He must set to work on the constructive task of finding the
intention of Parliament, and he must do this not only from
the language of the statute, but also from a consideration
of the social conditions which gave rise to it, and of the
mischief which it was passed to remedy, and then he must G
supplement the written word so as to give “force and life”
to the intention of the legislature. That was clearly laid down
by the resolution of the judges in Heydon’s case471, and it
469
Supra at Footnote No.185
470
[1944] K.B. 734
471
(1584) 3 Co. Rep. 7a H
564 SUPREME COURT REPORTS [2022] 6 S.C.R.

A is the safest guide today. Good practical advice on the
subject was given about the same time by Plowden in his
second volume Eyston v. Studd472. Put into homely metaphor
it is this: A judge should ask himself the question: If the
makers of the Act had themselves come across this ruck
in the texture of it, how would they have straightened it
B
out? He must then do as they would have done. A judge
must not alter the material of which it is woven, but he can
and should iron out the creases.”
(emphasis supplied)
C 48. Let us now also refer to the various cases that have been
pressed into service by the petitioners. The same deal with the proposition
as to the scope of an Explanation and the limits upto which it can stretch.
Yet given the present scenario, we cannot find a strong footing to rely on
the same in understating Section 3 of the 2002 Act as it stands today.
Reference has been made to K.P. Varghese473 wherein the Court noted
D the Heydon Case and to the fact that the speech of the mover of the bill
can explain the reason for introduction of the bill and help ascertain the
mischief sought to be remedied, the objects and purposes of the legislation.
Similarly, reference has been made to Hardev Motor Transport vs.
State of M.P. & Ors.474 and Martin Lottery Agencies Limited475, which
E states that the role of an Explanation in the Schedule of the Act cannot
defeat the main provision of the Act. Even otherwise, an Explanation
cannot enlarge the scope and effect of a provision. Reference is also
made to S. Sundaram Pillai & Ors. vs. V.R. Pattabiraman & Ors.476,
which reads thus:

F “50. In Bihta Cooperative Development Cane Marketing
Union Ltd. v. Bank of Bihar477 this Court observed thus:
The Explanation must be read so as to harmonise with and
clear up any ambiguity in the main section. It should not be so
construed as to widen the ambit of the section.
G *** *** ***
472
(1574) 2 Plowden, 465
473
Supra at Footnote No.19
474
(2006) 8 SCC 613 (also at Footnote No.128)
475
Supra at Footnote No.20
476
(1985) 1 SCC 591 (also at Footnote No.128)
477
H (1967) 1 SCR 848 : AIR 1967 SC 389 : 37 Com Cas 98 (also at Footnote No.128)
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 565
INDIA & ORS. [A. M. KHANWILKAR, J.]

53. Thus, from a conspectus of the authorities referred to above, A
it is manifest that the object of an Explanation to a statutory provision
is—
(a) to explain the meaning and intendment of the Act itself,
(b) where there is any obscurity or vagueness in the main
enactment, to clarify the same so as to make it consistent B
with the dominant object which it seems to subserve,
(c) to provide an additional support to the dominant object of
the Act in order to make it meaningful and purposeful,
(d) an Explanation cannot in any way interfere with or C
change the enactment or any part thereof but where some
gap is left which is relevant for the purpose of the
Explanation, in order to suppress the mischief and
advance the object of the Act it can help or assist the
Court in interpreting the true purport and intendment
of the enactment, and D
(e) it cannot, however, take away a statutory right with which
any person under a statute has been clothed or set at naught
the working of an Act by becoming an hindrance in the
interpretation of the same.”
E
(emphasis supplied)
However, in the present case we find that the Explanation only
sets forth in motion to clear the mist around the main definition, if any. It
is not to widen the ambit of Section 3 of the 2002 Act as such. Further,
the meaning ascribed to the expression “and” to be read as “or” is in
F
consonance with the contemporary thinking of the international
community and in consonance with the Vienna and Palermo Conventions.
49. Reference has also been made to judgments which refer to
the purport of side notes in the interpretation of a statute in Thakurain
Balraj Kunwar & Anr. vs. Rae Jagatpal Singh 478, Nalinakhya
Bysack vs. Shyam Sunder Haldar & Ors. 479, Chandroji Rao vs. G
Commissioner of Income Tax, M.P., Nagpur480, Board of Muslim

478
1904 SCC OnLine PC 9: (1904) 1 All LJ 384
479
AIR 1953 SC 148
480
(1970) 2 SCC 23 H
566 SUPREME COURT REPORTS [2022] 6 S.C.R.

A Wakfs, Rajasthan vs. Radha Kishan & Ors.481, Tara Prasad Singh
& Ors. vs. Union of India & Ors.482, Sakshi vs. Union of India &
Ors.483, Guntaiah & Ors. vs. Hambamma & Ors.484 and C. Gupta
vs. Glaxo-Smithkline Pharmaceuticals Ltd.485. However, we find them
of no use in the present case as we have already held that the Explanation
only goes on to clarify the main or original provision. Other cases, which
B
are of no help to the present issue, are the cases of D.R. Fraser & Co.
Ltd. vs. The Minister of National Revenue486, Tofan Singh487 and
Ashok Munilal Jain 488. Reference has also been made to Nikesh
Tarachand Shah489. However, there the questions raised were not in
respect of the meaning of money-laundering and pertinently the
C amendment has come post the judgment, hence, will have no real bearing,
unless it can be shown that the amendment is in some other way contrary
to the Indian law.
50. We also cannot countenance the argument made in light of
possible harassment of innocent persons. It is noted that to the 1999 Bill,
D the Select Committee of the Rajya Sabha had pointed out that if even
mere possession of money/property out of proceeds of crime were to be
punishable then:
“The Committee finds that sub-clauses (a) and (c) viewed ·in the
context of the provisions contained in clause 23 of the Bill may
lead to harassment of innocent persons who bona fide and
E unknowingly deal with the persons who have committed
the offence of money laundering and enter into transactions
with them. Such persons purchasing property born out of proceeds
of crime without having any inkling whatsoever about that are
liable to be prosecuted if the sub-Clauses (a) & (c) remain in the
F Bill in the existing form.
The fact of the matter is that these sub-clauses do not provide
any protection or defence to this category of persons.”
(emphasis supplied)
481
(1979) 2 SCC 468
482
(1980) 4 SCC 179
G 483
(2004) 5 SCC 518
484
(2005) 6 SCC 228
485
(2007) 7 SCC 171
486
1948 SCC OnLine PC 65 : AIR 1949 PC 120
487
Supra at Footnote No.31 (also at Footnote No.24)
488
Supra at Footnote No.163 (also at Footnote No.22)
489
H Supra at Footnote No.3
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 567
INDIA & ORS. [A. M. KHANWILKAR, J.]

Accordingly, the phrase “and projecting it as untainted property” A
was added the initial definition in the 2002 Act. However, it can also be
inferred from here that since the initial strokes of drafting the Act, the
intention was always to have a preventive Act and not simply a money-
laundering (penal) Act. Today, if one dives deep into the financial systems,
anywhere in the world, it is seen that once a financial mastermind can
B
integrate the illegitimate money into the bloodstream of an economy, it is
almost indistinguishable. In fact, the money can be simply wired abroad
at one click of the mouse. It is also well known that once this money
leaves the country, it is almost impossible to get it back. Hence, a simplistic
argument or the view that Section 3 should only find force once the
money has been laundered, does not commend to us. That has never C
been the intention of the Parliament nor the international Conventions.
51. We may also note that argument that removing the necessity
of projection from the definition will render the predicate offence and
money-laundering indistinguishable. This, in our view, is ill founded and
fallacious. This plea cannot hold water for the simple reason that the D
scheduled offences in the 2002 Act as it stands (amended upto date) are
independent criminal acts. It is only when money is generated as a result
of such acts that the 2002 Act steps in as soon as proceeds of crime are
involved in any process or activity. Dealing with such proceeds of crime
can be in any form —being process or activity. Thus, even assisting in
the process or activity is a part of the crime of money-laundering. We E
must keep in mind that for being liable to suffer legal consequences of
ones action of indulging in the process or activity, is sufficient and not
only upon projection of the ill-gotten money as untainted money. Many
members of a crime syndicate could then simply keep the money with
them for years to come, the hands of the law in such a situation cannot F
be bound and stopped from proceeding against such person, if information
of such illegitimate monies is revealed even from an unknown source.
52. The next question is: whether the offence under Section 3 is a
standalone offence? Indeed, it is dependent on the wrongful and illegal
gain of property as a result of criminal activity relating to a scheduled G
offence. Nevertheless, it is concerning the process or activity connected
with such property, which constitutes offence of money-laundering. The
property must qualify the definition of “proceeds of crime” under Section
2(1)(u) of the 2002 Act. As observed earlier, all or whole of the crime
property linked to scheduled offence need not be regarded as proceeds
H
568 SUPREME COURT REPORTS [2022] 6 S.C.R.

A of crime, but all properties qualifying the definition of “proceeds of crime”
under Section 2(1)(u) will necessarily be crime properties. Indeed, in the
event of acquittal of the person concerned or being absolved from
allegation of criminal activity relating to scheduled offence, and if it is
established in the court of law that the crime property in the concerned
case has been rightfully owned and possessed by him, such a property
B
by no stretch of imagination can be termed as crime property and ex-
consequenti proceeds of crime within the meaning of Section 2(1)(u)
as it stands today. On the other hand, in the trial in connection with the
scheduled offence, the Court would be obliged to direct return of such
property as belonging to him. It would be then paradoxical to still regard
C such property as proceeds of crime despite such adjudication by a Court
of competent jurisdiction. It is well within the jurisdiction of the concerned
Court trying the scheduled offence to pronounce on that matter.
53. Be it noted that the authority of the Authorised Officer under
the 2002 Act to prosecute any person for offence of money-laundering
D gets triggered only if there exists proceeds of crime within the meaning
of Section 2(1)(u) of the 2002 Act and further it is involved in any process
or activity. Not even in a case of existence of undisclosed income and
irrespective of its volume, the definition of “proceeds of crime” under
Section 2(1)(u) will get attracted, unless the property has been derived
or obtained as a result of criminal activity relating to a scheduled offence.
E It is possible that in a given case after the discovery of huge volume of
undisclosed property, the authorised officer may be advised to send
information to the jurisdictional police (under Section 66(2) of the 2002
Act) for registration of a scheduled offence contemporaneously, including
for further investigation in a pending case, if any. On receipt of such
F information, the jurisdictional police would be obliged to register the case
by way of FIR if it is a cognizable offence or as a non-cognizable offence
(NC case), as the case may be. If the offence so reported is a scheduled
offence, only in that eventuality, the property recovered by the authorised
officer would partake the colour of proceeds of crime under Section
2(1)(u) of the 2002 Act, enabling him to take further action under the
G Act in that regard.
54. Even though, the 2002 Act is a complete Code in itself, it is
only in respect of matters connected with offence of money-laundering,
and for that, existence of proceeds of crime within the meaning of Section
2(1)(u) of the Act is quintessential. Absent existence of proceeds of
H
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 569
INDIA & ORS. [A. M. KHANWILKAR, J.]

crime, as aforesaid, the authorities under the 2002 Act cannot step in or A
initiate any prosecution.
55. In other words, the Authority under the 2002 Act, is to prosecute
a person for offence of money-laundering only if it has reason to believe,
which is required to be recorded in writing that the person is in possession
of “proceeds of crime”. Only if that belief is further supported by tangible B
and credible evidence indicative of involvement of the person concerned
in any process or activity connected with the proceeds of crime, action
under the Act can be taken forward for attachment and confiscation of
proceeds of crime and until vesting thereof in the Central Government,
such process initiated would be a standalone process.
C
SECTION 5 OF THE 2002 ACT
56. Section 5 forms part of Chapter III dealing with attachment,
adjudication and confiscation. This provision empowers the Director or
officer not below the rank of Deputy Director authorised by the Director
for the purposes of attachment of property involved in money-laundering. D
Such authorised officer is expected to act only if he has reason to believe
that any person is in possession of proceeds of crime. This belief has to
be formed on the basis of material in his possession and the reasons
therefor are required to be recorded in writing. In addition, he must be
convinced that such proceeds of crime are likely to be concealed,
transferred or dealt with in any manner which is likely to result in E
frustrating any proceedings concerning confiscation thereof under the
2002 Act. The Section 5 as amended reads thus:
“CHAPTER III
ATTACHMENT, ADJUDICATION AND CONFISCATION F
5. Attachment of property involved in money-laundering.—
490
[(1)Where the Director or any other officer not below the rank
490
Subs. by Act 2 of 2013, sec. 5, for sub-section (1) (w.e.f. 15-2-2013 vide S.O.
343(E), dated 8-2-2013). Earlier sub-section (1) was amended by Act 21 of 2009, sec.
3(a) (w.e.f. 1-6-2009). Sub-section (1), before substitution by Act 2 of 2013, stood as
G
under:
“(1) Where the Director, or any other officer not below the rank of Deputy
Director authorised by him for the purposes of this section, has reason to
believe (the reason for such belief to be recorded in writing), on the basis of
material in his possession, that—
(a) any person is in possession of any proceeds of crime;
(b) such person has been charged of having committed a scheduled offence; and H
570 SUPREME COURT REPORTS [2022] 6 S.C.R.

A of Deputy Director authorised by the Director for the purposes of
this section, has reason to believe (the reason for such belief to be
recorded in writing), on the basis of material in his possession,
that—
(a) any person is in possession of any proceeds of crime; and
B (b) such proceeds of crime are likely to be concealed, transferred
or dealt with in any manner
which may result in frustrating any proceedings relating to
confiscation of such proceeds of crime under this Chapter,

C he may, by order in writing, provisionally attach such property for
a period not exceeding one hundred and eighty days from the
date of the order, in such manner as may be prescribed:
Provided that no such order of attachment shall be made
unless, in relation to the scheduled offence, a report has been
D forwarded to a Magistrate under section 173 of the Code of
Criminal Procedure, 1973 (2 of 1974), or a complaint has been
filed by a person authorised to investigate the offence mentioned
in that Schedule, before a Magistrate or court for taking

(c) such proceeds of crime are likely to be concealed, transferred or dealt with
E in any manner which may result in frustrating any proceedings relating to
confiscation of such proceeds of crime under this Chapter,
he may, by order in writing, provisionally attach such property for a period not
exceeding one hundred and fifty days from the date of the order, in the manner
provided in the Second Schedule to the Income-tax Act, 1961 (43 of 1961) and
the Director or the other office so authorised by him, as the case may be, shall
be deemed to be an officer under sub-rule (e) of rule 1 of that Schedule:
F Provided that no such order of attachment shall be made unless, in
relation to the scheduled offence, a report has been forwarded to a Magistrate
under section 173 of the Code of Criminal Procedure, 1973 (2 of 1974), or a
complaint has been filed by a person authorised to investigate the offence
mentioned in the Schedule, before a Magistrate or court for taking cognizance
of the scheduled offence, as the case may be:
Provided further that, notwithstanding anything contained in clause
G (b), any property of any person may be attached under this section if the
Director or any other officer not below the rank of Deputy Director authorised
by him for the purposes of this section has reason to believe (the reasons for
such belief to be recorded in writing), on the basis of material in his possession,
that if such property involved in money-laundering is not attached immediately
under this Chapter, the non-attachment of the property is likely to frustrate
H any proceeding under this Act.”
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 571
INDIA & ORS. [A. M. KHANWILKAR, J.]

cognizance of the scheduled offence, as the case may be, or a A
similar report or complaint has been made or filed under the
corresponding law of any other country:
Provided further that, notwithstanding anything contained
in 491[first proviso], any property of any person may be attached
under this section if the Director or any other officer not below B
the rank of Deputy Director authorised by him for the purposes
of this section has reason to believe (the reasons for such belief
to be recorded in writing), on the basis of material in his possession,
that if such property involved in money-laundering is not attached
immediately under this Chapter, the non-attachment of the property
is likely to frustrate any proceeding under this Act.]. C
492
[Provided also that for the purposes of computing the
period of one hundred and eighty days, the period during which
the proceedings under this section is stayed by the High Court,
shall be excluded and a further period not exceeding thirty days
from the date of order of vacation of such stay order shall be D
counted.]
(2) The Director, or any other officer not below the rank of Deputy
Director, shall, immediately after attachment under sub-section
(1), forward a copy of the order, along with the material in his
possession, referred to in that sub-section, to the Adjudicating E
Authority, in a sealed envelope, in the manner as may be prescribed
and such Adjudicating Authority shall keep such order and material
for such period as may be prescribed.
(3) Every order of attachment made under sub-section (1) shall
cease to have effect after the expiry of the period specified in F
that sub-section or on the date of an order made under 493 [sub-
section (3)] of section 8, whichever is earlier.

491
Subs. by the Finance Act, 2015 (20 of 2015), sec. 146, for “clause (b)” (w.e.f. 14-
5-2015).
492
G
Ins. by Act 13 of 2018, sec. 208(b)(i) (w.e.f. 19-4-2018 vide G.S.R. 383(E), dated
19th April, 2018).
493
Subs. by Act 13 of 2018, sec. 208(b)(ii), for “sub-section (2)” (w.e.f. 19-4-2018 vide
G.S.R. 383(E), dated 19th April, 2018).
Section 5 as it stood originally reads thus:
“5. Attachment of property involved in money laundering. – (1) Where the
Director, or any other officer not below the rank of Deputy Director authorised H
572 SUPREME COURT REPORTS [2022] 6 S.C.R.

A (4) Nothing in this section shall prevent the person interested in
the enjoyment of the immovable property attached under sub-
section (1) from such enjoyment.
by him for the purposes of this section, has reason to believe (the reason for
such belief to be recorded in writing), on the basis of material in his possession,
B that—
(a) any person is in possession of any proceeds of crime;
(b) such person has been charged of having committed a scheduled offence;
and
(c) such proceeds of crime are likely to be concealed, transferred or dealt
with in any manner which may result in frustrating any proceedings relating
to confiscation of such proceeds of crime under this chapter,
C he may, by order in writing, provisionally attach such property for a period not
exceeding ninety days from the date of the order, in the manner provided in the Second
Schedule to the Income-tax Act, 1961 (43 of 1961) and the Director or the other officer
so authorised by him, as the case may be, shall be deemed to be an officer under sub-rule
(e) of Rule 1 of that Schedule:
Provided that no such order of attachment shall be made unless, in relation to an
offence under—
D (i) Paragraph 1 of Part A and Part B of the Schedule, a report has been
forwarded to a Magistrate under Section 173 of the Code of Criminal
Procedure, 1973 (2 of 1974); or
(ii) Paragraph 2 of Part A of the Schedule, a police report or a complaint has
been filed for taking cognizance of an offence by the Special Court constituted
under sub-section (1) of Section 36 of the Narcotic Drugs and Psychotropic
Substances Act, 1985 (61 of 1985).
E
(2) The Director, or any other officer not below the rank of Deputy Director,
shall, immediately after attachment under sub-section (1), forward a copy of
the order, along with the material in his possession, referred to in that sub-
section, to the Adjudicating Authority, in a sealed envelope, in the manner as
may be prescribed and such Adjudicating Authority shall keep such order and
F material for such period as may be prescribed.

(3) Every order of attachment made under sub-section (1) shall cease to have
effect after the expiry of the period specified in that sub-section or on the date
of an order made under sub-section (2) of Section 8, whichever is earlier.

(4) Nothing in this section shall prevent the person interested in the enjoyment
G of the immovable property attached under sub-section (1) from such enjoyment.
Explanation.—For the purposes of this sub-section, “person interested”, in
relation to any immovable property, includes all persons claiming or entitled to
claim any interest in the property.

(5) The Director or any other officer who provisionally attaches any property
under sub-section (1) shall, within a period of thirty days from such attachment,
H file a complaint stating the facts of such attachment before the Adjudicating
Authority.”
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 573
INDIA & ORS. [A. M. KHANWILKAR, J.]

Explanation.—For the purposes of this sub-section, “person A
interested”, in relation to any immovable property, includes all
persons claiming or entitled to claim any interest in the property.
(5) The Director or any other officer who provisionally attaches
any property under sub-section (1) shall, within a period of thirty
days from such attachment, file a complaint stating the facts of B
such attachment before the Adjudicating Authority.”
From the plain language of this provision, it is evident that several
inbuilt safeguards have been provided by the Parliament while enacting
the 2002 Act. This provision has been amended vide Act 21 of 2009, Act
2 of 2013, Finance Act, 2015 and Act 13 of 2018, to strengthen the C
mechanism keeping in mind the scheme of the 2002 Act and the need to
prevent and regulate the activity of money-laundering. As regards the
amendments made vide Act 21 of 2009 and Act 2 of 2013, the same are
not matters in issue in these cases. The challenge is essentially to the
amendment effected in the second proviso in sub-section (1), vide Finance
Act, 2015. D

57. Be that as it may, as aforesaid, sub-section (1) delineates
sufficient safeguards to be adhered to by the authorised officer before
issuing provisional attachment order in respect of proceeds of crime. It
is only upon recording satisfaction regarding the twin requirements
referred to in sub-section (1), the authorised officer can proceed to issue E
order of provisional attachment of such proceeds of crime. Before issuing
a formal order, the authorised officer has to form his opinion and delineate
the reasons for such belief to be recorded in writing, which indeed is not
on the basis of assumption, but on the basis of material in his possession.
The order of provisional attachment is, thus, the outcome of such F
satisfaction already recorded by the authorised officer. Notably, the
provisional order of attachment operates for a fixed duration not
exceeding one hundred and eighty days from the date of the order. This
is yet another safeguard provisioned in the 2002 Act itself.
58. As per the first proviso, in ordinary situation, no order of G
provisional attachment can be issued until a report has been forwarded
to a Magistrate under Section 173 of the 1973 Code in relation to the
scheduled offence, or a complaint has been filed by a person authorised
to investigate the offence mentioned in that Schedule, before a Magistrate
or Court for taking cognizance of the scheduled offence, as the case
H
574 SUPREME COURT REPORTS [2022] 6 S.C.R.

A may be. It further provides that a similar report or complaint has been
made or filed under the corresponding law of any other country. In other
words, filing of police report or a private complaint in relation to the
scheduled offence had been made a precondition for issuing an order of
provisional attachment.
B 59. The second proviso, as it existed prior to Finance Act, 2015,
had predicated that notwithstanding anything contained in Clause (b) of
sub-section (1) any property of any person may be attached in the same
manner and satisfaction to be recorded that non-attachment of property
likely to frustrate any proceeding under the 2002 Act. By amendment
vide Finance Act, 2015, the words “clause (b)” occurring in the second
C proviso came to be substituted to read words “first proviso”. This is the
limited change, but an effective one to give full play to the legislative
intent regarding prevention and regulation of process or activity
concerning proceeds of crime entailing in offence of money-laundering.
Prior to the amendment, the first proviso was rightly perceived as an
D impediment. In that, to invoke the action of even provisional attachment
order, registration of scheduled offence and completion or substantial
progress in investigation thereof were made essential. This was
notwithstanding the urgency involved in securing the proceeds of crime
for being eventually confiscated and vesting in the Central Government.
Because of the time lag and the advantage or opportunities available to
E the person concerned to manipulate the proceeds of crime, the amendment
of 2015 had been brought about to overcome the impediment and
empower the Director or any other officer not below the rank of Deputy
Director authorised by him to proceed to issue provisional attachment
order. In terms of the second proviso, the authorised officer has to record
F satisfaction and reason for his belief in writing on the basis of material in
his possession that the property (proceeds of crime) involved in money-
laundering if not attached “immediately”, would frustrate proceedings
under the 2002 Act. This is a further safeguard provided in view of the
urgency felt by the competent authority to secure the property to
effectively prevent and regulate the offence of money-laundering. In
G other words, the authorised officer cannot resort to action of provisional
attachment of property (proceeds of crime) mechanically. Thus, there
are inbuilt safeguards provided in the main provision as well as the second
proviso to be fulfilled upto the highest ranking ED official, before invoking
such urgent or “immediate” action. We fail to understand as to how
H such a provision can be said to be irrelevant much less manifestly arbitrary,
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 575
INDIA & ORS. [A. M. KHANWILKAR, J.]

in the context of the purposes and objects behind the enactment of the A
2002 Act. Such provision would strengthen the mechanism of prevention
and regulation of process or activity resulting into commission of money-
laundering offence; and also, to ensure that the proceeds of crime are
properly dealt with as ordained by the 2002 Act, including for vesting in
the Central Government.
B
60. As a matter of fact, prior to amendment of 2015, the first
proviso acted as an impediment for taking such urgent measure even by
the authorised officer, who is no less than the rank of Deputy Director.
We must hasten to add that the nuanced distinction must be kept in mind
that to initiate “prosecution” for offence under Section 3 of the Act
registration of scheduled offence is a prerequisite, but for initiating action C
of “provisional attachment” under Section 5 there need not be a pre-
registered criminal case in connection with scheduled offence. This is
because the machinery provisions cannot be construed in a manner which
would eventually frustrate the proceedings under the 2002 Act. Such
dispensation alone can secure the proceeds of crime including prevent D
and regulate the commission of offence of money-laundering. The
authorised officer would, thus, be expected to and, also in a given case,
justified in acting with utmost speed to ensure that the proceeds of crime/
property is available for being proceeded with appropriately under the
2002 Act so as not to frustrate any proceedings envisaged by the 2002
Act. In case the scheduled offence is not already registered by the E
jurisdictional police or complaint filed before the Magistrate, it is open to
the authorised officer to still proceed under Section 5 of the 2002 Act
whilst contemporaneously sending information to the jurisdictional police
under Section 66(2) of the 2002 Act for registering FIR in respect of
cognizable offence or report regarding non-cognizable offence and if F
the jurisdictional police fails to respond appropriately to such information,
the authorised officer under the 2002 Act can take recourse to appropriate
remedy, as may be permissible in law to ensure that the culprits do not
go unpunished and the proceeds of crime are secured and dealt with as
per the dispensation provided for in the 2002 Act. Suffice it to observe
that the amendment effected in 2015 in the second proviso has reasonable G
nexus with the object sought to be achieved by the 2002 Act.
61. The third proviso in Section 5(1) of the 2002 Act is another
safeguard introduced vide Act 13 of 2018 about the manner in which
period of one hundred and eighty days need to be reckoned thereby
H
576 SUPREME COURT REPORTS [2022] 6 S.C.R.

A providing for fixed tenure of the provisional attachment order. Before
the expiry of the statutory period relating to the provisional attachment
order, the Director or any other officer not below the rank of Deputy
Director immediately after attachment under sub-section (1) is obliged
to forward a copy of the provisional attachment order to the three-
member Adjudicating Authority (appointed under Section 6(1) of the
B
2002 Act, headed by, amongst other, person qualified for appointment as
District Judge), in a sealed envelope under Section 5(2), which is required
to be retained by the Adjudicating Authority for the period as prescribed
under the rules framed in that regard. This ensures the fairness in the
action as also accountability of the Authority passing provisional
C attachment order. Further, in terms of Section 5(3), the provisional
attachment order ceases to operate on the date of an order passed by
the Adjudicating Authority under Section 8(3) or the expiry of the period
specified in sub-section (1), whichever is earlier. In addition, under Section
5(5) the authorised officer is obliged to file a complaint before the
Adjudicating Authority within a period of thirty days from such provisional
D
attachment. Going by the scheme of the 2002 Act and Section 5 thereof
in particular, it is amply clear that sufficient safeguards have been
provided for as preconditions for invoking the powers of emergency
attachment in the form of provisional attachment.
62. The background in which the amendment of 2013 became
E necessary can be culled out from the Report titled “Anti-Money
Laundering and Combating the Financing of Terrorism” dated 25.6.2010.
The relevant paragraphs of the said report read thus:
“143. It is no formal and express legal condition that a conviction
for the predicate offence is required as a precondition to prosecute
F money laundering, although some practitioners the assessment
team met with felt that only a conviction would satisfactorily meet
the evidentiary requirements. The definition of property in the
PMLA (see supra) however requires property to be —related to
a scheduled offence. Consequently, the section 3 ML offence not
G being an —all crimes offence, in the absence of case law, it is
generally interpreted as requiring at the very minimum positive
proof of the specific predicate offence before a conviction for
money laundering can be obtained, be it for third party or self-
laundering.

H
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 577
INDIA & ORS. [A. M. KHANWILKAR, J.]

144.Similarly, under section 8A of the NDPS Act, although it is A
debatable that the person charged with money laundering needs
to have been convicted of a predicate offence, the positive and
formal proof of a nexus with a drug related predicate offence is
essential.
*** *** *** B
168.The linkage and interaction of the ML offence with a specific
predicate criminality is historically very tight in the Indian AML
regime. The concept of stand-alone money laundering is quite
strange to the practitioners, who cannot conceive pursuing money
laundering as a sui generis autonomous offence. Some interlocutors C
were even of the (arguably erroneous) opinion that only a
conviction for the predicate criminality would effectively satisfy
the evidential requirements. As said, this attitude is largely due to
the general practice in India to start a ML investigation only on
the basis of a predicate offence case. Even if the ML investigation
since recently can run concurrently with the predicate offence D
enquiry, there is no inter-agency MOU or arrangement to deal
with evidentiary issues between the various agencies in
investigating predicates and ML offences. Also, the way the
interaction between the law enforcement agencies is presently
structured carries the risk that ML prosecutions could be delayed E
while the other predicate offence investigation agencies try to
secure convictions.
*** *** ***
175.Although recently an increased focus on the ML aspect and
use of the ML provisions is to be acknowledged, there are still F
some important and often long-standing legal issues to be resolved.
To that end following measures should be taken:
- The monetary threshold limitation of INR 3 million for the
Schedule Part B predicate offences should be abolished.
G
- The section 3 PMLA definition of the ML offence should be
brought in line with the Vienna and Palermo Conventions so as to
also fully cover the physical concealment and the sole acquisition,
possession and use of all relevant proceeds of crime.

H
578 SUPREME COURT REPORTS [2022] 6 S.C.R.

A - The present strict and formalistic interpretation of the evidentiary
requirements in respect of the proof of the predicate offence should
be put to the test of the courts to develop case law and receive
direction on this fundamental legal issue.
- The level of the maximum fine imposable on legal persons should
B be raised or left at the discretion of the court to ensure a more
dissuasive effect.
- The practice of making a conviction of legal persons contingent
on the concurrent prosecution/conviction of a (responsible) natural
person should be abandoned.
C - Consider the abolishment of the redundant section 8A NDPS
Act drug-related ML offence or, if maintained, bring the sanctions
at a level comparable to that of the PMLA offence.
*** *** ***

D 233.Confiscation under Chapter III of the PMLA is only possible
when it relates to —proceeds of crime as defined in s. 2(1)(u),
i.e. resulting from a scheduled offence, and when there is a
conviction of such scheduled (predicate) offence. In addition, in
such cases, only proceeds of the predicate offence can be
confiscated and not the proceeds of the ML offence itself.
E
234.The predicate offence conviction condition creates
fundamental difficulties when trying to confiscate the proceeds
of crime in the absence of a conviction of a predicate offence,
particularly in a stand-alone ML case, where the laundered assets
become the corpus delicti and should be forfeitable as such. In
F the international context, the predicate conviction requirement also
seriously affects the capacity to recover criminal assets where
the predicate offence has occurred outside India and the proceeds
are subsequently laundered in India (see also comments in Section
2.1 above).
G 235. The definition of proceeds of crime and property in the PMLA
are broad enough to allow for confiscation of property derived
directly or indirectly from proceeds of crime relating to a scheduled
(predicate) offence, including income, profits and other benefits
from the proceeds of crime. These definitions also allow for value
confiscation, regardless of whether the property is held or owned
H
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 579
INDIA & ORS. [A. M. KHANWILKAR, J.]

by a criminal or a third party. As section 65 of the PMLA refers A
to the rules in CrPC, instrumentalities and intended instrumentalities
can be confiscated in accordance with section 102 and 451 of the
CrPC. However, there is no case law in this respect.
236. Also, the procedural provisions of Chapter III make
confiscation of the proceeds of crime contingent on a prior seizure B
of attachment of the property by the Adjudicating Authority, and
consequently substantially limit the possibilities for confiscation
under the PMLA.”
*** *** ***
“General comments” C

244. Since confiscation is linked to a conviction it is not possible to
confiscate criminal proceeds when the defendant has died during
the criminal proceedings. However, it is possible to attach and
dispose of any property of a proclaimed offender when that person
has absconded. The absence of a regulation when the defendant D
has died may have a negative impact on the effectiveness of the
confiscation regime in place in India.”
63. In view of the observations made in said Report, the FATF
made recommendations as follows:
E
“2.3.3 Compliance with Recommendations 3
Rating Summary of factors relative to s.2.3 underlying
overall rating
R.3 PC Confiscation of property laundered is not covered
in the relevant legislation and depends on a
conviction for a scheduled predicate offence.
The UAPA does not allow for confiscation of
F
intended instrumentalities used in terrorist acts or
funds collected to be used by terrorist individuals.
The UAPA and NDPS Act do not allow for
property of corresponding value to be confiscated.
There are no clear provisions and procedures on
how to deal with the assets in the case of criminal
proceedings when the suspect died.
G
Concerns based on the limited number of
confiscations in relation to ML/FT offences.”

64. As a sequel to these recommendations of FATF and the
observations in the stated Report, Section 5 came to be amended vide
Act 2 of 2013. In this connection, it may be useful to refer to the Fifty H
580 SUPREME COURT REPORTS [2022] 6 S.C.R.

A Sixth Report of the Standing Committee on Finance relating to the 2011
Bill, which reads thus:
“5. Amendment in provisions implemented by Enforcement
Directorate:
(i)Attachment of property: The present Act in section 5
B stipulates that the person from whom property is attached
must “have been charged of having committed a scheduled
offence”. It is proposed to be deleted as property may come
to rest with someone, who has nothing to do with the
scheduled offence or even the money-laundering offence.
C Procedure for attachment is at present done as provided in the
Second Schedule to the Income Tax Act, 196. Now it is proposed
in section 5(1) that the procedure will be prescribed separately.
Time for Adjudicating Authority to confirm attachment of property
by ED has been proposed to be increased from 150 days to 180
days.
D
(ii) ****
(iii) Making confiscation independent of conviction: At
present attachment of property becomes final under section
8(3) “after the guilt of the person is proved in the trial court
E and order of such trial court becomes final”. Problems are
faced in such cases where money-laundering has been done
by a person who has not committed the scheduled offence
or where property has come to rest with someone who has
not committed any offence. Therefore, it is proposed to
amend section 8(5) to provide for attachment and
F confiscation of the proceeds of crime, even if there is no
conviction, so long as it is proved that predicate offence
and money laundering offence have taken place and the
property in question (i.e. the proceeds of crime) is involved
in money laundering.”
G *** *** ***
However, the MER 2010 highlighted certain deficiencies
in the AML legislation which adversely affected the ratings
on a few FATF recommendations. The areas are broadly
summarized below:—
H
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 581
INDIA & ORS. [A. M. KHANWILKAR, J.]

a) Commodities market out of the ambit of PMLA. A
b) DNFBP sector not subjected to PMLA (except Casino).
c) Effectiveness concerns due to absence of ML conviction.
d) Identification and verification of beneficial ownership of legal
persons. B
e) Ineffective sanctions regime for non-compliance. India has
suggested an Action Plan with short, medium and long term
objectives to address the specific issues raised in the MER 2010
that includes proposed amendments in the PMLA.”
(emphasis supplied) C
65. As aforesaid, in this backdrop the amendment Act 2 of 2013
came into being. Considering the purport of the amended provisions and
the experience of implementing/enforcement agencies, further changes
became necessary to strengthen the mechanism regarding prevention
of money-laundering. It is not right in assuming that the attachment of D
property (provisional) under the second proviso, as amended, has no link
with the scheduled offence. Inasmuch as Section 5(1) envisages that
such an action can be initiated only on the basis of material in possession
of the authorised officer indicative of any person being in possession of
proceeds of crime. The precondition for being proceeds of crime is that
E
the property has been derived or obtained, directly or indirectly, by any
person as a result of criminal activity relating to a scheduled offence.
The sweep of Section 5(1) is not limited to the accused named in the
criminal activity relating to a scheduled offence. It would apply to any
person (not necessarily being accused in the scheduled offence), if he is
involved in any process or activity connected with the proceeds of crime. F
Such a person besides facing the consequence of provisional attachment
order, may end up in being named as accused in the complaint to be filed
by the authorised officer concerning offence under Section 3 of the
2002 Act.
66. Be it noted that the attachment must be only in respect of G
property which appears to be proceeds of crime and not all the properties
belonging to concerned person who would eventually face the action of
confiscation of proceeds of crime, including prosecution for offence of
money-laundering. As mentioned earlier, the relevant date for initiating
action under the 2002 Act — be it of attachment and confiscation or
H
582 SUPREME COURT REPORTS [2022] 6 S.C.R.

A prosecution, is linked to the inclusion of the offence as scheduled offence
and of carrying on the process or activity in connection with the proceeds
of crime after such date. The pivot moves around the date of carrying
on the process and activity connected with the proceeds of crime; and
not the date on which the property has been derived or obtained by the
person concerned as a result of any criminal activity relating to or relatable
B
to the scheduled offence.
67. The argument of the petitioners that the second proviso permits
emergency attachment in disregard of the safeguard provided in the
first proviso regarding filing of report (chargesheet) clearly overlooks
that the second proviso contains non-obstante clause and, being an
C exceptional situation, warrants “immediate” action so that the property
is not likely to frustrate any proceeding under the 2002 Act. Concededly,
there is stipulation fastened upon the authorised officer to record in writing
reasons for his belief on the basis of material in his possession that such
“immediate” action is indispensable. This stipulation has reasonable nexus
D with the purposes and objects sought to be achieved by the 2002 Act.
68. It was also urged before us that the attachment of property
must be equivalent in value of the proceeds of crime only if the proceeds
of crime are situated outside India. This argument, in our opinion, is
tenuous. For, the definition of “proceeds of crime” is wide enough to not
E only refer to the property derived or obtained as a result of criminal
activity relating to a scheduled offence, but also of the value of any such
property. If the property is taken or held outside the country, even in
such a case, the property equivalent in value held within the country or
abroad can be proceeded with. The definition of “property” as in Section
2(1)(v) is equally wide enough to encompass the value of the property
F of proceeds of crime. Such interpretation would further the legislative
intent in recovery of the proceeds of crime and vesting it in the Central
Government for effective prevention of money-laundering.
69. We find force in the stand taken by the Union of India that the
objectives of enacting the 2002 Act was the attachment and confiscation
G of proceeds of crime which is the quintessence so as to combat the evil
of money-laundering. The second proviso, therefore, addresses the broad
objectives of the 2002 Act to reach the proceeds of crime in whosoever’s
name they are kept or by whosoever they are held. To buttress this
argument, reliance has been placed on the dictum in Attorney General
H
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 583
INDIA & ORS. [A. M. KHANWILKAR, J.]

for India494 and Raman Tech. & Process Engg. Co. & Anr. vs. Solanki A
Traders 495.
70. The procedural safeguards provided in respect of provisional
attachment are effective measures to protect the interest of the person
concerned who is being proceeded with under the 2002 Act, in the
following manner as rightly indicated by the Union of India: B
i. For invoking the second proviso, the Director or any officer not
below the rank of Deputy Director will have to first apply his
mind to the materials on record before recording in writing his
reasons to believe is certainly a sufficient safeguard to the
invocation of the powers under the second proviso to Section 5(1) C
of the 2002 Act.
ii. There has to be a satisfaction that if the property involved in
money-laundering or ‘proceeds of crime’ are not attached
“immediately”, such non-attachment might frustrate the
confiscation proceedings under the 2002 Act. D
iii. The order passed under Section 5(1) of the 2002 Act is only
provisional in nature. The life of this provisional attachment order
passed under Section 5(1) of the 2002 Act is only for 180 days,
subject to confirmation by an independent Adjudicating Authority.
iv. Under Section 5(2) officer passing provisional attachment order E
has to immediately forward a copy of this order to the Adjudicating
Authority in a sealed envelope.
v. Under Section 5(5) of the 2002 Act, the officer making such
order must file a complaint before the Adjudicating Authority within
30 days of the order of provisional attachment being made. F
vi. Section 5(3) of the 2002 Act provides that the provisional
attachment order shall cease to have effect on the expiry of the
period specified in Section 5(1) i.e. 180 days or on the date when
the Adjudicating Authority makes an order under Section 8(2),
whichever is earlier. G
vii. Under Section 8(1), once the officer making the provisional
attachment order files a complaint and if the Adjudicating Authority

494
Supra at Footnote No.428 (also at Footnote No.175)
495
(2008) 2 SCC 302 (also at Footnote No.430) H
584 SUPREME COURT REPORTS [2022] 6 S.C.R.

