Declare several provisions of PMLA Act 2002 as ultra vires, Delhi HC issues Notice

The Delhi High Court on Monday sought response of respondents on a petition which challenged various provisions of PMLA, 2002 including the insertion of "Explanation" added to Section 3 of the Prevention of Money Laundering. Act, 2002 vide Section 193 of the Finance Act (No. 2) 2019, which now erroneously mandates reading of the disjunctive 'or' instead of conjunctive 'and' in Section 3 before the words "projecting or claiming it as untainted property".

The Delhi High Court on Monday sought response of respondents on a petition which challenged various provisions of PMLA, 2002 including the insertion of "Explanation" added to Section 3 of the Prevention of Money Laundering. Act, 2002 vide Section 193 of the Finance Act (No. 2) 2019, which now erroneously mandates reading of the disjunctive 'or' instead of conjunctive 'and' in Section 3 before the words "projecting or claiming it as untainted property". Petitioner Dr. Kapil Jain, who is a medical practitioner in Jabalpur (M.P) was listed for hearing before the bench comprising of Chief Justice D.N Patel and Justice Prateek Jalan, wherein Court issued notice to the Centre and others for further hearing on 12th November. The matter relates to the alleged Rs 2240 crore bank fraud case involving Surya Vinayak Industries.

The Petitioner was represented by Advocate Vijay Aggarwal and Ashul Agarwal. The Petition states that a new offence is created by inserting 'Explanation' contrary to the main Section 3 PMLA. It is trite that an 'Explanation' is a tool to aid in understanding the Section or to iron out the vagueness in the statute. However, 'Explanation' cannot be inserted to alter the Section or create a new offence. By impugned amendment, 'Explanation' has been inserted to create a new offence contrary to the main Section 3, and such exercise being wholly impermissible, it would be in the interest of justice if the same is declared unconstitutional and ultra vires.

The petition further states there are no rules framed under the PMLA Act, 2002 for ED to reach to a particular valuation of the property before attaching the same under section 5(1) of the PMLA which results in giving unbridled and unfettered powers to an officer attaching a property under the PMLA, 2002. Value is defined under Section 2 (ZB) of the PMLA as the value of a property at the date of its acquisition. Provision of Section 17 of the Prevention of Money Laundering Act, 2002 permits the Respondent/ ED to take extreme steps of entering into the premises of a person and taking away any document/article/ etc., without any proof of connection with the alleged "proceeds of crime".

The Prevention of Money Laundering (Taking Possession of Attached or Frozen Properties Confirmed by the Adjudicating Authority) Rules, 2013 (hereinafter 'Rules') are pleaded to be unconstitutional because it discriminates among the owner and the tenant of the immovable property while exercising the un-cannon arbitrary powers of the Enforcement Directorate. Advocate Amit Mahajan, appearing for ED while opposing the petition submitted that almost every provision of PMLA has been challenged without showing as to how the Petitioner are affected from the various PMLA, 2002 provisions. (ANI)

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