THE RIGHT TO REMAIN SILENT UNDER THE PREVENTION OF MONEY LAUNDERING ACT, 2002

THE RIGHT TO REMAIN SILENT UNDER THE PREVENTION OF MONEY LAUNDERING ACT, 2002

1. Protection from self-incrimination and its status under the PMLA
    
2. 1. Article 20(3) of the Indian Constitution protects accused persons from being compelled to make self-incriminatory statements. The protection from self-incrimination along with the protection from double jeopardy as enshrined under Article 20(2) of the Constitution forms the fulcrum of the criminal justice system in India. As a necessary corollary, any confessional statement made before a police officer or out of coercion during criminal proceedings is inadmissible as evidence, and the same has been cemented in Sections 24 to 26 of the Indian Evidence Act, 1872 (“Evidence Act”).
       
3. 1. The provisions under the Prevention of Money Laundering Act, 2002 (“PMLA”) take a sharp deviation from the constitutional protection from self-incrimination. The vires of the said provisions, among others, were challenged before the Indian Supreme Court (“SC”). The SC settled the issue by way of its decision in Vijay Madanlal Choudhary and Others v. Union of India and Others (“Judgment”), after almost a decade since the earliest batch of the petitions were filed. Consequently, the SC upheld the status quo. Though the Judgment is presently under review before the SC, this article respectfully disagrees with the conclusion arrived at by the SC in the Judgment with respect to self-incrimination.

1. Relevant provisions under the PMLA
   
   1. 1.   Broadly, the PMLA criminalises laundering and aiding in laundering of money generated from commission of offences listed in its schedule. The offences are referred to as ‘scheduled’ or ‘predicate’ offences. Therefore, an offence under the PMLA, must be preceded by commission of a predicate offence through which money said to be laundered was generated. The Enforcement Directorate (“ED”) has been vested with the power to inter alia investigate offences under the PMLA.
    
2. 1. Through Section 50 of the PMLA, the ED is empowered to summon a person, compel production of documents, and give evidence. For this purpose, the ED is vested with the powers of a civil court. Any person who is summoned under the PMLA is bound to state the truth, produce documents, or give evidence as the case may be.
       
3. 1. Section 63 penalises a person for inter alia not stating or refusing to state the truth upon being summoned, or omitting or refusing to produce documents, give evidence, sign statements made by him/her. Further, a person who does not obey the directions under Section 50 (supra) is liable to be proceeded against under the Indian Penal Code (“IPC”) for disobeying the order of a ‘public servant’, i.e., the ED.
   2. As per Section 69, if a person fails to pay the penalty imposed under Section 63 (supra) within 6 months, the ED is empowered to recover the penalty amount from him/her in the manner prescribed under the Income Tax Act, 1961.

1. Why the status quo is unconstitutional?

1. 1. The PMLA not only compels persons to appear in response to summons and produce documents or give evidence and state the truth on oath, but it also penalises them for not answering questions put forth during the proceedings. More often than not, a person who is summoned is not aware under what capacity he is to appear for the ED — whether as an accused or as a witness. Under normal circumstances, if a person is being called in his capacity of an accused, Article 20(3) of the Constitution kicks in, and he must be protected from self-incrimination.

1. 1. Accused in the predicate offence: It was held in the Judgment that as far as the PMLA is concerned, Article 20(3) comes into picture only when a person is arrested. As per the Judgment, any proceedings prior to arrest, would mean that the person is not an ‘accused’. At this juncture, it is pertinent to recall that proceedings under the PMLA are initiated only when a predicate offence already exists — i.e., a PMLA offence cannot exist independently of the predicate offence. When a person who is already an accused in the FIR registered for the predicate offence, is summoned by the ED to investigate/ inquiry about aspects related to proceedings of crime generated from the predicate offence, he does not have a choice but be compelled to give statements under oath. Even though he has been summoned under a different statute to address a different set of allegations relating to money laundering, he does not ipso facto lose the status (or protection, in this case) of an accused. Constitutionally, he has the right to remain silent, or not make any self-incriminating statements. However, by virtue of Section 63 of the PMLA, if a person chooses to remain silent, and not make statements that he perceives would be damaging, he is liable to be chastised for choosing to remain silent.