A “has a reason to believe that any person has committed an offence
under Section 3 or is in possession of the proceeds of crime”, the
Adjudicating Authority may serve a show cause notice of not less
than 30 days on such person calling upon him to indicate the
sources of his income, earning or assets or by means of which he
has acquired the property attached under Section 5(1) of the 2002
B
Act.
viii. The above SCN would require the noticee to produce evidence
on which he relies and other relevant information and particulars
to show cause why all or any of the property “should not be
declared to be the properties involved in money-laundering and
C confiscated by the Central Government”.
ix. Section 8(2) requires the Adjudicating Authority to consider
the reply to the SCN issued under Section 8(1) of the 2002 Act.
The Section further provides to hear the aggrieved person as well
as the officer issuing the order of provisional attachment and also
D take into account “all relevant materials placed on record before
the Adjudicating Authority”. After following the above procedure,
the Adjudicating Authority will record its finding whether all the
properties referred to in the SCN are involved in money-laundering
or not.
E x. While passing order under Section 8(2) read with Section 8(3)
there are two possibilities which might happen:
a. the Adjudicating Authority may confirm the order of provisional
attachment, in which case again, the confirmation will continue only up
to
i. the period of investigation not exceeding 365 days, or
F
ii. till the pendency of any proceedings relating to any offence
under the 2002 Act or under the corresponding law of any other
country before the competent Court of criminal jurisdiction outside
India.
b. Adjudicating Authority may disagree and not confirm the
G
provisional attachment, in which case attachment over the property
ceases.
xi. Under Section 8(4) of the 2002 Act, upon confirmation of the
order of provisional attachment, the Director or other officer authorized
by him shall take the possession of property attached.
H
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 585
INDIA & ORS. [A. M. KHANWILKAR, J.]

xii. Under Section 8(5) of the 2002 Act, on the conclusion of a A
trial for an offence under the 2002 Act if the Special Court finds that the
offence of money-laundering has been committed it will order that the
property involved in money-laundering or the property which has been
involved in the commission of the offence of money-laundering shall
stand confiscated to the Central Government.
B
xiii. However, under Section 8(6) if the Special Court on the
conclusion of the trial finds that no offence of money-laundering has
taken place or the property is not involved in money-laundering it will
release the property which has been attached to the person entitled to
receive it.
C
xiv. Under Section 8(7), if the trial before the Special Court cannot
be conducted because of the death of the accused or because the accused
is declared proclaimed offender, then the Special Court on an application
of the Director or a person claiming to be entitled to possession of a
property in respect of which an order under Section 8(3) is passed either
to confiscate the property or release the property to the claimant, after D
considering the material before it.
xv. Under Section 8(8), when a property is confiscated, Special
Court may direct the central government to restore the property
to a person with the legitimate interest in the property, who may
have suffered a quantifiable loss as a result of money-laundering. E
Provided that the person must not have been involved in money-
laundering and must have acted in a good faith and has suffered a
considerable loss despite taking all reasonable precautions.
xvi. The order passed by the Adjudicating Authority is also subject
to appeal before the Appellate Tribunal which is constituted under F
Section 25 of the 2002 Act. Thus, the Adjudicating Authority is
not the final authority under the 2002 Act as far as the attachment
of proceeds of crime or property involved in money-laundering is
concerned.
xvii. Any person aggrieved of an order confirming the provisional G
attachment order can file an appeal before the Appellate Tribunal
under Section 26(1) of the 2002 Act. The Appellate Tribunal on
receipt of an appeal after giving the parties an opportunity of being
heard will pass an order as it thinks fit either confirming or
H
586 SUPREME COURT REPORTS [2022] 6 S.C.R.

A modifying or setting aside the provisional attachment order
appealed against.
xviii. Further, the order passed by the Appellate Tribunal is further
appealable before the High Court under Section 42 of the 2002
Act on any question of fact or question of law arising out of the
B order passed by the Appellate Tribunal.
It is, thus, clear that the provision in the form of Section 5 provides
for a balancing arrangement to secure the interest of the person as well
as to ensure that the proceeds of crime remain available for being dealt
with in the manner provided by the 2002 Act. This provision, in our
C opinion, has reasonable nexus with the objects sought to be achieved by
the 2002 Act in preventing and regulating money-laundering effectively.
The constitutional validity including interpretation of Section 5 has already
been answered against the petitioners by different High Courts496. We
do not wish to dilate on those decisions for the view already expressed
hitherto.
D
SECTION 8 OF THE 2002 ACT
71. This section is part of Chapter III dealing with attachment,
adjudication and confiscation. It provides for the procedure and
safeguards to be adhered to by the Authorities referred to in Section 48
E and in particular the Adjudicating Authority appointed by the Central
Government under Section 6, for dealing with the complaint filed by the
authorised officer under Section 5(5) of the 2002 Act or applications
made under Section 17(4) or 18(10) of the 2002 Act. This is a wholesome
provision, not only protecting the interest of the person concerned, but
affording him/her fair opportunity during the adjudication process. This
F section, as amended from time to time and as applicable to the present
cases, reads thus:
“8. Adjudication.—(1) On receipt of a complaint under sub-
section (5) of section 5, or applications made under sub-section
(4) of section 17 or under sub-section (10) of section 18, if the
G Adjudicating Authority has reason to believe that any person has
496
(1) Bombay High Court in Radha Mohan Lakhotia (supra at Footnote No.431); (2)
High Court of Andhra Pradesh in B. Rama Raju (supra at Footnote No.433); (3) High
Court of Gujarat in J Alive Hospitality and Food Private Limited (supra at Footnote
No.434); (4) High Court of Karnataka in K. Sowbaghya (supra at Footnote No.435);
(5) High Court of Sikkim at Gangtok in Usha Agarwal (supra at Footnote No.436); and
H Delhi High Court in J. Sekar (supra at Footnote No.437).
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 587
INDIA & ORS. [A. M. KHANWILKAR, J.]

committed an 497[offence under section 3 or is in possession of A
proceeds of crime], he may serve a notice of not less than thirty
days on such person calling upon him to indicate the sources of
his income, earning or assets, out of which or by means of which
he has acquired the property attached under sub-section (1) of
section 5, or, seized 498[or frozen] under section 17 or section 18,
B
the evidence on which he relies and other relevant information
and particulars, and to show cause why all or any of such properties
should not be declared to be the properties involved in money-
laundering and confiscated by the Central Government:
Provided that where a notice under this sub-section specifies
any property as being held by a person on behalf of any other C
person, a copy of such notice shall also be served upon such other
person:
Provided further that where such property is held jointly by
more than one person, such notice shall be served to all persons
holding such property. D

(2) The Adjudicating Authority shall, after—
(a) considering the reply, if any, to the notice issued under sub-
section (1);
(b) hearing the aggrieved person and the Director or any other E
officer authorised by him in this behalf; and
(c) taking into account all relevant materials placed on record
before him,
by an order, record a finding whether all or any of the properties
F
referred to in the notice issued under sub-section (1) are involved
in money-laundering:
Provided that if the property is claimed by a person, other
than a person to whom the notice had been issued, such person
shall also be given an opportunity of being heard to prove that the
property is not involved in money-laundering. G

(3) Where the Adjudicating Authority decides under sub-section
(2) that any property is involved in money-laundering, he shall, by
497
Subs. by Act 21 of 2009, sec. 5, for “offence under section 3” (w.e.f. 1-6-2009).
498
Ins. by Act 2 of 2013, sec. 6(i) (w.e.f. 15-2-2013, vide S.O. 343(E), dated 8-2-2013).
H
588 SUPREME COURT REPORTS [2022] 6 S.C.R.

A an order in writing, confirm the attachment of the property made
under sub-section (1) of section 5 or retention of property or
499
[record seized or frozen under section 17 or section 18 and
record a finding to that effect, whereupon such attachment or
retention or freezing of the seized or frozen property] or record
shall—
B
(a) continue during 500[investigation for a period not exceeding
501
[three hundred and sixty-five days] or] the pendency of the
proceedings relating to any 502[offence under this Act before a
court or under the corresponding law of any other country,
before the competent court of criminal jurisdiction outside India,
C as the case may be; and]
503
[(b) become final after an order of confiscation is passed
under sub-section (5) or sub-section (7) of section 8 or section
58B or sub-section (2A) of section 60 by the 504[Special Court];]
505
D [Explanation.—For the purposes of computing the period of
three hundred and sixty-five days under clause (a), the period
during which the investigation is stayed by any court under any
law for the time being in force shall be excluded.]
(4) Where the provisional order of attachment made under sub-
E section (1) of section 5 has been confirmed under sub-section (3),
the Director or any other officer authorised by him in this behalf

499
Subs. by Act 2 of 2013, sec. 6(ii)(a), for “record seized under section 17 or section
18 and record a finding to that effect, such attachment or retention of the seized
property” (w.e.f. 15-2-2013), vide S.O. 343(E), dated 8-2-2013.
F 500
Ins. by Act 13 of 2018, sec. 208(c)(i) (w.e.f. 19-4-2018, vide G.S.R. 383(E), dated
19th April, 2018).
501
Subs. by Act 7 of 2019, sec. 22(i), for “ninety days” (w.e.f. 20-3-2019, vide G.S.R.
225(E), dated 19 th March, 2019).
502
Subs. by Act 2 of 2013, sec. 6(ii)(b), for “Scheduled offence before a Court and”
(w.e.f. 15-2-2013, vide S.O. 343(E), dated 8-2-2013).
503
G Subs. by Act 2 of 2013, sec. 6(ii)(c), for clause (b) (w.e.f. 15-2-2013, vide S.O.
343(E), dated 8-2-2013). Clause (b), before substitution, stood as under:
“(b) become final after the guilt of the person is proved in the trial court and
order of such trial court becomes final”.
504
Subs. by the Finance Act, 2015 (20 of 2015), sec. 147(i), for “Adjudicating Authority”
(w.e.f. 14-5-2015).
505
Ins. by Act 7 of 2019, sec. 22(ii) (w.e.f. 20-3-2019, vide G.S.R. 225(E), dated 19 th
H March, 2019).
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 589
INDIA & ORS. [A. M. KHANWILKAR, J.]

shall forthwith take the 506[possession of the property attached A
under section 5 or frozen under sub-section (1A) of section 17, in
such manner as may be prescribed:
Provided that if it is not practicable to take possession of a
property frozen under sub-section (1A) of section 17, the order of
confiscation shall have the same effect as if the property had B
been taken possession of.]
507
[(5) Where on conclusion of a trial of an offence under this
Act, the Special Court finds that the offence of money-laundering
has been committed, it shall order that such property involved in
the money-laundering or which has been used for commission of C
the offence of money-laundering shall stand confiscated to the
Central Government.
(6) Where on conclusion of a trial under this Act, the Special
Court finds that the offence of money-laundering has not taken
place or the property is not involved in money-laundering, it shall D
order release of such property to the person entitled to receive it.
(7) Where the trial under this Act cannot be conducted by reason
of the death of the accused or the accused being declared a
proclaimed offender or for any other reason or having commenced
but could not be concluded, the Special Court shall, on an application E
moved by the Director or a person claiming to be entitled to
possession of a property in respect of which an order has been
passed under sub-section (3) of section 8, pass appropriate orders
regarding confiscation or release of the property, as the case may
be, involved in the offence of money-laundering after having regard
to the material before it.] F
506
Subs. by Act 2 of 2013, sec. 6(iii), for “possession of the attached property” (w.e.f.
15-2-2013, vide S.O. 343(E), dated 8-2-2013).
507
Subs. by Act 2 of 2013, sec. 6(iv), for sub-sections (5) and (6) (w.e.f. 15-2-2013,
vide S.O. 343(E), dated 8-2-2013). Sub-sections (5) and (6), before substitution, stood
as under:
“(5) Where on conclusion of a trial for any scheduled offence, the person G
concerned is acquitted, the attachment of the property or retention of the
seized property or record under sub-section (3) and net income, if any, shall
cease to have effect.
(6) Where the attachment of any property or retention of the seized property
or record becomes final under clause (b) of sub-section (3), the Adjudicating
Authority shall, after giving an opportunity of being heard to the person
concerned, make an order confiscating such property.”
H
590 SUPREME COURT REPORTS [2022] 6 S.C.R.

508
A [(8) Where a property stands confiscated to the Central
Government under sub-section (5), the Special Court, in such
manner as may be prescribed, may also direct the Central
Government to restore such confiscated property or part thereof
of a claimant with a legitimate interest in the property, who may
have suffered a quantifiable loss as a result of the offence of
B
money laundering:
Provided that the Special Court shall not consider such claim
unless it is satisfied that the claimant has acted in good faith and
has suffered the loss despite having taken all reasonable
precautions and is not involved in the offence of money laundering:]
C
509
[Provided further that the Special Court may, if it thinks
fit, consider the claim of the claimant for the purposes of restoration
of such properties during the trial of the case in such manner as
may be prescribed.]”

D 72. The grievance of the petitioners in respect of this provision is
broadly about the period of attachment specified under Section 8(3)(a)
and the modality of taking possession of the property under Section 8(4)
of the 2002 Act. As a result, we will confine our discussion to the
dispensation provided in the stated sub-sections. Reverting to sub-section
(3), it postulates that where the Adjudicating Authority records a finding
E whether all or any of the properties referred to in the show cause notice
issued under sub-section (1) by the Adjudicating Authority consequent
to receipt of a complaint/application that the property in question is
involved in money-laundering, he shall, by an order in writing confirm
the attachment (provisional) of property made under Section 5(1) or
F retention of property or record seized or frozen under Section 17 or
Section 18, and direct continuation of the attachment or retention or
freezing of the concerned property for a period not exceeding three
hundred and sixty-five days or the pendency of the proceedings relating
to any offence under the 2002 Act before a Court or under the
corresponding law of any country outside India and become final after
G an order of confiscation is passed under sub-section (5) or sub-section
(7) of Section 8 or Section 58B or Section 60(2A) by the Special Court.
The Explanation added thereat vide Act 7 of 2019 stipulates the method
508
Ins. by the Finance Act, 2015 (20 of 2015), sec. 147(ii) (w.e.f. 14-5-2015).
509
Ins. by Act 13 of 2018, sec. 208(c)(ii) (w.e.f. 19-4-2018, vide G.S.R. 383(E), dated
H 19th April, 2018).
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 591
INDIA & ORS. [A. M. KHANWILKAR, J.]

of computing the period of three hundred and sixty-five days after A
reckoning the stay order of the Court, if any. The argument proceeds
that the period of attachment mentioned in Section 8(3)(a) of the 2002
Act does not clearly provide for the consequence of non-filing of the
complaint within three hundred and sixty-five days from the date of
attachment (provisional). This argument clearly overlooks the obligation
B
on the Director or any other officer who provisionally attaches any
property under Section 5(1), to file a complaint stating the fact of such
attachment before the Adjudicating Authority within thirty days in terms
of Section 5(5) of the 2002 Act. Concededly, filing of complaint before
the Adjudicating Authority in terms of Section 5(5) within thirty days
from the provisional attachment for confirmation of such order of C
provisional attachment is different than the complaint to be filed before
the Special Court under Section 44(1)(b) for initiating criminal action
regarding offence of money-laundering punishable under Section 4 of
the 2002 Act. Furthermore, the provisional attachment would operate
only for a period of one hundred and eighty days from the date of order
D
passed under Section 5(1) of the 2002 Act in terms of that provision.
Whereas, Section 8(3) refers to the period of three hundred and sixty-
five days from the passing of the order under sub-section (2) of Section
8 by the Adjudicating Authority and confirming the provisional attachment
order and the order of confirmation of attachment operates until the
confiscation order is passed or becomes final in terms of order passed E
under Section 8(5) or 8(7) or 58B or 60(2A) by the Special Court. The
order of confirmation of attachment could also last during the pendency
of the proceedings relating to the offence of money-laundering under
the 2002 Act, or before the competent Court of criminal jurisdiction outside
India, as the case may be. We need not elaborate on this aspect any
F
further and leave the parties to agitate this aspect in appropriate
proceedings as it is not about the constitutional validity of the provision
as such.
73. The other grievance of the petitioners is in reference to the
stipulation in sub-section (4) of Section 8 providing for taking possession
of the property. This provision ought to be invoked only in exceptional G
situation keeping in mind the peculiar facts of the case. In that, merely
because the provisional attachment order passed under Section 5(1) is
confirmed, it does not follow that the property stands confiscated; and
until an order of confiscation is formally passed, there is no reason to
hasten the process of taking possession of such property. The principle H
592 SUPREME COURT REPORTS [2022] 6 S.C.R.

A set out in Section 5(4) of the 2002 Act needs to be extended even after
confirmation of provisional attachment order until a formal confiscation
order is passed. Section 5(4) clearly states that nothing in Section 5
including the order of provisional attachment shall prevent the person
interested in the enjoyment of immovable property attached under sub-
section (1) from such enjoyment. The need to take possession of the
B
attached property would arise only for giving effect to the order of
confiscation. This is also because sub-section (6) of Section 8 postulates
that where on conclusion of a trial under the 2002 Act which is obviously
in respect of offence of money-laundering, the Special Court finds that
the offence of money-laundering has not taken place or the property is
C not involved in money-laundering, it shall order release of such property
to the person entitled to receive it. Once the possession of the property
is taken in terms of sub-section (4) and the finding in favour of the
person is rendered by the Special Court thereafter and during the
interregnum if the property changes hands and title vest in some third
party, it would result in civil consequences even to third party. That is
D
certainly avoidable unless it is absolutely necessary in the peculiar facts
of a particular case so as to invoke the option available under sub-section
(4) of Section 8.
74. Indisputably, statutory Rules have been framed by the Central
Government in exercise of powers under Section 73 of the 2002 Act
E regarding the manner of taking possession of attached or frozen properties
confirmed by the Adjudicating Authority in 2013, and also regarding
restoration of confiscated property in 2019. Suffice it to observe that
direction under Section 8(4) for taking possession of the property in
question before a formal order of confiscation is passed merely on the
F basis of confirmation of provisional attachment order, should be an
exception and not a rule. That issue will have to be considered on case-
to-case basis. Upon such harmonious construction of the relevant
provisions, it is not possible to countenance challenge to the validity of
sub-section (4) of Section 8 of the 2002 Act.
G 75. The learned counsel appearing for the Union of India, had
invited our attention to the recommendations made by FATF in 2003 and
2012 to justify the provision under consideration. The fact that non-
conviction based confiscation model is permissible, it does not warrant
an extreme and drastic action of physical dispossession of the person
from the property in every case — which can be industrial/commercial/
H
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 593
INDIA & ORS. [A. M. KHANWILKAR, J.]

business and also residential property, until a formal order of confiscation A
is passed under Section 8(5) or 8(7) of the 2002 Act. As demonstrated
earlier, it is possible that the Special Court in the trial concerning money-
laundering offence may eventually decide the issue in favour of the person
in possession of the property as not being proceeds of crime or for any
other valid ground. Before such order is passed by the Special Court, it
B
would be a case of serious miscarriage of justice, if not abuse of process
to take physical possession of the property held by such person. Further,
it would serve no purpose by hastening the process of taking possession
of the property and then returning the same back to the same person at
a later date pursuant to the order passed by the Court of competent
jurisdiction. Moreover, for the view taken by us while interpretating C
Section 3 of the 2002 Act regarding the offence of money-laundering, it
can proceed only if it is established that the person has directly or
indirectly derived or obtained proceeds of crime as a result of criminal
activity relating to or relatable to a scheduled offence or was involved in
any process or activity connected with proceeds of crime.
D
76. It is unfathomable as to how the action of confiscation can be
resorted to in respect of property in the event of his acquittal or discharge
in connection with the scheduled offence. Resultantly, we would sum up
by observing that the provision in the form of Section 8(4) can be resorted
to only by way of an exception and not as a rule. The analogy drawn by
the Union of India on the basis of decisions of this Court in Divisional E
Forest Officer & Anr. vs. G.V. Sudhakar Rao & Ors. 510, Biswanath
Bhattacharya511, Yogendra Kumar Jaiswal & Ors. vs. State of Bihar
& Ors.512, will be of no avail in the context of the scheme of attachment,
confiscation and vesting of proceeds of crime in the Central Government
provided for in the 2002 Act. F
SEARCHES AND SEIZURES
77. After having traversed through the provisions of Chapter I to
III, we may now turn to other contentious provision in Chapter V of the
2002 Act, dealing with summons, searches and seizures, etc. Section 16
provides for power of survey bestowed upon the Authorities under the G
2002 Act. They have been empowered to enter upon any place within
the limits of the area assigned to them or in respect of which, has been
510
(1985) 4 SCC 573 (also at Footnote No.439)
511
Supra at Footnote No.438
512
(2016) 3 SCC 183 (also at Footnote No.448)
H
594 SUPREME COURT REPORTS [2022] 6 S.C.R.

A specifically authorised for the purposes of Section 16 by the competent
authority, for inspection of records or other matters, in the event, it has
reason to believe on the basis of material in possession that an offence
under Section 3 of the 2002 Act has been committed. However, when it
comes to search and seizure, Section 17 of the 2002 Act permits only
the Director or any other officer not below the rank of Deputy Director
B
authorised by him to exercise that power on the basis of information in
his possession and having reason to believe that any person has committed
some act which constitutes money-laundering or is in possession of
proceeds of crime involved in money-laundering, including the records
and property relating to money-laundering. Section 17 of the 2002 Act,
C as amended, reads thus:
“17. Search and seizure.—(1) Where 513[the Director or any
other officer not below the rank of Deputy Director authorised by
him for the purposes of this section,] on the basis of information in
his possession, has reason to believe (the reason for such belief to
D be recorded in writing) that any person—
(i) has committed any act which constitutes money-
laundering, or
(ii) is in possession of any proceeds of crime involved in
money-laundering, or
E
(iii) is in possession of any records relating to money-
laundering, 514[or]
515
[(iv) is in possession of any property related to crime,]
then, subject to the rules made in this behalf, he may authorise
F any officer subordinate to him to—
(a) enter and search any building, place, vessel, vehicle or
aircraft where he has reason to suspect that such records or
proceeds of crime are kept;

G

513
Subs. by Act 21 of 2009, sec. 7(i), for “the Director” (w.e.f. 1-6-2009)
514
Ins. by Act 2 of 2013, sec. 14(i)(a) (w.e.f. 15-2-2013, vide S.O. 343(E), dated 8-2-
2013)
515
Ins. by Act 2 of 2013, sec. 14(i)(b) (w.e.f. 15-2-2013, vide S.O. 343(E), dated 8-2-
H 2013)
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 595
INDIA & ORS. [A. M. KHANWILKAR, J.]

(b) break open the lock of any door, box, locker, safe, almirah A
or other receptacle for exercising the powers conferred by
clause (a) where the keys thereof are not available;
(c) seize any record or property found as a result of such search;
(d) place marks of identification on such record or 516[property,
if required or] make or cause to be made extracts or copies B
therefrom;
(e) make a note or an inventory of such record or property;
(f) examine on oath any person, who is found to be in possession
or control of any record or property, in respect of all matters C
relevant for the purposes of any investigation under this Act:
517
[***]
518
[(1A) Where it is not practicable to seize such record or
property, the officer authorised under sub-section (1), may make
an order to freeze such property whereupon the property shall D
not be transferred or otherwise dealt with, except with the prior
permission of the officer making such order, and a copy of such
order shall be served on the person concerned:

E
516
Ins. by Act 2 of 2013, sec. 14(i)(c) (w.e.f. 15-2-2013, vide S.O. 343(E), dated 8-2-
2013)
517
Proviso omitted by the Finance (No.2) Act, 2019, sec. 197 (w.e.f. 1-8-2019).
Earlier the proviso was substituted by Act 2 of 2013, sec. 14(i)(d) (w.e.f. 15-2-2013,
vide S.O. 343(E), dated 8-2-2013) and by Act 21 of 2009, sec. 7(ii) (w.e.f. 1-6-2009).
The Proviso, before omission, stood as under:
“Provided that no search shall be conducted unless, in relation to the scheduled F
offence, a report has been forwarded to a Magistrate under section 157 of the
Code of Criminal Procedure, 1973 (2 of 1974) or a complaint has been filed by
a person, authorised to investigate the offence mentioned in the Schedule,
before a Magistrate or court for taking cognizance of the scheduled offence, as
the case may be, or in cases where such report is not required to be forwarded,
a similar report of information received or otherwise has been submitted by an
G
officer authorised to investigate a scheduled offence to an officer not below the
rank of Additional Secretary to the Government of India or equivalent being
head of the office or Ministry or Department or Unit, as the case may be, or
any other officer who may be authorised by the Central Government, by
notification, for this purpose”
518
Ins. by Act 2 of 2013, sec. 14(ii) (w.e.f. 15-2-2013, vide S.O. 343(E), dated 8-2-
2013). H
596 SUPREME COURT REPORTS [2022] 6 S.C.R.

A Provided that if, at any time before its confiscation under
sub-section (5) or sub-section (7) of section 8 or section 58B or
sub-section (2A) of section 60, it becomes practical to seize a
frozen property, the officer authorised under sub-section (1) may
seize such property.]
B (2) The authority, who has been authorised under sub-section (1)
shall, immediately after search and seizure519[or upon issuance of
a freezing order], forward a copy of the reasons so recorded
along with material in his possession, referred to in that sub-section,
to the Adjudicating Authority in a sealed envelope, in the manner,
as may be prescribed and such Adjudicating Authority shall keep
C such reasons and material for such period, as may be prescribed.
(3) Where an authority, upon information obtained during survey
under section 16, is satisfied that any evidence shall be or is likely
to be concealed or tampered with, he may, for reasons to be
recorded in writing, enter and search the building or place where
D such evidence is located and seize that evidence:
Provided that no authorisation referred to in sub-section
(1) shall be required for search under this sub-section.
520
[(4) The authority seizing any record or property under sub-
section (1) or freezing any record or property under sub-section
E (1A) shall, within a period of thirty days from such seizure or
freezing, as the case may be, file an application, requesting for
retention of such record or property seized under sub-section (1)
or for continuation of the order of freezing served under sub-
section (1A), before the Adjudicating Authority.]”
As noticed from the amended provision, it has been amended
F
vide Act 21 of 2009, Act 2 of 2013 and finally by the Finance (No.2) Act,
2019. The challenge is essentially in respect of deletion of proviso vide
Finance (No.2) Act, 2019 — which provides that no search shall be
conducted unless, in relation to the scheduled offence, a report has been
forwarded to a Magistrate under Section 157 of the 1973 Code or a
G 519
Ins. by Act 2 of 2013, sec. 14(iii) (w.e.f. 15-2-2013, vide S.O. 343(E), dated 8-2-
2013).
520
Subs. by Act 2 of 2013, sec. 14(iv), for sub-section (14) (w.e.f. 15-2-2013, vide S.O.
343(E), dated 8.2.2013). Sub-section (14), before substitution, stood as under:
“(4) The authority, seizing any record or property under this section shall,
within a period of thirty days from such seizure, file an application, requesting
H for retention of such record or property, before the Adjudicating Authority.”
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 597
INDIA & ORS. [A. M. KHANWILKAR, J.]

complaint has been filed by a person, authorised to investigate the offence A
mentioned in the Schedule, before a Magistrate or Court for taking
cognizance of the scheduled offence, as the case may be, or in cases
where such report is not required to be forwarded, a similar report of
information received or otherwise has been submitted by an officer
authorised to investigate a scheduled offence to an officer not below the
B
rank of Additional Secretary to the Government of India or equivalent
being Head of the Office or Ministry or Department or Unit, as the case
may be, or any other officer who may be authorised by the Central
Government, by notification, for this purpose. Further, the challenge is
about no safeguards, as provided under the 1973 Code regarding searches
and seizures, have been envisaged and that such drastic power is being C
exercised without a formal FIR registered or complaint filed in respect
of scheduled offence. The provision is, therefore, unconstitutional.
78. These challenges have been rightly refuted by the Union of
India on the argument that the 2002 Act is a self-contained Code and the
dispensation envisaged thereunder, must prevail in terms of Section 71520A D
of the 2002 Act, which predicates that the provisions of the 2002 Act
have effect notwithstanding anything inconsistent therewith contained
in any other law for the time being in force, which includes the provisions
of the 1973 Code. Even Section 65520B of the 2002 Act predicates that
the provisions of the 1973 Code shall apply, insofar as they are not
inconsistent with the provisions of the 2002 Act in respect of arrest, E
search and seizure, attachment, confiscation, investigation, prosecution
and all other proceedings under the 2002 Act. To bolster this submission,
reliance is also placed on Sections 4521 and 5522 of the 1973 Code. Section
520A
71. Act to have overriding effect.—The provisions of this Act shall have effect
notwithstanding anything inconsistent therewith contained in any other law for the F
time being in force.
520B
65. Code of Criminal Procedure, 1973 to apply.—The provisions of the Code of
Criminal Procedure, 1973 (2 of 1974) shall apply, insofar as they are not inconsistent
with the provisions of this Act, to arrest, search and seizure, attachment, confiscation
investigation, prosecution and all other proceedings under this Act.
521
4. Trial of offences under the Indian Penal Code and other laws.—(1) All
offences under the India Penal Code (45 of 1860) shall be investigated, inquired into,
tried, and otherwise dealt with according to the provisions hereinafter contained. G
(2) All offences under any other law shall be investigated, inquired into, tried, and
otherwise dealt with according to the same provisions, but subject to any enactment for
the time being in force regulating the manner or place of investigating, inquiring into,
trying or otherwise dealing with such offences.
522
5. Saving.—Nothing contained in this Code shall, in the absence of a specific
provision to the contrary, affect any special or local law for the time being in force, or
any special jurisdiction or power conferred, or any special from of procedure prescribed, H
by any other law for the time being in force.
598 SUPREME COURT REPORTS [2022] 6 S.C.R.

A 4(2) pertains to offences under other laws (other than IPC) which are
required to be investigated, inquired into, tried, and otherwise dealt with
according to the same provisions, but subject to any enactment for the
time being in force regulating the manner or place of investigating, inquiring
into, trying or otherwise dealing with such offences. Similarly, Section 5
of the 1973 Code envisages that nothing in the 1973 Code shall, in the
B
absence of a specific provision to the contrary, affect any special or
local law for the time being in force, or any special jurisdiction or power
conferred, or any special form of procedure prescribed, by any other
law for the time being in force.
79. Undoubtedly, the 2002 Act is a special self-contained law;
C and Section 17 is a provision, specifically dealing with the matters
concerning searches and seizures in connection with the offence of
money-laundering to be inquired into and the proceeds of crime dealt
with under the 2002 Act. We have already noted in the earlier part of
this judgment that before resorting to action of provisional attachment,
D registration of scheduled offence or complaint filed in that regard, is not
a precondition. The authorised officer can still invoke power of issuing
order of provisional attachment and contemporaneously send information
to the jurisdictional police about the commission of scheduled offence
and generation of property as a result of criminal activity relating to a
scheduled offence, which is being made subject matter of provisional
E attachment. Even in the matter of searches and seizures under the 2002
Act, that power can be exercised only by the Director or any other
officer not below the rank of Deputy Director authorised by him. They
are not only high-ranking officials, but have to be fully satisfied that
there is reason to believe on the basis of information in their possession
F about commission of offence of money-laundering or possession of
proceeds of crime involved in money-laundering. Such reason(s) to
believe is required to be recorded in writing and contemporaneously
forwarded to the Adjudicating Authority along with the material in his
possession in a sealed envelope to be preserved by the Adjudicating
Authority for period as is prescribed under the Rules framed in that
G regard. Such are the inbuilt safeguards provided in the 2002 Act. The
proviso as it existed prior to 2019 was obviously corresponding to the
stipulation in the first proviso in Section 5. However, for strengthening
the mechanism, including regarding prevention of money-laundering, the
Parliament in its wisdom deemed it appropriate to drop the proviso in
H sub-section (1) of Section 17 of the 2002 Act, thereby dispensing with
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 599
INDIA & ORS. [A. M. KHANWILKAR, J.]

the condition that no search shall be conducted unless in relation to the A
scheduled offence a report has been forwarded to a Magistrate under
Section 157 of the 1973 Code or a complaint has been filed before a
Magistrate in regard to such offence. As it is indisputable that the 2002
Act is a special Act and is a self-contained Code regarding the subject
of searches and seizures in connection with the offence of money-
B
laundering under the 2002 Act, coupled with the fact that the purpose
and object of the 2002 Act is prevention of money-laundering; and the
offence of money-laundering being an independent offence concerning
the process and activity connected with the proceeds of crime, the deletion
of the first proviso has reasonable nexus with the objects sought to be
achieved by the 2002 Act for strengthening the mechanism of prevention C
of money-laundering and to secure the proceeds of crime for being dealt
with appropriately under the 2002 Act.
80. As aforementioned, Section 17 provides for inbuilt safeguards,
not only mandating exercise of power by high ranking officials, of the
rank of Director (not below the rank of Additional Secretary to the D
Government of India who is appointed by a Committee chaired by the
Central Vigilance Commissioner in terms of Section 25 of the CVC Act)
or Deputy Director authorised by the Director in that regard, but also to
adhere to other stipulations of recording of reasons regarding the belief
formed on the basis of information in his possession about commission
of offence of money-laundering and possession of proceeds of crime E
involved in money-laundering. Further, such recorded reasons along with
the materials is required to be forwarded to the three-member Adjudicating
Authority (appointed under Section 6 of the 2002 Act headed by a person
qualified for appointment as District Judge) in a sealed cover to be
preserved for specified period, thus, guaranteeing fairness, transparency F
and accountability regarding the entire process of search and seizure.
This is unlike the provision in the 1973 Code where any police officer
including the Head Constable can proceed to search and seize records
or property merely on the basis of allegation or suspicion of commission
of a scheduled offence.
G
81. Concededly, the 2002 Act provides for an inquiry to be
conducted by the Authorities and with power to collect evidence for
being submitted to the Adjudicating Authority for consideration of
confirmation of provisional attachment order passed by the Authorities
in respect of properties being proceeds of crime involved in the offence
H
600 SUPREME COURT REPORTS [2022] 6 S.C.R.

A of money-laundering. In that sense, the provisions in 2002 Act are not
only to investigate into the offence of money-laundering, but more
importantly to prevent money-laundering and to provide for confiscation
of property related to money-laundering and matters connected therewith
and incidental thereto.
B 82. The process of searches and seizures under the 2002 Act are,
therefore, not only for the purposes of inquiring into the offence of money-
laundering, but also for the purposes of prevention of money-laundering.
This is markedly distinct from the process of investigating into a scheduled
offence.
C 83. It is pertinent to note that if the action taken by the Authority
under the 2002 Act, including regarding searches and seizures, is
eventually found to be without reasons recorded in writing, would entail
punishment for vexatious search under Section 62 of the 2002 Act. Such
being the stringent safeguards provided under Section 17 of the 2002
Act and Rules framed regarding the process of searches and seizures
D concerning the offence of money-laundering and for prevention of
money-laundering including attachment of proceeds of crime, it is
unfathomable as to how the challenge under consideration can be
countenanced. We may usefully advert to the decision of Constitution
Bench of this Court in Pooran Mal523, which had dealt with similar
E power entrusted to the Director of Inspection or the Commissioner under
the Income-tax Act, 1961 (also see Income-Tax Officer, Special
Investigation Circle-B, Meerut524). To the same end is the decision in
R.S. Seth Gopikrishan Agarwal vs. R.N. Sen, Assistant Collector of
Customs & Ors.525, dealing with Sections 105 and 136 of the Customs
Act. In the case of Dr. Partap Singh 526, this Court upheld the
F dispensation provided in Section 37 of the FERA by adopting purposive
interpretation to give full play to the legislative intent and negating the
argument regarding incorporation of the provisions of the 1973 Code by
pen and ink in that section, as is the argument advanced before us.
84. As noticed earlier, in terms of Section 17(2) of the 2002 Act
G immediately after the search and seizure, the Authority conducting the
search is obliged to forward a copy of the reasons recorded and materials
523
Supra at Footnote No.416
524
Supra at Footnote No.424
525
(1967) 2 SCR 340 (also at Footnote No.417)
526
H Supra at Footnote No.425
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 601
INDIA & ORS. [A. M. KHANWILKAR, J.]

in his possession to the Adjudicating Authority in a sealed envelope. A
This sealed envelope is required to be preserved for period as specified
under the Rules framed in that regard so that it is not tempered with in
any manner and to ensure fairness of the procedure including
accountability of the Authority. Not only that, in terms of Section 17(4)
of the 2002 Act the Authority seizing the record or property is obliged to
B
submit an application before the Adjudicating Authority within a period
of thirty days therefrom for the retention of the said record and
Adjudicating Authority in turn gives opportunity to be heard by issuing
show cause notice to the person concerned before passing order of
retention of record or property, as the case may be, under the 2002 Act
and the Rules framed therefor. The Authorities carrying out search and C
seizure is also made accountable by providing for punishment under
Section 62 of the 2002 Act for vexatious search and giving false
information. All these inbuilt safeguards prevent arbitrary exercise or
misuse of power by the authorities appointed under the 2002 Act.
85. The emphasis placed on Section 102 of the 1973 Code D
regarding seizure procedure by the petitioners, is of no avail. That provision
does not provide for any safeguard prior to a seizure as is provided
under Section 17 of the 2002 Act and the Rules framed thereunder. As
noted earlier, it can be made even by a Head Constable as the expression
used is “any police officer” that too merely on the basis of an allegation
or suspicion of commission of an offence. In case of search, Section E
165 of the 1973 Code empowers the officer in-charge of a police station
or a police officer making an investigation to take recourse to that in the
event he has reasonable grounds for believing that it would be necessary
to do so for investigating into any offence. This power can be exercised
by any police officer (irrespective of his rank) investigating into an F
offence. Suffice it to observe that the power of search and seizure
entrusted to the Authorities under Section 17 of the 2002 Act, is a special
self-contained provision and is different from the general provisions in
the 1973 Code, which, therefore, ought to prevail in terms of Section 71
of the 2002 Act. Further, in view of the inbuilt safeguards and stringent
stipulations to be adhered to by the Authorities under the 2002 Act, it G
ought to be regarded as reasonable provision having nexus with the
purposes and objects sought to be achieved by the 2002 Act. It is certainly
not an arbitrary power at all.

