New Delhi: Can statements given by a Prevention of Money Laundering Act (PMLA) accused while under the custody of investigating officers of the Enforcement Directorate (ED) incriminating himself in another money laundering case be admissible in evidence?
A bench comprising justices B.R. Gavai and K.V. Viswanathan answered this question in the negative on Wednesday, observing, “We have no hesitation in holding that when an accused is in custody under PMLA irrespective of the case for which he is under custody, any statement under Section 50 PMLA to the same Investigating Agency is inadmissible against the maker.”
“The reason being that the person in custody pursuant to the proceeding investigated by the same investigating agency is not a person who can be considered as one operating with a free mind. It will be extremely unsafe to render such statements admissible against the maker, as such a course of action would be contrary to all canons of fair play and justice,” the court further explained.
The court was hearing an appeal filed by Prem Prakash, an alleged associate of Jharkhand Chief Minister Hemant Soren. Prakash had challenged a judgment passed by the Jharkhand High Court dismissing his bail application in March this year in a PMLA case registered against him.
The prosecution in the case relied on the statements made by the co-accused as well as Prakash himself under Section 50 of the PMLA, which talks about the power of the ED to summon persons, asking them to produce documents and give evidence. However, the statements that the agency sought to rely on were allegedly made by Prakash while he was in judicial custody in another PMLA case.
Ruling such statements to be inadmissible, the court, therefore, allowed his appeal and set aside the Jharkhand High Court judgment. He was asked to be released on bail.
What does Section 50 of PMLA say
Section 50 of the PMLA mandates that the person summoned by the ED should disclose true and correct facts he knows in connection with the subject matter of investigation. The person also has to sign the statement and can be punished for falsehood or incorrectness under Section 63 of the PMLA. These statements are then admissible as evidence.
The validity of sections 50 and 63 is currently under challenge before the Supreme Court.
In the Vijay Madanlal Choudhary judgment—which upheld provisions of the PMLA in 2022—the petitioners had challenged this provision on the ground that it violates Articles 20(3) (right against self-incrimination) and 21 (right to life and personal liberty) of the Constitution. They had also contended that the provision is contrary to Section 25 of the Indian Evidence Act, which makes confessions made to police officers inadmissible as evidence.
While the Vijay Madanlal Choudhary judgment upheld the provision, it had added that in a given case, whether the protection of Section 25 of the Indian Evidence Act is available to a money laundering accused or not “may have to be considered on case-to-case basis being rule of evidence”.
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‘A travesty of justice’
In this case, the ED sought to rely on Prakash’s own statements. However, his lawyers resisted this, pointing out that the remarks sought to be relied upon by the agency were made when he was in custody in another PMLA case.
The question before the court, therefore, was, “when a person is in judicial custody/custody in another case investigated by the same investigating agency, whether the statements recorded…for a new case in which his arrest is not yet shown, and which are claimed to contain incriminating material against the maker, would be admissible under Section 50?”
The Supreme Court ruled that if his statement is considered incriminating against him, it will be hit by Section 25 of the Indian Evidence Act since he gave the remarks while he was in judicial custody in another proceeding instituted by the same agency.
It asserted that since he was taken from judicial custody to record the statement, it would be a “travesty of justice” to make the statement admissible against him.
The court also asserted that the judgment in the Vijay Madanlal Choudhary case mandated that it ask itself the following question: “Is a reasonable inference legitimately possible that, due to the vulnerable position in which the appellant was placed and the dominating position in which the investigating agency was situated, in view of the arrest in the other proceeding, there obtained a conducive atmosphere to obtain a confession?”
“We certainly think so. The question is not whether it actually happened. The question is, could it have been possible?” the bench answered.
‘Bail is the rule’
Section 45 of the PMLA is often criticised for its stringency. It lays down the strict twin conditions of bail under the ct, which makes getting bail under the money laundering law extremely difficult.
According to this section, bail can be granted to an accused in a money laundering case only if two conditions are satisfied. First, there should be prima facie satisfaction that the accused has not committed the offence. Second, that he is not likely to commit any offence while on bail.
This puts the burden on the accused to demonstrate that he is not guilty.
The court also stressed the importance of the principle that “bail is the rule and jail is the exception”, asserting that this is “only a paraphrasing of Article 21 of the Constitution of India.”
It observed that the liberty of an individual is always the rule, and its deprivation is an exception.
The court reiterated its verdict earlier this month that granted bail to former Delhi Deputy CM Manish Sisodia. In that judgment, the same bench comprising justices Gavai and Viswanathan emphasised that a speedy trial is a fundamental right under Article 21 of the Constitution and opined that “on account of a long period of incarceration running for around 17 months and the trial even not having been commenced, the appellant has been deprived of his right to speedy trial.”
The court now said that Section 45 of the PMLA must be applied in this background, adding that since Article 21 is a higher constitutional right, statutory provisions like Section 45 “should align themselves to the said higher constitutional edict.”
‘Not substantive evidence’
As for the case against Prakash, the court opined that the statements of the co-accused against Prakash “will not have the character of substantive evidence.” It observed that the prosecution cannot start with such a statement to establish its case.
Looking at the prosecution’s submissions and reliance on the statements of the co-accused, the court now held that Prakash had satisfied the twin conditions under Section 45.
“Inasmuch as from the material on record, this court is satisfied that there are reasonable grounds for believing that the appellant is not guilty of the offence of money laundering as alleged under sections 3 and 4 of the PMLA and the court is further satisfied that the appellant is not likely to commit any offence, if enlarged on bail,” it observed.
(Edited by Tarannum Khan)