B. Ramaraju v. Union of India

By FG LawKit

The writ petitions challenged several provisions of the Prevention of Money Laundering Act (PMLA), 2002, as amended in 2005 and 2009.
The petitions were filed at the second stage of proceedings: the confirmation of provisional attachment orders under Section 8(3).
At this stage, the Adjudicating Authority is required to take a prima facie view on whether properties are involved in money laundering.
The challenge focused on the PMLA's presumption of guilt and the shifting of the burden of proof to the defendant to establish that properties are not involved in money laundering.

Whether the property owned by or in possession of a person other than a person charged of having committed a scheduled offence is liable to attachment and confiscation proceedings under Chapter-III.
Whether the provisions of the second proviso of Section 5(1) (incorporated by the 2nd amendment Act) are applicable to property acquired prior to enforcement of this provision and, if so, whether the provision is invalid for retrospective penalisation?
Whether the provisions of Section 8 are invalid for vagueness, incoherence, or ambiguity.
Whether Section 8(4) is invalid for enjoining deprivation of possession of immovable property even before conviction in the prosecution for a money-laundering offence.
Whether the presumption enjoined by Section 23 is unreasonably restrictive and invalid.
Whether the shifting/imposition of the burden of proof, by Section 24, is arbitrary and invalid; is applicable only to the trial of an offence under Section 3; and not in respect of a person not accused of having committed the offence under Section 3.

The court ruled that property owned or in possession of a person other than a person charged with a scheduled offence is equally liable to attachment and confiscation proceedings under Chapter-III.
The provisions of the second proviso to Section 5 are applicable to property acquired even prior to its coming into force, and retrospective penalization is not invalid in this context.
The court held that Section 8 is not invalid for vagueness, incoherence, ambiguity, or exclusion of mens rea/knowledge of criminality in the acquisition of property.
Section 8(4), which enjoins deprivation of possession of immovable property pursuant to an order confirming the provisional attachment and before conviction of the accused, is valid.
The court affirmed the validity of the presumption in cases of interconnected transactions enjoined by Section 23.
The burden of proving that proceeds of crime are untainted property applies not only to the prosecution and trial of a person charged with an offence under Section 3 but also to proceedings for attachment and confiscation in Chapter III of the Act.
The burden enjoined by Section 24 does not inhere on a person not accused of an offence under Section 3.

SAFEMA Comparison: The court noted that the application of SAFEMA (Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976) to relatives and associates is valid, as the purpose is to reach the properties of the detainee or convict, regardless of where they are held.
Scope of Section 24: The court was not satisfied that the provisions of Section 24 are arbitrary or unconstitutional. Section 24 is not confined to the trial of an offence under Section 3 but operates to attachment and confiscation proceedings under Chapter-III, as well.
Interplay of Sections 23 and 24: The legislative prescription that the burden of proof under Section 24 inheres only on a person accused of having committed the offence under Section 3 is only to confine the expressed burden. Where the property is in the ownership, control, or possession of a person not accused of having committed an offence under Section 3, the presumption enjoined in Section 23 comes into operation, and not the inherence of the burden of proof under Section 24.

A third level of safeguard is that the order of the Adjudicating Authority (AA) is further subject to review by the Appellate Tribunal (AT) and then again by the High Court. With there being so many levels of judicial review, there can be very little scope for arbitrary or whimsical decision-making.