H
602 SUPREME COURT REPORTS [2022] 6 S.C.R.

A 86. It was urged that the Rule 3(2) proviso in the 2005 Rules
regarding forms, search and seizure or freezing and the manner of
forwarding the reasons and material to the Adjudicating Authority,
impounding and custody of records and the period of retention, remained
unamended despite deletion of the proviso in Section 17(1) of the 2002
Act vide Finance (No.2) Act, 2019. In the first place, it is unfathomable
B
that the effect of amending Act is being questioned on the basis of
unamended Rule. It is well-settled that if the Rule is not consistent with
the provisions of the Act, the amended provisions in the Act must prevail.
The statute cannot be declared ultra vires on the basis of Rule framed
under the statute. The precondition in the proviso in Rule 3(2) cannot be
C read into Section 17 of the 2002 Act, more so contrary to the legislative
intent in deleting the proviso in Section 17(1) of the 2002 Act. In any
case, it is open to the Central Government to take necessary corrective
steps to obviate confusion caused on account of the subject proviso, if
any.
D SEARCH OF PERSONS
87. The subject of search of persons is dealt with in Section 18 of
the 2002 Act forming part of Chapter V. Even in respect of this provision,
the challenge is essentially founded on the deletion of proviso in sub-
section (1) of Section 18 vide Finance (No.2) Act, 2019 which was pari
E materia with the proviso in Section 17(1) of the 2002 Act — stipulating
that no search of any person shall be made unless in relation to the
scheduled offence a report has been forwarded to a Magistrate under
Section 157 of the 1973 Code, etc. The Section 18, as amended reads
thus:

F “18. Search of persons.—(1) If an authority, authorised in this
behalf by the Central Government by general or special order,
has reason to believe (the reason for such belief to be recorded in
writing) that any person has secreted about his person or in anything
under his possession, ownership or control, any record or proceeds
of crime which may be useful for or relevant to any proceedings
G under this Act, he may search that person and seize such record
or property which may be useful for or relevant to any proceedings
under this Act:
527
[***]
527
Proviso omitted by the Finance (No.2) Act, 2019, sec. 198 (w.e.f. 1-8-2019).
H Earlier the proviso was inserted by Act 21 of 2009, sec. 8(i) (w.e.f. 1-6-2009) and
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 603
INDIA & ORS. [A. M. KHANWILKAR, J.]

(2) The authority, who has been authorised under sub-section (1) A
shall, immediately after search and seizure, forward a copy of the
reasons so recorded along with material in his possession, referred
to in that sub-section, to the Adjudicating Authority in a sealed
envelope, in the manner, as may be prescribed and such
Adjudicating Authority shall keep such reasons and material for
B
such period, as may be prescribed.
(3) Where an authority is about to search any person, he shall, if
such person so requires, take such person within twenty-four hours
to the nearest gazetted officer, superior in rank to him, or a
Magistrate:
C
Provided that the period of twenty-four hours shall exclude
the time necessary for the journey undertaken to take such person
to the nearest gazetted officer, superior in rank to him, or
Magistrate’s Court.
(4) If the requisition under sub-section (3) is made, the authority D
shall not detain the person for more than twenty-four hours prior
to taking him before the Gazetted Officer, superior in rank to him,
or the Magistrate referred to in that sub-section:
Provided that the period of twenty-four hours shall exclude
the time necessary for the journey from the place of detention to E
the office of the Gazetted Officer, superior in rank to him, or the
Magistrate’s Court.
(5) The Gazetted Officer or the Magistrate before whom any
such person is brought shall, if he sees no reasonable ground for
substituted by Act 2 of 2013, sec. 15 (w.e.f. 15-2-2013, vide S.O. 343(E), dated 8-2- F
2013). The proviso, before omission, stood as under:
“Provided that no search of any person shall be made unless, in relation to the
scheduled offence, a report has been forwarded to a Magistrate under section
157 of the Code of Criminal Procedure, 1973 (2 of 1974) or a complaint has
been filed by a person, authorised to investigate the offence mentioned in the
Schedule, before a Magistrate or court for taking cognizance of the scheduled
offence, as the case may be, or in cases where such report is not required to be
G
forwarded, a similar report of information received or otherwise has been
submitted by an officer authorised to investigate a scheduled offence to an
officer not below the rank of Additional Secretary to the Government of India
or equivalent being head of the office or Ministry or Department or Unit, as the
case may be, or any other officer who may be authorised by the Central
Government, by notification, for this purpose” H
604 SUPREME COURT REPORTS [2022] 6 S.C.R.

A search, forthwith discharge such person but otherwise shall direct
that search be made.
(6) Before making the search under sub-section (1) or sub-section
(5), the authority shall call upon two or more persons to attend
and witness the search, and the search shall be made in the
B presence of such persons.
(7) The authority shall prepare a list of record or property seized
in the course of the search and obtain the signatures of the
witnesses on the list.
(8) No female shall be searched by any one except a female.
C
(9) The authority shall record the statement of the person searched
under sub-section (1) or sub-section (5) in respect of the records
or proceeds of crime found or seized in the course of the search:
528
[***]
D (10) The authority, seizing any record or property under sub-section
(1) shall, within a period of thirty days from such seizure, file an
application requesting for retention of such record or property,
before the Adjudicating Authority.”
For the reasons noted to negate the challenge to the deletion of
E proviso in Section 17(1) of the 2002 Act, the same would apply with full
force for rejecting the same argument in respect of deletion of proviso in
Section 18(1) of the 2002 Act. Suffice it to observe that even under
Section 18 of the 2002 Act, the Authority authorised to exercise power
of search of person is obliged to adhere to identical inbuilt safeguards as
in the case of exercise of power under Section 17 of the 2002 Act. In
F
528
Proviso omitted by Act 21 of 2009, sec. 8(ii) (w.e.f. 1-6-2009). Proviso, before
omission, stood as under:
“Provided that no search of any person shall be made unless, in relation to an
offence under:
(a) Paragraph 1 of Part A or Paragraph 1 or Paragraph 2 or Paragraph 3 or
G Paragraph 4 or Paragraph 5 of Part B of the Schedule, a report has been forwarded
to a Magistrate under section 173 of the Code of Criminal Procedure, 1973 (2
of 1974); or
(b) Paragraph 2 of Part A of the Schedule, a police report or a complaint has
been filed for taking cognizance of an offence by the Special Court constituted
under sub-section (1) of section 36 of the Narcotic Drugs and Psychotropic
Substances Act, 1985 (61 of 1985).”
H
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 605
INDIA & ORS. [A. M. KHANWILKAR, J.]

addition to the similar safeguards in terms of Section 18(3) of the 2002 A
Act, the Authority is obliged to take the person who is about to be searched
to a Gazetted Officer or a Magistrate before the search of such person
is carried out. The Constitution Bench of this Court while dealing with
similar provisions of NDPS Act in State of Punjab vs. Baldev Singh529
upheld the search of person procedure being a fair and reasonable
B
procedure. In paragraph 25 of the said decision, this Court observed as
follows:
“25. To be searched before a gazetted officer or a Magistrate, if
the suspect so requires, is an extremely valuable right which the
legislature has given to the person concerned having regard to the
grave consequences that may entail the possession of illicit articles C
under the NDPS Act. It appears to have been incorporated in the
Act keeping in view the severity of the punishment. The rationale
behind the provision is even otherwise manifest. The search before
a gazetted officer or a Magistrate would impart much more
authenticity and creditworthiness to the search and seizure D
proceeding. It would also verily strengthen the prosecution case.
There is, thus, no justification for the empowered officer, who
goes to search the person, on prior information, to effect the search,
of not informing the person concerned of the existence of his
right to have his search conducted before a gazetted officer or a
Magistrate, so as to enable him to avail of that right. It is, however, E
not necessary to give the information to the person to be searched
about his right in writing. It is sufficient if such information is
communicated to the person concerned orally and as far as
possible in the presence of some independent and respectable
persons witnessing the arrest and search. The prosecution must, F
however, at the trial, establish that the empowered officer had
conveyed the information to the person concerned of his right of
being searched in the presence of a Magistrate or a gazetted
officer, at the time of the intended search. Courts have to be
satisfied at the trial of the case about due compliance with the
requirements provided in Section 50. No presumption under G
Section 54 of the Act can be raised against an accused, unless the
prosecution establishes it to the satisfaction of the court, that the
requirements of Section 50 were duly complied with.”

529
(1999) 6 SCC 172 (also at Footnote No.418) H
606 SUPREME COURT REPORTS [2022] 6 S.C.R.

A Additionally, under Section 18(5) of the 2002 Act, if the person to
be searched is taken to a Gazetted Officer or the Magistrate, then such
Officer or Magistrate may release the person if there is no ground for
search and under Section 18(6), the Authority is obliged to call at least
two witnesses to attend to witness the search, in whose presence, the
search is to be carried out. In terms of Section 18(7), the Authority
B
seizing any property during the search of such a person has to prepare a
list of the record or the property seized which is required to be signed by
the witnesses to ensure that no tempering thereof takes place later on.
In case, search of a female is to be carried out, in terms of Section
18(8), it could be done only by a female. Significantly, the Authority
C seizing any record or property during the search of the person, is obliged
to submit an application to the Adjudicating Authority within thirty days
for permitting retention of record or property. On such application, the
Adjudicating Authority gives opportunity of hearing to the person
concerned as to why record or property should not be retained in terms
of Section 18(10). Such inbuilt safeguards are provided to secure the
D
interest of the person being subjected to search, at the same time for
strengthening the mechanism regarding prevention of money-laundering
and attachment of proceeds of crime. Merely because Section 165 of
the 1973 Code provides for a different mechanism regarding search by
the police officer, that will be of no consequence for dealing with the
E inquiry/investigation and adjudication including prosecution under the 2002
Act. Suffice it to observe that the provision in the form of Section 18, as
amended, is a special provision and is certainly not arbitrary much less
manifestly arbitrary. Instead, we hold that the amended provision in Section
18 has reasonable nexus with the purposes and objects sought to be
achieved by the 2002 Act of prevention of money-laundering and
F
attachment and confiscation of property (proceeds of crime) involved in
money-laundering, as also prosecution against the person concerned for
offence of money-laundering under Section 3 of the 2002 Act.
ARREST
G 88. Section 19 of the 2002 Act postulates the manner in which
arrest of person involved in money-laundering can be effected. Sub-
section (1) of Section 19 envisages that the Director, Deputy Director,
Assistant Director, or any other officer authorised in this behalf by the
Central Government, if has material in his possession giving rise to reason
to believe that any person has been guilty of an offence punishable under
H
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 607
INDIA & ORS. [A. M. KHANWILKAR, J.]

the 2002 Act, he may arrest such person. Besides the power being invested A
in high-ranking officials, Section 19 provides for inbuilt safeguards to be
adhered to by the authorised officers, such as of recording reasons for
the belief regarding the involvement of person in the offence of money-
laundering. That has to be recorded in writing and while effecting arrest
of the person, the grounds for such arrest are informed to that person.
B
Further, the authorised officer has to forward a copy of the order, along
with the material in his possession, in a sealed cover to the Adjudicating
Authority, who in turn is obliged to preserve the same for the prescribed
period as per the Rules. This safeguard is to ensure fairness, objectivity
and accountability of the authorised officer in forming opinion as recorded
in writing regarding the necessity to arrest the person being involved in C
offence of money-laundering. Not only that, it is also the obligation of
the authorised officer to produce the person so arrested before the Special
Court or Judicial Magistrate or a Metropolitan Magistrate, as the case
may be, within twenty-four hours. This production is also to comply with
the requirement of Section 167 of the 1973 Code. There is nothing in
D
Section 19, which is contrary to the requirement of production under
Section 167 of the 1973 Code, but being an express statutory requirement
under the 2002 Act in terms of Section 19(3), it has to be complied by
the authorised officer. Section 19, as amended from time to time, reads
thus:
“19. Power to arrest.—(1) If the Director, Deputy Director, E
Assistant Director or any other officer authorised in this behalf
by the Central Government by general or special order, has on the
basis of material in his possession, reason to believe (the reason
for such belief to be recorded in writing) that any person has been
guilty of an offence punishable under this Act, he may arrest such F
person and shall, as soon as may be, inform him of the grounds
for such arrest.
(2) The Director, Deputy Director, Assistant Director or any other
officer shall, immediately after arrest of such person under sub-
section (1), forward a copy of the order along with the material in G
his possession, referred to in that sub-section, to the Adjudicating
Authority in a sealed envelope, in the manner, as may be prescribed
and such Adjudicating Authority shall keep such order and material
for such period, as may be prescribed.

H
608 SUPREME COURT REPORTS [2022] 6 S.C.R.

A (3) Every person arrested under sub-section (1) shall, within
twenty-four hours, be taken to a 530[Special Court or] Judicial
Magistrate or a Metropolitan Magistrate, as the case may be,
having jurisdiction:
Provided that the period of twenty-four hours shall exclude
B the time necessary for the journey from the place of arrest to the
531
[Special Court or] Magistrate’s Court.”
In the context of this provision, the challenge is that in absence of
any formal complaint being filed, arrest under Section 19 is being
made by the authorised officers. Whereas, the purport of Section
C 167 of the 1973 Code would suggest that the person can be arrested
by the jurisdictional police without warrant under Section 41 of
the 1973 Code only upon registration of a complaint under Section
154 of the 1973 Code in connection with cognizable offence or
pursuant to the order of the Court. Even, in case of arrest pursuant
to the order of the Court, a formal complaint against such person
D accusing him of being involved in commission of an offence is
essential. Moreover, the person produced before the Court would
be at a loss to know the grounds for arrest unless a formal FIR or
complaint is filed accusing him about his involvement in the
commission of an offence. The provision if interpreted to permit
E the authorised officer to arrest someone being involved in the
commission of offence of money-laundering without a formal
complaint against him, would be ex facie manifestly arbitrary and
unconstitutional.
89. This argument clearly overlooks the overall scheme of the
F 2002 Act. As noticed earlier, it is a comprehensive legislation, not limited
to provide for prosecution of person involved in the offence of money-
laundering, but mainly intended to prevent money-laundering activity and
confiscate the proceeds of crime involved in money-laundering. It also
provides for prosecuting the person involved in such activity constituting
offence of money-laundering. In other words, this legislation is an
G amalgam of different facets including setting up of agencies and
mechanisms for coordinating measures for combating money-laundering.
530
Ins. by Act 13 of 2018, sec. 208 (d)(i) (w.e.f. 19-4-2018, vide G.S.R. 383(E), dated
19th April, 2018).
531
Ins. by Act 13 of 2018, sec. 208 (d)(ii) (w.e.f. 19-4-2018, vide G.S.R. 383(E), dated
19th April, 2018).
H
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 609
INDIA & ORS. [A. M. KHANWILKAR, J.]

Chapter III is a provision to effectuate these purposes and objectives by A
attachment, adjudication and confiscation. The adjudication is done by
the Adjudicating Authority to confirm the order of provisional attachment
in respect of proceeds of crime involved in money-laundering. For
accomplishing that objective, the authorities appointed under Chapter
VIII have been authorised to make inquiry into all matters by way of
B
survey, searches and seizures of records and property. These provisions
in no way invest power in the Authorities referred to in Chapter VIII of
the 2002 Act to maintain law and order or for that matter, purely
investigating into a criminal offence. The inquiry preceding filing of the
complaint by the authorities under the 2002 Act, may have the semblance
of an investigation conducted by them. However, it is essentially an inquiry C
to collect evidence to facilitate the Adjudicating Authority to decide on
the confirmation of provisional attachment order, including to pass order
of confiscation, as a result of which, the proceeds of crime would vest in
the Central Government in terms of Section 9 of the 2002 Act. In other
words, the role of the Authorities appointed under Chapter VIII of the
D
2002 Act is such that they are tasked with dual role of conducting inquiry
and collect evidence to facilitate adjudication proceedings before the
Adjudicating Authority in exercise of powers conferred upon them under
Chapters III and V of the 2002 Act and also to use the same materials to
bolster the allegation against the person concerned by way of a formal
complaint to be filed for offence of money-laundering under the 2002 E
Act before the Special Court, if the fact situation so warrant. It is not as
if after every inquiry prosecution is launched against all persons found to
be involved in the commission of offence of money-laundering. It is also
not unusual to provide for arrest of a person during such inquiry before
filing of a complaint for indulging in alleged criminal activity. The
F
respondent has rightly adverted to somewhat similar provisions in other
legislations, such as Section 35 of FERA and Section 102 of Customs
Act including the decisions of this Court upholding such power of arrest
at the inquiry stage bestowed in the Authorities in the respective
legislations. In Romesh Chandra Mehta532, the Constitution Bench of
this Court enunciated that Section 104 of the Customs Act confers power G
to arrest upon the Custom Officer if he has reason to believe that any
person in India or within the Indian Customs waters has been guilty of
an offence punishable under Section 135 of that Act. Again, in the case
of Padam Narain Aggarwal533, while dealing with the provisions of
532
Supra at Footnote No.119
533
Supra at Footnote No.246 H
610 SUPREME COURT REPORTS [2022] 6 S.C.R.

A the Customs Act, it noted that the term “arrest” has neither been defined
in the 1973 Code nor in the Indian Penal Code, 1860 nor in any other
enactment dealing with offences. This word has been derived from the
French word “arrater” meaning “to stop or stay”. It signifies a restraint
of a person. It is, thus, obliging the person to be obedient to law. Further,
arrest may be defined as “the execution of the command of a court of
B
law or of a duly authorised officer”. Even, this decision recognises the
power of the authorised officer to cause arrest during the inquiry to be
conducted under the concerned legislations. While adverting to the
safeguards provided under that legislation before effecting such arrest,
the Court noted as follows:
C “Safeguards against abuse of power
36. From the above discussion, it is amply clear that power
to arrest a person by a Customs Officer is statutory in
character and cannot be interfered with. Such power of arrest
can be exercised only in those cases where the Customs
D Officer has “reason to believe” that a person has been guilty
of an offence punishable under Sections 132, 133, 135, 135-
A or 136 of the Act. Thus, the power must be exercised on
objective facts of commission of an offence enumerated and
the Customs Officer has reason to believe that a person
E sought to be arrested has been guilty of commission of such
offence. The power to arrest thus is circumscribed by
objective considerations and cannot be exercised on whims,
caprice or fancy of the officer.
37. The section534 also obliges the Customs Officer to inform the
F person arrested of the grounds of arrest as soon as may be. The
law requires such person to be produced before a
Magistrate without unnecessary delay.
38. The law thus, on the one hand, allows a Customs Officer
to exercise power to arrest a person who has committed
G certain offences, and on the other hand, takes due care to
ensure individual freedom and liberty by laying down norms
and providing safeguards so that the power of arrest is not
abused or misused by the authorities. ….”
(emphasis supplied)
534
H Ed.: Section 104 of the Customs Act, 1962.
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 611
INDIA & ORS. [A. M. KHANWILKAR, J.]

The safeguards provided in the 2002 Act and the preconditions to A
be fulfilled by the authorised officer before effecting arrest, as contained
in Section 19 of the 2002 Act, are equally stringent and of higher standard.
Those safeguards ensure that the authorised officers do not act arbitrarily,
but make them accountable for their judgment about the necessity to
arrest any person as being involved in the commission of offence of
B
money-laundering even before filing of the complaint before the Special
Court under Section 44(1)(b) of the 2002 Act in that regard. If the action
of the authorised officer is found to be vexatious, he can be proceeded
with and inflicted with punishment specified under Section 62 of the
2002 Act. The safeguards to be adhered to by the jurisdictional police
officer before effecting arrest as stipulated in the 1973 Code, are certainly C
not comparable. Suffice it to observe that this power has been given to
the high-ranking officials with further conditions to ensure that there is
objectivity and their own accountability in resorting to arrest of a person
even before a formal complaint is filed under Section 44(1)(b) of the
2002 Act. Investing of power in the high-ranking officials in this regard
D
has stood the test of reasonableness in Premium Granites535, wherein
the Court restated the position that requirement of giving reasons for
exercise of power by itself excludes chances of arbitrariness. Further, in
M/s. Sukhwinder Pal Bipan Kumar536, the Court restated the position
that where the discretion to apply the provisions of a particular statute is
left with the Government or one of the highest officers, it will be presumed E
that the discretion vested in such highest authority will not be abused.
Additionally, the Central Government has framed Rules under Section
73 in 2005, regarding the forms and the manner of forwarding a copy of
order of arrest of a person along with the material to the Adjudicating
Authority and the period of its retention. In yet another decision in Ahmed
F
Noormohmed Bhatti537, this Court opined that the provision cannot be
held to be unreasonable or arbitrary and, therefore, unconstitutional merely
because the authority vested with the power may abuse his authority.
(Also see Manzoor Ali Khan538).
90. Considering the above, we have no hesitation in upholding the
validity of Section 19 of the 2002 Act. We reject the grounds pressed G
into service to declare Section 19 of the 2002 Act as unconstitutional.
535
Supra at Footnote No.248
536
Supra at Footnote No.249
537
Supra at Footnote No.250
538
Supra at Footnote No.251 H
612 SUPREME COURT REPORTS [2022] 6 S.C.R.

A On the other hand, we hold that such a provision has reasonable nexus
with the purposes and objects sought to be achieved by the 2002 Act of
prevention of money-laundering and confiscation of proceeds of crime
involved in money-laundering, including to prosecute persons involved in
the process or activity connected with the proceeds of crime so as to
ensure that the proceeds of crime are not dealt with in any manner
B
which may result in frustrating any proceedings relating to confiscation
thereof.
BURDEN OF PROOF
91. The validity of Section 24 of the 2002 Act has been assailed.
C This section has been amended in 2013 vide Act 2 of 2013. Before that
amendment, it read thus:
“24. Burden of Proof.— When a person is accused of having
committed the offence under section 3, the burden of proving
that proceeds of crime are untainted property shall be on the
D accused.”
The amendment of 2013 was necessitated because of the
recommendations made by FATF in 2012, wherein it was noted that the
countries should adopt measures similar to those set forth in the Vienna
Convention, Palermo Convention and Terrorist Financing Convention.
E The Objects and Reasons for effecting amendment as appended to the
Amendment Bill read thus:
“The Prevention of Money Laundering Act, 2002 was
enacted to prevent money-laundering and to provide for
confiscation of property derived from, or involved in, money-
F laundering and for matters connected therewith or incidental
thereto. The aforesaid Act also addresses the international
obligations under the Political Declaration and Global Programme
of Action adopted by General Assembly of the United Nations to
prevent money-laundering. The Act was amended in the year
2005 and 2009 to remove the difficulties arisen in implementation
G of the Act.
The problem of money-laundering is no longer restricted to
the geo-political boundaries of any country. It is a global menace
that cannot be contained by any nation alone. In view of this,
India has become a member of the Financial Action Task Force
H
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 613
INDIA & ORS. [A. M. KHANWILKAR, J.]

and Asia Pacific Group on money-laundering, which are committed A
to the effective implementation and enforcement of internationally
accepted standards against money-laundering and the financing
of terrorism. Consequent to the submission of an action plan to
the Financial Action Task Force to bring anti money-laundering
legislation of India at par with the international standards and to
B
obviate some of the deficiencies in the Act that have been
experienced by the implementing agencies, the need to amend
the Prevention of Money-Laundering Act, 2002 became
necessary.”
The Amendment Bill had proposed substitution of Section 24 as
under: C

“24. In any proceedings relating to proceeds of crime under this
Act, unless the contrary is proved, it shall be presumed that such
proceeds of crime is involved in money-laundering.”
The Standing Committee of Finance then made some D
recommendations as follows:
“The Committee recommend that the prescribed onus of proof
that the property in question is not out of proceeds of money-
laundering crime, being not only on the accused but also on anyone
who is in possession of the proceeds of crime, should be subject E
to adequate safeguards to protect the innocent.”
Finally, the provision came to be amended by Act 2 of 2013 which
came into force with effect from 15.2.2013 and reads thus:
“539[24. Burden of proof.— In any proceeding relating to
proceeds of crime under this Act,— F
(a) in the case of a person charged with the offence of money-
laundering under section 3, the Authority or Court shall, unless
the contrary is proved, presume that such proceeds of crime
are involved in money-laundering; and
(b) in the case of any other person the Authority or Court, may G
presume that such proceeds of crime are involved in money-
laundering.]”

539
Subs. By Act 2 of 2013, sec. 19, for section 24 (w.e.f. 15-2-2013, vide S.O. 343(E),
dated 8-2-2013). H
614 SUPREME COURT REPORTS [2022] 6 S.C.R.

A From the plain language of the amended provision, which is subject
matter of assail in these cases being unconstitutional, clearly indicates
that it concerns (all) proceeding(s) relating to proceeds of crime under
the 2002 Act. The expression “proceeding” has not been defined in the
2002 Act or the 1973 Code. However, in the setting in which it has been
placed in this provision, as rightly argued by the learned Additional Solicitor
B
General for the Union of India, it must relate to the proceeding before
the Adjudicating Authority or the Special Court. The proceeding before
the authorities (referred to in Chapter VIII) relates to action taken
regarding prevention of offence of money-laundering and ordering
provisional attachment of property derived or obtained, directly or
C indirectly, by any person as a result of criminal activity relating to a
scheduled offence; and to inquire into all matters connected therewith
and collect evidence to be presented before the Adjudicating Authority
for consideration of application regarding confirmation of provisional
attachment order as per Section 8 of the 2002 Act. This provision (Section
24) must, however, apply to proceeding before the Adjudicating Authority
D
regarding confirmation of provisional attachment order and eventually
for ordering confiscation of the attached property for vesting in the Central
Government under Section 9 of the 2002 Act. This is reinforced from
the purport of Section 23 of the 2002 Act. Further, it would also apply to
proceeding before the Special Court empowered to try the offence of
E money-laundering under Section 3 of the 2002 Act upon presentation of
a complaint by the authority authorised as per Section 44(1)(b) of the
2002 Act.
92. It is, thus, clear that this special provision regarding burden of
proof in any proceeding relating to proceeds of crime under this Act
F would apply to stated proceeding before the Adjudicating Authority and
not limited to the proceeding before the Special Court. That is evident
from the plain language, indicative of applicability of the provision to
“any” proceeding before the “Authority” or the “Court”. The expression
“Authority” occurring in this provision must be given its proper meaning
indicative of the Adjudicating Authority appointed under Section 6 of the
G 2002 Act to adjudicate on matters concerning confirmation of provisional
attachment order and eventual confiscation and vesting of the property,
if the fact situation so warrant. It is an independent body, free from the
control of the Executive540. It is ordained to deal with civil aspects of the

540
H See Pareena Swarup (supra at Footnote No.366)
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 615
INDIA & ORS. [A. M. KHANWILKAR, J.]

action of attachment and confiscation of the proceeds of crime and not A
about the criminality of the offence under Section 3 of the 2002 Act.
When this provision is made applicable to the proceeding before the
Authority, it would not be necessary to follow the strict principle of
standard of proof beyond reasonable doubt, as applicable in criminal
trials. That principle will have no bearing on the proceeding before the
B
Authority. However, when the same evidence and provision is relied
upon in the proceeding before the Special Court regarding trial of offence
of money-laundering under Section 3 of the 2002 Act, it would have a
different connotation in the context of a criminal trial.
93. Be that as it may, this Section 24 deals with two situations.
The first part concerns the person charged with the offence of money- C
laundering under Section 3. The second part [Clause (b)] concerns any
other person. Taking the second part first, such other person would
obviously mean a person not charged with the offence of money-
laundering under Section 3 of the 2002 Act. The two parts, in one sense,
are mutually exclusive. If a person is charged with the offence of money- D
laundering under Section 3 of the 2002 Act owing to a complaint filed by
the authority authorised before the Special Court, Clause (a) would trigger
in. As regards the second category [Clause (b)] of person, the expression
used is “may presume”. Whereas, qua the first category [covered under
Clause (a)] the expression used is “shall, unless the contrary is proved,
presume”. In this category, if a charge is already framed against the E
person for having committed offence of money-laundering, it would
presuppose that the Court framing charge against him was prima facie
convinced that the materials placed before it had disclosed grave suspicion
against such person. In such a case, once the issue of admissibility of
materials supporting the factum of grave suspicion about the involvement F
of the person in the commission of crime under the 2002 Act, is accepted,
in law, the burden must shift on the person concerned to dispel that
suspicion. It would then not be a case of reversal of burden of proof as
such, but one of shifting of burden on him to show that no offence of
money-laundering had been committed and, in any case, the property
(proceeds of crime) was not involved in money-laundering. G

94. Before we proceed to analyse the efficacy of Section 24 of
the 2002 Act, it may be appropriate to visit the definition of expressions
in the Evidence Act, relevant to answer the issue of standard of proof in
any proceeding. In the interpretation clause, Section 3 of the Evidence
Act, expression “fact” has been defined as follows: H
616 SUPREME COURT REPORTS [2022] 6 S.C.R.

A “3. Interpretation clause.—In this Act the following words and
expressions are used in the following senses, unless a contrary
intention appears from the context:—
….
“Fact”.––”Fact” means and includes––
B
(1) any thing, state of things, or relation of things, capable of being
perceived by the senses;
(2) any mental condition of which any person is conscious.”
We need not dilate on the expression “relevant”, “facts in issue”
C and “document”. We may usefully advert to the definition of “evidence”,
which reads thus:
“3. Interpretation clause.—In this Act the following words and
expressions are used in the following senses, unless a contrary
intention appears from the context:—
D
…..
“Evidence”. ––”Evidence” means and includes––
(1) all statements which the Court permits or requires to be
made before it by witnesses, in relation to matters of fact under
E inquiry,
such statements are called oral evidence;
(2) 541[all documents including electronic records produced for
the inspection of the Court],

F such documents are called documentary evidence.”
The other relevant definitions are:
“3. Interpretation clause.—In this Act the following words
and expressions are used in the following senses, unless a
contrary intention appears from the context:—
G ……
“Proved”.––A fact is said to be proved when, after
considering the matters before it, the Court either believes it to
541
Subs. by Act 21 of 2000, sec. 92 and Sch.II-1(a), for “all documents produced for the
H inspection of the Court” (w.e.f. 17-10-2000)
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 617
INDIA & ORS. [A. M. KHANWILKAR, J.]

exist, or considers its existence so probable that a prudent man A
ought, under the circumstances of the particular case, to act
upon the supposition that it exists.
“Disproved”.––A fact is said to be disproved when, after
considering the matters before it, the Court either believes that
it does not exist, or considers its non-existence so probable B
that a prudent man ought, under the circumstances of the
particular case, to act upon the supposition that it does not
exist.
“Not proved”. –– A fact is said not to be proved when it is
neither proved nor disproved. C
*** *** ***
4. “May presume”.––Whenever it is provided by this Act
that the Court may presume a fact, it may either regard such
fact as proved, unless and until it is disproved, or may call for
proof of it. D
“Shall presume”.––Whenever it is directed by this Act that
the Court shall presume a fact, it shall regard such fact as
proved, unless and until it is disproved.
“Conclusive proof”.––When one fact is declared by this
E
Act to be conclusive proof of another, the Court shall, on proof
of the one fact, regard the other as proved, and shall not allow
evidence to be given for the purpose of disproving it.”
As aforementioned, standard of proof varies depending on the
nature of proceedings. In civil actions, it can be preponderance of
F
probability but in criminal actions, unless the law provides to the contrary,
the onus is on the prosecution to establish the allegations and facts in
issue beyond reasonable doubt. Furthermore, the burden or onus of
establishing the facts in issue, keeps on shifting and is on the party who
asserts a particular fact.
95. Indeed, in a criminal trial, the principle of innocence of the G
accused/offender is regarded as a human right — as held by this Court
in Narendra Singh & Anr. vs. State of M.P. 542. However, that
presumption can be interdicted by a law made by the Parliament/

542
(2004) 10 SCC 699 (also at Footnote No.377) H
618 SUPREME COURT REPORTS [2022] 6 S.C.R.

A Legislature. It is well-settled that statutory provisions regarding
presumptions are nothing but rule of evidence. As observed by this Court
in State of W.B. vs. Mir Mohammad Omar & Ors.543, the pristine rule
that the burden of proof is on the prosecution to prove the guilt of the
accused should not be taken as a fossilised doctrine as though it admits
no process of intelligent reasoning. The Court went on to observe that
B
the doctrine of presumption is not alien to such a rule, nor would it impair
the temper of the rule. On the other hand, if the traditional Rule relating
to burden of proof of the prosecution is allowed to be wrapped in pedantic
coverage, the offenders in serious offences would be the major
beneficiaries and the society would be the casualty. This observation
C has been quoted with approval in Sucha Singh544. In the latter judgment,
the Court relying upon other decisions including in Shambhu Nath Mehra
vs. The State of Ajmer545, noted that the provisions, such as Section
106546 of the Evidence Act, is not intended to relieve the prosecution of
its burden to prove the guilt of the accused beyond reasonable doubt, but
the Section would apply to cases where the prosecution has succeeded
D
in proving facts for which a reasonable inference can be drawn regarding
the existence of certain other facts, unless the accused by virtue of
special knowledge regarding such facts failed to offer any explanation
which might drive the Court to draw a different inference. The Court
quoted with approval paragraph 33 of the decision in Shambhu Nath
E Mehra547, which reads thus:
“33. Presumption of fact is an inference as to the existence
of one fact from the existence of some other facts, unless
the truth of such inference is disproved. Presumption of
fact is a rule in law of evidence that a fact otherwise doubtful
F may be inferred from certain other proved facts. When
inferring the existence of a fact from other set of proved
facts, the court exercises a process of reasoning and reaches
a logical conclusion as the most probable position. The
above principle has gained legislative recognition in India
G
543
(2000) 8 SCC 382
544
Supra at Footnote No.381
545
AIR 1956 SC 404
546
106. Burden of proving fact especially within knowledge. –– When any fact is
especially within the knowledge of any person, the burden of proving that fact is upon
him.
H 547
Supra at Footnote No.545
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 619
INDIA & ORS. [A. M. KHANWILKAR, J.]

when Section 114 is incorporated in the Evidence Act. It A
empowers the court to presume the existence of any fact
which it thinks likely to have happened. In that process
the court shall have regard to the common course of natural
events, human conduct etc. in relation to the facts of the
case.”
B
(emphasis supplied)
On similar lines, this Court in Hiten P. Dalal548, in paragraphs 22
and 23 observed thus:
“22. Because both Sections 138 and 139 require that the court
“shall presume” the liability of the drawer of the cheques for the C
amounts for which the cheques are drawn, as noted in State of
Madras v. A. Vaidyanatha Iyer549 it is obligatory on the court to
raise this presumption in every case where the factual basis for
the raising of the presumption had been established. “It introduces
an exception to the general rule as to the burden of proof in criminal D
cases and shifts the onus on to the accused.” (Ibid. at p. 65, para
14.) Such a presumption is a presumption of law, as
distinguished from a presumption of fact which describes
provisions by which the court “may presume” a certain state
of affairs. Presumptions are rules of evidence and do not
conflict with the presumption of innocence, because by the E
latter, all that is meant is that the prosecution is obliged to
prove the case against the accused beyond reasonable
doubt. The obligation on the prosecution may be discharged
with the help of presumptions of law or fact unless the
accused adduces evidence showing the reasonable F
possibility of the non-existence of the presumed fact.
23. In other words, provided the facts required to form the basis
of a presumption of law exist, no discretion is left with the court
but to draw the statutory conclusion, but this does not preclude
the person against whom the presumption is drawn from rebutting G
it and proving the contrary. A fact is said to be proved when,
“after considering the matters before it, the court either believes
it to exist, or considers its existence so probable that a prudent
548
Supra at Footnote No.378
549
AIR 1958 SC 61 (also at Footnote No.392) H
620 SUPREME COURT REPORTS [2022] 6 S.C.R.

A man ought, under the circumstances of the particular case, to
act upon the supposition that it exists”550.
Therefore, the rebuttal does not have to be conclusively established
but such evidence must be adduced before the court in support of
the defence that the court must either believe the defence to exist
B or consider its existence to be reasonably probable, the standard
of reasonability being that of the “prudent man”.”
(emphasis supplied)
The respondents have rightly invited our attention to several other
statutes551 providing for shifting of the burden of proof on the accused,
C as in the case of Section 24 of the 2002 Act. The constitutional validity
of similar provisions has been upheld by this Court from time to time. In
the case of Noor Aga552, it has been observed that the Court while
interpreting the provision, such as Section 24 of the 2002 Act, must keep
in mind that the concerned Act has been the outcome of the mandate
D contained in the international convention, as is the case on hand. Further,
only because the burden of proof under certain circumstances is placed
on the accused, the same, by itself would not render the legal provision
unconstitutional. The question whether the burden on the accused is a
legal burden or an evidentiary burden, would depend on the statute and
its purport and object. Indeed, it must pass the test of the doctrine of
E proportionality. In any case, as the burden on the accused would be only
an evidentiary burden, it can be discharged by the accused by producing
evidence regarding the facts within his personal knowledge. Again, in
the case of Seema Silk & Sarees553, this Court restated that a legal
550
Section 3, Evidence Act
551
F (i) Section 57A of the (Kerala) Abkari Act, I of 1077; (ii) Sections 105, 106, 113A and
113B of the Indian Evidence Act, 1872; (iii) Section 139 of the Negotiable Instruments
Act, 1881; (iv) Section 9 of the Opium Act, 1878; (v) Section 9B of the Explosives Act
1884; (vi) Section 7 of the Prevention of Food Adulteration Act, 1954; (vii) Section 10C
of the Essential Commodities Act, 1955; (viii) Section 138A of the Customs Act, 1962;
(ix) Section 43E of the Unlawful Activities (Prevention) Act, 1967; (x) Section 98-B of
the Gold (Control) Act, 1968; (xi) Section 57 of the Wild Life (Protection) Act, 1972;
G (xii) Section 18 of the Foreign Exchange Regulation Act, 1973; (xiii) Sections 35 and 54
of the Narcotic Drugs and Psychotropic Substances Act, 1985; (xiv) Sections 3C and
3D of the Epidemic Diseases Act, 1897; (xv) Section 21 of the Terrorist and Disruptive
Activities (Prevention) Act, 1987; (xvi) Section 20 of the Prevention of Corruption
Act, 1988; and (xvii) Sections 29 and 30 of the Protection of Children from Sexual
Offences Act, 2012.
552
Supra at Footnote No.384 (also at Footnote No.55)
H 553
Supra at Footnote No.385
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 621
INDIA & ORS. [A. M. KHANWILKAR, J.]

provision does not become unconstitutional only because it provides for A
reverse burden as it is only a rule of evidence. So long as the accused is
entitled to show that he has not violated the provisions of the Act, such a
legal provision cannot be regarded as unconstitutional. For, the accused
is then entitled to rebut the presumption.
96. Suffice it to observe that the change effected in Section 24 of B
the 2002 Act is the outcome of the mandate of international Conventions
and recommendations made in that regard. Further, keeping in mind the
legislative scheme and the purposes and objects sought to be achieved
by the 2002 Act coupled with the fact that the person charged or any
other person involved in money-laundering, would get opportunity to
disclose information and evidence to rebut the legal presumption in respect C
of facts within his personal knowledge during the proceeding before the
Authority or the Special Court, by no stretch of imagination, provision in
the form of Section 24 of the 2002 Act, can be regarded as unconstitutional.
It has reasonable nexus with the purposes and objects sought to be
achieved by the 2002 Act. In any case, it cannot be perceived as manifestly D
arbitrary as is sought to be urged before us.
97. Be that as it may, we may now proceed to decipher the purport
of Section 24 of the 2002 Act. In the first place, it must be noticed that
the legal presumption in either case is about the involvement of proceeds
of crime in money-laundering. This fact becomes relevant, only if, the E
prosecution or the authorities have succeeded in establishing at least
three basic or foundational facts. First, that the criminal activity relating
to a scheduled offence has been committed. Second, that the property in
question has been derived or obtained, directly or indirectly, by any person
as a result of that criminal activity. Third, the person concerned is, directly
or indirectly, involved in any process or activity connected with the said F
property being proceeds of crime. On establishing the fact that there
existed proceeds of crime and the person concerned was involved in
any process or activity connected therewith, itself, constitutes offence
of money-laundering. The nature of process or activity has now been
elaborated in the form of Explanation inserted vide Finance (No.2) Act, G
2019. On establishing these foundational facts in terms of Section 24 of
the 2002 Act, a legal presumption would arise that such proceeds of
crime are involved in money-laundering. The fact that the person
concerned had no causal connection with such proceeds of crime and
he is able to disprove the fact about his involvement in any process or
H
622 SUPREME COURT REPORTS [2022] 6 S.C.R.