1. 1. The predicate offence and the consequent PMLA proceedings are so intertwined that it is improbable for a person to respond to any questions raised during the investigation/ inquiry, or documents sought without self-incriminating. In such scenarios, the person so summoned must have every right to remain silent.

1. 1. ED officers are not police officers: The SC, in its wisdom, addressed the issue of confessional statements by taking the route of answering whether ED officers are police officers are not. It was held in the Judgment that ED officers are not police officers. Consequentially, an accused does not have the safeguards available to him under Sections 25 and 26 of the Evidence Act — which essentially state that any confessions made before a police officer (in custody or otherwise) cannot be proved as evidence against him.
       
2. 1. Right to remain silent vs. right to lie: While dealing with the legality of the penalties under Section 63 of the PMLA, one of the primary concerns of the SC was that accused persons must not be given the wriggle room to lie during investigation/ inquiry. Though this is a legitimate concern, lying during investigation or inquiry is only one aspect of the issue. Given the seriousness attached to money laundering and the international commitments leading up to the enacting the PMLA, it is necessary to curb individuals (accused or witness) from lying under oath. However, it ought to be differentiated from one’s right to remain silent when posed with a question answering which would amount to self-incrimination.
       
3. 1. As the PMLA stands today, a person could be penalised up to Rupees Ten Thousand per default or failure to respond to a question. He is also liable to be tried under the IPC for disobeying a public servant (i.e., the ED officer) the punishment for which is up to 6 months’ simple imprisonment and/ or fine of Rupees Ten Thousand. This means, a person may be jailed for simply not speaking during an investigation/ inquiry under the PMLA. This is in the teeth of Article 20(3) of the Constitution.
       
4. 1. Section 24 of the Evidence Act vis-à-vis the veiled threat under the PMLA: Section 24 of the Evidence Act states that confessions caused by inducement, threat, or promise are irrelevant in criminal proceedings. When the statute itself penalises a person for not making self-incriminatory statements, one ponders whether that amounts to a veiled threat as envisaged under the Evidence Act. There is a stark disparity between the PMLA and Section 24, which deserves consideration.
       
5. 1. Ramanlal Bhogilal Shah and Others v. D. K. Guha and Others: In the year 1973, the SC had the occasion to decide on whether a person summoned by the ED under the Foreign Exchange (Regulation) Act, 1947 was liable to respond to the questions put forth by the ED when there was a pre-existing first information report (FIR) dealing with the same subject, even though he was not specifically an accused in the said FIR. While holding the summons to be valid, the SC held that the petitioner therein may appear before the ED and answer only those questions which were not self-incriminatory in nature.
       
6. 1. Ramanlal (supra) was decided by a Five-Judge Bench of the SC (as opposed to the Three Judge Bench that passed the Judgment). It categorically upholds an individual’s right to remain silent on questions that he/she believes to be incriminatory. The facts in Ramanlal are similar to the question at hand, i.e., the PMLA offence does not exist independent of the predicate offence.
       
7. 1. While the Ramanlal judgment was extensively canvassed before the SC by Senior Counsel, Mr. Aabad Ponda on behalf of the parties he represented, the SC in its wisdom, did not delve into the import of Ramanlal. Not giving Ramanlal the consideration it deserves leads to a conundrum where a Three Judge Bench did not follow a Five-Judge Bench decision, nor did it differentiate Vijay Madanlal Choudhary (supra) from the findings in Ramanlal while arriving at its decision.

1. Conclusion
    
2. 1. Even though a lot of questions concerning self-incrimination remain unanswered, the Judgment holds the field as of today. While the scope of the SC’s jurisdiction is narrow under review proceedings, it is hoped that the issue relating to self-incrimination is reconsidered and settled at the earliest, lest we spend another decade waiting while the constitutional right to remain silent is given a go-by.