A activity connected therewith, by producing evidence in that regard, the
legal presumption would stand rebutted.
98. The person falling under the first category being person charged
with the offence of money-laundering, presupposes that a formal
complaint has already been filed against him by the authority authorised
B naming him as an accused in the commission of offence of money-
laundering. As observed in P.N. Krishna Lal554, the Court cannot be
oblivious about the purpose of the law. Further, the special provisions or
the special enactments as in this case is required to tackle new situations
created by human proclivity to amass wealth at the altar of formal
financial system of the country including its sovereignty and integrity.
C While dealing with such provision, reading it down would also defeat the
legislative intent.
99. Be it noted that the legal presumption under Section 24(a) of
the 2002 Act, would apply when the person is charged with the offence
of money-laundering and his direct or indirect involvement in any process
D or activity connected with the proceeds of crime, is established. The
existence of proceeds of crime is, therefore, a foundational fact, to be
established by the prosecution, including the involvement of the person
in any process or activity connected therewith. Once these foundational
facts are established by the prosecution, the onus must then shift on the
E person facing charge of offence of money-laundering — to rebut the
legal presumption that the proceeds of crime are not involved in money-
laundering, by producing evidence which is within his personal knowledge.
In other words, the expression “presume” is not conclusive. It also does
not follow that the legal presumption that the proceeds of crime are
involved in money-laundering is to be invoked by the Authority or the
F Court, without providing an opportunity to the person to rebut the same
by leading evidence within his personal knowledge555.
100. Such onus also flows from the purport of Section 106 of the
Evidence Act. Whereby, he must rebut the legal presumption in the manner
he chooses to do and as is permissible in law, including by replying under
G Section 313 of the 1973 Code or even by cross-examining prosecution
witnesses. The person would get enough opportunity in the proceeding
before the Authority or the Court, as the case may be. He may be able
to discharge his burden by showing that he is not involved in any process
554
Supra at Footnote No.382
555
H See Sarbananda Sonowal (supra at Footnote No.389)
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 623
INDIA & ORS. [A. M. KHANWILKAR, J.]

or activity connected with the proceeds of crime. In any case, in terms A
of Section 114556 of the Evidence Act, it is open to the Court to presume
the existence of any fact which it thinks likely to have happened, regard
being had to the common course of natural events, human conduct, and
public and private business, in their relation to the facts of the particular
case. Considering the above, the provision under consideration [Section
B
24(a)] by no standards can be said to be unreasonable much less
manifestly arbitrary and unconstitutional.
101. Reverting to Section 24(b) of the 2002 Act, that concerns
person other than the person charged with the offence of money-
laundering under Section 3 of the 2002 Act. In his case, the expression
used in Clause (b) is “may presume”. This is essentially a factual C
presumption or discretionary presumption as expounded by this Court in
A. Vaidyanatha Iyer557. In paragraph 14 of the decision, the Court
noted the marked distinction between the words “shall presume” and
“may presume” as follows:
“(14). …… Therefore where it is proved that a gratification D
has been accepted, then the presumption shall at once arise
under the section. It introduces an exception to the general
rule as to the burden of proof in criminal cases and shifts the
onus on to the accused. It may here be mentioned that the
legislature has chosen to use the words ‘shall presume’ E
and not ‘may presume’, the former a presumption of law
and latter of fact. Both these phrases have been defined
in the Indian Evidence Act, no doubt for the purpose of
that Act, but S. 4 of the Prevention of Corruption Act is
in pari materia with the Evidence Act because it deals
with a branch of law of evidence e.g., presumptions, and F
therefore should have the same meaning. “Shall
presume” has been defined in the Evidence Act as
follows:
“Whenever it is directed by this Act that the
Court shall presume a fact, it shall regard such fact as G
proved unless and until it is disproved.”
556
114. Court may presume existence of certain facts.–– The Court may presume
the existence of any fact which it thinks likely to have happened, regard being had to
the common course of natural events, human conduct and public and private business,
in their relation to the facts of the particular case.
557
Supra at Footnote No.549 (also at Footnote No.392) H
624 SUPREME COURT REPORTS [2022] 6 S.C.R.

A It is a presumption of law and therefore it is obligatory
on the court to raise this presumption in every case
brought under S. 4 of the Prevention of Corruption
Act because unlike the case of presumption of fact,
presumptions of law constitute a branch of
jurisprudence. …...”
B
(emphasis supplied)
Again, in the case of M. Narsinga Rao vs. State of A.P.558, the
Court observed in paragraphs 13 and 17 as follows:
“13. Before proceeding further, we may point out that the
C expressions “may presume” and “shall presume” are
defined in Section 4 of the Evidence Act. The presumptions
falling under the former category are compendiously known
as “factual presumptions” or “discretionary presumptions”
and those falling under the latter as “legal presumptions”
D or “compulsory presumptions”. When the expression “shall
be presumed” is employed in Section 20(1) of the Act it
must have the same import of compulsion.
*** *** ***
17. Presumption is an inference of a certain fact drawn from
E other proved facts. While inferring the existence of a fact from
another, the court is only applying a process of intelligent reasoning
which the mind of a prudent man would do under similar
circumstances. Presumption is not the final conclusion to be
drawn from other facts. But it could as well be final if it
F remains undisturbed later. Presumption in law of evidence
is a rule indicating the stage of shifting the burden of proof.
From a certain fact or facts the court can draw an inference and
that would remain until such inference is either disproved or
dispelled.”
(emphasis supplied)
G
Notably, the legal presumption in the context of Section 24(b) of
the 2002 Act is attracted once the foundational fact of existence of
proceeds of crime and the link of such person therewith in the process
or activity is established by the prosecution. The stated legal presumption
558
H (2001) 1 SCC 691 (also at Footnote No.392)
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 625
INDIA & ORS. [A. M. KHANWILKAR, J.]

can be invoked in the proceeding before the Adjudicating Authority or A
the Court, as the case may be. The legal presumption is about the fact
that the proceeds of crime are involved in money-laundering which,
however, can be rebutted by the person by producing evidence within
his personal knowledge.
102. Be it noted that the presumption under Section 24(b) of the B
2002 Act is not a mandatory legal presumption, unlike in the case falling
under the other category, namely Section 24(a). If the person has not
been charged with the offence of money-laundering, the legal
presumption under Section 24(b) can be invoked by the Adjudicating
Authority or the Court, as the case may be. More or less, same logic as
already noted while dealing with the efficacy of Section 24(a) of the C
2002 Act, would apply even to the category of person covered by Section
24(b), in equal measure.
103. We, therefore, hold that the provision under consideration
namely Section 24 has reasonable nexus with the purposes and objects
sought to be achieved by the 2002 Act and cannot be regarded as D
manifestly arbitrary or unconstitutional.
SPECIAL COURTS
104. The expression “Special Court” has been defined in Section
2(1)(z), which in turn refers to Section 43. Section 43 reads thus: E
“CHAPTER VII
SPECIAL COURTS
43. Special Courts.—(1) The Central Government, in
consultation with the Chief Justice of the High Court, shall, for
trial of offence punishable under section 4, by notification, designate F
one or more Courts of Session as Special Court or Special Courts
for such area or areas or for such case or class or group of cases
as may be specified in the notification.
Explanation.—In this sub-section, “High Court” means the
High Court of the State in which a Sessions Court designated as G
Special Court was functioning immediately before such designation.
(2) While trying an offence under this Act, a Special Court shall
also try an offence, other than an offence referred to in sub-
section (1), with which the accused may, under the Code of
H
626 SUPREME COURT REPORTS [2022] 6 S.C.R.

A Criminal Procedure, 1973 (2 of 1974), be charged at the same
trial.”
The Special Courts established under Section 43 of the 2002 Act
are empowered to try the offences under the 2002 Act. Section 44 bestows
that power in the Special Courts. The same reads thus:
B “44. Offences triable by Special Courts.—(1) Notwithstanding
anything contained in the Code of Criminal Procedure, 1973 (2 of
1974),—
559
[(a) an offence punishable under section 4 and any scheduled
offence connected to the offence under that section shall be triable
C by the Special Court constituted for the area in which the offence
has been committed:
Provided that the Special Court, trying a scheduled offence before
the commencement of this Act, shall continue to try such scheduled
offence; or]
D
(b) a Special Court may, 560[***] upon a complaint made by an
authority authorised in this behalf under this Act take 561[cognizance
of offence under section 3, without the accused being committed
to it for trial].
562
[Provided that after conclusion of investigation, if no offence
E
of money-laundering is made out requiring filing of such complaint,
the said authority shall submit a closure report before the Special
Court; or]

559
Subs. by Act 2 of 2013, sec. 21(i), for clause (a) (w.e.f. 15-2-2013, vide S.O. 343(E),
F dated 8-2-2013). Clause (a) before substitution, stood as under:
“(a) the scheduled offence and offence punishable under section 4 shall be
triable only by the Special Court constituted for the area in which the offence
has been committed:
Provided that the Special Court, trying a scheduled offence before the
commencement of this Act, shall continue to try such scheduled offence; or”
G 560
The words “upon perusal of police report of the facts which constitute an offence
under this Act or” omitted by Act 20 of 2005, sec. 6 (w.e.f. 1-7-2005).
561
Subs. by Act 2 of 2013, sec. 21(ii), for “cognizance of the offence for which the
accused is committed to it for trial” (w.e.f. 15-2-2013, vide S.O. 343(E), dated 8-2-
2013).
562
Ins. by the Finance (No.2) Act, 2019, sec. 199(i) (w.e.f. 1-8-2019)
H
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 627
INDIA & ORS. [A. M. KHANWILKAR, J.]

563
[(c) if the court which has taken cognizance of the scheduled A
offence is other than the Special Court which has taken cognizance
of the complaint of the offence of money-laundering under sub-
clause (b), it shall, on an application by the authority authorised to
file a complaint under this Act, commit the case relating to the
scheduled offence to the Special Court and the Special Court
B
shall, on receipt of such case proceed to deal with it from the
stage at which it is committed.
(d) a Special Court while trying the scheduled offence or the
offence of money-laundering shall hold trial in accordance with
the provisions of the Code of Criminal Procedure, 1973 (2 of 1974)
as it applies to a trial before a Court of Session.] C
564
[Explanation.—For the removal of doubts, it is clarified that,—
(i) the jurisdiction of the Special Court while dealing with the
offence under this Act, during investigation, enquiry or trial
under this Act, shall not be dependent upon any orders passed D
in respect of the scheduled offence, and the trial of both sets
of offences by the same court shall not be construed as joint
trial;
(ii) the complaint shall be deemed to include any subsequent
complaint in respect of further investigation that may be E
conducted to bring any further evidence, oral or documentary,
against any accused person involved in respect of the offence,
for which complaint has already been filed, whether named in
the original complaint or not.]
(2) Nothing contained in this section shall be deemed to affect the F
special powers of the High Court regarding bail under section 439
of the Code of Criminal Procedure, 1973 (2 of 1974) and the High
Court may exercise such powers including the power under clause
(b) of sub-section (1) of that section as if the reference to
“Magistrate” in that section includes also a reference to a “Special
Court” designated under section 43.” G
This provision opens with a non-obstante clause making it clear
that the dispensation provided therein is notwithstanding anything
563
Ins. by Act 2 of 2013, sec. 21(iii) (w.e.f. 15-2-2013, vide S.O. 343(E), dated 8-2-
2013)
564
Ins. by the Finance (No.2) Act, 2019, sec. 199(ii) (w.e.f. 1-8-2019) H
628 SUPREME COURT REPORTS [2022] 6 S.C.R.

A contained in the 1973 Code regarding the matters provided therein in
relation to trials concerning offence of money-laundering to be conducted
by the Special Court. This provision has undergone amendment vide Act
20 of 2005, Act 2 of 2013 and Finance (No.2) Act, 2019. In the present
set of matters, we are essentially concerned with the provision as obtaining
after Act 2 of 2013 and the subsequent amendment vide Finance (No.2)
B
Act, 2019. To begin with, Clause (a) in sub-section (1) of Section 44, as
existed prior to amendment Act 2 of 2013, stood thus:
“44. Offences triable by Special Courts.—(1) Notwithstanding
anything contained in the Code of Criminal Procedure, 1973 (2 of
1974),—
C
(a) the scheduled offence and offence punishable under Section
4 shall be triable only by the Special Court constituted for the area
in which the offence has been committed:
Provided that the Special Court, trying a scheduled offence
D before the commencement of this Act, shall continue to try such
scheduled offence; or.”
Post amendment of 2013 and as applicable to this date, Clause
(a) reads thus:
“44. Offences triable by Special Courts.—(1) Notwithstanding
E anything contained in the Code of Criminal Procedure, 1973 (2 of
1974),—
565
[(a) an offence punishable under section 4 and any scheduled
offence connected to the offence under that section shall be triable
by the Special Court constituted for the area in which the offence
F has been committed:
Provided that the Special Court, trying a scheduled offence before
the commencement of this Act, shall continue to try such scheduled
offence; or];
….”
G
The amendment of 2013 in fact clarifies the dispensation to be
followed in regard to trials concerning offence of money-laundering under
this Act and the trial in relation to scheduled offence including before the
565
Subs. by Act 2 of 2013, sec. 21(i), for clause (a) (w.e.f. 15-2-2013, vide S.O. 343(E),
H dated 8-2-2013).
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 629
INDIA & ORS. [A. M. KHANWILKAR, J.]

Special Court trying such (scheduled) offence. By virtue of this clause, A
the trials regarding the offence of money-laundering need to proceed
before the Special Court constituted for the area in which the offence of
money-laundering has been committed. In case the scheduled offence
is triable by Special Court under the special enactment elsewhere, the
provision, as amended, makes it amply clear that both the trials after
B
coming into effect of this Act need to proceed independently, but in the
area where the offence of money-laundering has been committed.
105. In that, the offence of money-laundering ought to proceed
for trial only before the Special Court designated to try money-laundering
offences where the offence of money-laundering has been committed.
This is a special enactment and being a later law, would prevail over any C
other law for the time being in force in terms of Section 71 of the 2002
Act.
106. The proviso in Clause (a) of sub-section (1) of Section 44, is
in the nature of an exception. It predicates that before the commencement
of this Act, if the Special Court elsewhere was already trying the D
scheduled offence, shall continue to try the same. Prima facie, it is
possible to take the view that the effect of this proviso, which has come
in 2013, may have retrospective effect. However, no specific case has
been brought to our notice wherein the effect of such amendment is
required to be examined. Accordingly, it is not necessary to dilate on this E
aspect any further.
107. This stipulation, however, will have to be regarded as directory
provision. We say so because in a given case, the offence of money-
laundering may have been committed at place x, which may be in one
State, but the property which is subject matter of money-laundering may F
have been derived or obtained, directly or indirectly, as a result of criminal
activity relating to a scheduled offence committed at more than one
place including in multiple States throughout the country. In such a case,
it will not be open to the Special Court at place x to transfer all other
cases in the area (even outside the State). If the provision is to be
interpreted otherwise, it would have serious consequences on the trials G
which are pending in connection with the scheduled offences including
before the Special Court elsewhere. This provision, therefore, needs to
be read down to mean that as far as possible, the trial of scheduled
offence before the Special Court under the concerned law, if in different
area, that Special Court may continue to try such scheduled offence. H
630 SUPREME COURT REPORTS [2022] 6 S.C.R.

A For, the trial of the scheduled offence and the trial in connection with the
money-laundering are in any way required to proceed independently.
That is because, the offence of money-laundering by itself is an
independent offence in respect of the process and activity connected
with the proceeds of crime which may have been derived or obtained,
directly or indirectly, by any person as a result of criminal activity relating
B
to a scheduled offence.
108. The stipulation in Clause (b) of sub-section (1) of Section 44
has been amended vide Act 20 of 2005, Act 2 of 2013 and the Finance
(No.2) Act, 2019. Consequent to amendment of 2013, the Clause (b)
read thus:
C
“44. Offences triable by Special Courts.—(1) Notwithstanding
anything contained in the Code of Criminal Procedure, 1973 (2 of
1974),—
(a)***
D (b) a Special Court may, 566[***] upon a complaint made by an
authority authorised in this behalf under this Act take 567[cognizance
of offence under section 3, without the accused being committed
to it for trial];
….”
E
Later, a proviso came to be inserted vide Finance (No.2) Act,
2019, which reads thus:
“44. Offences triable by Special Courts.—(1) Notwithstanding
anything contained in the Code of Criminal Procedure, 1973 (2 of
1974),—
F
(a)***
(b)***
568
[Provided that after conclusion of investigation, if no offence
of money-laundering is made out requiring filing of such complaint,
G
566
The words “upon perusal of police report of the facts which constitute an offence
under this Act or” omitted by Act 20 of 2005, sec. 6 (w.e.f. 1-7-2005).
567
Subs. by Act 2 of 2013, sec. 21(ii), for “cognizance of the offence for which the
accused is committed to it for trial” (w.e.f. 15-2-2013, vide S.O. 343(E), dated 8-2-
2013).
568
H Ins. by the Finance (No.2) Act, 2019, sec. 199(i) (w.e.f. 1-8-2019).
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 631
INDIA & ORS. [A. M. KHANWILKAR, J.]

the said authority shall submit a closure report before the Special A
Court; or]
…”
Clause (b) of sub-section (1) of Section 44 before amendment of
2019 envisaged that the Special Court upon a complaint made by any
authority authorised in this behalf under this Act, could take cognizance B
of offence of money-laundering under Section 3 of the 2002 Act without
the accused being committed to it for trial. This would mean that if the
accused was already in custody and facing trial in respect of a scheduled
offence elsewhere and is not required to be produced before the Special
Court (PMLA) at the time of taking cognizance on the complaint filed C
by the authority authorised. This provision again must be regarded as
directory or a discretionary provision and the Special Court trying the
offence of money-laundering need not insist for producing the accused
before it at the time of taking cognizance of offence of money-laundering,
provided no prejudice is caused to such accused. The expression
“committed” occurring in this clause can be also construed as “produced”. D
If so understood, we fail to comprehend as to how this provision violates
any right of the accused, much less constitutional rights.
109. Coming to the proviso inserted in this clause [Section 44(1)(b)]
vide Finance (No.2) Act, 2019, is, in fact, an enabling provision. It permits
the Authority authorised to file a closure report before the Special Court E
in case it is of the opinion that no offence of money-laundering has been
made out, requiring filing of such complaint. This provision is only to
dispel the doubt that in the event the person has been arrested by the
officer authorised under Section 19 of this Act on the basis of material in
his possession and having reason to believe and recorded in writing of F
being guilty of an offence punishable under this Act, but after the inquiry
done by him in exercise of powers under Chapters V and VIII of the
2002 Act, he forms an opinion that no offence of money-laundering is
made out, requiring filing of complaint, it is open to him to file a closure
report before the Special Court disclosing that position. The proviso
would, thus, come into play in such cases where the complaint is yet to G
be filed owing to the pendency of inquiry before the authorities, under
Chapters V and VIII of the 2002 Act. In that view of the matter and
more so keeping in mind the purposes and objects behind the enactment
of 2002 Act, such a provision must be regarded as having reasonable
nexus with the purposes and objects sought to be achieved by the 2002 H
632 SUPREME COURT REPORTS [2022] 6 S.C.R.

A Act. Accordingly, for the view taken by us, we do not find any dichotomy
in these provisions, much less being manifestly arbitrary or
unconstitutional.
110. We now revert to Clause (c) of sub-section (1) of Section 44
of the 2002 Act. The same has undergone amendment vide Act 2 of
B 2013 and post that amendment, it reads thus:
“44. Offences triable by Special Courts.—(1) Notwithstanding
anything contained in the Code of Criminal Procedure, 1973 (2 of
1974),—
(a)***
C
(b)***
569
[(c) if the court which has taken cognizance of the scheduled
offence is other than the Special Court which has taken cognizance
of the complaint of the offence of money-laundering under sub-
D clause (b), it shall, on an application by the authority authorised to
file a complaint under this Act, commit the case relating to the
scheduled offence to the Special Court and the Special Court
shall, on receipt of such case proceed to deal with it from the
stage at which it is committed.]”
We must reconcile this provision with Clause (a) of sub-section
E
(1) of Section 44. That provision has already been elaborated in the
earlier part of this judgment and read down to mean that it is an enabling
and discretionary provision. The same consideration must be kept in
mind by the Special Court while considering the application filed in terms
of this clause. For, this clause also recognises that the trial of scheduled
F offence and the trial concerning offence of money-laundering need to
proceed independently, even though it may be tried by the same Special
Court as both are distinct and independent offences. In that, the offence
of money-laundering is and can be only in relation to the process or
activity connected with proceeds of crime and has nothing to do with the
criminal activity relating to a scheduled offence as such.
G
111. In the context of this provision, it was emphatically argued
before us by the petitioners that it would take away one right of appeal,
otherwise available under the 1973 Code. Resultantly, Section 44(1)(c)
569
Ins. by Act 2 of 2013, sec. 21(iii) (w.e.f. 15-2-2013, vide S.O. 343(E), dated 8-2-
H 2013)
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 633
INDIA & ORS. [A. M. KHANWILKAR, J.]

of the 2002 Act in particular, is unconstitutional. To buttress this submission, A
reliance has been placed on the dictum in A.R. Antulay570. However,
this ground need not detain us in view of the just stand taken by the
learned Additional Solicitor General appearing for Union of India relying
on the decision of this Court in State (Through Central Bureau of
Investigation) vs. Kalyan Singh (Former Chief Minister of Uttar
B
Pradesh) & Ors.571, which has considered similar challenge. The latter
decision has distinguished the exposition in A.R. Antulay572. In that, the
core issue considered in A.R. Antulay573 was whether the High Court
was competent to transfer the criminal trial pending before the Special
Court dealing with the offence of PC Act, to itself by invoking powers
under Section 407 of the 1973 Code. The Court answered the same in C
the negative and held that such power does not exist in the High Court
and it would inevitably violate Article 21 of the Constitution. However,
we are dealing with the dispensation provided by the law made by the
Parliament in the form of 2002 Act. This being a special legislation and
keeping in view the purport of Sections 65 and 71 of the 2002 Act, it is
D
not possible to countenance the ground of challenge under consideration.
We may usefully refer to paragraph 28 of Kalyan Singh574, which reads
thus:
“28. In the present case, the power of transfer is being
exercised to transfer a case from one Special Judge to
another Special Judge, and not to the High Court. The fact E
that one Special Judge happens to be a Magistrate, whereas
the other Special Judge has committed the case to a Court
of Session would not make any difference as, as has been
stated hereinabove, even a right of appeal from a
Magistrate to the Sessions Court, and from the Sessions F
Court to the High Court could be taken away under the
procedure established by law i.e. by virtue of Sections 407(1)
and (8) if the case is required to be transferred from the
Magistrate at Rae Bareilly to the High Court itself. Hence,
under Section 407, even if 2 tiers of appeal are done away
with, there is no infraction of Article 21 as such taking away G

570
Supra at Footnote No.134
571
(2017) 7 SCC 444
572
Supra at Footnote No.134
573
Supra at Footnote No.134
574
Supra at Footnote No.571 H
634 SUPREME COURT REPORTS [2022] 6 S.C.R.

A of the right of appeal is expressly contemplated by Section
407(1)(iv) read with Section 407(8). In the circumstances,
Antulay 575 judgment which dealt with the right of a
substantive appeal from a Special Judge to the High Court
being taken away by an order of transfer contrary to the
non obstante clause in Section 7(1) of the Criminal Law
B
Amendment Act, 1952 would not apply in the facts and
circumstances before us.”
(emphasis supplied)
Applying the principle underlying this decision, we have no
C hesitation in rejecting the challenge to Section 44 as unconstitutional
being violative of Articles 14, 20(3) and 21 of the Constitution.
112. Reverting to Clause (d) of sub-section (1) of Section 44, it
postulates that a Special Court while trying the scheduled offence or
offence of money-laundering shall hold trial in accordance with the
D provisions of the 1973 Code as it applies to a trial before a Court of
Sessions. Going by the plain language of this provision, no fault can be
found for conducting trial in the respective cases in the same manner as
provided in the 1973 Code. However, the grievance is about the insertion
of Explanation vide Finance (No.2) Act, 2019. As a matter of fact, this
insertion is only a clarificatory provision, as is evident from the opening
E statement of the provision which says that “for the removal of doubts, it
is clarified that”. None of the clauses inserted by this amendment travel
beyond the principal provision contained in Clause (d). Clause (i) of the
Explanation enunciates that the jurisdiction of the Special Court while
dealing with the offence being tried under this Act, shall not be dependent
F upon any orders passed in respect of the scheduled offence, and the trial
of both sets of offences by the same Court shall not be construed as
joint trials. This, in fact, is reiteration of the earlier part of the same
section, which envisages that even though both the trials may proceed
before the same Special Court, it must be tried separately as per the
provisions of the 1973 Code. Insofar as Clause (ii) of the Explanation, at
G the first glance, it does give an impression that the same is unconnected
with the earlier part of the section. However, on closer scrutiny of this
provision, it is noted that the same is only an enabling provision permitting
to take on record material regarding further investigation against any

575
H Supra at Footnote No.134
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 635
INDIA & ORS. [A. M. KHANWILKAR, J.]

accused person involved in respect of offence of money-laundering for A
which complaint has already been filed, whether he has been named in
the complaint or not. Such a provision, in fact, is a wholesome provision
to ensure that no person involved in the commission of offence of money-
laundering must go unpunished. It is always open to the Authority
authorised to seek permission of the Court during the trial of the complaint
B
in respect of which cognizance has already been taken by the Court to
bring on record further evidence which request can be dealt with by the
Special Court in accordance with law keeping in mind the provisions of
the 1973 Code as well. It is also open to the Authority authorised to file
a fresh complaint against the person who has not been named as accused
in the complaint already filed in respect of same offence of money- C
laundering, including to request the Court to proceed against such other
person appearing to be guilty of offence under Section 319 of the 1973
Code, which otherwise would apply to such a trial.
113. The petitioners may be justified in making grievance that the
provision though permits the Special Court to proceed with the trial in D
respect of scheduled offence, yet it may be oppressive as against the
accused who is not charged with the offence of money-laundering but
only scheduled offence. For, he may be denied of opportunity of one
appeal or revision, as the case may be before the higher forum. Such a
grievance can certainly be looked into by the Special Court if an application
is moved by the Authority authorised. Since we have held that the E
provision is only to bestow enabling power in the Special Court, it must
follow that the Special Court will examine the request of the Authority
authorised for transfer of trial of predicate offence to itself on case-to-
case basis. Similarly, request for trial of offence under another special
statute, such as PC Act, NDPS Act, etc. can also be considered by the F
Special Court on case-to-case basis after examining all aspects of the
matter.
114. In view of the above discussion, we do not find merit in the
challenge to Section 44 being arbitrary or unconstitutional. We hold that
the same is consistent with the legislative scheme and the purposes and G
objects behind the enactment of the 2002 Act to ensure that the proceeds
of crime involved in money-laundering are dealt with appropriately as
per the special Act and all concerned involved in the process or activity
connected with such proceeds of crime are prosecuted for offence of
money-laundering.
H
636 SUPREME COURT REPORTS [2022] 6 S.C.R.

A BAIL
115. The relevant provisions regarding bail in the 2002 Act can be
traced to Sections 44(2), 45 and 46 in Chapter VII concerning the offence
under this Act. The principal grievance is about the twin conditions
specified in Section 45 of the 2002 Act. Before we elaborate further, it
B would be apposite to reproduce Section 45, as amended. The same reads
thus:
“45. Offences to be cognizable and non-bailable.—(1)
576
[Notwithstanding anything contained in the Code of Criminal
Procedure, 1973 (2 of 1974), no person accused of an offence
577
C [under this Act] shall be released on bail or on his own bond
unless—]
(i) the Public Prosecutor has been given an opportunity to oppose
the application for such release; and
(ii) where the Public Prosecutor opposes the application, the
D court is satisfied that there are reasonable grounds for believing
that he is not guilty of such offence and that he is not likely to
commit any offence while on bail:
Provided that a person who is under the age of sixteen
years, or is a woman or is sick or infirm, 578[or is accused either
E on his own or along with other co-accused of money-laundering a
sum of less than one crore rupees], may be released on bail, if the
Special Court so directs:
Provided further that the Special Court shall not take
cognizance of any offence punishable under section 4 except upon
F a complaint in writing made by—

576
Subs. by Act 20 of 2005, sec. 7, for “Notwithstanding anything contained in the
Code of Criminal Procedure, 1973 (2 of 1974),—
(a) every offence punishable under this Act shall be cognizable;
(b) no person accused of an offence punishable for a term of imprisonment of
G more than three years under Part A of the Schedule shall be released on bail or
on his own bond unless” (w.e.f. 1-7-2005).
577
Subs. by Act 13 of 2018, sec. 208(e)(i), for “punishable for a term of imprisonment
of more than three years under Part A of the Schedule” (w.e.f. 19-4-2018, vide G.S.R.
383(E), dated 19 th April, 2018).
578
Ins. by Act 13 of 2018, s. 208(e)(ii) (w.e.f. 19-4-2018, vide G.S.R. 383(E), dated 19 th
H April, 2018).
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 637
INDIA & ORS. [A. M. KHANWILKAR, J.]

(i) the Director; or A
(ii) any officer of the Central Government or a State
Government authorised in writing in this behalf by the Central
Government by a general or special order made in this behalf
by that Government.
579
[(1A) Notwithstanding anything contained in the Code of B
Criminal Procedure, 1973 (2 of 1974), or any other provision of
this Act, no police officer shall investigate into an offence under
this Act unless specifically authorised, by the Central Government
by a general or special order, and, subject to such conditions as
may be prescribed.] C
580
(2) The limitation on granting of bail specified in [***] sub-
section (1) is in addition to the limitations under the Code of Criminal
Procedure, 1973 (2 of 1974) or any other law for the time being in
force on granting of bail.
581
[Explanation.—For the removal of doubts, it is clarified that D
the expression “Offences to be cognizable and non-bailable” shall
mean and shall be deemed to have always meant that all offences
under this Act shall be cognizable offences and non-bailable
offences notwithstanding anything to the contrary contained in
the Code of Criminal Procedure, 1973 (2 of 1974), and accordingly E
the officers authorised under this Act are empowered to arrest an
accused without warrant, subject to the fulfilment of conditions
under section 19 and subject to the conditions enshrined under
this section.]”
Section 45 has been amended vide Act 20 of 2005, Act 13 of 2018 F
and Finance (No.2) Act, 2019. The provision as it obtained prior to
23.11.2017 read somewhat differently. The constitutional validity of Sub-
section (1) of Section 45, as it stood then, was considered in Nikesh
Tarachand Shah582. This Court declared Section 45(1) of the 2002
Act, as it stood then, insofar as it imposed two further conditions for
release on bail, to be unconstitutional being violative of Articles 14 and G
21 of the Constitution. The two conditions which have been mentioned
as twin conditions are:
579
Ins. by Act 20 of 2005, sec. 7 (w.e.f. 1-7-2005).
580
The words “clause (b) of” omitted by Act 20 of 2005, sec. 7 (w.e.f. 1-7-2005).
581
Ins. by the Finance (No.2) Act, 2019, sec. 200 (w.e.f. 1-8-2019).
582
Supra at Footnote No.3 H
638 SUPREME COURT REPORTS [2022] 6 S.C.R.

A (i) that there are reasonable grounds for believing that he is not
guilty of such offence; and
(ii) that he is not likely to commit any offence while on bail.
According to the petitioners, since the twin conditions have been
declared to be void and unconstitutional by this Court, the same stood
B obliterated. To buttress this argument, reliance has been placed on the
dictum in State of Manipur583.
116. The first issue to be answered by us is: whether the twin
conditions, in law, continued to remain on the statute book post decision
of this Court in Nikesh Tarachand Shah584 and if yes, in view of the
C amendment effected to Section 45(1) of the 2002 Act vide Act 13 of
2018, the declaration by this Court will be of no consequence. This
argument need not detain us for long. We say so because the observation
in State of Manipur585 in paragraph 29 of the judgment that owing to
the declaration by a Court that the statute is unconstitutional obliterates
D the statute entirely as though it had never been passed, is contextual. In
this case, the Court was dealing with the efficacy of the repealing Act.
While doing so, the Court had adverted to the repealing Act and made
the stated observation in the context of lack of legislative power. In the
process of reasoning, it did advert to the exposition in Behram Khurshid
Pesikaka 586 and Deep Chand587 including American jurisprudence
E expounded in Cooley on Constitutional Limitations588 and Norton vs.
Shelby County589.
117. In the present case, however, there is no issue of lack of
legislative power of the Parliament to enact a law on the subject of
money-laundering. In such a situation, the enunciation of the Constitution
F Bench of this Court, including seven-Judge Bench, may have direct bearing
for answering the argument under consideration. We may usefully refer
to the dictum of the Constitution Bench of five-Judges of this Court in
M.P.V. Sundararamier & Co.590. It had noted the distinction between

583
Supra at Footnote No.159
G 584
Supra at Footnote No.3
585
Supra at Footnote No.159
586
Supra at Footnote No.310
587
Supra at Footnote No. 210 (also at Footnote No.69)
588
Vol.1, page 382
589
118 US 425 (1886)
590
H Supra at Footnote No.311
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 639
INDIA & ORS. [A. M. KHANWILKAR, J.]

the effect of unconstitutionality of a statute arising either because the A
law is in respect of a matter not within the competence of the Legislature,
or because the matter itself being within its competence, its provisions
offend some constitutional restrictions. It went on to observe that if a
law is on a field not within the domain of the Legislature, it is absolutely
null and void, and a subsequent cession of that field to or by the Legislature
B
will not have the effect of breathing life into what was a still born piece
of legislation. At the same time, it noted that if the law is in respect of a
matter assigned to the Legislature but its provisions disregard constitutional
prohibitions, though the law would be unenforceable by reason of those
prohibitions, when once they are removed, the law will become effective
without re-enactment. After discussing the American decisions and C
jurisprudence, it went on to sum up as follows:
“The result of the authorities may thus be summed up:
Where an enactment is unconstitutional in part but valid as
to the rest, assuming of course that the two portions are
severable, it cannot be held to have been wiped out of the D
statute book as it admittedly must remain there for the
purpose of enforcement of the valid portion thereof, and
being on the statute book, even that portion which is
unenforceable on the ground that it is unconstitutional will
operate Proprio vigore when the Constitutional bar is
removed, and there is no need for a fresh legislation to E
give effect thereto. On this view, the contention of the petitioners
with reference to the Explanation in s. 22 of the Madras Act must
fail. That Explanation operates, as already stated, on two classes
of transactions. It renders taxation of sales in which the property
in the goods passes in Madras but delivery takes place outside F
Madras illegal on the ground that they are outside sales falling
within Art. 286(1)(a). It also authorises the imposition of tax on
the sales in which the property in the goods passes outside Madras
but goods are delivered for consumption within Madras. It is valid
in so far as it prohibits tax on outside sales, but invalid in so far as
sales in which goods are delivered inside the State are concerned, G
because such sales are hit by Art. 286(2). The fact that it is invalid
as to a part has not the effect of obliterating it out of the statute
book, because it is valid as to a part and has to remain in the
statute book for being enforced as to that part. The result of the
enactment of the impugned Act is to lift the ban under Article H
640 SUPREME COURT REPORTS [2022] 6 S.C.R.

A 286(2), and the consequence of it is that that portion of the
Explanation which relates to sales in which property passes outside
Madras but the goods are delivered inside Madras and which
was unenforceable before, became valid and enforceable. In this
view, we do not feel called upon to express any opinion as to
whether it would make any difference in the result if the impugned
B
provision was unconstitutional in its entirety.”
(emphasis supplied)
118. No doubt Deep Chand591 is a subsequent judgment as has
been noticed in the State of Manipur592. However, in the later judgment
C of the Constitution Bench of seven-Judges of this Court in Jagannath593,
the legal position has been reviewed and answered. This decision has
not only adverted to two earlier Constitution Bench decisions referred to
and relied upon in State of Manipur 594 (i.e., Behram Khurshid
Pesikaka595 and Deep Chand596), including American jurisprudence
and decision in Norton597, but to hosts of other decisions. The first point
D noted in paragraph 9 of this decision is that when this Court has declared
the concerned legislation void under the provisions of Article 13 sub-
clause (2) of the Constitution, should the Court proceed on the basis that
the legislation was void ab initio and non est or still born and, thus, any
validating measure could not instil life therein. After having analysed all
E the relevant decisions, the Court went on to observe in paragraphs 22
and 23, as follows:
“22. In our view, although decisions of the American
Supreme Court and the comments of well known
commentators like Willoughby and Cooley have great
F persuasive force, we need not interpret our Constitution
by too much reliance on them. Nor is it necessary to
scrutinise too closely the decisions wherein views appear
to have been expressed that a law which is void under
Article 13(2) is to be treated as still-born. Equally unfruitful
would it be to consider the doctrine of eclipse.
G 591
Supra at Footnote No. 210 (also at Footnote No.69)
592
Supra at Footnote No.159
593
Supra at Footnote No.314
594
Supra at Footnote No.159
595
Supra at Footnote No.310
596
Supra at Footnote No. 210 (also at Footnote No.69)
H 597
Supra at Footnote No.589
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 641
INDIA & ORS. [A. M. KHANWILKAR, J.]

23. Apart from the question as to whether fundamental rights A
originally enshrined in the Constitution were subject to the
amendatory process of Article 368 it must now be held that Article
31-B and the Ninth Schedule have cured the defect, if any, in the
various Acts mentioned in the said Schedule as regards any
unconstitutionality alleged on the ground of infringement of
B
fundamental rights, and by the express words of Article 31-B
such curing of the defect took place with retrospective operation
from the dates on which the Acts were put on the statute book.
These Acts even if void or inoperative at the time when
they were enacted by reason of infringement of Article 13(2)
of the Constitution, assumed full force and vigour from the C
respective dates of their enactment after their inclusion in
the Ninth Schedule, read with Article 31-B of the
Constitution. The States could not, at any time, cure any defect
arising from the violation of the provisions of Part III of the
Constitution and therefore the objection that the Madras Ceilings
D
Act should have been re-enacted by the Madras legislature after
the Seventeenth Constitutional Amendment came into force cannot
be accepted.”
(emphasis supplied)
Thus, where the defect as pointed out by the Court has been E
removed by virtue of the validating Act retrospectively, then the provision
can be held to be intra vires provided that it does not transgress any
other constitutional limitation. It is, therefore, clear from above that if by
amending the provision retrospectively, the Parliament has removed the
defect or has taken away the basis on which the provision was declared
void then the provision cannot be said to be in conflict with Article 13 of F
the Constitution. In other words, if the very premise on which the judgment
of the Court declaring the provision to be void has been uprooted by the
Parliament, thereby resulting in the change of circumstances, the judgment
could not be given effect to in the altered circumstances, then the provision
cannot be held to be void. In this case, as has been stated above, the G
anomalies noted in Nikesh Tarachand Shah598 have been removed by
way of Act No. 13 of 2018. Further, it has been clarified by way of
Finance (No.2) Act, 2019 that amendment shall operate retrospectively.

598
Supra at Footnote No.3 H
642 SUPREME COURT REPORTS [2022] 6 S.C.R.

A Thus, it cannot be said that twin conditions under Section 45 of the 2002
Act does not get revived.
119. A priori, it is not open to argue that Section 45 of the 2002
Act post decision in Nikesh Tarachand Shah599 stood obliterated from
the statute book as such. Indubitably, it is not unknown that even after
B declaration of unconstitutionality by the Court owing to violation of rights
guaranteed under Part III of the Constitution, it is open to the Parliament/
Legislature to cure the defect reckoned by the Constitutional Court in
relation to the concerned provision whilst declaring it as unconstitutional.
120. In the case of Nikesh Tarachand Shah600, as aforesaid,
C this Court declared the twin conditions in Section 45(1) of the 2002 Act
as unconstitutional being violative of Articles 14 and 21 of the Constitution.
That conclusion reached by this Court is essentially on account of two
basic reasons. The first being that the provision, as it existed at the
relevant time, was founded on a classification based on sentencing of
the scheduled offence and it had no nexus with objectives of the 2002
D Act; and secondly, because the twin conditions were restricted only to a
particular class of offences within the 2002 Act, such as offences
punishable for a term of imprisonment for more than three years under
Part A of the Schedule, and not to all the offences under the 2002 Act.
In paragraph 1 of the same decision, the Court had noted that the
E challenge set forth in the writ petition was limited to imposing two
conditions for grant of bail wherein an offence punishable for a term of
imprisonment for more than three years under Part A of the Schedule to
the Act is involved. This aspect has been thoroughly analysed by the
Court in the said decision. The Court also noted the legislative history
for enacting such a law and other relevant material from paragraph 11
F onwards upto paragraph 43. It adverted to several circumstances and
illustrations to conclude that the provision, as it stood then, on the face of
it, was discriminatory and manifestly arbitrary. Eventually in the operative
order, being paragraph 54 of the decision, the Court declared that Section
45(1) of the 2002 Act, as it stood then, insofar as it imposes two further
G conditions for release on bail, to be unconstitutional as it violated Articles
14 and 21 of the Constitution.
121. By the amendment vide Act 13 of 2018, the defects noted by
this Court in the aforementioned decision have been duly cured by deleting
599
Supra at Footnote No.3
600
H Supra at Footnote No.3
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 643
INDIA & ORS. [A. M. KHANWILKAR, J.]

the words “punishable for a term of imprisonment of more than three A
years under Part A of the Schedule” in Section 45(1) of the 2002 Act
and substituted by words “under this Act”. The question is: whether it
was open to the Parliament to undo the effect of the judgment of this
Court declaring the twin conditions unconstitutional? On a fair reading
of the judgment, we must observe that although the Court declared the
B
twin conditions as unconstitutional, but it was in the context of the opening
part of the sub-section (1) of Section 45, as it stood then, which resulted
in discrimination and arbitrariness as noticed in the judgment. But that
opening part referring to class of offences, namely punishable for a term
of imprisonment of more than three years under Part A of the Schedule
having been deleted and, instead, the twin conditions have now been C
associated with all the offences under the 2002 Act, the defect pointed
out in the stated decision, stands cured. To answer the question posed
above, we may also usefully refer to the enunciation of the Constitution
Bench of this Court, which recognises power of the Legislature to cure
the defect when the law is struck down by the Constitutional Court as
D
violative of some fundamental rights traceable to Part-III of the
Constitution. It has been consistently held that such declaration does not
have the effect of repealing the relevant provision as such. For, the
power to repeal vests only in the Parliament and none else. Only upon
such repeal by the Parliament, the provision would become non est for
all purposes until re-enacted, but it is open to the Parliament to cure the E
defect noticed by the Constitutional Court so that the provision, as
amended by removing such defect gets revived. This is so because, the
declaration by the Constitutional Court and striking down of a legal
provision being violative of fundamental rights traceable to Part III of
the Constitution, merely results in the provision, as it existed then,
F
becoming inoperative and unenforceable, even though it may continue
to remain on the statute book.
122. The decision of the Constitution Bench of this Court in Shri
Prithvi Cotton Mills Ltd.601 recognises this doctrine of taking away as
the basis or validating acts thereby removing the causes for ineffectiveness
or invalidity of actions or proceedings which are validated by a legislative G
measure and, then by fiction, it becomes re-enacted law. We may usefully
refer to the decision in Bhubaneshwar Singh602, wherein in paragraph
11, the Court noted as follows:
601
Supra at Footnote No.300
602
Supra at Footnote No.301 H
644 SUPREME COURT REPORTS [2022] 6 S.C.R.

A “11. From time to time controversy has arisen as to whether
the effect of judicial pronouncements of the High Court or
the Supreme Court can be wiped out by amending the
legislation with retrospective effect. Many such Amending
Acts are called Validating Acts, validating the action taken
under the particular enactments by removing the defect in
B
the statute retrospectively because of which the statute or
the part of it had been declared ultra vires. Such exercise
has been held by this Court as not to amount to
encroachment on the judicial power of the courts. The
exercise of rendering ineffective the judgments or orders
C of competent courts by changing the very basis by
legislation is a well-known device of validating legislation.
This Court has repeatedly pointed out that such validating
legislation which removes the cause of the invalidity cannot
be considered to be an encroachment on judicial power. At
the same time, any action in exercise of the power under
D
any enactment which has been declared to be invalid by a
court cannot be made valid by a Validating Act by merely
saying so unless the defect which has been pointed out by
the court is removed with retrospective effect. The
validating legislation must remove the cause of invalidity.
E Till such defect or the lack of authority pointed out by the
court under a statute is removed by the subsequent
enactment with retrospective effect, the binding nature of
the judgment of the court cannot be ignored.”
(emphasis supplied)
F 123. Again, in the case of Comorin Match Industries (P) Ltd.603,
this Court after adverting to earlier decisions, including Shri Prithvi
Cotton Mills Ltd.604 observed in paragraph 24 as follows:
“24. This case does not lay down that after a judgment has
been pronounced on the basis of an Act, the provisions of
G that Act cannot be amended so as to cure the defect pointed
out in the judgment retrospectively. The effect of the
amending Act of 1969 is not to overrule a judgment passed
by a court of law, which the legislature cannot do. What the
603
Supra at Footnote No.302
H 604
Supra at Footnote No.300
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 645
INDIA & ORS. [A. M. KHANWILKAR, J.]

legislature can do is to change the law on the basis of which A
the judgment was pronounced retrospectively and thereby
nullify the effect of the judgment. When the legislature
enacts that notwithstanding any judgment or order the new
law will operate retrospectively and the assessments shall
be deemed to be validly made on the basis of the amended
B
law, the legislature is not declaring the judgment to be void
but rendering things or acts deemed to have been done
under amended statute valid notwithstanding any judgment
or order on the basis of the unamended law to the contrary.
The validity to the assessment orders which had been
struck down by the Court, is imparted by the amending Act C
by changing the law retrospectively.”
(emphasis supplied)
124. The legal principles have been recapitulated by this Court
once again in Indian Aluminium Co.605, in paragraph 56, it was observed
as under: D

“56. From a resume of the above decisions the following principles
would emerge:
(1) The adjudication of the rights of the parties is the essential
judicial function. Legislature has to lay down the norms of conduct E
or rules which will govern the parties and the transactions and
require the court to give effect to them;
(2) The Constitution delineated delicate balance in the exercise of
the sovereign power by the legislature, executive and judiciary;
(3) In a democracy governed by rule of law, the legislature exercises F
the power under Articles 245 and 246 and other companion articles
read with the entries in the respective lists in the Seventh Schedule
to make the law which includes power to amend the law.
(4) Courts in their concern and endeavour to preserve
judicial power equally must be guarded to maintain the G
delicate balance devised by the Constitution between the
three sovereign functionaries. In order that rule of law
permeates to fulfil constitutional objectives of establishing
an egalitarian social order, the respective sovereign
605
Supra at Footnote No.303 H
646 SUPREME COURT REPORTS [2022] 6 S.C.R.

A functionaries need free play in their joints so that the march
of social progress and order remains unimpeded. The
smooth balance built with delicacy must always be
maintained.
(5) In its anxiety to safeguard judicial power, it is
B unnecessary to be overzealous and conjure up incursion
into the judicial preserve invalidating the valid law
competently made;
(6) The court, therefore, needs to carefully scan the law to
find out: (a) whether the vice pointed out by the court and
invalidity suffered by previous law is cured complying with
C the legal and constitutional requirements; (b) whether the
legislature has competence to validate the law; (c) whether
such validation is consistent with the rights guaranteed in
Part III of the Constitution.
(7) The court does not have the power to validate an invalid
D law or to legalise impost of tax illegally made and collected
or to remove the norm of invalidation or provide a remedy.
These are not judicial functions but the exclusive province
of the legislature. Therefore, they are not encroachment
on judicial power.
E (8) In exercising legislative power, the legislature by mere
declaration, without anything more, cannot directly
overrule, revise or override a judicial decision. It can render
judicial decision ineffective by enacting valid law on the
topic within its legislative field fundamentally altering or
changing its character retrospectively. The changed or
F altered conditions are such that the previous decision would
not have been rendered by the court, if those conditions
had existed at the time of declaring the law as invalid. It is
also empowered to give effect to retrospective legislation
with a deeming date or with effect from a particular date.
G The legislature can change the character of the tax or duty
from impermissible to permissible tax but the tax or levy
should answer such character and the legislature is
competent to recover the invalid tax validating such a tax
on removing the invalid base for recovery from the subject
or render the recovery from the State ineffectual. It is
H competent for the legislature to enact the law with
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 647
INDIA & ORS. [A. M. KHANWILKAR, J.]

retrospective effect and authorise its agencies to levy and A
collect the tax on that basis, make the imposition of levy
collected and recovery of the tax made valid,
notwithstanding the declaration by the court or the direction
given for recovery thereof.
(9) The consistent thread that runs through all the decisions B
of this Court is that the legislature cannot directly overrule
the decision or make a direction as not binding on it but
has power to make the decision ineffective by removing
the base on which the decision was rendered, consistent
with the law of the Constitution and the legislature must
have competence to do the same.” C
(emphasis supplied)
125. We may also usefully refer to the dictum in Narain Singh606,
it was held as under:
“21. The power of the sovereign legislature to legislate within its
field, both prospectively and retrospectively cannot be questioned. D
This position has been settled in many judgments of this Court.
Some of them may be considered below. In Bhubaneshwar
Singh v. Union of India607 the Court expressly approved the
aforesaid position in para 9 at pp. 82-83. Insofar as the validating
Acts are concerned, this Court in Bhubaneshwar Singh608 also E
considered the question in para 11 and held that the Court has the
powers by virtue of such validating legislation, to “wipe out” judicial
pronouncements of the High Court and the Supreme Court by
removing the defects in the statute retrospectively when such
statutes had been declared ultra vires by Courts in view of its
defects. F
22. This Court in Bhubaneshwar Singh609 has held that such
legislative exercise will not amount to encroachment on the judicial
power. This Court has accepted that such legislative device which
removes the vice in previous legislation is not considered an
encroachment on judicial power. In support of the aforesaid G
proposition, this Court in Bhubaneshwar Singh610 relied on the
606
Supra at Footnote No.305
607
Supra at Footnote No.301
608
Supra at Footnote No.301
609
Supra at Footnote No.301
610
Supra at Footnote No.301 H
648 SUPREME COURT REPORTS [2022] 6 S.C.R.

A proposition laid down by Hidayatullah, C.J. speaking for the
Constitution Bench in Shri Prithvi Cotton Mills Ltd. v. Broach
Borough Municipality611.
23. Again in Indian Aluminium Co. v. State of Kerala612 this
Court while summarising the principle held that a legislature cannot
B directly overrule a judicial decision but it has the power to make
the decision ineffective by removing the basis on which the decision
is rendered, while at the same time adhering to the constitutional
imperatives and the legislature is competent to do so [see para 56
sub-para (9) at p. 1446].

C 24. In Comorin Match Industries (P) Ltd. v. State of T.N.613,
the facts were that the assessment orders passed under the Central
Sales Tax Act were set aside by the High Court and the State
was directed to refund the amount to the assessee. As the State
failed to carry it out, contempt petitions were filed but the
assessment orders were validated by passing the Amendment Act
D of 1969 with retrospective effect and the Court held that the tax
demanded became valid and enforceable.
25. The Court in Comorin Match case614 held that in such a
situation the State will not be precluded from realising the tax due
as subsequently the assessment order was validated by the
E amending Act of 1969 and the order passed in the contempt
proceeding will not have the effect of the writing off the debt
which is statutorily owed by the assessee to the State. The learned
Judges held that the effect of the amending Act is retrospective
validation of the assessment orders which were struck down by
F the High Court. Therefore, the assessment order is legislatively
valid and the tax demands are also enforceable.
26. It is therefore clear where there is a competent
legislative provision which retrospectively removes the
substratum of foundation of a judgment, the said exercise
is a valid legislative exercise provided it does not
G
transgress any other constitutional limitation. Therefore,
this Court cannot uphold the reasoning in the High Court
611
Supra at Footnote No.300
612
Supra at Footnote No.303
613
Supra at Footnote No.302
H 614
Supra at Footnote No.302
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 649
INDIA & ORS. [A. M. KHANWILKAR, J.]

judgment that the impugned amendment is invalid just A
because it nullifies some provisions of the earlier Act.”
(emphasis supplied)
There are long line of decisions restating the above position and
the recent being Cheviti Venkanna Yadav615, which after analysing all
the relevant authorities on the point, noted in paragraph 30 as follows: B

“30. From the aforesaid authorities, it is settled that there
is a demarcation between the legislative and judicial
functions predicated on the theory of separation of powers.
The legislature has the power to enact laws including the
power to retrospectively amend laws and thereby remove C
causes of ineffectiveness or invalidity. When a law is enacted
with retrospective effect, it is not considered as an
encroachment upon judicial power when the legislature
does not directly overrule or reverse a judicial dictum. The
legislature cannot, by way of an enactment, declare a D
decision of the court as erroneous or a nullity, but can amend
the statute or the provision so as to make it applicable to
the past. The legislature has the power to rectify, through
an amendment, a defect in law noticed in the enactment
and even highlighted in the decision of the court. This
plenary power to bring the statute in conformity with the E
legislative intent and correct the flaw pointed out by the
court, can have a curative and neutralising effect. When
such a correction is made, the purpose behind the same is
not to overrule the decision of the court or encroach upon
the judicial turf, but simply enact a fresh law with F
retrospective effect to alter the foundation and meaning of
the legislation and to remove the base on which the
judgment is founded. This does not amount to statutory
overruling by the legislature. In this manner, the earlier
decision of the court becomes non-existent and
unenforceable for interpretation of the new legislation. No G
doubt, the new legislation can be tested and challenged on
its own merits and on the question whether the legislature
possesses the competence to legislate on the subject-

615
Supra at Footnote No.307 H
650 SUPREME COURT REPORTS [2022] 6 S.C.R.

A matter in question, but not on the ground of overreach or
colourable legislation.”
(emphasis supplied)
From the above discussion, it is amply clear that the twin conditions
declared as unconstitutional by this Court in Nikesh Tarachand Shah616
B was in reference to the provision, as it existed at the relevant time,
predicating application of Section 45 of the 2002 Act to only offences
punishable for a term of imprisonment of more than three years under
Part A of the Schedule of the 2002 Act and not even linked to the offences
of money-laundering under the 2002 Act. The reasons which weighed
C with this Court for declaring the twin conditions in Section 45(1), as it
stood at the relevant time, unconstitutional in no way obliterated the
provision from the statute book. Therefore, it was open to the Parliament
to cure the defect noted by this Court and to revive the same provision
as in the present form, post amendment Act 13 of 2018 with effect form
19.4.2018.
D
126. Having said thus, we must now address the challenge to the
twin conditions as applicable post amendment of 2018. That challenge
will have to be tested on its own merits and not in reference to the
reasons weighed with this Court in declaring the provision, (as it existed
at the relevant time), applicable only to offences punishable for a term
E of imprisonment of more than three years under Part A of the Schedule
to the 2002 Act. Now, the provision (Section 45) including twin conditions
would apply to the offence(s) under the 2002 Act itself. The provision
post 2018 amendment, is in the nature of no bail in relation to the offence
of money-laundering unless the twin conditions are fulfilled. The twin
F conditions are that there are reasonable grounds for believing that the
accused is not guilty of offence of money-laundering and that he is not
likely to commit any offence while on bail. Considering the purposes and
objects of the legislation in the form of 2002 Act and the background in
which it had been enacted owing to the commitment made to the
international bodies and on their recommendations, it is plainly clear that
G it is a special legislation to deal with the subject of money-laundering
activities having transnational impact on the financial systems including
sovereignty and integrity of the countries. This is not an ordinary offence.
To deal with such serious offence, stringent measures are provided in
the 2002 Act for prevention of money-laundering and combating menace
616
H Supra at Footnote No.3
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 651
INDIA & ORS. [A. M. KHANWILKAR, J.]

of money-laundering, including for attachment and confiscation of A
proceeds of crime and to prosecute persons involved in the process or
activity connected with the proceeds of crime. In view of the gravity of
the fallout of money-laundering activities having transnational impact, a
special procedural law for prevention and regulation, including to
prosecute the person involved, has been enacted, grouping the offenders
B
involved in the process or activity connected with the proceeds of crime
as a separate class from ordinary criminals. The offence of money-
laundering has been regarded as an aggravated form of crime “world
over”. It is, therefore, a separate class of offence requiring effective
and stringent measures to combat the menace of money-laundering.
127. There is no challenge to the provision on the ground of C
legislative competence. The question, therefore, is: whether such
classification of offenders involved in the offence of money-laundering
is reasonable? Considering the concern expressed by the international
community regarding the money-laundering activities world over and
the transnational impact thereof, coupled with the fact that the presumption D
that the Parliament understands and reacts to the needs of its own people
as per the exigency and experience gained in the implementation of the
law, the same must stand the test of fairness, reasonableness and having
nexus with the purposes and objects sought to be achieved by the 2002
Act. Notably, there are several other legislations where such twin
conditions have been provided for617. Such twin conditions in the E
concerned provisions have been tested from time to time and have stood
the challenge of the constitutional validity thereof. The successive
decisions of this Court dealing with analogous provision have stated that
617
Central Legislations:- Section 36AC of Drugs and Cosmetics Act, 1940; Section
51A of the Wild Life (Protection) Act, 1972; Section 6A of the Suppression of Unlawful F
Acts against Safety of Civil Aviation Act, 1982; Section 15 Terrorist Affected Areas Act
(Special Courts), 1984; Section 37 of the Narcotic Drugs and Psychotropic Substances
Act, 1985; Section 20 of the Terrorist and Disruptive Activities (Prevention) Act,
1987; Section 8 of the Suppression Of Unlawful Acts Against Safety Of Maritime
Navigation and Fixed Platforms On Continental Shelf Act, 2002; Section 212 of the
Companies Act, 2013; and Section 12 of the Anti-Hijacking Act, 2016.
State Legislations:- Section 19 of the Uttar Pradesh Gangsters and Anti-Social G
Activities (Prevention) Act, 1986; Section 21 of the Maharashtra Control of Organised
Crime Act, 1999; Section 22 of the Karnataka Control of Organized Crime Act, 2000;
Section 21 of the Telangana Control of Organized Crime Act, 2001 (renamed from
Andhra Pradesh COCA, 2001); Section 18 of the Sikkim Anti-Drugs Act, 2006; Section
20 of the Gujrat Control of Terrorism and Organised Crime Act, 2015; Section 19 of the
Mizoram Drug (Controlled Substances) Act, 2016; and Section 18 of the Haryana
Control of Organised Crime Act, 2020. H
652 SUPREME COURT REPORTS [2022] 6 S.C.R.

A the Court at the stage of considering the application for grant of bail, is
expected to consider the question from the angle as to whether the
accused was possessed of the requisite mens rea. The Court is not
required to record a positive finding that the accused had not committed
an offence under the Act. The Court ought to maintain a delicate balance
between a judgment of acquittal and conviction and an order granting
B
bail much before commencement of trial. The duty of the Court at this
stage is not to weigh the evidence meticulously but to arrive at a finding
on the basis of broad probabilities. Further, the Court is required to record
a finding as to the possibility of the accused committing a crime which is
an offence under the Act after grant of bail.
C 128. For understanding whether such twin conditions can be
regarded as reasonable condition, we may usefully refer to the decision
of the Constitution Bench of this Court in Kartar Singh618. While dealing
with the challenge to Section 20(8) of TADA Act, the Court rejected the
argument that such provision results in deprivation of liberty and violates
D Articles 14 and 21 of the Constitution. It noted that such provision imposes
complete ban on release of accused on bail involved in the stated offence
under the special legislation, but that ban stands diluted by virtue of twin
conditions. It noted that rest of the provision, as in the case of the Section
45 of the 2002 Act, is comparable with the conditions specified in the
1973 Code for release of accused on bail concerning ordinary offence
E under general law. The Constitution Bench approved the dictum in
Usmanbhai Dawoodbhai Memon619 and in paragraph 349 noted thus:
“349. The conditions imposed under Section 20(8)(b), as
rightly pointed out by the Additional Solicitor General, are
in consonance with the conditions prescribed under clauses
F (i) and (ii) of sub-section (1) of Section 437 and clause (b) of
sub-section (3) of that section. Similar to the conditions in
clause (b) of sub-section (8), there are provisions in various
other enactments — such as Section 35(1) of Foreign
Exchange Regulation Act and Section 104(1) of the Customs
G Act to the effect that any authorised or empowered officer
under the respective Acts, if, has got reason to believe that
any person in India or within the Indian customs waters
has been guilty of an offence punishable under the respective
618
Supra at Footnote No.190
H 619
Supra at Footnote No.202
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 653
INDIA & ORS. [A. M. KHANWILKAR, J.]

Acts, may arrest such person. Therefore, the condition that A
“there are grounds for believing that he is not guilty of an
offence”, which condition in different form is incorporated
in other Acts such as clause (i) of Section 437(1) of the
Code and Section 35(1) of FERA and 104(1) of the Customs
Act, cannot be said to be an unreasonable condition
B
infringing the principle of Article 21 of the Constitution.”
(emphasis supplied)
Again, in paragraph 351, the Constitution Bench observed thus:
“351. No doubt, liberty of a citizen must be zealously
safeguarded by the courts; nonetheless the courts while C
dispensing justice in cases like the one under the TADA
Act, should keep in mind not only the liberty of the accused
but also the interest of the victim and their near and dear
and above all the collective interest of the community and
the safety of the nation so that the public may not lose faith D
in the system of judicial administration and indulge in private
retribution.”
(emphasis supplied)
We may immediately note that this judgment has been considered
by the two-Judge Bench of this Court in Nikesh Tarachand Shah620 in E
paragraph 47 and distinguished in the following words:
“47. ….
It is clear that this Court upheld such a condition only because the
offence under TADA was a most heinous offence in which the
F
vice of terrorism is sought to be tackled. Given the heinous
nature of the offence which is punishable by death or life
imprisonment, and given the fact that the Special Court in
that case was a Magistrate and not a Sessions Court, unlike
the present case, Section 20(8) of TADA was upheld as being
in consonance with conditions prescribed under Section 437 G
of the Code of Criminal Procedure. In the present case, it
is Section 439 and not Section 437 of the Code of Criminal
Procedure that applies. Also, the offence that is spoken of in
Section 20(8) is an offence under TADA itself and not an offence
620
Supra at Footnote No.3 H
654 SUPREME COURT REPORTS [2022] 6 S.C.R.

A under some other Act. For all these reasons, the judgment in Kartar
Singh621 cannot apply to Section 45 of the present Act.”
(emphasis supplied)
129. With utmost humility at our command, we do not agree with
this (highlighted) observation. The reason for distinguishing the enunciation
B of the Constitution Bench noted above, is not only inapposite, but it is not
consistent with the provisions in both the Acts. Even the TADA Act, the
appointment of Designated Court is from amongst the Sessions Judge or
Additional Sessions Judge in any State and the offences under that Act
were made exclusively triable before such Designated Court and not
C the Magistrate. The powers of the Magistrate were required to be
bestowed on the Designated Court being the Sessions Judge for the
limited purpose of proceeding with the case directly before it. This is
amply clear, inter alia, from Section 9, in particular Clause (6) thereof,
including Sections 20(3)622 and 20(4)623 of the TADA Act. Same is the
logic adopted under Chapter VII of the 2002 Act in constituting the
D Special Courts and empowering the Sessions Judge appointed as Special
Court with the powers of the Magistrate. That aspect has been dealt
621
Supra at Footnote No.190
622
20. Modified application of certain provisions of the Code .- (1) …..
….
(3) Section 164 of the Code shall apply in relation to a case involving an offence
E punishable under this Act or any rule made thereunder, subject to the modification that
the reference in sub-section (1) thereof to “Metropolitan Magistrate or Judicial
Magistrate” shall be construed as a reference to “Metropolitan Magistrate”, “Judicial
Magistrate, Executive Magistrate or Special Executive Magistrate”.
623
20. Modified application of certain provisions of the Code .- (1) …..
…..
(4) Section 167 of the Code shall apply in relation to a case involving an offence
F
punishable under this Act or any rule made thereunder subject to the modifications
that—
(a) the reference in sub-section (1) thereof to “Judicial Magistrate” shall be
construed as reference to “Judicial Magistrate or Executive Magistrate or Special
Executive Magistrate”;
(b) the reference in sub-section (2) thereof the “fifteen days”, “ninety days”
G and “sixty days”, wherever they occur, shall be construed as references to
“sixty days”, one hundred and eighty days and one hundred and eighty days
respectively; and
(bb) sub-section (2), after the proviso, the following proviso shall be inserted,
namely:
“Provided further that, if it is not possible to complete the investigation
within the said period of one hundred and eighty days, the Designated Court
H
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 655
INDIA & ORS. [A. M. KHANWILKAR, J.]

with by the Constitution Bench in paragraphs 342 to 344, while approving A
the exposition in Usmanbhai Dawoodbhai Memon624. The same reads
thus:
“342. Sub-section (8) which imposes a complete ban on release
on bail against the accused of an offence punishable under this
Act minimises or dilutes that ban under two conditions, those being B
(1) the Public Prosecutor must be given an opportunity to oppose
the bail application for such release; and (2) where the Public
Prosecutor opposes the bail application the court must be satisfied
that the two conditions, namely, (a) there are reasonable grounds
for believing that the person accused is not guilty of such offence
C
and (b) he is not likely to commit any offence while on bail. Sub-
section (9) qualifies sub-section (8) to the effect that the above
two limitations imposed on grant of bail specified in sub-section
(8) are in addition to the limitations under the Code or any other
law for the time being in force on granting of bail. Section 436 of
the Code provides for grant of bail to a person accused of a bailable D
offence, while Section 437 provides for grant of bail to any accused
of, or suspected of, the commission of any non-bailable offence.
Nonetheless, sub-section (1) of Section 437 imposes certain fetters
on the exercise of the powers of granting bail on fulfilment of two
conditions, namely (1) if there appear reasonable grounds for
E
believing that he has been guilty of an offence punishable with
death or imprisonment for life; and (2) if the offence complained
of is a cognizable offence and that the accused had been previously
convicted of an offence punishable with death, imprisonment for
life or imprisonment for seven years or more or he had previously
convicted on two or more occasions of a nonbailable and F
cognizable offence. Of course, these two conditions are subject
to three provisos attached to sub-section (1) of Section 437. But
we are not very much concerned about the provisos. However,
sub-section (3) of Section 437 gives discretion to the court to
grant bail attached with some conditions if it considers necessary
G
shall extend the said period up to one year, on the report of the Public Prosecutor
indicating the progress of the investigation and the specific reasons for the
detention of the accused beyond the said period of one hundred and eighty
days; and.
(c) sub-section (2-A) thereof shall be deemed to have been omitted.
624
Supra at Footnote No.202 H
656 SUPREME COURT REPORTS [2022] 6 S.C.R.

A or in the interest of justice. For proper understanding of those
conditions or limitations to which two other conditions under clauses
(a) and (b) of sub-section (8) of Section 20 of the TADA Act are
attached, we reproduce those conditions in Section 437(3)
hereunder:
B “437. (3) * * *
(a) in order to ensure that such person shall attend in
accordance with the conditions of the bond executed under
this Chapter, or
(b) in order to ensure that such person shall not commit an
C offence similar to the offence of which he is accused or of the
commission of which he is suspected, or
(c) otherwise in the interests of justice.”
343. Section 438 of the code speaks of bail and Section 439 deals
D with the special powers of High Court or Court of Session
regarding bail. It will be relevant to cite Section 439(1)(a) also, in
this connection, which reads as follows:
“439. Special powers of High Court or Court of Session
regarding bail.— (1) A High Court or Court of Session may
direct—
E
(a) that any person accused of an offence and in custody be
released on bail, and if the offence is of the nature specified in
sub-section (3) of Section 437, may impose any condition which
it considers necessary for the purposes mentioned in that sub-
section;
F
(b) …”
344. In this connection, we would like to quote the following
observation of this Court in Usmanbhai Dawoodbhai Memon v.
State of Gujarat625, with which we are in agreement : (SCC pp.
G 286-287, para 19)
“Though there is no express provision excluding the applicability
of Section 439 of the Code similar to the one contained in
Section 20(7) of the Act in relation to a case involving the
arrest of any person on an accusation of having committed an
H 625
Supra at Footnote No.202
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 657
INDIA & ORS. [A. M. KHANWILKAR, J.]

offence punishable under the Act or any rule made thereunder, A
but that result must, by necessary implication, follow. It is true
that the source of power of a Designated Court to grant bail is
not Section 20(8) of the Act as it only places limitations on
such power. This is made explicit by Section 20(9) which enacts
that the limitations on granting of bail specified in Section 20(8)
B
are ‘in addition to the limitations under the Code or any other
law for the time being in force’. But it does not necessarily
follow that the power of a Designated Court to grant bail is
relatable to Section 439 of the Code. It cannot be doubted that
a Designated Court is ‘a court other than the High Court or
the Court of Session’ within the meaning of Section 437 of the C
Code. The exercise of the power to grant bail by a Designated
Court is not only subject to the limitations contained therein,
but is also subject to the limitations placed by Section 20(8) of
the Act.””
This portion of the judgment of the Constitution Bench has not D
been noticed in Nikesh Tarachand Shah626. Further, we do not agree
with the observations suggestive of that the offence of money-laundering
is less heinous offence than the offence of terrorism sought to be tackled
under TADA Act or that there is no compelling State interest in tackling
offence of money-laundering. The international bodies have been E
discussing the menace of money-laundering on regular basis for quite
some time; and strongly recommended enactment of stringent legislation
for prevention of money-laundering and combating with the menace
thereof including to prosecute the offenders and for attachment and
confiscation of the proceeds of crime having direct impact on the financial
systems and sovereignty and integrity of the countries. That concern F
has been duly noted even in the opening part of the introduction and
Statement of Objects and Reasons, for which the 2002 Act came into
being. This declaration by the Parliament itself is testimony of compelling
necessity to have stringent regime (enactment) for prevention and control
of the menace of money-laundering. Be it noted that under Article 38 of G
the Constitution of India, it is the duty of the State to secure social,
economic and political justice and minimize income inequalities. Article
39 of the Constitution mandates the State to prevent concentration of
wealth, thus, to realize its socialist goal, it becomes imperative for the

626
Supra at Footnote No.3 H
658 SUPREME COURT REPORTS [2022] 6 S.C.R.

A State to make such laws, which not only ensure that the unaccounted
money is infused back in the economic system of the country, but also
prevent any activity which damages the economic fabric of the nation.
It cannot be gainsaid that social and economic offences stand on a graver
footing as they not only involve an individual direct victim, but harm the
society as a whole627. Thus, the Law Commission also in its 47th report
B
recommended an increase in punishment for most of the offences
considered therein. Further, the quantum of punishment for money-
laundering offence, being only seven years, cannot be the basis to
undermine the seriousness and gravity of this offence. The quantum of
sentence is a matter of legislative policy. The punishment provided for
C the offence is certainly one of the principles in deciding the gravity of
the offence, however, it cannot be said that it is the sole factor in deciding
the severity of offence as contended by the petitioners. Money-laundering
is one of the heinous crimes, which not only affects the social and
economic fabric of the nation, but also tends to promote other heinous
offences, such as terrorism, offences related to NDPS Act, etc. It is a
D
proven fact that international criminal network that support home grown
extremist groups relies on transfer of unaccounted money across nation
States628, thus, by any stretch of imagination, it cannot be said that there
is no compelling State interest in providing stringent conditions of bail for
the offence of money-laundering. In Ram Jethmalani & Ors. vs. Union
E of India & Ors.629, the Court expounded the theory of “soft state”
which is used to describe a nation which is not capable of preventing the
offence of money-laundering. The Court held thus:

“13. The concept of a “soft state” was famously articulated by
the Nobel Laureate, Gunnar Myrdal. It is a broad-based
F assessment of the degree to which the State, and its machinery, is
equipped to deal with its responsibilities of governance. The more
soft the State is, greater the likelihood that there is an unholy
nexus between the law maker, the law keeper, and the law
breaker.”
G
(emphasis supplied)

627
47th Law Commission Report
628
Ram Jethmalani & Ors. vs. Union of India & Ors., (2011) 8 SCC 1
629
(2011) 8 SCC 1 (also at Footnote No.628)
H
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 659
INDIA & ORS. [A. M. KHANWILKAR, J.]

In Mohanlal Jitamalji Porwal630, while explaining the impact of A
economic offences on the community, the Court observed that usually
the community view the economic offender with a permissive eye,
although the impact of the offence is way greater than that of offence of
murder. The Court held thus:
“5..…The entire Community is aggrieved if the economic offenders B
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 C
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 D
Interest. ……”
(emphasis supplied)
In Rohit Tandon631&632, this Court observed as follows:-
“21. The consistent view taken by this Court is that E
economic offences having deep-rooted conspiracies and
involving huge loss of public funds need to be viewed
seriously and considered as grave offences affecting the
economy of the country as a whole and thereby posing
serious threat to the financial health of the country. Further,
when attempt is made to project the proceeds of crime as untainted F
money and also that the allegations may not ultimately be
established, but having been made, the burden of proof that the
monies were not the proceeds of crime and were not, therefore,
tainted shifts on the accused persons under Section 24 of the 2002
Act.” G
(emphasis supplied)

630
Supra at Footnote No.254
631
Supra at Footnote No.189
632
Supra at Footnote No.189 H
660 SUPREME COURT REPORTS [2022] 6 S.C.R.

A Thus, it is well settled by the various decisions of this Court and
policy of the State as also the view of international community that the
offence of money-laundering is committed by an individual with a
deliberate design with the motive to enhance his gains, disregarding the
interests of nation and society as a whole and which by no stretch of
imagination can be termed as offence of trivial nature. Thus, it is in the
B
interest of the State that law enforcement agencies should be provided
with a proportionate effective mechanism so as to deal with these types
of offences as the wealth of the nation is to be safeguarded from these
dreaded criminals. As discussed above, the conspiracy of money-
laundering, which is a three-staged process, is hatched in secrecy and
C executed in darkness, thus, it becomes imperative for the State to frame
such a stringent law, which not only punishes the offender proportionately,
but also helps in preventing the offence and creating a deterrent effect.
130. In the case of the 2002 Act, the Parliament had no reservation
to reckon the offence of money-laundering as a serious threat to the
D financial systems of our country, including to its sovereignty and integrity.
Therefore, the observations and in particular in paragraph 47 of Nikesh
Tarachand Shah633, are in the nature of doubting the perception of the
Parliament in that regard, which is beyond the scope of judicial review.
That cannot be the basis to declare the law manifestly arbitrary.
E 131. It is important to note that the twin conditions provided under
Section 45 of the 2002 Act, though restrict the right of the accused to
grant of bail, but it cannot be said that the conditions provided under
Section 45 impose absolute restraint on the grant of bail. The discretion
vests in the Court which is not arbitrary or irrational but judicial, guided
by the principles of law as provided under Section 45 of the 2002 Act.
F While dealing with a similar provision prescribing twin conditions in
MCOCA, this Court in Ranjitsing Brahmajeetsing Sharma634, held
as under:
“44. The wording of Section 21(4), in our opinion, does not
lead to the conclusion that the court must arrive at a
G positive finding that the applicant for bail has not committed
an offence under the Act. If such a construction is placed, the
court intending to grant bail must arrive at a finding that the applicant

633
Supra at Footnote No.3
634
H Supra at Footnote No.275 (also at Footnote No.53)
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 661
INDIA & ORS. [A. M. KHANWILKAR, J.]

has not committed such an offence. In such an event, it will be A
impossible for the prosecution to obtain a judgment of conviction
of the applicant. Such cannot be the intention of the legislature.
Section 21(4) of MCOCA, therefore, must be construed
reasonably. It must be so construed that the court is able
to maintain a delicate balance between a judgment of
B
acquittal and conviction and an order granting bail much
before commencement of trial. Similarly, the Court will be
required to record a finding as to the possibility of his committing
a crime after grant of bail. However, such an offence in futuro
must be an offence under the Act and not any other offence.
Since it is difficult to predict the future conduct of an accused, the C
court must necessarily consider this aspect of the matter having
regard to the antecedents of the accused, his propensities and the
nature and manner in which he is alleged to have committed the
offence.
45. It is, furthermore, trite that for the purpose of D
considering an application for grant of bail, although detailed
reasons are not necessary to be assigned, the order granting
bail must demonstrate application of mind at least in serious
cases as to why the applicant has been granted or denied
the privilege of bail.
E
46. The duty of the court at this stage is not to weigh the
evidence meticulously but to arrive at a finding on the basis
of broad probabilities. However, while dealing with a special
statute like MCOCA having regard to the provisions
contained in sub-section (4) of Section 21 of the Act, the
F
court may have to probe into the matter deeper so as to
enable it to arrive at a finding that the materials collected
against the accused during the investigation may not justify
a judgment of conviction. The findings recorded by the court
while granting or refusing bail undoubtedly would be
tentative in nature, which may not have any bearing on the G
merit of the case and the trial court would, thus, be free to
decide the case on the basis of evidence adduced at the
trial, without in any manner being prejudiced thereby”
(emphasis supplied)
H
662 SUPREME COURT REPORTS [2022] 6 S.C.R.

A We are in agreement with the observation made by the Court in
Ranjitsing Brahmajeetsing Sharma635. The Court while dealing with
the application for grant of bail need not delve deep into the merits of the
case and only a view of the Court based on available material on record
is required. The Court will not weigh the evidence to find the guilt of the
accused which is, of course, the work of Trial Court. The Court is only
B
required to place its view based on probability on the basis of reasonable
material collected during investigation and the said view will not be taken
into consideration by the Trial Court in recording its finding of the guilt or
acquittal during trial which is based on the evidence adduced during the
trial. As explained by this Court in Nimmagadda Prasad636, the words
C used in Section 45 of the 2002 Act are “reasonable grounds for believing”
which means the Court has to see only if there is a genuine case against
the accused and the prosecution is not required to prove the charge
beyond reasonable doubt.
132. Sub-section (6) of Section 212 of the Companies Act imposes
D similar twin conditions, as envisaged under Section 45 of the 2002 Act
on the grant of bail, when a person is accused of offence under Section
447 of the Companies Act which punishes fraud, with punishment of
imprisonment not less than six months and extending up to 10 years,
with fine not less than the amount involved in the fraud, and extending
up to 3 times the fraud. The Court in Nittin Johari637, while justifying
E the stringent view towards grant of bail with respect to economic offences
held that-
“24. At this juncture, it must be noted that even as per Section
212(7) of the Companies Act, the limitation under Section
212(6) with respect to grant of bail is in addition to those already
F provided in the CrPC. Thus, it is necessary to advert to the
principles governing the grant of bail under Section 439 of the
CrPC. Specifically, heed must be paid to the stringent view
taken by this Court towards grant of bail with respect of
economic offences. In this regard, it is pertinent to refer to
G the following observations of this Court in Y.S. Jagan Mohan
Reddy638: (SCC p.449, paras 34-35)

635
Supra at Footnote No.275 (also at Footnote No.53)
636
Supra at Footnote No.256
637
Supra at Footnote No.291
638
H Supra at Footnote No.255
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 663
INDIA & ORS. [A. M. KHANWILKAR, J.]

“34. Economic offences constitute a class apart and A
need to be visited with a different approach in the matter of
bail. The economic offences having deep--rooted conspiracies
and involving huge loss of public funds need to be viewed seriously
and considered as grave offences affecting the economy of the
country as a whole and thereby posing serious threat to the
B
financial health of the country.
35. While granting bail, the court has to keep in mind the
nature of accusations, the nature of evidence in support
thereof, the severity of the punishment which conviction
will entail, the character of the accused, circumstances
which are peculiar to the accused, reasonable possibility of C
securing the presence of the accused at the trial, reasonable
apprehension of the witnesses being tampered with, the
larger interests of the public/State and other similar
considerations.”
(emphasis supplied) D

133. This Court has been restating this position in several decisions,
including Gautam Kundu 639 and Amit Kumar 640 . Thus, while
considering the application for bail under Section 45 of the 2002 Act, the
Court should keep in mind the abovementioned principles governing the
grant of bail. The limitations on granting bail as prescribed under Section E
45 of the 2002 Act are in addition to the limitations under the 1973 Code.
134. As aforementioned, similar twin conditions have been
provided in several other special legislations641 validity whereof has been

639
Supra at Footnote No.207 F
640
Supra at Footnote No.258
641
(i) Section 43D(5) of the UAPA [Zahoor Ahmad Shah Watali (supra at Footnote
No.290)]; (ii) Section 21(4) of the MCOCA [Vishwanath Maranna Shetty (supra at
Footnote No.287); Chenna Boyanna Krishna Yadav (supra at Footnote No.283) and
Ranjitsing Brahmajeetsing Sharma (supra at Footnote Nos.53 and 275)]; (iii) Section
21(5) of the MCOCA [Bharat Shanti Lal Shah (supra at Footnote No.285); (iv) Section
37 of the NDPS Act [R. Paulsamy (supra at Footnote No.277); Gurcharan Singh G
(supra at Footnote No.278); Ahmadalieva Nodira (supra at Footnote No.276); Abdulla
(supra at Footnote No.280); Karma Phuntsok (supra at Footnote No.282); N.R. Mon
(supra at Footnote No.284); Rattan Mallik alias Habul (supra at Footnote No.286);
Satpal Singh (supra at Footnote No.289); and Niyazuddin Sk. (supra at Footnote
No.288); and (v) Section 212(6) of the Companies Act [Nittin Johari (supra at Footnote
No.291)].
H
664 SUPREME COURT REPORTS [2022] 6 S.C.R.

A upheld by this Court being reasonable and having nexus with the purposes
and objects sought to be achieved by the concerned special legislations.
Besides the special legislation, even the provisions in the general law,
such as 1973 Code stipulate compliance of preconditions before releasing
the accused on bail. The grant of bail, even though regarded as an
important right of the accused, is not a mechanical order to be passed by
B
the Courts. The prayer for grant of bail even in respect of general
offences, have to be considered on the basis of objective discernible
judicial parameters as delineated by this Court from time to time, on
case-to-case basis.
135. We are conscious of the fact that in paragraph 53 of the
C Nikesh Tarachand Shah642, the Court noted that it had struck down
Section 45 of the 2002 as a whole. However, in paragraph 54, the
declaration is only in respect of further (two) conditions for release on
bail as contained in Section 45(1), being unconstitutional as the same
violated Articles 14 and 21 of the Constitution. Be that as it may, nothing
D would remain in that observation or for that matter, the declaration as
the defect in the provision [Section 45(1)], as existed then, and noticed
by this Court has been cured by the Parliament by enacting amendment
Act 13 of 2018 which has come into force with effect from 19.4.2018.
We, therefore, confined ourselves to the challenge to the twin conditions
in the provision, as it stands to this date post amendment of 2018 and
E which, on analysis of the decisions referred to above dealing with
concerned enactments having similar twin conditions as valid, we must
reject the challenge. Instead, we hold that the provision in the form of
Section 45 of the 2002 Act, as applicable post amendment of 2018, is
reasonable and has direct nexus with the purposes and objects sought to
F be achieved by the 2002 Act to combat the menace of money-laundering
having transnational consequences including impacting the financial
systems and sovereignty and integrity of the countries.
136. It was urged that the scheduled offence in a given case may
be a non-cognizable offence and yet rigors of Section 45 of the 2002 Act
G would result in denial of bail even to such accused. This argument is
founded on clear misunderstanding of the scheme of the 2002 Act. As
we have repeatedly mentioned in the earlier part of this judgment that
the offence of money-laundering is one wherein a person, directly or
indirectly, attempts to indulge or knowingly assists or knowingly is a
642
H Supra at Footnote No.3
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 665
INDIA & ORS. [A. M. KHANWILKAR, J.]

party or is actually involved in any process or activity connected with A
the proceeds of crime. The fact that the proceeds of crime have been
generated as a result of criminal activity relating to a scheduled offence,
which incidentally happens to be a non-cognizable offence, would make
no difference. The person is not prosecuted for the scheduled offence
by invoking provisions of the 2002 Act, but only when he has derived or
B
obtained property as a result of criminal activity relating to or in relation
to a scheduled offence and then indulges in process or activity connected
with such proceeds of crime. Suffice it to observe that the argument
under consideration is completely misplaced and needs to be rejected.
137. Another incidental issue that had been raised is about the
non-application of rigors of Section 45 of the 2002 Act in respect of C
anticipatory bail filed under Section 438 of the 1973 Code. This submission
presumably is linked to the observation in paragraph 42 in the case of
Nikesh Tarachand Shah643. Similar argument was considered in The
Asst. Director Enforcement Directorate vs. Dr. V.C. Mohan644. We
are in agreement with the observation in this decision that it is one thing D
to say that Section 45 of the 2002 Act refers to a scheduled offence
under the general law, but, as noted earlier, the offence under this Act in
terms of Section 3 is specific to involvement in any process or activity
connected with the proceeds of crime which is generated as a result of
criminal activity relating to a scheduled offence. It is also true that Section
45 does not make specific reference to Section 438 of the 1973 Code, E
but it cannot be overlooked that sub-section (1) opens with a non-
obstante clause and clearly provides that anything contained in the 1973
Code (2 of 1974), no person accused of an offence under this Act shall
be released on bail or on his own bond, unless the stipulations provided
therein are fulfilled. On account of the non-obstante clause in Section F
45(1) of the 2002 Act, the sweep of that provision must prevail in terms
of Section 71 of the 2002 Act. Further, the expression “anticipatory bail”
is not used either in the 1973 Code or the 2002 Act. The relief granted in
terms of Section 438 of the 1973 Code is one of directing release of the
person on “bail” in case of his arrest; and such a relief has been described
in judicial pronouncements as anticipatory bail. Section 45(1) uses generic G
expression “bail” without reference to any provision of the 1973 Code,
such as Sections 437, 438 and 439 of the 1973 Code. Concededly, Section
65 of the 2002 Act states that the provisions of the 1973 Code shall
643
Supra at Footnote No.3
644
Criminal Appeal No.21 of 2022, decided on 4.1.2022 H
666 SUPREME COURT REPORTS [2022] 6 S.C.R.

A apply to the provisions under the Act insofar as they are not inconsistent
with the provisions of the 2002 Act. Further, Section 71 of the Act gives
overriding effect to the Act. Section 45 of the Act begins with a non-
obstante clause, thus excluding the application of the 1973 Code in matters
related to “bail”. The word “anticipatory bail” has not been defined under
the 1973 Code. In Sushila Aggarwal645, it was held as under:
B
“7.1. At the outset, it is required to be noted that as such
the expression “anticipatory bail” has not been defined in
the Code. As observed by this Court in Balchand Jain646,
“anticipatory bail” means “bail in anticipation of arrest”.
As held by this Court, the expression “anticipatory bail” is
C a misnomer inasmuch as it is not as if bail is presently
granted by the court in anticipation of arrest. An application
for “anticipatory bail” in anticipation of arrest could be moved by
the accused at a stage before an FIR is filed or at a stage when
FIR is registered but the charge sheet has not been filed and the
D investigation is in progress or at a stage after the investigation is
concluded. Power to grant “anticipatory bail” under Section 438
of the CrPC vests only with the Court of Session or the High
Court. Therefore, ultimately it is for the court concerned to consider
the application for “anticipatory bail” and while granting the
“anticipatory bail” it is ultimately for the court concerned to impose
E conditions including the limited period of “anticipatory bail”,
depends upon the stages at which the application for anticipatory
bail is moved. A person in whose favour a pre-arrest bail order is
made under Section 438 of the CrPC has to be arrested. However,
once there is an order of pre-arrest bail/anticipatory bail, as and
F when he is arrested he has to be released on bail. Otherwise,
there is no distinction or difference between the pre-arrest bail
order under Section 438 and the bail order under Section 437 &
439 CrPC. The only difference between the pre-arrest bail order
under Section 438 and the bail order under Sections 437 and 439
is the stages at which the bail order is passed. The bail order
G under Section 438 CrPC is prior to his arrest and in anticipation of
his arrest and the order of bail under Sections 437 and 439 is after
a person is arrested. A bare reading of Section 438 CrPC shows
that there is nothing in the language of the Section which goes to
645
Supra at Footnote No.318
646
H Balchand Jain (Shri) vs. State of Madhya Pradesh, (1976) 4 SCC 572
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 667
INDIA & ORS. [A. M. KHANWILKAR, J.]

show that the pre-arrest bail granted under Section 438 has to be A
time-bound. The position is the same as in Section 437 and Section
439 CrPC.”
(emphasis supplied)
Thus, anticipatory bail is nothing but a bail granted in anticipation
of arrest, hence, it has been held in various judgments by this Court that B
the principles governing the grant of bail in both cases are more or less
on the same footing, except that in case of anticipatory bail the
investigation is still underway requiring the presence of the accused before
investigation authority. Thus, ordinarily, anticipatory bail is granted in
exceptional cases where the accused has been falsely implicated in an C
offence with a view to harass and humiliate him. Therefore, it would not
be logical to disregard the limitations imposed on granting bail under
Section 45 of the 2002 Act, in the case of anticipatory bail as well.
138. In P. Chidambaram647, this Court observed that the power
of anticipatory bail should be sparingly exercised in economic offences D
and held thus:
“77. After referring to Siddharam Satlingappa Mhetre648 and
other judgments and observing that anticipatory bail can be granted
only in exceptional circumstances, in Jai Prakash Singh v. State
of Bihar649 , the Supreme Court held as under: (SCC p.386, para E
19)
“19. Parameters for grant of anticipatory bail in a serious
offence are required to be satisfied and further while granting
such relief, the court must record the reasons therefor.
Anticipatory bail can be granted only in exceptional F
circumstances where the court is prima facie of the view that
the applicant has falsely been enroped in the crime and would
not misuse his liberty. (See D.K. Ganesh Babu v. P.T.
Manokaran 650 , State of Maharashtra v. Mohd. Sajid
Husain Mohd. S. Husain651 and Union of India v. Padam
Narain Aggarwal 652) G
647
Supra at Footnote No.21
648
Siddharam Satlingappa Mhetre vs. State of Maharashtra & Ors., (2011) 1 SCC 694
649
(2012) 4 SCC 379
650
(2007) 4 SCC 434
651
(2008) 1 SCC 213
652
Supra at Footnote No.246 H
668 SUPREME COURT REPORTS [2022] 6 S.C.R.

A Economic Offences
78. Power under Section 438 CrPC being an extraordinary
remedy, has to be exercised sparingly; more so, in cases of
economic offences. Economic offences stand as a different class
as they affect the economic fabric of the society. In Directorate
B of Enforcement v. Ashok Kumar Jain653, it was held that in
economic offences, the accused is not entitled to anticipatory bail.
*** *** ***
83. Grant of anticipatory bail at the stage of investigation
may frustrate the investigating agency in interrogating the
C accused and in collecting the useful information and also
the materials which might have been concealed. Success
in such interrogation would elude if the accused knows that
he is protected by the order of the court. Grant of
anticipatory bail, particularly in economic offences would
D definitely hamper the effective investigation. Having regard
to the materials said to have been collected by the respondent
Enforcement Directorate and considering the stage of the
investigation, we are of the view that it is not a fit case to grant
anticipatory bail.

E 84. In a case of money-laundering where it involves many
stages of “placement”, “layering i.e. funds moved to other
institutions to conceal origin” and “interrogation i.e. funds
used to acquire various assets”, it requires systematic and
analysed investigation which would be of great advantage.
As held in Anil Sharma 654, success in such interrogation
F would elude if the accused knows that he is protected by a
pre-arrest bail order. Section 438 CrPC is to be invoked
only in exceptional cases where the case alleged is frivolous
or groundless. In the case in hand, there are allegations of
laundering the proceeds of the crime. The Enforcement Directorate
G claims to have certain specific inputs from various sources,
including overseas banks. Letter rogatory is also said to have been
issued and some response have been received by the Department.

653
(1998) 2 SCC 105
654
State rep. by the C.B.I. vs. Anil Sharma, (1997) 7 SCC 187
H
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 669
INDIA & ORS. [A. M. KHANWILKAR, J.]

Having regard to the nature of allegations and the stage of the A
investigation, in our view, the investigating agency has to be given
sufficient freedom in the process of investigation. Though we do
not endorse the approach of the learned Single Judge in extracting
the note produced by the Enforcement Directorate, we do not
find any ground warranting interference with the impugned
B
order655. Considering the facts and circumstances of the case, in
our view, grant of anticipatory bail to the appellant will hamper
the investigation and this is not a fit case for exercise of discretion
to grant anticipatory bail to the appellant.”
(emphasis supplied)
C
139. Therefore, as noted above, investigation in an economic
offence, more so in case of money-laundering, requires a systematic
approach. Further, it can never be the intention of the Parliament to
exclude the operation of Section 45 of 2002 Act in the case of anticipatory
bail, otherwise, it will create an unnecessary dichotomy between bail
and anticipatory bail which not only will be irrational but also discriminatory D
and arbitrary. Thus, it is totally misconceived that the rigors of Section
45 of the 2002 Act will not apply in the case of anticipatory bail.
140. Suffice it to observe that it would be preposterous and illogical
to hold that if a person applies for bail after arrest, he/she can be granted
that relief only if the twin conditions are fulfilled in addition to other E
stipulations predicated in the 1973 Code; but another person, who is yet
to be arrested in connection with the same offence of money-laundering,
will not be required to fulfil such twin conditions whilst considering
application for grant of bail under Section 438 of the 1973 Code. The
relief of bail, be it in the nature of regular bail or anticipatory bail, is F
circumscribed by the stipulations predicated in Section 45 of the 2002
Act. The underlying principles of Section 45 of the 2002 Act would get
triggered in either case before the relief of bail in connection with the
offence of money-laundering is taken forward. Any other view would
be counterproductive and defeat the purposes and objects behind the
stringent provision enacted by the Parliament for prevention of money- G
laundering and to combat the menace on account of such activity which
directly impacts the financial systems, including the sovereignty and
integrity of the country.

655
P. Chidambaram vs. Central Bureau of Investigation, 2019 SCC OnLine Del 9703 H
670 SUPREME COURT REPORTS [2022] 6 S.C.R.

A 141. As a result, we have no hesitation in observing that in
whatever form the relief is couched including the nature of proceedings,
be it under Section 438 of the 1973 Code or for that matter, by invoking
the jurisdiction of the Constitutional Court, the underlying principles and
rigors of Section 45 of the 2002 must come into play and without
exception ought to be reckoned to uphold the objectives of the 2002 Act,
B
which is a special legislation providing for stringent regulatory measures
for combating the menace of money-laundering.
142. There is, however, an exception carved out to the strict
compliance of the twin conditions in the form of Section 436A of the
1973 Code, which has come into being on 23.6.2006 vide Act 25 of
C 2005. This, being the subsequent law enacted by the Parliament, must
prevail. Section 436A of the 1973 Code reads as under:
“656[436A. Maximum period for which an undertrial prisoner
can be detained.— Where a person has, during the period of
investigation, inquiry or trial under this Code of an offence under
D any law (not being an offence for which the punishment of death
has been specified as one of the punishments under that law)
undergone detention for a period extending up to one-half of the
maximum period of imprisonment specified for that offence under
that law, he shall be released by the Court on his personal bond
E with or without sureties:
Provided that the Court may, after hearing the Public
Prosecutor and for reasons to be recorded by it in writing, order
the continued detention of such person for a period longer than
one-half of the said period or release him on bail instead of the
F personal bond with or without sureties:
Provided further that no such person shall in any case be
detained during the period of investigation, inquiry or trial for more
than the maximum period of imprisonment provided for the said
offence under that law.
G Explanation.—In computing the period of detention under
this section for granting bail, the period of detention passed due to
delay in proceeding caused by the accused shall be excluded.]”
In the Statement of Objects and Reasons, it was stated thus:
656
H Ins. by Act 25 of 2005, sec. 36 (w.e.f. 23-6-2006)
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 671
INDIA & ORS. [A. M. KHANWILKAR, J.]

“There had been instances, where under-trial prisoners were A
detained in jail for periods beyond the maximum period of
imprisonment provided for the alleged offence. As remedial
measure section 436A has been inserted to provide that where an
under-trial prisoner other than the one accused of an offence for
which death has been prescribed as one of the punishments, has
B
been under detention for a period extending to one-half of the
maximum period of imprisonment provided for the alleged offence,
he should be released on his personal bond, with or without sureties.
It has also been provided that in no case will an under-trial prisoner
be detained beyond the maximum period of imprisonment for which
he can be convicted for the alleged offence.” C
143. In Hussainara Khatoon & Ors. vs. Home Secretary, State
of Bihar, Patna657, this Court stated that the right to speedy trial is one
of the facets of Article 21 and recognized the right to speedy trial as a
fundamental right. This dictum has been consistently followed by this
Court in several cases. The Parliament in its wisdom inserted Section D
436A under the 1973 Code recognizing the deteriorating state of undertrial
prisoners so as to provide them with a remedy in case of unjustified
detention. In Supreme Court Legal Aid Committee Representing
Undertrial Prisoners vs. Union of India & Ors.658, the Court, relying
on Hussainara Khatoon659, directed the release of prisoners charged
under the Narcotic Drugs and Psychotropic Act after completion of E
one-half of the maximum term prescribed under the Act. The Court
issued such direction after taking into account the non obstante provision
of Section 37 of the NDPS Act, which imposed the rigors of twin conditions
for release on bail. It was observed:
“15. ….We are conscious of the statutory provision finding place F
in Section 37 of the Act prescribing the conditions which have to
be satisfied before a person accused of an offence under the Act
can be released. Indeed we have adverted to this section in the
earlier part of the judgment. We have also kept in mind the
interpretation placed on a similar provision in Section 20 of the G
TADA Act by the Constitution Bench in Kartar Singh v. State
of Punjab660. Despite this provision, we have directed as above
657
(1980) 1 SCC 98
658
(1994) 6 SCC 731
659
Supra at Footnote No.657
660
Supra at Footnote No.190 H
672 SUPREME COURT REPORTS [2022] 6 S.C.R.

A mainly at the call of Article 21 as the right to speedy trial may
even require in some cases quashing of a criminal proceeding
altogether, as held by a Constitution Bench of this Court in A.R.
Antulay v. R.S. Nayak661, release on bail, which can be taken to
be embedded in the right of speedy trial, may, in some cases be
the demand of Article 21. As we have not felt inclined to accept
B
the extreme submission of quashing the proceedings and setting
free the accused whose trials have been delayed beyond
reasonable time for reasons already alluded to, we have felt that
deprivation of the personal liberty without ensuring speedy trial
would also not be in consonance with the right guaranteed by
C Article 21. Of course, some amount of deprivation of personal
liberty cannot be avoided in such cases; but if the period of
deprivation pending trial becomes unduly long, the fairness assured
by Article 21 would receive a jolt. It is because of this that we
have felt that after the accused persons have suffered
imprisonment which is half of the maximum punishment provided
D
for the offence, any further deprivation of personal liberty would
be violative of the fundamental right visualised by Article 21, which
has to be telescoped with the right guaranteed by Article 14 which
also promises justness, fairness and reasonableness in procedural
matters. …”
E 144. The Union of India also recognized the right to speedy trial
and access to justice as fundamental right in their written submissions
and, thus, submitted that in a limited situation right of bail can be granted
in case of violation of Article 21 of the Constitution. Further, it is to be
noted that the Section 436A of the 1973 Code was inserted after the
F enactment of the 2002 Act. Thus, it would not be appropriate to deny the
relief of Section 436A of the 1973 Code which is a wholesome provision
beneficial to a person accused under the 2002 Act. However, Section
436A of the 1973 Code, does not provide for an absolute right of bail as
in the case of default bail under Section 167 of the 1973 Code. For, in the
fact situation of a case, the Court may still deny the relief owing to
G ground, such as where the trial was delayed at the instance of accused
himself.
145. Be that as it may, in our opinion, this provision is comparable
with the statutory bail provision or, so to say, the default bail, to be granted
661
H (1992) 1 SCC 225
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 673
INDIA & ORS. [A. M. KHANWILKAR, J.]

in terms of Section 167 of the 1973 Code consequent to failure of the A
investigating agency to file the chargesheet within the statutory period
and, in the context of the 2002 Act, complaint within the specified period
after arrest of the person concerned. In the case of Section 167 of the
1973 Code, an indefeasible right is triggered in favour of the accused the
moment the investigating agency commits default in filing the
B
chargesheet/complaint within the statutory period. The provision in the
form of Section 436A of the 1973 Code, as has now come into being is
in recognition of the constitutional right of the accused regarding speedy
trial under Article 21 of the Constitution. For, it is a sanguine hope of
every accused, who is in custody in particular, that he/she should be
tried expeditiously — so as to uphold the tenets of speedy justice. If the C
trial cannot proceed even after the accused has undergone one-half of
the maximum period of imprisonment provided by law, there is no reason
to deny him this lesser relief of considering his prayer for release on bail
or bond, as the case may be, with appropriate conditions, including to
secure his/her presence during the trial.
D
146. Learned Solicitor General was at pains to persuade us that
this view would impact the objectives of the 2002 Act and is in the
nature of super imposition of Section 436A of the 1973 Code over Section
45 of the 2002 Act. He has also expressed concern that the same logic
may be invoked in respect of other serious offences, including terrorist
offences which would be counterproductive. So be it. We are not E
impressed by this submission. For, it is the constitutional obligation of the
State to ensure that trials are concluded expeditiously and at least within
a reasonable time where strict bail provisions apply. If a person is detained
for a period extending up to one-half of the maximum period of
imprisonment specified by law and is still facing trial, it is nothing short F
of failure of the State in upholding the constitutional rights of the citizens,
including person accused of an offence.
147. Section 436A of the 1973 Code, is a wholesome beneficial
provision, which is for effectuating the right of speedy trial guaranteed
by Article 21 of the Constitution and which merely specifies the outer G
limits within which the trial is expected to be concluded, failing which,
the accused ought not to be detained further. Indeed, Section 436A of
the 1973 Code also contemplates that the relief under this provision cannot
be granted mechanically. It is still within the discretion of the Court,
unlike the default bail under Section 167 of the 1973 Code. Under Section
H
674 SUPREME COURT REPORTS [2022] 6 S.C.R.

A 436A of the 1973 Code, however, the Court is required to consider the
relief on case-to-case basis. As the proviso therein itself recognises that,
in a given case, the detention can be continued by the Court even longer
than one-half of the period, for which, reasons are to be recorded by it in
writing and also by imposing such terms and conditions so as to ensure
that after release, the accused makes himself/herself available for
B
expeditious completion of the trial.
148. However, that does not mean that the principle enunciated
by this Court in Supreme Court Legal Aid Committee Representing
Undertrial Prisoners662, to ameliorate the agony and pain of persons
kept in jail for unreasonably long time, even without trial, can be whittled
C down on such specious plea of the State. If the Parliament/Legislature
provides for stringent provision of no bail, unless the stringent conditions
are fulfilled, it is the bounden duty of the State to ensure that such trials
get precedence and are concluded within a reasonable time, at least
before the accused undergoes detention for a period extending up to
D one-half of the maximum period of imprisonment specified for the
concerned offence by law. [Be it noted, this provision (Section 436A of
the 1973 Code) is not available to accused who is facing trial for offences
punishable with death sentence].
149. In our opinion, therefore, Section 436A needs to be construed
E as a statutory bail provision and akin to Section 167 of the 1973 Code.
Notably, learned Solicitor General has fairly accepted during the arguments
and also restated in the written notes that the mandate of Section 167 of
the 1973 Code would apply with full force even to cases falling under
Section 3 of the 2002 Act, regarding money-laundering offences. On the
same logic, we must hold that Section 436A of the 1973 Code could be
F invoked by accused arrested for offence punishable under the 2002 Act,
being a statutory bail.
SECTION 50 OF THE 2002 ACT
150. The validity of this provision has been challenged on the
G ground of being violative of Articles 20(3) and 21 of the Constitution.
For, it allows the authorised officer under the 2002 Act to summon any
person and record his statement during the course of investigation.
Further, the provision mandates that the person should disclose true and
correct facts known to his personal knowledge in connection with the
662
H Supra at Footnote No.658
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 675
INDIA & ORS. [A. M. KHANWILKAR, J.]

subject matter of investigation. The person is also obliged to sign the A
statement so given with the threat of being punished for the falsity or
incorrectness thereof in terms of Section 63 of the 2002 Act. Before we
proceed to analyse the matter further, it is apposite to reproduce Section
50 of the 2002 Act, as amended. The same reads thus:
“50. Powers of authorities regarding summons, production B
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:—
C
(a) discovery and inspection;
(b) enforcing the attendance of any person, including any officer
of a 663[reporting entity], and examining him on oath;
(c) compelling the production of records;
D
(d) receiving evidence on affidavits;
(e) issuing commissions for examination of witnesses and
documents; and
(f) any other matter which may be prescribed.
(2) The Director, Additional Director, Joint Director, Deputy E
Director or Assistant Director shall have power to summon any
person whose attendance he considers necessary whether to give
evidence or to produce any records during the course of any
investigation or proceeding under this Act.
(3) All the persons so summoned shall be bound to attend in person F
or through authorised agents, as such officer may direct, and shall
be bound to state the truth upon any subject respecting which
they are examined or make statements, and produce such
documents as may be required.
(4) Every proceeding under sub-sections (2) and (3) shall be G
deemed to be a judicial proceeding within the meaning of section
193 and section 228 of the Indian Penal Code (45 of 1860).

663
Subs. by Act 2 of 2013, sec. 22, for “banking company or a financial institution or
a company” (w.e.f. 15-2-2013, vide S.O. 343(E), dated 8-2-2013). H
676 SUPREME COURT REPORTS [2022] 6 S.C.R.

A (5) Subject to any rules made in this behalf by the Central
Government, any officer referred to in sub-section (2) may impound
and retain in his custody for such period, as he thinks fit, any
records produced before him in any proceedings under this Act:
Provided that an Assistant Director or a Deputy Director
B shall not—
(a) impound any records without recording his reasons for so
doing; or
(b) retain in his custody any such records for a period exceeding
three months, without obtaining the previous approval of the
C 664
[Joint Director].”
151. Section 50 forms part of Chapter VIII of the 2002 Act which
deals with matters connected with authorities referred to in Section 48
in the same Chapter. Section 50 has been amended vide Act 2 of 2013
and again, by Act 13 of 2018. Nothing much would turn on these
D amendments.
152. By this provision, the Director has been empowered to
exercise the same powers as are vested in a civil Court under the 1908
Code while trying a suit in respect of matters specified in sub-section
(1). This is in reference to Section 13 of the 2002 Act dealing with
E powers of Director to impose fine in respect of acts of commission and
omission by the banking companies, financial institutions and
intermediaries. From the setting in which Section 50 has been placed
and the expanse of empowering the Director with same powers as are
vested in a civil Court for the purposes of imposing fine under Section
F 13, is obviously very specific and not otherwise.
153. Indeed, sub-section (2) of Section 50 enables the Director,
Additional Director, Joint Director, Deputy Director or Assistant Director
to issue summon to any person whose attendance he considers necessary
for giving evidence or to produce any records during the course of any
investigation or proceeding under this Act. We have already highlighted
G
the width of expression “proceeding” in the earlier part of this judgment
and held that it applies to proceeding before the Adjudicating Authority
or the Special Court, as the case may be. Nevertheless, sub-section (2)
664
Subs. by Act 13 of 2018, sec. 208(f), for “Director” (w.e.f. 19-4-2018, vide G.S.R.
383(E), dated 19 th April, 2018).
H
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 677
INDIA & ORS. [A. M. KHANWILKAR, J.]

empowers the authorised officials to issue summon to any person. We A
fail to understand as to how Article 20(3) would come into play in respect
of process of recording statement pursuant to such summon which is
only for the purpose of collecting information or evidence in respect of
proceeding under this Act. Indeed, the person so summoned, is bound to
attend in person or through authorised agent and to state truth upon any
B
subject concerning which he is being examined or is expected to make
statement and produce documents as may be required by virtue of sub-
section (3) of Section 50 of the 2002 Act. The criticism is essentially
because of sub-section (4) which provides that every proceeding under
sub-sections (2) and (3) shall be deemed to be a judicial proceeding
within the meaning of Sections 193 and 228 of the IPC. Even so, the C
fact remains that Article 20(3) or for that matter Section 25 of the
Evidence Act, would come into play only when the person so summoned
is an accused of any offence at the relevant time and is being compelled
to be a witness against himself. This position is well-established. The
Constitution Bench of this Court in M.P. Sharma665 had dealt with a
D
similar challenge wherein warrants to obtain documents required for
investigation were issued by the Magistrate being violative of Article
20(3) of the Constitution. This Court opined that the guarantee in Article
20(3) is against “testimonial compulsion” and is not limited to oral evidence.
Not only that, it gets triggered if the person is compelled to be a witness
against himself, which may not happen merely because of issuance of E
summons for giving oral evidence or producing documents. Further, to
be a witness is nothing more than to furnish evidence and such evidence
can be furnished by different modes. The Court went on to observe as
follows:
“Broadly stated the guarantee in article 20(3) is against “testimonial F
compulsion”. It is suggested that this is confined to the oral evidence
of a person standing his trial for an offence when called to the
witness-stand. We can see no reason to confine the content of
the constitutional guarantee to this barely literal import. So to limit
it would be to rob the guarantee of its substantial purpose and to
miss the substance for the sound as stated in certain American G
decisions. The phrase used in Article 20(3) is “to be a witness”. A
person can “be a witness” not merely by giving oral evidence but
also by producing documents or making intelligible gestures as in

665
Supra at Footnote No.324 (also at Footnote No.47) H
678 SUPREME COURT REPORTS [2022] 6 S.C.R.

A the case of a dumb witness (See section 119 of the Evidence Act)
or the like. “To be a witness” is nothing more than “to furnish
evidence”, and such evidence can be furnished through the lips or
by production of a thing or of a document or in other modes. So
far as production of documents is concerned, no doubt Section
139 of the Evidence Act says that a person producing a document
B
on summons is not a witness. But that section is meant to regulate
the right of cross-examination. It is not a guide to the connotation
of the word “witness”, which must be understood in its natural
sense, i.e., as referring to a person who furnishes evidence. Indeed,
every positive volitional act which furnishes evidence is testimony,
C and testimonial compulsion connotes coercion which procures the
positive volitional evidentiary acts of the person, as opposed to
the negative attitude of silence or submission on his part. Nor is
there any reason to think that the protection in respect of the
evidence so procured is confined to what transpires at the trial in
the court room. The phrase used in article 20(3) is “to be a witness”
D
and not to “appear as a witness”. It follows that the protection
afforded to an accused in so far as it is related to the phrase “to
be a witness” is not merely in respect of testimonial compulsion in
the court room but may well extend to compelled testimony
previously obtained from him. It is available therefore to a
E person against whom a formal accusation relating to the
commission of an offence has been levelled which in the
normal course may result in prosecution. Whether it is
available to other persons in other situations does not call for
decision in this case.”
F (emphasis supplied)
154. In the case of Mohammed Dastagir666, the Court restated
that the requirement to invoke the protection under Article 20(3) is that
the person must be formally accused of the offence and observed thus:
“(9) …
G
“Considered in this light, the guarantee under Art.
20(3) would be available in the present cases these
petitioners against whom a First Information Report has
been recorded as accused therein. It would extend to any

H 666
Supra at Footnote No.325
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 679
INDIA & ORS. [A. M. KHANWILKAR, J.]

compulsory process for production of evidentiary documents A
which are reasonably likely to support a prosecution against
them.”
These observations were unnecessary in Sharma’s case 667, having
regard to the fact that this Court held that the seizure of documents
on a search warrant was not unconstitutional as that would not B
amount to a compulsory production of incriminating evidence. In
the present case, even on what was stated in Sharma’s case668,
there was no formal accusation against the appellant relating to
the commission of an offence. Mr. Kaliyappan had clearly stated
that he was not doing any investigation. It does not appear from
his evidence that he had even accused the appellant of having C
committed any offence. Even if it were to be assumed that the
appellant was a person accused of an offence the circumstances
do not establish that he was compelled to produce the money
which he had on his person. No doubt he was asked to do so.
It was, however, within his power to refuse to comply with D
Mr. Kaliyappan’s request. In our opinion, the facts established in
the present case show that the appellant was not compelled to
produce the currency notes and therefore do not attract the
provisions of Art. 20(3) of the Constitution.”
(emphasis supplied) E
155. In yet another case in Raja Narayanlal Bansilal669, the
Constitution Bench dealt with the challenge to the validity of the notice
served on the appellant for asking the appellant to attend the office of
the Inspector appointed by the Central Government to investigate into
the affairs of the company and for giving statement and producing books F
of accounts and other documents. The Court repelled the said challenge
in the following words:
“(23)…….Similarly, for invoking the constitutional right
against testimonial compulsion guaranteed under Art. 20(3)
it must appear that a formal accusation has been made G
against the party pleading the guarantee and that it relates
to the commission of an offence which in the normal course
may result in prosecution.… .
667
Supra at Footnote No.324 (also at Footnote No.47)
668
Supra at Footnote No.324 (also at Footnote No.47)
669
Supra at Footnote No.327 H
680 SUPREME COURT REPORTS [2022] 6 S.C.R.

A (25) ……The cardinal words of the section are those which
empower the Commissioner or his inspector to examine into and
report on the affairs of the society”. Thus it is clear that the
examination of, or investigation into, the affairs of the
company cannot be regarded as a proceeding started
against any individual after framing an accusation against
B
him. Besides it is quite likely that in some cases
investigation may disclose that there are no irregularities,
or if there are they do not amount to the commission of any
offence; in such cases there would obviously be no occasion
for the Central Government to institute criminal
C proceedings under S. 242(1). Therefore, in our opinion, the
High Court was right in holding that when the inspector
issued the impugned notices against the appellant he cannot
be said to have been accused of any offence; and so the
first essential condition for the application of Art. 20(3) is
absent. We ought to add that in the present case the same
D
conclusion would follow even if the clause “accused of any
offence” is interpreted more liberally than was done in the case
of M.P. Sharma670 because even if the expression “accused of
any offence” is interpreted in a very broad and liberal way it is
clear that at the relevant stage the appellant has not been, and in
E law cannot be, accused of any offence. ….”
(emphasis supplied)
156. Again, the question came up for consideration before the
eleven Judges of this Court in Kathi Kalu Oghad671, wherein the Court
noted that the person on whom summon has been served, must fulfil the
F character of an accused person at the time of making the statement.
The Court expounded thus:
“(15) In order to bring the evidence within the inhibitions
of cl. (3) of Art. 20 it is must be shown not only that the
person making the statement was an accused at the time
G he made it and that it had a material bearing on the criminality of
the maker of the statement, but also that he was compelled to
make that statement. ‘Compulsion’ in the context, must mean what

670
Supra at Footnote No.324 (also at Footnote No.47)
671
H Supra at Footnote No.44
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 681
INDIA & ORS. [A. M. KHANWILKAR, J.]

in law is called ‘duress’. In the Dictionary of English Law by Earl A
Jowitt, ‘duress’ is explained as follows:
“Duress is where a man is compelled to do an act by injury,
beating or unlawful imprisonment (sometimes called duress in
strict sense) or by the threat of being killed, suffering some
grievous bodily harm, or being unlawfully imprisoned B
(sometimes called menace, or duress per mines). Duress also
includes threatening, beating or imprisonment of the wife, parent
or child of a person.”
….”
(emphasis supplied) C

157. In another celebrated decision of this Court in Romesh
Chandra Mehta672, while following the earlier decisions and dealing
with the challenge in reference to the provisions of the Sea Customs
Act, the Court noted thus:
D
“In the two earlier cases M.P. Sharma’s case 673 and Raja
Narayanlal Bansilal Case674 this Court in describing a person
accused used the expression “against whom a formal accusation
had been made”, and in Kathi Kalu Oghad’s case675 this Court
used the expression “the person accused must have stood in the
character of an accused person”. Counsel for Mehta urged that E
the earlier authorities were superseded in Kathi Kalu Oghad’s
case 676 and it was ruled that a statement made by a person
standing in the character of a person accused of an offence is
inadmissible by virtue of Art. 20(3) of the Constitution. But the
Court in Kathi Kalu Oghad’s case677 has not set out a different F
test for determining the stage when a person may be said to be
accused of an offence. In Kathi Kalu Oghad’s case678 the Court
merely set out the principles in the light of the effect of a formal
accusation on a person, viz., that he stands in the character of an
accused person at the time when he makes the statement.
672
Supra at Footnote No.119
G
673
Supra at Footnote No.324 (also at Footnote No.47)
674
Supra at Footnote No.327
675
Supra at Footnote No.44
676
Supra at Footnote No.44
677
Supra at Footnote No.44
678
Supra at Footnote No.44 H
682 SUPREME COURT REPORTS [2022] 6 S.C.R.

A Normally a person stands in the character of an accused
when a First Information Report is lodged against him in
respect of an offence before an Officer competent to
investigate it, or when a complaint is made relating to the
commission of an offence before a Magistrate competent
to try or send to another Magistrate for trial the offence.
B
Where a Customs Officer arrests a person and informs that
person of the grounds of his arrest, (which he is bound to
do under Art. 22(1) of the Constitution) for the purposes of
holding an enquiry into the infringement of the provisions
of the Sea Customs Act which he has reason to believe has
C taken place, there is no formal accusation of an offence. In
the case of an offence by infringement of the Sea Customs Act
and punishable at the trial before a Magistrate there is an
accusation when a complaint is lodged by an officer competent in
that behalf before the Magistrate.”
D (emphasis supplied)
158. Relying on the exposition in Nandini Satpathy679, it was
urged that it is not necessary that a formal accusation is made against
the person in the form of FIR/ECIR/chargesheet/complaint to invoke
protection under Article 20(3) of the Constitution and that protection is
E available even to a suspect at the time of interrogation. (See also
Balkishan A. Devidayal680 and Selvi681).
159. In the context of the 2002 Act, it must be remembered that
the summon is issued by the Authority under Section 50 in connection
with the inquiry regarding proceeds of crime which may have been
F attached and pending adjudication before the Adjudicating Authority. In
respect of such action, the designated officials have been empowered to
summon any person for collection of information and evidence to be
presented before the Adjudicating Authority. It is not necessarily for
initiating a prosecution against the noticee as such. The power entrusted
to the designated officials under this Act, though couched as investigation
G in real sense, is to undertake inquiry to ascertain relevant facts to facilitate
initiation of or pursuing with an action regarding proceeds of crime, if
the situation so warrants and for being presented before the Adjudicating
679
Supra at Footnote No.35
680
Supra at Footnote Nos.120 (also at Footnote No.41)
681
H Supra at Footnote No.43
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 683
INDIA & ORS. [A. M. KHANWILKAR, J.]

Authority. It is a different matter that the information and evidence so A
collated during the inquiry made, may disclose commission of offence of
money-laundering and the involvement of the person, who has been
summoned for making disclosures pursuant to the summons issued by
the Authority. At this stage, there would be no formal document indicative
of likelihood of involvement of such person as an accused of offence of
B
money-laundering. If the statement made by him reveals the offence of
money-laundering or the existence of proceeds of crime, that becomes
actionable under the Act itself. To put it differently, at the stage of
recording of statement for the purpose of inquiring into the relevant facts
in connection with the property being proceeds of crime is, in that sense,
not an investigation for prosecution as such; and in any case, there would C
be no formal accusation against the noticee. Such summons can be issued
even to witnesses in the inquiry so conducted by the authorised officials.
However, after further inquiry on the basis of other material and evidence,
the involvement of such person (noticee) is revealed, the authorised
officials can certainly proceed against him for his acts of commission or
D
omission. In such a situation, at the stage of issue of summons, the person
cannot claim protection under Article 20(3) of the Constitution. However,
if his/her statement is recorded after a formal arrest by the ED official,
the consequences of Article 20(3) or Section 25 of the Evidence Act
may come into play to urge that the same being in the nature of confession,
shall not be proved against him. Further, it would not preclude the E
prosecution from proceeding against such a person including for
consequences under Section 63 of the 2002 Act on the basis of other
tangible material to indicate the falsity of his claim. That would be a
matter of rule of evidence.
160. The Andhra Pradesh High Court in Dalmia Cement (Bharat) F
Limited682, while dealing with the purpose of investigation under Section
50(2) noted that it is essentially for collecting evidence with regard to
the involvement of a person or about existence of certain facts concerning
proceeds of crime or process or activity connected with proceeds of
crime, such inquiry or investigation could be commenced on the basis of
information to be recorded in the internal document maintained by the G
authority authorised also described as ECIR. The High Court noted as
follows:

682
Supra at Footnote No.234 H
684 SUPREME COURT REPORTS [2022] 6 S.C.R.

A “33. In the light of the detailed submissions of the learned senior
counsel on either side, the point for consideration is: Whether the
summons issued to the second petitioner under Section 50(2) and
(3) of PMLA is violative of the Constitutional protection and
guarantee under Article 20(3) of the Constitution of India.
B *** *** ***
47. At this stage, therefore, investigation is only for the
purpose of collecting evidence with regard to proceeds of
crime in the hands of the persons suspected and their
involvement, if any, in the offence under Section 3 of PMLA.
C I am, therefore, unable to equate ECIR registered by the
first respondent to an FIR under Section 154 Cr.P.C and
consequently, I agree with the learned Additional Solicitor
General that under PMLA the petitioners are not accused
at present. Consequently, therefore, the submission on behalf of
the petitioners on the assumption that petitioners are accused under
D PMLA is liable to be rejected.”
(emphasis supplied)
161. The Delhi High Court also had occasion to examine the
provisions of the 2002 Act in Vakamulla Chandrashekhar683 and noted
E the special feature of the 2002 Act which deals with both civil and criminal
consequences as against the offender. Having so noted, the High Court
observed as follows:
“11. The act of money laundering has both civil and criminal
consequences for the perpetrator. To deal with the civil
F consequences, the Act creates, and empowers the adjudicating
authority (under Section 2(1)(a) read with Section 6) with powers
of a Civil Court to summon, direct production of documents and
evidence (see Section 11), and adjudicate on the issue whether
any property is involved in money laundering (Section 8). It also
creates the right of appeal from orders of the Adjudicating
G Authority (Section 26), and designates the Appellate Tribunal
authorized to hear appeals (Section 2(b) read with Section 25). It
also creates a right of further appeal before the High Court (Section
42).”

H 683
Supra at Footnote No.226
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 685
INDIA & ORS. [A. M. KHANWILKAR, J.]

162. It is, thus, clear that the power invested in the officials is one A
for conducting inquiry into the matters relevant for ascertaining
existence of proceeds of crime and the involvement of persons in
the process or activity connected therewith so as to initiate
appropriate action against such person including of seizure,
attachment and confiscation of the property eventually vesting in
B
the Central Government.
163. We are conscious of the fact that the expression used in
Section 2(1)(na) of the 2002 Act is “investigation”, but there is obvious
distinction in the expression “investigation” occurring in the 1973 Code.
Under Section 2(h) of the 1973 Code, the investigation is done by a
“police officer” or by any person (other than a Magistrate) who is C
authorised by a Magistrate thereby to collect the evidence regarding the
crime in question. Whereas, the investigation under Section 2(1)(na) of
the 2002 Act is conducted by the Director or by an authority authorised
by the Central Government under the 2002 Act for the collection of
evidence for the purpose of proceeding under this Act. Obviously, this D
investigation is in the nature of inquiry to initiate action against the proceeds
of crime and prevent activity of money-laundering. In the process of
such investigation, the Director or the authority authorised by the Central
Government referred to in Section 48 of the 2002 Act is empowered to
resort to attachment of the proceeds of crime and for that purpose, also
to do search and seizure and to arrest the person involved in the offence E
of money-laundering. While doing so, the prescribed authority (Director,
Additional Director, Joint Director, Deputy Director or Assistant Director)
alone has been empowered to summon any person for recording his
statement and production of documents as may be necessary by virtue
of Section 50 of the 2002 Act. Sensu stricto, at this stage (of issuing F
summon), it is not an investigation for initiating prosecution in respect of
crime of money-laundering as such. That is only an incidental matter
and may be the consequence of existence of proceeds of crime and
identification of persons involved in money-laundering thereof. The
legislative scheme makes it amply clear that the authority authorised
under this Act is not a police officer as such. This becomes amply clear G
from the speech of the then Finance Minister delivered in 2005, which
reads thus:
“Sir, the Money-Laundering Act was passed by this House in the
year 2002, and number of steps have to be taken to implement it.
H
686 SUPREME COURT REPORTS [2022] 6 S.C.R.

A Sir, two kinds of steps were required. One was to appoint an
authority who will gather intelligence and information, and the
other was an authority to investigate and prosecute. This Act was
made to implement the political declaration adopted by the Special
Session of the UN General Assembly in 1999. Section 1(3) of the
Act stipulates that the Act will come into force on such date as
B
the Central Government may by notification appoint. While we
were examining the question of notifying the Act, I found that
there was certain lacunae in the Act. I regret to say that not
enough homework had been done in the definitions, and in the
division of responsibility and authority. So, in consultation with the
C Ministry of Law, we came to the conclusion that these lacunae
had to be removed. Broadly, the reasons for the amendment are
the following.
Under the existing provisions in Section 45 of the Act, every
offence is cognizable. If an offence is cognizable, then any
D police officer in India can arrest an offender without warrant.
At the same time, under Section 19 of the Act, only a
Director or a Deputy Director or an Assistant Director or
any other officer authorised, may arrest an offender. Clearly,
there was a conflict between these two provisions. Under
Section 45(1)(b) of the Act, the Special Court shall not take
E cognizance of any offence punishable under Section 4 except upon
a complaint made in writing by the Director or any other officer
authorised by the Central Government. So, what would happen to
an arrest made by any police officer in the case of a cognizable
offence? Which is the court that will try the offence? Clearly,
F there were inconsistencies in these provisions.
They have now been removed. We have now enabled only
the Director or an officer authorised by him to investigate offences.
Of course, we would, by rule, set up a threshold; and, below that
threshold, we would allow State police officers also to take action.
G The second anomaly that we found was that the
expression “investigation officer” and the word
“investigation” occur in a number of sections but they were
not defined in the Act. Consequently, one has to go to the
definition in the Criminal Procedure Code and that Code
H provides only “investigation by a police officer or by an
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 687
INDIA & ORS. [A. M. KHANWILKAR, J.]

officer authorised by a magistrate”. So, clearly, there was a A
lacuna in not enabling the Director or the Assistant Director
under this Act to investigate offences. That has been cured
now.
….
What we are doing is, we are inserting a new Section, 2(n)(a) B
defining the term, ‘investigation’; making an amendment to Sections
28, 29 and 30, dealing with tribunals; amending Sections 44 and
45 of the Act to make the offence non-cognisable so that only the
Director could take action; and also making consequential changes
in Section 73. I request hon. Members to kindly approve of these C
amendments so that the Act could be amended quickly and we
could bring it into force.”
(emphasis supplied)
From this speech, it is more than clear that the intention of the
Parliament was to empower the prescribed Authority under Section 48 D
including the class of officers appointed for the purposes of this Act to
investigate the matters falling within the purview of the Act and in the
manner specified in that regard. By inserting Section 45(1A) in the 2002
Act vide amendment Act 20 of 2005, was essentially to restrict and
explicitly disable the police officer from taking cognizance of the offence E
of money-laundering much less investigating the same. It is a provision
to restate that only the Authority (Section 48) under this Act is competent
to do investigation in respect of matters specified under the 2002 Act
and none else. This provision rules out coextensive power to local police
as well as the authority authorised. As aforementioned, the officer
specifically authorised is also expected to confine the inquiry/investigation F
only in respect of matters under this Act and in the manner specified
therein.
164. The purposes and objects of the 2002 Act for which it has
been enacted, is not limited to punishment for offence of money-
laundering, but also to provide measures for prevention of money- G
laundering. It is also to provide for attachment of proceeds of crime,
which are likely to be concealed, transferred or dealt with in any manner
which may result in frustrating any proceeding relating to confiscation
of such proceeds under the 2002 Act. This Act is also to compel the
banking companies, financial institutions and intermediaries to maintain
H
688 SUPREME COURT REPORTS [2022] 6 S.C.R.

A records of the transactions, to furnish information of such transactions
within the prescribed time in terms of Chapter IV of the 2002 Act 684.
164A. Considering the above, it is unfathomable as to how the
authorities referred to in Section 48 can be described as police officer.
The word “police” in common parlance means a civil force whose main
B aim is to prevent and detect crimes and to maintain law and order of the
nation as expounded in Barkat Ram685. In this decision, while dealing
with the role of Customs Officer under the Land Customs Act, 1924 686,
the Court opined as follows:
“The Police Act, 1861 (Act V of 1861), is described as an Act for
C the regulation of police, and is thus an Act for the regulation of
that group of officers who come within the word ‘police’ whatever
meaning be given to that word. The preamble of the Act further
says: ‘whereas it is expedient to re-organise the police and to
make it a more efficient instrument for the prevention and detection
of crime, it is enacted as follows’. This indicates that the police
D is the instrument for the prevention and detection of crime
which can be said to be the main object and purpose of
having the police. Sections 23 and 25 lay down the duties of the
police officers and s. 20 deals with the authority they can exercise.
They can exercise such authority as is provided for a police officer
E under the Police Act and any Act for regulating criminal procedure.
The authority given to police officers must naturally be to enable
them to discharge their duties efficiently. Of the various duties
mentioned in s. 23, the more important duties are to collect
and communicate intelligence affecting the public peace,
to prevent the commission of offences and public nuisances
F and to detect and bring offenders to justice and to apprehend
all persons whom the police officer is legally authorised to
apprehend. It is clear, therefore, in view of the nature of the
duties imposed on the police officers, the nature of the authority
conferred and the purpose of the police Act, that the powers which
G the police officers enjoy are powers for the effective prevention
and detection of crime in order to maintain law and order.”
(emphasis supplied)
684
See Pareena Swarup (supra at Footnote No.366)
685
Supra at Footnote No.24
686
H For short, “Land Customs Act”
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 689
INDIA & ORS. [A. M. KHANWILKAR, J.]

And again, opined thus: A
“….The Customs Officer, therefore, is not primarily concerned
with the detection and punishment of crime committed by
a person, but is mainly interested in the detection and prevention
of smuggling of goods and safeguarding the recovery of customs
duties. He is more concerned with the goods and customs duty, B
than with the offender.”
Thus, this Court concluded that the Customs Officer under the
Land Customs Act is not a police officer within the meaning of Section
25 of the Evidence Act. In that, the main object of the Customs Officer
is to safeguard goods and customs duty and detection and prevention of C
crime is an ancillary function.
165. On similar lines, in the case of Raja Ram Jaiswal687, while
examining the efficacy of confession made to an Excise Inspector under
the 1915 Act, the Court held as follows:
“(10). …Thus he can exercise all the powers which an officer in D
charge of a police station can exercise under Chapter XIV of the
Code of Criminal Procedure. He can investigate into offences,
record statements of the persons questioned by him, make
searches, seize any articles connected with an offence under
the Excise Act, arrest an accused person, grant him bail, E
send him up for trial before a Magistrate, file a charge-
sheet and so on. Thus his position in so far as offences
under the Excise Act committed within the area to which
his appointment extends are concerned is not different from
that of an officer in charge of a police station. As regards
these offences not only is he charged with the duty of preventing F
their commission but also with their detection and is for these
purposes empowered to act in all respects as an officer in charge
of a police station. No doubt unlike an officer in charge of a police
station he is not charged with the duty of the maintenance of law
and order nor can he exercise the powers of such officer with G
respect to offences under the general law or under any other
special laws. But all the same, in so far as offences under the
Excise Act are concerned, there is no distinction whatsoever in
the nature of the powers he exercises and those which a police
687
Supra at Footnote No.30 H
690 SUPREME COURT REPORTS [2022] 6 S.C.R.

A officer exercises in relation to offences which it is his duty to
prevent and bring to light. It would be logical, therefore, to
hold that a confession recorded by him during an
investigation into an excise offence cannot reasonably be
regarded as anything different from a confession to a police
officer. For, in conducting the investigation he exercises
B
the powers of a police officer and the act itself deems him
to be a police officer, even though he does not belong to
the police force constituted under the Police Act. It has been
held by this court that the expression “police officer” in S. 25 of
the Evidence Act is not confined to persons who are members of
C the regularly constituted police force. The position of an Excise
Officer empowered under S. 77(2) of the Bihar and Orissa Excise
Act is not analogous to that of a Customs Officer for two reasons.
One is that the Excise Officer, does not exercise any judicial
powers just as the Customs Officer does under the Sea Customs
Act, 1878. Secondly, the Customs Officer is not deemed to be an
D
officer in charge of a police station and therefore can exercise no
powers under the Code of Criminal Procedure and certainly not
those of an officer in charge of a police station. No doubt, he too
has the power to make a search, to seize articles suspected to
have been smuggled and arrest persons suspected of having
E committed an offence under the Sea Customs Act. But that is all.
Though he can make an enquiry, he has no power to investigate
into an offence under S. 156 of the Code of Criminal Procedure.
Whatever powers he exercises are expressly set out in the Sea
Customs Act. Though some of those set out in Ch. XVII may be
analogous to those of a Police Officer under the Code of Criminal
F
Procedure they are not identical with those of a police officer and
are not derived from or by reference to the Code. In regard to
certain matters, he does not possess powers even analogous to
those of a Police Officer. Thus he is not entitled to submit a report
to a Magistrate under S. 190 of the Code of Criminal Procedure
G with a view that cognizance of the offence be taken by the
Magistrate. Section 187(A) of the Sea Customs Act specifically
provides that cognizance of an offence under the Sea Customs
Act can be taken only upon a complaint in writing made by the
Customs Officers or other officer of the customs not below the
H
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 691
INDIA & ORS. [A. M. KHANWILKAR, J.]

rank of an Assistant Collector of Customs authorised in this behalf A
by the Chief Customs Officer.
(11) It may well be that a statute confers powers and imposes
duties on a public servant, some of which are analogous to those
of a police officer. But by reason of the nature of other duties
which he is required to perform he may be exercising various B
other powers also. It is argued on behalf of the State that where
such is the case the mere conferral of some only of the powers of
a police officer on such a person would not make him a police
officer and, therefore, what must be borne in mind is the sum total
of the powers which he enjoys by virtue of his office as also the
dominant purpose for which he is appointed. The contention thus C
is that when an officer has to perform a wide range of duties and
exercise correspondingly a wide range of powers, the mere fact
that some of the powers which the statute confers upon him are
analogous to or even identical with those of a police officer would
not make him a police officer and, therefore, if such an officer D
records a confession it would not be hit by S. 25 of the Evidence
Act. In our judgment what is pertinent to bear in mind for the
purpose of determining as to who can be regarded a ‘police officer’
for the purpose of this provision is not the totality of the powers
which an officer enjoys but the kind of powers which the law
enables him to exercise. The test for determining whether such a E
person is a “police officer” for the purpose of S. 25 of the Evidence
Act would, in our judgment, be whether the powers of a police
officer which are conferred on him or which are exercisable by
him because he is deemed to be an officer in charge of police
station establish a direct or substantial relationship with the F
prohibition enacted by S. 25, that is, the recording of a confession.
In other words, the test would be whether the powers are
such as would tend to facilitate the obtaining by him of a
confession from a suspect or delinquent. If they do, then it
is unnecessary to consider the dominant purpose for which
he is appointed or the question as to what other powers he G
enjoys. These questions may perhaps be relevant for
consideration where the powers of the police officer conferred
upon him are of a very limited character and are not by themselves
sufficient to facilitate the obtaining by him of a confession.”
(emphasis supplied) H
692 SUPREME COURT REPORTS [2022] 6 S.C.R.

A 166. Again, in the case of Badaku Joti Svant688, the Constitution
Bench of this Court held that a Central Excise Officer exercising power
under Central Excise and Salt Act, 1944 is not a police officer as he
does not possess the power to submit a charge-sheet under Section 173
of the 1973 Code. The Court noted thus:
B “(9) …..It is urged that under sub-s. (2) of S. 21 a Central Excise
Officer under the Act has all the powers of an officer-in-charge
of a police station under Chap. XIV of the Cr.P.C. and, therefore,
he must be deemed to be a police officer within the meaning of
those words in S. 25 of the Evidence Act. It is true that sub-s. (2)
confers on the Central Excise Officer under the Act the same
C powers as an officer-in-charge of a police station has when
investigating a cognizable case; but this power is conferred for
the purpose of sub-s. (1) which gives power to a Central Excise
Officer to whom any arrested person is forwarded to inquire into
the charge against him. Thus under S. 21 it is the duty of the
D Central Excise Officer to whom an arrested person is forwarded
to inquire into the charge made against such person. Further under
proviso (a) to sub-s. (2) of S. 21 if the Central Excise Officer is of
opinion that there is sufficient evidence or reasonable ground of
suspicion against the accused person, he shall either admit him to
bail to appear before a Magistrate having jurisdiction in the case,
E or forward him in custody to such Magistrate. It does not,
however, appear that a Central Excise Officer under the
Act has power to submit a charge-sheet under S. 173 of the
Cr.P.C. Under S. 190 of the Cr.P.C. a Magistrate can take
cognizance of any offence either (a) upon receiving a complaint
F of facts which constitute such offence, or (b) upon a report in
writing of such facts made by any police officer, or (c) upon
information received from any person other than a police officer,
or upon his own knowledge or suspicion, that such offence has
been committed. A police officer for purposes of Cl. (b) above
can in our opinion only be a police officer properly so-called
G as the scheme of the Code of Criminal Procedure shows
and it seems therefore that a Central Excise Officer will
have to make a complaint under Cl. (a) above if he wants
the Magistrate to take cognizance of an offence, for

688
H Supra at Footnote No.357
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 693
INDIA & ORS. [A. M. KHANWILKAR, J.]

example, under S. 9 of the Act. Thus though under sub-s. (2) A
of S. 21 the Central Excise Officer under the Act has the powers
of an officer-in-charge of a police station when investigating a
cognizable case, that is for the purpose of his inquiry under sub-s.
(1) of S. 21. Section 21 is in terms different from S. 78(3) of the
Bihar and Orissa Excise Act, 1915 which came to be considered
B
in Raja Ram Jaiswal’s case689 and which provided in terms that
“for the purposes of S. 156 of the Cr.P.C., 1898, the area to which
an excise officer empowered under S. 77, sub-s. (2), is appointed
shall be deemed to be a police-station, and such officer shall be
deemed to be the officer-in-charge of such station”. It cannot
therefore be said that the provision in S. 21 is on par with the C
provision in S. 78(3) of the Bihar and Orissa Excise Act. All that
S. 21 provides is that for the purpose of his enquiry, a Central
Excise Officer shall have the powers of an officer-in-charge of a
police station when investigating a cognizable case. But even so it
appears that these powers do not include the power to submit a
D
charge-sheet under S. 173 of the Cr.P.C., for unlike the Bihar and
Orissa Excise Act, the Central Excise Officer is not deemed to
be an officer in charge of a police station.”
167. Another Constitution Bench of this Court in Romesh Chandra
Mehta690 concluded that a Customs Officer under the Sea Customs
Act, 1878 could not be coined as a police officer and noted thus: E

“…..The Customs Officer does not exercise, when enquiring into
a suspected infringement of the Sea Customs Act, powers of
investigation which a police-officer may in investigating the
commission of an offence. He is invested with the power to enquire
into infringements of the Act primarily for the purpose of F
adjudicating forfeiture and penalty. He has no power to
investigate an offence triable by a Magistrate, nor has he
the power to submit a report under s. 173 of the Code of
Criminal Procedure. He can only make a complaint in writing
before a competent Magistrate.” G
*** *** ***

689
Supra at Footnote No.30
690
Supra at Footnote No.119 H
694 SUPREME COURT REPORTS [2022] 6 S.C.R.

A “…..But the test for determining whether an officer of customs is
to be deemed a police officer is whether he is invested with
all the powers of a police officer qua investigation of an
offence, including the power to submit a report under s.
173 of the Code of Criminal Procedure. It is not claimed that
a Customs Officer exercising power to make an enquiry may
B
submit a report under s. 173 of the Code of Criminal Procedure.”
(emphasis supplied)
168. The petitioners, however, have pressed into service exposition
of this Court in the recent decision in Tofan Singh691, which had occasion
C to deal with the provisions of the NDPS Act wherein the Court held that
the designated officer under that Act must be regarded as a police officer.
The Court opined that the statement made before him would be violative
of protection guaranteed under Article 20(3) of the Constitution. This
decision has been rightly distinguished by the learned Additional Solicitor
General on the argument that the conclusion reached in that judgment is
D on the basis of the legislative scheme of the NDPS Act, which permitted
that interpretation. However, it is not possible to reach at the same
conclusion in respect of the 2002 Act for more than one reason. In this
decision, the Court first noted that the Act (NDPS Act) under
consideration was a penal statute. In the case of 2002 Act, however,
E such a view is not possible. The second aspect which we have repeatedly
adverted to, is the special purposes and objects behind the enactment of
the 2002 Act. As per the provisions of the NDPS Act, it permitted both
a regular police officer as well as a designated officer, who is not a
defined police officer, to investigate the offence under that Act. This has
resulted in discrimination. Such a situation does not emerge from the
F provisions of the 2002 Act. The 2002 Act, on the other hand, authorises
only the authorities referred to in Section 48 to investigate/inquire into
the matters under the Act in the manner prescribed therein. The provision
inserted in 2005 as Section 45(1A) is not to empower the regular police
officers to take cognizance of the offence. On the other hand, it is a
G provision to declare that the regular police officer is not competent
to take cognizance of offence of money-laundering, as it can be
investigated only by the authorities referred to in Section 48 of the
2002 Act. The third aspect which had weighed with the Court in
Tofan Singh692 is that the police officer investigating an offence under
691
Supra at Footnote No.31 (also at Footnote No.24)
H 692
Supra at Footnote No.31 (also at Footnote No.24)
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 695
INDIA & ORS. [A. M. KHANWILKAR, J.]

the NDPS Act, the provisions of Sections 161 to 164 of the 1973 Code A
as also Section 25 of the Evidence Act, would come into play making the
statement made before them by the accused as inadmissible. Whereas,
the investigation into the same offence was to be done by the designated
officer under the NDPS Act, the safeguards contained in Sections 161
to 164 of the 1973 Code and Section 25 of the Evidence Act, will have
B
no application and the statement made before them would be inadmissible
in evidence. This had resulted in discrimination. No such situation
emerges from the provisions of the 2002 Act. Whereas, the 2002 Act
clearly authorises only the authorities under the 2002 Act referred to in
Section 48 to step in and summon the person when occasion arises and
proceed to record the statement and take relevant documents on record. C
For that, express provision has been made authorising them to do so and
by a legal fiction, deemed it to be a statement recorded in a judicial
proceeding by virtue of Section 50(4) of the 2002 Act. A regular police
officer will neither be in a position to take cognizance of the offence of
money-laundering, much less be permitted to record the statement which
D
is to be made part of the proceeding before the Adjudicating Authority
under the 2002 Act for confirmation of the provisional attachment order
and confiscation of the proceeds of crime for eventual vesting in the
Central Government. That may entail in civil consequences. It is a different
matter that some material or evidence is made part of the complaint if
required to be filed against the person involved in the process or activity E
connected with money-laundering so as to prosecute him for offence
punishable under Section 3 of the 2002 Act. The next point which has
been reckoned by this Court in the said decision is that in the provisions
of NDPS Act, upon culmination of investigation of crime by a designated
officer under that Act (other than a Police Officer), he proceeds to file
F
a complaint; but has no authority to further investigate the offence, if
required. Whereas, if the same offence was investigated by a regular
Police Officer after filing of the police report under Section 173(2) of
the 1973 Code, he could still do further investigation by invoking Section
173(8) of the 1973 Code. This, on the face of it, was discriminatory.
169. Notably, this dichotomy does not exist in the 2002 Act for G
more than one reason. For, there is no role for the regular Police Officer.
The investigation is to be done only by the authorities under the 2002 Act
and upon culmination of the investigation, to file complaint before the
Special Court. Moreover, by virtue of Clause (ii) of Explanation in Section
44(1) of the 2002 Act, it is open to the authorities under this Act to bring H
696 SUPREME COURT REPORTS [2022] 6 S.C.R.

A any further evidence, oral or documentary, against any accused person
involved in respect of offence of money-laundering, for which, a complaint
has already been filed by him or against person not named in the complaint
and by legal fiction, such further complaint is deemed to be part of the
complaint originally filed. Strikingly, in Tofan Singh692A the Court also
noted that, while dealing with the provisions of the NDPS Act, the
B
designated officer has no express power to file a closure report unlike
the power bestowed on the police officer, if he had investigated the
same crime under the NDPS Act. Once again, this lack of authority to
file closure report is not there in the 2002 Act. For, by the virtue of
proviso in Section 44(1)(b), after conclusion of investigation, if no offence
C of money-laundering is made out requiring filing of a complaint, the
Authority under the Act expected to file such complaint, is permitted to
file a closure report before the Special Court in that regard. In that
decision, while analysing the provisions of the Section 67 of the NDPS
Act, the Court noted that the statement recorded under Section 67 of
that Act was to be held as inadmissible in all situations. That renders
D
Section 53A of the same Act otiose. Section 53A of the NDPS Act is
about relevancy of statement made under certain circumstances.
Realising the conflicting position emerging in the two provisions, the issue
came to be answered.
170. However, in the case of provisions of the 2002 Act, there is
E no similar provision as Section 53A of the NDPS Act. As a result, even
this deficiency noticed in that judgment has no application to the provisions
of the 2002 Act. The Court also noted in that decision that unlike the
provisions of in the Customs Acts, 1962, Central Excise Act, 1944 and
Railway Property (Unlawful Possession) Act, 1966, in the case of NDPS
F Act prevention, detection and punishment of crime cannot be said to be
ancillary to the purpose of regulating and exercising of control over
narcotic drugs and psychotropic substances.
171. We have already adverted to the purposes and objects for
enacting the 2002 Act. It is a sui generis legislation, not only dealing
G with the prevention, detection, attachment, confiscation, vesting and
making it obligatory for the banking companies, financial institutions and
intermediaries to comply with certain essential formalities and make them
accountable for failure thereof, and also permits prosecution of the persons
found involved in the money-laundering activity. Keeping in mind the
692A
H Supra at Footnote No.31 (also at Footnote No.24)
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 697
INDIA & ORS. [A. M. KHANWILKAR, J.]

sweep of the purposes and objectives of the 2002 Act, the reason weighed A
with this Court while dealing with the provisions of the NDPS Act, will
have no bearing whatsoever. In that decision, this Court also noted that
the offences under the NDPS Act are cognizable as opposed to other
statutes referred to above. The scheme of the NDPS Act, including
regarding making offences under that Act as cognizable by the designated
B
officer as well as the local police, and the scheme of the 2002 Act is
entirely different.
171A. Indeed, in the original 2002 Act, as enacted, the offence of
money-laundering was made cognizable as a result of which confusion
had prevailed in dealing with the said crime when the legislative intent
was only to authorise the Authority under the 2002 Act to deal with such C
cases. That position stood corrected in 2005, as noticed earlier. The fact
that the marginal note of Section 45 retains marginal note that offences
to be cognizable and non-bailable, however, does not mean that the regular
Police Officer is competent to take cognizance of the offence of money-
laundering. Whereas, that description has been retained for the limited D
purpose of understanding that the offence of money-laundering is
cognizable and non-bailable and can be inquired into and investigated by
the Authority under the 2002 Act alone.
172. In other words, there is stark distinction between the scheme
of the NDPS Act dealt with by this Court in Tofan Singh693 and that in E
the provisions of the 2002 Act under consideration. Thus, it must follow
that the authorities under the 2002 Act are not Police Officers. Ex-
consequenti, the statements recorded by authorities under the 2002
Act, of persons involved in the commission of the offence of money-
laundering or the witnesses for the purposes of inquiry/investigation,
cannot be hit by the vice of Article 20(3) of the Constitution or for that F
matter, Article 21 being procedure established by law. In a given case,
whether the protection given to the accused who is being prosecuted for
the offence of money-laundering, of Section 25 of the Evidence Act is
available or not, may have to be considered on case-to-case basis being
rule of evidence. G
173. We may note that the learned Additional Solicitor General
was at pains to persuade us to take the view that the decision in Tofan
Singh694 is per incuriam. For the reasons already noted, we do not
deem it necessary to examine that argument.
693
Supra at Footnote No.31 (also at Footnote No.24) H
694
Supra at Footnote No.31 (also at Footnote No.24)
698 SUPREME COURT REPORTS [2022] 6 S.C.R.

A SECTION 63 OF THE 2002 ACT
174. By this provision, penal consequences are provided in respect
of acts of commission and omission by any person who wilfully and
maliciously gives false information and so causing an arrest or a search
under this Act; also against the person legally bound to state the truth of
B any matter relating to an offence under Section 3, but refuses to answer
such any question put to him by the Authority under the 2002 Act or
refuses to sign any statement made by him in the course of any
proceedings under the Act including failure to attend or produce books
of account or documents when called upon to do so. Section 63 reads
thus:
C
“63. Punishment for false information or failure to give
information, etc.—(1) Any person wilfully and maliciously giving
false information and so causing an arrest or a search to be made
under this Act shall on conviction be liable for imprisonment for a
term which may extend to two years or with fine which may
D extend to fifty thousand rupees or both.
(2) If any person,—
(a) being legally bound to state the truth of any matter relating to
an offence under section 3, refuses to answer any question put to
E him by an authority in the exercise of its powers under this Act; or
(b) refuses to sign any statement made by him in the course of
any proceedings under this Act, which an authority may legally
require to sign; or
(c) to whom a summon is issued under section 50 either to attend
F to give evidence or produce books of account or other documents
at a certain place and time, omits to attend or produce books of
account or documents at the place or time,
he shall pay, by way of penalty, a sum which shall not be less than
five hundred rupees but which may extend to ten thousand rupees
G for each such default or failure.
(3) No order under this section shall be passed by an authority
referred to in sub-section (2) unless the person on whom the penalty
is proposed to be imposed is given an opportunity of being heard
in the matter by such authority.
H
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 699
INDIA & ORS. [A. M. KHANWILKAR, J.]

695
[(4) Notwithstanding anything contained in clause (c) of sub- A
section (2), a person who intentionally disobeys any direction issued
under section 50 shall also be liable to be proceeded against under
section 174 of the Indian Penal Code (45 of 1860).]”
This provision is only an enabling provision and applies to situations
referred to therein. It is in the nature of providing consequences for not B
discharging the burden or cooperating with the authorities during the
proceedings before the Authority and pursuant to summons, production
of documents and to give evidence is issued by such Authority in exercise
of power under Section 50 of the 2002 Act. The power exercised by the
Authority is analogous to power vested in a civil Court under the 1908
Code while trying a suit in respect of matters referred to in Section 50 of C
the 2002 Act. This is in the nature of deeming provision empowering the
concerned Authority to ensure prevention of money-laundering and also
to take consequential steps for attachment and confiscation of the
property involved in such money-laundering to be vested in the Central
Government. Absent such authority given to the Director under the 2002 D
Act, the inquiry or investigation required to be done for fulfilling the
mandate predicated under the 2002 Act, would eventually result in paper
inquiry and no meaningful purpose would be served much less to combat
the menace of money-laundering. In such inquiry if misleading revelations
are made by any person or for that matter fails to cooperate, is required
to be proceeded in accordance with law. In that sense, Section 63 is the E
procedure established by law. It is unfathomable to countenance the
argument that such a provision must be regarded as unreasonable or
manifestly arbitrary. It has clear nexus with the purposes and objects
sought to be achieved by the 2002 Act.
SCHEDULE OF THE 2002 ACT F

175. The expression “scheduled offence” has been defined in
Section 2(1)(y). This provision assumes significance as it has direct link
with the definition of “proceeds of crime”. In that, the property derived
or obtained as a result of criminal activity relating to notified offences,
termed as scheduled offence, is regarded as tainted property and dealing G
with such property in any manner is an offence of money-laundering.
The Schedule is in three parts, namely Part A, B and C. Part A of the
Schedule consists of 29 paragraphs. These paragraphs deal with
respective enactments and the offences specified thereunder which are
695
Ins. by Act 2 of 2013, sec.26 (w.e.f. 15-2-2013, vide S.O. 343(E), dated 8-2-2013) H
700 SUPREME COURT REPORTS [2022] 6 S.C.R.

A regarded as scheduled offences. Similarly, Part B deals with offence
under the Customs Act specifically and Part C is in relation to offence
of cross border implications. The Schedule reads thus:

B

C

D

E

F

G

696
Subs. by Act 2 of 2013, Sec. 30(i), for Part A (w.e.f. 15-2-2013, vide S.O. 343(E),
dated 8-2-2013). Earlier Part A was amended by Act 21 of 2009, sec. 13 (w.e.f. 1-6-
H 2009).
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 701
INDIA & ORS. [A. M. KHANWILKAR, J.]

A

B

C

D

E

PARAGRAPH 2
OFFENCES UNDER THE NARCOTIC DRUGS AND
PSYCHOTROPIC SUBSTANCES ACT, 1985
(61 of 1985) F

G

H
702 SUPREME COURT REPORTS [2022] 6 S.C.R.

A

B
PARAGRAPH 3
OFFENCES UNDER THE EXPLOSIVE SUBSTANCES
ACT, 1908
(6 of 1908)
C

D PARAGRAPH 4
OFFENCES UNDER THE UNLAWFUL ACTIVITIES
(PREVENTION) ACT, 1967
(37 of 1967)

E

F

G

H
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 703
INDIA & ORS. [A. M. KHANWILKAR, J.]

A

PARAGRAPH 5
OFFENCES UNDER THE ARMS ACT, 1959
B
(54 of 1959)

C

D

E

F

G

H
704 SUPREME COURT REPORTS [2022] 6 S.C.R.

A PARAGRAPH 6
OFFENCES UNDER THE WILD LIFE (PROTECTION) ACT,
1972
(53 of 1972)

B

C

D

E
PARAGRAPH 7
OFFENCES UNDER THE IMMORAL TRAFFIC
(PREVENTION) ACT, 1956
(104 of 1956)
F

G

H
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 705
INDIA & ORS. [A. M. KHANWILKAR, J.]

697
[PARAGRAPH 8 A
OFFENCES UNDER THE PREVENTION OF
CORRUPTION ACT, 1988
(49 of 1988)

B

C

D

PARAGRAPH 9
OFFENCES UNDER THE EXPLOSIVES ACT, 1884
(4 of 1884)
E

F

G

H
706 SUPREME COURT REPORTS [2022] 6 S.C.R.

A PARAGRAPH 10
OFFENCES UNDER THE ANTIQUITIES AND ARTS
TREASURES ACT, 1972
(52 of 1972)

B

PARAGRAPH 11
OFFENCES UNDER THE SECURITIES AND EXCHANGE
C BOARD OF INDIA ACT, 1992
(15 of 1992)

D PARAGRAPH 12
OFFENCES UNDER THE CUSTOMS ACT, 1962
(52 of 1962)

PARAGRAPH 13
E
OFFENCES UNDER THE BONDED LABOUR SYSTEM
(ABOLITION) ACT, 1976
(19 of 1976)

F

PARAGRAPH 14
OFFENCES UNDER THE CHILD LABOUR (PROHIBITION
AND REGULATION) ACT, 1986
G (61 of 1986)

H
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 707
INDIA & ORS. [A. M. KHANWILKAR, J.]

PARAGRAPH 15 A
OFFENCES UNDER THE TRANSPLANTATION OF
HUMAN ORGANS ACT, 1994
(42 of 1994)

B

PARAGRAPH 16
OFFENCES UNDER THE JUVENILE JUSTICE (CARE AND
PROTECTION OF CHILDREN) ACT, 2000
(56 of 2000) C

D
PARAGRAPH 17
OFFENCES UNDER THE EMIGRATION ACT, 1983
(31 of 1983)

E
PARAGRAPH 18
OFFENCES UNDER THE PASSPORTS ACT, 1967
(15 of 1967)

F
PARAGRAPH 19
OFFENCES UNDER THE FOREIGNERS ACT, 1946
(31 of 1946)

G

H
708 SUPREME COURT REPORTS [2022] 6 S.C.R.

A PARAGRAPH 20
OFFENCES UNDER THE COPYRIGHT ACT, 1957
(14 of 1957)

B

PARAGRAPH 21
C OFFENCES UNDER THE TRADE MARKS ACT, 1999
(47 of 1999)

D

PARAGRAPH 22
E OFFENCES UNDER THE INFORMATION TECHNOLOGY
ACT, 2000
(21 of 2000)

F
PARAGRAPH 23
OFFENCES UNDER THE BIOLOGICAL DIVERSITY ACT,
2002
(18 of 2003)
G

H
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 709
INDIA & ORS. [A. M. KHANWILKAR, J.]

PARAGRAPH 24 A
OFFENCES UNDER THE PROTECTION OF PLANT
VARIETIES AND FARMERS’ RIGHTS ACT, 2001
(53 of 2001)

B

C

PARAGRAPH 25
OFFENCES UNDER THE ENVIRONMENT PROTECTION
ACT, 1986
(29 of 1986)
D

PARAGRAPH 26 E
OFFENCES UNDER THE WATER (PREVENTION AND
CONTROL OF POLLUTION) ACT, 1974
(6 of 1974)

F

PARAGRAPH 27
OFFENCES UNDER THE AIR (PREVENTION AND
CONTROL OF POLLUTION) ACT, 1981
(14 of 1981)
G

H
710 SUPREME COURT REPORTS [2022] 6 S.C.R.

A PARAGRAPH 28
OFFENCES UNDER THE SUPPRESSION OF UNLAWFUL
ACTS AGAINST SAFETY OF MARITIME NAVIGATION
AND FIXED PLATFORMS ON CONTINENTAL SHELF ACT,
2002
(69 of 2002)
B

698
[PARAGRAPH 29
OFFENCE UNDER THE COMPANIES ACT, 2013
C (18 of 2013)

699
[PART B
OFFENCE UNDER THE CUSTOMS ACT, 1962
D

700
[PART C
An offence which is the offence of cross border implications and
E is specified in,—
(1) Part A; or
701
[***]
(3) the offences against property under Chapter XVII of the Indian
F Penal Code.]
702
[(4) The offence of wilful attempt to evade any tax, penalty or
interest referred to in section 51 of the Black Money (Undisclosed
Foreign Income and Assets) and Imposition of Tax Act, 2015.]”
698
Ins. by Act 13 of 2018, sec. 208(h) (w.e.f. 19-4-2018, vide G.S.R. 383(E), dated 19 th
G April, 2018).
699
Ins. by the Finance Act, 2015 (20 of 2015), sec. 151 (w.e.f. 14-5-2015). Earlier Part
B was amended by Act 21 of 2009, sec. 13 (w.e.f. 1-6-2009) and was omitted by Act 2
of 2013, sec. 30(ii) (w.e.f. 15-2-2013, vide S.O. 343(E), dated 8-2-2013).
700
Ins. by Act 21 of 2009, sec. 13(iii) (w.e.f. 1-6-2009).
701
Omitted by Act 2 of 2013, sec. 30(iii) (w.e.f. 15-2-2013, vide S.O. 343(E), dated 8-
2-2013).
702
H Ins. by Act 22 of 2015, sec. 88 (w.e.f. 1-7-2015, vide S.O. 1790(E), dated 1 st July,
2015).
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 711
INDIA & ORS. [A. M. KHANWILKAR, J.]

This Schedule has been amended by Act 21 of 2009, Act 2 of A
2013, Act 22 of 2015, Act 13 of 2018 and Act 16 of 2018, thereby inserting
new offences to be regarded as scheduled offence. The challenge is not
on the basis of legislative competence in respect of enactment of
Schedule and the amendments thereto from time to time. However, it
had been urged before us that there is no consistency in the approach as
B
it includes even minor offences as scheduled offence for the purposes
of offence of money-laundering, more so even offences which have no
trans-border implications and are compoundable between the parties.
The classification or grouping of offences for treating the same as relevant
for constituting offence of money-laundering is a matter of legislative
policy. The Parliament in its wisdom has regarded the property derived C
or obtained as a result of specified criminal activity, being an offence
under the concerned legislation mentioned in the Schedule. The fact that
some of the offences may be non-cognizable offences under the
concerned legislation or regarded as minor and compoundable offences,
yet, the Parliament in its wisdom having perceived the cumulative effect
D
of the process or activity concerning the proceeds of crime generated
from such criminal activities as being likely to pose threat to the economic
stability, sovereignty and integrity of the country and thus, grouped them
together for reckoning it as an offence of money-laundering, is a matter
of legislative policy. It is not open to the Court to have a second guess at
such a policy. E
175A. Needless to underscore that the 2002 Act is intended to
initiate action in respect of money-laundering activity which necessarily
is associated with the property derived or obtained by any person, directly
or indirectly, as a result of specified criminal activity. The prosecution
under this Act is not in relation to the criminal activity per se but limited F
to property derived or obtained from specified criminal activity.
Resultantly, the inclusion of criminal activity which has been regarded
as non-cognizable, compoundable or minor offence under the concerned
legislation, should have no bearing to answer the matter in issue. In that,
the offence of money-laundering is an independent offence and the
persons involved in the commission of such offence are grouped together G
as offenders under this Act. There is no reason to make distinction
between them insofar as the offence of money-laundering is concerned.
In our opinion, therefore, there is no merit in the argument under
consideration.
H
712 SUPREME COURT REPORTS [2022] 6 S.C.R.

A ECIR VIS-À-VIS FIR
176. As per the procedure prescribed by the 1973 Code, the officer
in-charge of a police station is under an obligation to record the
information relating to the commission of a cognizable offence, in terms
of Section 154 of the 1973 Code703. There is no corresponding provision
B in the 2002 Act requiring registration of offence of money-laundering.
As noticed earlier, the mechanism for proceeding against the property
being proceeds of crime predicated in the 2002 Act is a sui generis
procedure. No comparison can be drawn between the mechanism
regarding prevention, investigation or trial in connection with the scheduled
offence governed by the provisions of the 1973 Code. In the scheme of
C 2002 Act upon identification of existence of property being proceeds of
crime, the Authority under this Act is expected to inquire into relevant
aspects in relation to such property and take measures as may be
necessary and specified in the 2002 Act including to attach the property
for being dealt with as per the provisions of the 2002 Act. We have
D elaborately adverted to the procedure to be followed by the authorities
for such attachment of the property being proceeds of crime and the
follow-up steps of confiscation upon confirmation of the provisional
attachment order by the Adjudicating Authority. For facilitating the
Adjudicating Authority to confirm the provisional attachment order and
direct confiscation, the authorities under the 2002 Act (i.e., Section 48)
E are expected to make an inquiry and investigate. Incidentally, when
sufficient credible information is gathered by the authorities during such
inquiry/investigation indicative of involvement of any person in any
process or activity connected with the proceeds of crime, it is open to
such authorities to file a formal complaint before the Special Court naming
F the concerned person for offence of money-laundering under Section 3
of this Act. Considering the scheme of the 2002 Act, though the offence
of money-laundering is otherwise regarded as cognizable offence
(cognizance whereof can be taken only by the authorities referred to in
Section 48 of this Act and not by jurisdictional police) and punishable
under Section 4 of the 2002 Act, special complaint procedure is prescribed
G by law. This procedure overrides the procedure prescribed under 1973
Code to deal with other offences (other than money-laundering offences)
in the matter of registration of offence and inquiry/investigation thereof.
This special procedure must prevail in terms of Section 71 of the 2002
Act and also keeping in mind Section 65 of the same Act. In other words,
703
H Lalita Kumari (supra at Footnote Nos.13 and 206)
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 713
INDIA & ORS. [A. M. KHANWILKAR, J.]

the offence of money-laundering cannot be registered by the jurisdictional A
police who is governed by the regime under Chapter XII of the 1973
Code. The provisions of Chapter XII of the 1973 Code do not apply in all
respects to deal with information derived relating to commission of money-
laundering offence much less investigation thereof. The dispensation
regarding prevention of money-laundering, attachment of proceeds of
B
crime and inquiry/investigation of offence of money-laundering upto filing
of the complaint in respect of offence under Section 3 of the 2002 Act is
fully governed by the provisions of the 2002 Act itself. To wit, regarding
survey, searches, seizures, issuing summons, recording of statements of
concerned persons and calling upon production of documents, inquiry/
investigation, arrest of persons involved in the offence of money- C
laundering including bail and attachment, confiscation and vesting of
property being proceeds of crime. Indeed, after arrest, the manner of
dealing with such offender involved in offence of money-laundering would
then be governed by the provisions of the 1973 Code - as there are no
inconsistent provisions in the 2002 Act in regard to production of the
D
arrested person before the jurisdictional Magistrate within twenty-four
hours and also filing of the complaint before the Special Court within the
statutory period prescribed in the 1973 Code for filing of police report, if
not released on bail before expiry thereof.
177. Suffice it to observe that being a special legislation providing
for special mechanism regarding inquiry/investigation of offence of E
money-laundering, analogy cannot be drawn from the provisions of 1973
Code, in regard to registration of offence of money-laundering and more
so being a complaint procedure prescribed under the 2002 Act. Further,
the authorities referred to in Section 48 of the 2002 Act alone are
competent to file such complaint. It is a different matter that the materials/ F
evidence collected by the same authorities for the purpose of civil action
of attachment of proceeds of crime and confiscation thereof may be
used to prosecute the person involved in the process or activity connected
with the proceeds of crime for offence of money-laundering. Considering
the mechanism of inquiry/investigation for proceeding against the property
(being proceeds of crime) under this Act by way of civil action (attachment G
and confiscation), there is no need to formally register an ECIR, unlike
registration of an FIR by the jurisdictional police in respect of cognizable
offence under the ordinary law. There is force in the stand taken by the
ED that ECIR is an internal document created by the department before
initiating penal action or prosecution against the person involved with H
714 SUPREME COURT REPORTS [2022] 6 S.C.R.

A process or activity connected with proceeds of crime. Thus, ECIR is not
a statutory document, nor there is any provision in 2002 Act requiring
Authority referred to in Section 48 to record ECIR or to furnish copy
thereof to the accused unlike Section 154 of the 1973 Code. The fact
that such ECIR has not been recorded, does not come in the way of the
authorities referred to in Section 48 of the 2002 Act to commence inquiry/
B
investigation for initiating civil action of attachment of property being
proceeds of crime by following prescribed procedure in that regard.
178. The next issue is: whether it is necessary to furnish copy of
ECIR to the person concerned apprehending arrest or at least after his
arrest? Section 19(1) of the 2002 Act postulates that after arrest, as
C soon as may be, the person should be informed about the grounds for
such arrest. This stipulation is compliant with the mandate of Article
22(1) of the Constitution. Being a special legislation and considering the
complexity of the inquiry/investigation both for the purposes of initiating
civil action as well as prosecution, non-supply of ECIR in a given case
D cannot be faulted. The ECIR may contain details of the material in
possession of the Authority and recording satisfaction of reason to believe
that the person is guilty of money-laundering offence, if revealed before
the inquiry/investigation required to proceed against the property being
proceeds of crime including to the person involved in the process or
activity connected therewith, may have deleterious impact on the final
E outcome of the inquiry/investigation. So long as the person has been
informed about grounds of his arrest that is sufficient compliance of
mandate of Article 22(1) of the Constitution. Moreover, the arrested
person before being produced before the Special Court within twenty-
four hours or for that purposes of remand on each occasion, the Court
F is free to look into the relevant records made available by the Authority
about the involvement of the arrested person in the offence of money-
laundering. In any case, upon filing of the complaint before the statutory
period provided in 1973 Code, after arrest, the person would get all relevant
materials forming part of the complaint filed by the Authority under
Section 44(1)(b) of the 2002 Act before the Special Court.
G
179. Viewed thus, supply of ECIR in every case to person
concerned is not mandatory. From the submissions made across the
Bar, it is noticed that in some cases ED has furnished copy of ECIR to
the person before filing of the complaint. That does not mean that in
every case same procedure must be followed. It is enough, if ED at the
H
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 715
INDIA & ORS. [A. M. KHANWILKAR, J.]

time of arrest, contemporaneously discloses the grounds of such arrest A
to such person. Suffice it to observe that ECIR cannot be equated with
an FIR which is mandatorily required to be recorded and supplied to the
accused as per the provisions of 1973 Code. Revealing a copy of an
ECIR, if made mandatory, may defeat the purpose sought to be achieved
by the 2002 Act including frustrating the attachment of property (proceeds
B
of crime). Non-supply of ECIR, which is essentially an internal document
of ED, cannot be cited as violation of constitutional right. Concededly,
the person arrested, in terms of Section 19 of the 2002 Act, is
contemporaneously made aware about the grounds of his arrest. This is
compliant with the mandate of Article 22(1) of the Constitution. It is not
unknown that at times FIR does not reveal all aspects of the offence in C
question. In several cases, even the names of persons actually involved
in the commission of offence are not mentioned in the FIR and described
as unknown accused. Even, the particulars as unfolded are not fully
recorded in the FIR. Despite that, the accused named in any ordinary
offence is able to apply for anticipatory bail or regular bail, in which
D
proceeding, the police papers are normally perused by the concerned
Court. On the same analogy, the argument of prejudice pressed into
service by the petitioners for non-supply of ECIR deserves to be answered
against the petitioners. For, the arrested person for offence of money-
laundering is contemporaneously informed about the grounds of his arrest;
and when produced before the Special Court, it is open to the Special E
Court to call upon the representative of ED to produce relevant record
concerning the case of the accused before him and look into the same
for answering the need for his continued detention. Taking any view of
the matter, therefore, the argument under consideration does not take
the matter any further.
F
ED MANUAL
180. It had been urged that the 2002 Act creates an overbroad
frame with no fetters on investigation. Besides questioning the refusal to
furnish copy of ECIR, grievance is also made about the opacity
surrounding the usage of ED Manual. Relying on Section 4(b)(v) of the G
RTI Act, it was urged that it was obligatory on the part of the Public
Authority to publish the stated Manual within 120 days of the enactment
of RTI Act. All other authorities including the Central Vigilance
Commission, Income-tax Authorities, Authorities under 1962 Act, Police
Authorities, Jail Authorities have adhered to this statutory compliance,
H
716 SUPREME COURT REPORTS [2022] 6 S.C.R.

A except the ED. In response, it is submitted by the learned Additional
Solicitor General that ED Manual is an internal departmental document
only for the use of officers of the ED. It is to give them guidance on
proper enforcement of 2002 Act and outlines the procedure for
implementation of the provisions of this Act. In addition, reliance is placed
on the exposition of the Constitution Bench of this Court in Lalita
B
Kumari704. In paragraph 89 of this decision, the Court observed thus:
“89. Besides, the learned Senior Counsel relied on the special
procedures prescribed under the CBI Manual to be read into
Section 154. It is true that the concept of “preliminary inquiry” is
contained in Chapter IX of the Crime Manual of CBI. However,
C this Crime Manual is not a statute and has not been enacted by
the legislature. It is a set of administrative orders issued for internal
guidance of the CBI officers. It cannot supersede the Code.
Moreover, in the absence of any indication to the contrary in the
Code itself, the provisions of the CBI Crime Manual cannot be
D relied upon to import the concept of holding of preliminary inquiry
in the scheme of the Code of Criminal Procedure. At this juncture,
it is also pertinent to submit that CBI is constituted under a special
Act, namely, the Delhi Special Police Establishment Act, 1946
and it derives its power to investigate from this Act.”
E 181. It is true that the ED Manual may be an internal document
for departmental use and in the nature of set of administrative orders. It
is equally true that the accused or for that matter common public may
not be entitled to have access to such administrative instructions being
highly confidential and dealing with complex issues concerning mode
and manner of investigation, for internal guidance of officers of ED. It
F is also correct to say that there is no such requirement under the 2002
Act or for that matter, that there is nothing like investigation of a crime
of money-laundering as per the scheme of 2002 Act. The investigation,
however, is to track the property being proceeds of crime and to attach
the same for being dealt with under the 2002 Act. Stricto sensu, it is in
G the nature of an inquiry in respect of civil action of attachment.
Nevertheless, since the inquiry in due course ends in identifying the
offender who is involved in the process or activity connected with the
proceeds of crime and then to prosecute him, it is possible for the
department to outline the situations in which that course could be adopted
704
H Supra at Footnote No.206 (also at Footnote No.13)
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 717
INDIA & ORS. [A. M. KHANWILKAR, J.]

in reference to specific provisions of 2002 Act or the Rules framed A
thereunder; and in which event, what are the options available to such
person before the Authority or the Special Court, as the case may be.
Such document may come handy and disseminate information to all
concerned. At least the feasibility of placing such document on the official
website of ED may be explored.
B
APPELLATE TRIBUNAL
182. Serious grievance has been made about the vacancies in the
Appellate Tribunal despite the serious prejudice being caused on account
of provisional attachment order and, in some cases, taking over possession
of the property so attached. This grievance, even though genuine, cannot C
be the basis to test the validity of the provisions of the 2002 Act or to
question the efficacy of those provisions on that account. The Parliament
by this special legislation having created an expert body being Appellate
Tribunal to deal with matters concerning attachment, possession and
confiscation and vesting of property in the Central Government, it is, but
necessary, that the forum should be functional and accessible to the D
aggrieved persons uninterruptedly. We need to impress upon the
Executive to take necessary corrective measures in this regard. Absent
such forum, the aggrieved persons have to rush to the High Court on
every occasion which indeed is avoidable.
PUNISHMENT UNDER SECTION 4 OF THE 2002 ACT E

183. It is urged that there is no gradation of punishment depending
on the nature of offence which may be committed by the principal
offender and other offenders. Section 4704A of the 2002 Act makes no
distinction between person directly involved in the process or activity
connected with the proceeds of crime and the other not so directly F
involved. Further, the scheduled offence may have been committed by

704A
4. Punishment for money-laundering.—Whoever commits the offence of money-
laundering shall be punishable with rigorous imprisonment for a term which shall not be
less than three years but which may extend to seven years and shall also be liable to fine
[***]**:
G
Provided that where the proceeds of crime involved in money-laundering relates
to any offence specified under paragraph 2 of Part A of the Schedule, the provisions of
this section shall have effect as if for the words “which may extend to seven years”, the
words “which may extend to ten years” had been substituted.
**The words “which may extend to five lakh rupees” omitted by Act 2 of 2013, sec. 4
(w.e.f. 15-2-2013, vide S.O. 343(E), dated 8-2-2013). H
718 SUPREME COURT REPORTS [2022] 6 S.C.R.

A someone else and the offence of money-laundering by third person owing
to being involved in the process or activity connected with the proceeds
of crime. The petitioners have relied on Section 201 and 212 of IPC. It
is their case that this distinction is absent in Section 4 of the 2002 Act
which provides that the term of rigorous imprisonment shall not be less
than three years and extend upto seven years or ten years, as the case
B
may be, with fine. This argument to say the least is flimsy and tenuous.
For, the punishment under Section 4 is not in relation to the predicate
offence, but offence of money-laundering under Section 3 of the 2002
Act. The person may be involved in any one or more than one process
or activity connected with the proceeds of crime. All of them are treated
C as one class of offender involved in money-laundering. The proceeds of
crime may be derived or obtained as a result of criminal activity with
which the offender involved in money-laundering offence may not be
directly concerned at all. Even so, he becomes liable to be proceeded
under Section 3 and punished under Section 4 of the 2002 Act. The
principle of an accessory after the fact will have no application to the
D
offence of money-laundering. Suffice it to observe that the argument
under consideration is devoid of merit.

184. On the basis of same analogy, it was argued that the twin
conditions of bail contained in Section 45 of the 2002 Act would act
E grossly disproportionate and illogical qua a person who is not directly
connected with the scheduled offence but merely an accessory after
the fact. Even this argument needs to be stated to be rejected for the
same reason.

185. The above analysis, in our view, is sufficient to answer the
F diverse issues canvassed before us. We have attempted to extensively
deal with the essential aspects to record our conclusion issue-wise.
Further, we do not wish to dissect every reported decision cited before
us to obviate prolixity.

186. We once again clarify that in this judgment, we have confined
G
our analysis only to the issues regarding the validity and interpretation of
the provisions of the 2002 Act, referred to above. We have not dealt
with any other issue involved in individual cases concerning 2002 Act as
the parties have been given liberty to pursue their other remedies before
appropriate forum. Furthermore, we have delinked the matters pertaining
H
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 719
INDIA & ORS. [A. M. KHANWILKAR, J.]

to other legislations and issues arising therefrom from this batch of cases, A
for being proceeded appropriately.
CONCLUSION
187. In light of the above analysis, we now proceed to summarise
our conclusion on seminal points in issue in the following terms: -
B
(i) The question as to whether some of the amendments to the
Prevention of Money-laundering Act, 2002 could not have been enacted
by the Parliament by way of a Finance Act has not been examined in
this judgment. The same is left open for being examined along with or
after the decision of the Larger Bench (seven Judges) of this Court in
C
the case of Rojer Mathew705.
(ii) The expression “proceedings” occurring in Clause (na) of
Section 2(1) of the 2002 Act is contextual and is required to be given
expansive meaning to include inquiry procedure followed by the
Authorities of ED, the Adjudicating Authority, and the Special Court.
D
(iii) The expression “investigation” in Clause (na) of Section 2(1)
of the 2002 Act does not limit itself to the matter of investigation
concerning the offence under the Act and is interchangeable with the
function of “inquiry” to be undertaken by the Authorities under the Act.
(iv) The Explanation inserted to Clause (u) of Section 2(1) of the E
2002 Act does not travel beyond the main provision predicating tracking
and reaching upto the property derived or obtained directly or indirectly
as a result of criminal activity relating to a scheduled offence.
(v) (a) Section 3 of the 2002 Act has a wider reach and captures
every process and activity, direct or indirect, in dealing with the proceeds F
of crime and is not limited to the happening of the final act of integration
of tainted property in the formal economy. The Explanation inserted to
Section 3 by way of amendment of 2019 does not expand the purport of
Section 3 but is only clarificatory in nature. It clarifies the word “and”
preceding the expression projecting or claiming as “or”; and being a
clarificatory amendment, it would make no difference even if it is G
introduced by way of Finance Act or otherwise.
(b) Independent of the above, we are clearly of the view that the
expression “and” occurring in Section 3 has to be construed as “or”, to
705
Supra at Footnote No.90 H
720 SUPREME COURT REPORTS [2022] 6 S.C.R.

A give full play to the said provision so as to include “every” process or
activity indulged into by anyone. Projecting or claiming the property as
untainted property would constitute an offence of money-laundering on
its own, being an independent process or activity.
(c) The interpretation suggested by the petitioners, that only upon
B projecting or claiming the property in question as untainted property that
the offence of Section 3 would be complete, stands rejected.
(d) The offence under Section 3 of the 2002 Act is dependent on
illegal gain of property as a result of criminal activity relating to a
scheduled offence. It is concerning the process or activity connected
C with such property, which constitutes the offence of money-laundering.
The Authorities under the 2002 Act cannot prosecute any person on
notional basis or on the assumption that a scheduled offence has been
committed, unless it is so registered with the jurisdictional police and/or
pending enquiry/trial including by way of criminal complaint before the
competent forum. If the person is finally discharged/acquitted of the
D scheduled offence or the criminal case against him is quashed by the
Court of competent jurisdiction, there can be no offence of money-
laundering against him or any one claiming such property being the
property linked to stated scheduled offence through him.
(vi) Section 5 of the 2002 Act is constitutionally valid. It provides
E for a balancing arrangement to secure the interests of the person as also
ensures that the proceeds of crime remain available to be dealt with in
the manner provided by the 2002 Act. The procedural safeguards as
delineated by us hereinabove are effective measures to protect the
interests of person concerned.
F (vii) The challenge to the validity of sub-section (4) of Section 8
of the 2002 Act is also rejected subject to Section 8 being invoked and
operated in accordance with the meaning assigned to it hereinabove.
(viii) The challenge to deletion of proviso to sub-section (1) of
Section 17 of the 2002 Act stands rejected. There are stringent safeguards
G provided in Section 17 and Rules framed thereunder. Moreover, the pre-
condition in the proviso to Rule 3(2) of the 2005 Rules cannot be read
into Section 17 after its amendment. The Central Government may take
necessary corrective steps to obviate confusion caused in that regard.
(ix) The challenge to deletion of proviso to sub-section (1) of
H Section 18 of the 2002 Act also stands rejected. There are similar
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 721
INDIA & ORS. [A. M. KHANWILKAR, J.]

safeguards provided in Section 18. We hold that the amended provision A
does not suffer from the vice of arbitrariness.
(x) The challenge to the constitutional validity of Section 19 of the
2002 Act is also rejected. There are stringent safeguards provided in
Section 19. The provision does not suffer from the vice of arbitrariness.
(xi) Section 24 of the 2002 Act has reasonable nexus with the B
purposes and objects sought to be achieved by the 2002 Act and cannot
be regarded as manifestly arbitrary or unconstitutional.
(xii) (a) The proviso in Clause (a) of sub-section (1) of Section
44 of the 2002 Act is to be regarded as directory in nature and this
provision is also read down to mean that the Special Court may exercise C
judicial discretion on case-to-case basis.
(b) We do not find merit in the challenge to Section 44 being
arbitrary or unconstitutional. However, the eventualities referred to in
this section shall be dealt with by the Court concerned and by the
Authority concerned in accordance with the interpretation given in this D
judgment.
(xiii) (a) The reasons which weighed with this Court in Nikesh
Tarachand Shah706 for declaring the twin conditions in Section 45(1)
of the 2002 Act, as it stood at the relevant time, as unconstitutional in no
way obliterated the provision from the statute book; and it was open to E
the Parliament to cure the defect noted by this Court so as to revive the
same provision in the existing form.
(b) We are unable to agree with the observations in Nikesh
Tarachand Shah707 distinguishing the enunciation of the Constitution
Bench decision in Kartar Singh708; and other observations suggestive F
of doubting the perception of Parliament in regard to the seriousness of
the offence of money-laundering, including about it posing serious threat
to the sovereignty and integrity of the country.
(c) The provision in the form of Section 45 of the 2002 Act, as
applicable post amendment of 2018, is reasonable and has direct nexus G
with the purposes and objects sought to be achieved by the 2002 Act
and does not suffer from the vice of arbitrariness or unreasonableness.
706
Supra at Footnote No.3
707
Supra at Footnote No.3
708
Supra at Footnote No.190 H
722 SUPREME COURT REPORTS [2022] 6 S.C.R.

A (d) As regards the prayer for grant of bail, irrespective of the
nature of proceedings, including those under Section 438 of the 1973
Code or even upon invoking the jurisdiction of Constitutional Courts, the
underlying principles and rigours of Section 45 may apply.
(xiv) The beneficial provision of Section 436A of the 1973 Code
B could be invoked by the accused arrested for offence punishable under
the 2002 Act.
(xv) (a) The process envisaged by Section 50 of the 2002 Act is
in the nature of an inquiry against the proceeds of crime and is not
“investigation” in strict sense of the term for initiating prosecution; and
C the Authorities under the 2002 Act (referred to in Section 48), are not
police officers as such.
(b) The statements recorded by the Authorities under the 2002
Act are not hit by Article 20(3) or Article 21 of the Constitution of India.
(xvi) Section 63 of the 2002 Act providing for punishment
D regarding false information or failure to give information does not suffer
from any vice of arbitrariness.
(xvii) The inclusion or exclusion of any particular offence in the
Schedule to the 2002 Act is a matter of legislative policy; and the nature
or class of any predicate offence has no bearing on the validity of the
E Schedule or any prescription thereunder.
(xviii) (a) In view of special mechanism envisaged by the 2002
Act, ECIR cannot be equated with an FIR under the 1973 Code. ECIR
is an internal document of the ED and the fact that FIR in respect of
scheduled offence has not been recorded does not come in the way of
F the Authorities referred to in Section 48 to commence inquiry/investigation
for initiating “civil action” of “provisional attachment” of property being
proceeds of crime.
(b) Supply of a copy of ECIR in every case to the person concerned
is not mandatory, it is enough if ED at the time of arrest, discloses the
G grounds of such arrest.
(c) However, when the arrested person is produced before the
Special Court, it is open to the Special Court to look into the relevant
records presented by the authorised representative of ED for answering
the issue of need for his/her continued detention in connection with the
H offence of money-laundering.
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 723
INDIA & ORS. [A. M. KHANWILKAR, J.]

(xix) Even when ED manual is not to be published being an internal A
departmental document issued for the guidance of the Authorities (ED
officials), the department ought to explore the desirability of placing
information on its website which may broadly outline the scope of the
authority of the functionaries under the Act and measures to be adopted
by them as also the options/remedies available to the person concerned
B
before the Authority and before the Special Court.
(xx) The petitioners are justified in expressing serious concern
bordering on causing injustice owing to the vacancies in the Appellate
Tribunal. We deem it necessary to impress upon the executive to take
corrective measures in this regard expeditiously.
C
(xxi) The argument about proportionality of punishment with
reference to the nature of scheduled offence is wholly unfounded and
stands rejected.
ORDER
T.P. (Crl.) No. 150/2016, T.P. (Crl.) Nos. 151-157/2016, D
T.P. (C) No. 1583/2018 and T.P. (Crl.) No. 435/2021
1. These transfer petitions are disposed of with liberty to the private
parties to pursue the proceedings pending before the High Court. The
contentions, other than dealt with in this judgment, are kept open, to be
decided in those proceedings on its own merits. It would be open to the E
parties to pursue all (other) contentions in those proceedings, except the
question of validity and interpretation of the concerned provision(s)
already dealt with in this judgment.
T.C. (Crl.) Nos.3/2018 and 4/2018
F
2. In these transferred cases, the parties are relegated before the
High Court by restoring the concerned writ petition(s) to the file of the
concerned High Court to its original number limited to consider relief of
discharge/bail/quashing, as the case may be, on its own merits and in
accordance with law. It would be open to the parties to pursue all (other)
contentions in those proceedings, except the question of validity and G
interpretation of the concerned provision(s) already dealt with in this
judgment. The transferred cases are disposed of accordingly.
W.P. (Crl.) Nos. 169/2020, 370/2021, 454/2021 and 475/2021
3. (a) These writ petitions involve issues relating to Finance Bill/
Money Bill. Hence, the same are delinked, to be heard along with Civil H
724 SUPREME COURT REPORTS [2022] 6 S.C.R.

A Appeal No.8588 of 2019 titled ‘Rojer Mathew vs. South Indian Bank
Ltd. & Ors.’.
W.P. (Crl.) Nos. 251/2018 and 532/2021
(b) In these writ petitions, as the relief claimed was only regarding
the validity and interpretation of the provisions of the 2002 Act, the same
B are disposed of in terms of this judgment.
W.P. (Crl.) Nos. 152/2016, 202/2017, 26/2018, 33/2018, 75/
2018, 117/2018, 173/2018, 175/2018, 184/2018, 226 of 2018,
309/2018, 333/2018, 9/2019, 16/2019, 49/2019, 122/2019,
127/2019, 139/2019, 147/2019, 205/2019, 217/2019, 244/
C 2019, 272/2019, 283/2019, 289/2019, 300/2019, 308/2019,
326/2019, 365/2019, 367/2019, 39/2020, 259/2020, 60/2020,
91/2020, 239/2020, 267/2020, 366/2020, 385/2020, 404/2020,
429/2020, 18/2021, 19/2021, 21/2021, 27/2021, 66/2021,
179/2021, 199/2021, 207/2021, 239/2021, 263 of 2021, 268/
D 2021, 282/2021, 303/2021, 305/2021, 323/2021 and 453/
2021
(c) In these writ petitions as further relief of bail/discharge/quashing
has been prayed, the same are disposed of in terms of this judgment
with liberty to the private parties to pursue further reliefs before the
E appropriate forum, leaving all contentions in that regard open, to be
decided on its own merits.
Crl. A. Nos. 1269/2017, 1270/2017, 223/2018, 391-392/
2018, 793-794/2018, 1210/2018 and 682/2019
SLP (Crl.) Nos. 4634/2014, 9987/2015, 10018/2015, 10019/
F 2015, 993/2016, 1271-1272/2017, 2890/2017, 5487/2017,
1701-1703/2018, 1705/2018, 5444/2018, 6922/2018, 8156/
2018, 5350/2019, 8174/2019, 9652/2019, 10627/2019, 260/
2020, 3474/2020, 6128/2020, 609/2021, 734/2021, 1355/
2021, 1403/2021, 1440/2021, 1586/2021, 1855/2021, 1920/
2021, 2237/2021, 2250/2021, 2435/2021, 2818/2021, 3228/
G
2021, 3274/2021, 3439/2021, 3514/2021, 3629/2021, 3769/
2021, 3813/2021, 3921/2021, 4024/2021, 4834/2021, 5156/
2021, 5174/2021, 5252/2021, 5457/2021, 5652/2021, 5696-
97/2021, 6189/2021, 7021-23/2021 and 8429/2021
SLP (C) Nos. 28394/2011, 28922/2011, 29273/2011 and
H 8764-67/2021
VIJAY MADANLAL CHOUDHARY & ORS. v. UNION OF 725
INDIA & ORS. [A. M. KHANWILKAR, J.]

Diary Nos. 9360/2018, 9365/2018, 17000/2018, 17462/2018, A
20250/2018 and 22529/2018, 8626/2021 and 11605/2021
4. These appeals/petitions are de-tagged and ordered to be listed
separately before appropriate Bench as the impugned judgment in the
concerned case deals with the prayer for bail/discharge/quashing. This
relief will have to be decided on case-to-case basis. Accordingly, these B
matters be listed separately before appropriate Bench. The Registry to
do the needful in this regard.
709
WP (Crl.) Nos. 336/2018, 173/2019, 212/2019, 253/2019,
261/2019, 266/2019, 273/2019, 285/2019, 288/2019, 298/
2019, 299/2019, 306/2019, 346/2019, 09/2020, 35/2020, 49/ C
2020, 52/2020, 240/2020 and 329/2020
WP (C) Nos. 1401/2020 and 56/2021
SLP (Crl.) Nos. 1534/2018, 2971/2018, 7408/2018, 11049/
2018, 11839/2019, 1732/2020, 2023/2020 and 6303/2020;
710
D
WP (Crl.) Nos. 119/2019, 239/2019, 263/2019, 36/2020,
124/2020, 137/2020, 140/2020, 142/2020, 145/2020, 228/
2020, 69/2021, 359/2021 and 520/2021
SLP (Crl.) Nos. 1114/2018, 1115/2018, 618/2020, 2814/2020,
6456/2020, 6660/2020, 6338/2021 and 6847/2021;
E
711
WP (Crl.) Nos. 118/2019, 267/2019, 286/2019, 287/2019,
303/2019, 305/2019, 309/2019, 313/2019, 28/2020, 61/2020,
89/2020, 90/2020, 93/2020, 184/2020, 221/2020, 223/2020,
285/2020, 286/2020, 410/2020, 411/2020, 04/2021, 06/2021,
33/2021, 40/2021, 47/2021, 144/2021 and 301/2021
F
SLP (Crl.) Nos. 244/2019, 3647/2019, 4322-24/2019, 4546/
2019, 5153/2019, 9541/2019, 647/2020, 3366/2020, 5536/
2020, 1031/2021, 1072/2021, 1073/2021, 1107/2021, 2050-
54/2021 and 6834/2019
SLP (C) No. 20310/2021 G
Diary No. 31616/2021;

709
These matters relate to the Customs Act, 1962
710
These matters relate to the Companies Act, 2013
711
These matters relate to Central Goods and Services Tax Act, 2017 H
726 SUPREME COURT REPORTS [2022] 6 S.C.R.

712
A WP (Crl.) Nos. 05/2020, 311/2020, 380/2020, 387/2020
and 11/2021
SLP (Crl.) Nos. 4078/2018, 8111/2019 and 6172/2020
Transferred Case (Crl.) No. 5/2018
B Diary No. 41063/2015
5. In these cases, the challenge is regarding the validity and
interpretation of other statutes (other than 2002 Act), such as Indian
Penal Code, 1860, Code of Criminal Procedure, 1973, Customs Act,
1962, Prevention of Corruption Act, 1988, Companies Act, 2013, Central
C Goods & Services Act, 2017, etc. Hence, the same are delinked and be
placed before the appropriate Bench “group-wise/Act-wise” as indicated
above. The Registry to do the needful in that regard.
6. The interim relief granted in the petitions/appeals which are
disposed of in terms of this order, to continue for a period of four weeks
D from today, to enable the private parties to take recourse to appropriate
remedies before the concerned forum, if so advised.
7. The interim relief granted in petitions/appeals, which are delinked
and ordered to be listed separately or otherwise, shall continue for four
weeks from today, with liberty to the parties to mention for early listing
of the concerned case including for continuation/vacation of the interim
E
relief.

Bibhuti Bhushan Bose Issues Answered.

F

G

712
These matters relate to Indian Penal Code, 1860, Prevention of Corruption Act,
1988, Information Technology Act, 2000, Foreign Contribution (Regulation) Act, 2010,
H etc.