Institute of Legal and Management Studies

The Supreme Court on Thursday (July 3) observed that it will first hear the issue of maintainability of the review petitions filed against the Vijay Madanlal Choudhary judgement, which upheld various provisions of the Prevention of Money Laundering Act (PMLA), before going into the merits.

A bench of Justices Surya Kant, Ujjal Bhuyan and N Kotiswar Singh posted the review petitions for hearing on August 6.

During the brief hearing today, Additional Solicitor General SV Raju, for the Union, raised the issue of maintainability, saying that the review bench cannot sit in appeal over the Vijay Madanlal Chaudhary judgment. The bench also took note of the order passed by the Court in August 2022 issuing notice on the review petitions, where it was observed that at least two issues required reconsideration (the order had not recorded what those two issues were).

Senior Advocate Kapil Sibal, for the review petitioners, urged the bench to also consider the other batch of cases where the issue relating to the correctness of the Vijay Madanlal judgment was raised. That batch did not get listed after the Justice SK Kaul, who was heading the bench, retired in December 2023.

Justice Kant told Sibal to make a mention before the CJI to get that batch also listed along with the review petitions.

Justice Kant further said that the ED is justified in raising the preliminary issues regarding maintainability and said that the petitioners will have to first address those.

"You'll (petitioners) proceed on the premise as if entire matter has been re-opened...they (ED) are justified in raising preliminary issues...review has limitations...first what we will suggest is you address preliminary issues..." Justice Kant said.

In the order, the bench noted that the ED has raised three preliminary issues regarding maintainability while the petitioners have raised 13 issues.

"Since the proposed issues are arising in the review proceedings, we propose to first hear the parties on the issue of maintainability of the review petitions followed by a hearing on the questions proposed to be raised on behalf of the review petitioners. Eventually, the questions that would finally arise for consideration will also be determined by us if we hold that the review petitions are maintainable," the bench observed.

Issues raised by the ED.

The three preliminary objections raised by the ED are:

Issues raised by the petitioners.

Previously, on May 7, the Union Government told the Court that the review hearing could not go beyond 2 specific issues which were orally flagged by the bench which issued notice in August 2022. The 2 issues related to supply of the ECIR to the accused and the reversal of burden of proof (Section 24 PMLA), said Solicitor General Tushar Mehta. The petitioners however countered the submission, highlighting that no such thing was recorded in the 2022 order. "The order must be taken for what it is...It can't be that the Government of India's affidavit (stating the 2 issues) will override the Court's order," said Senior Advocate Kapil Sibal. The petitioners also made reference to a judgment by Justice Abhay S Oka regarding the right of the accused to get list of documents in PMLA cases.

Background

The VMC judgment was delivered on July 27, 2022 by a bench comprising Justices AM Khanwilkar, Dinesh Maheshwari and CT Ravikumar. Vide this judgment, certain provisions of the Prevention of Money Laundering Act, 2002 (PMLA) were upheld. These included -

(i) Sections 5, 8(4), 15, 17 and 19 of PMLA, relating to Enforcement Directorate's power of arrest, attachment, search and seizure;

(ii) Section 24 of PMLA, relating to reverse burden of proof (in this regard, the Court said the provision had "reasonable nexus" with the objects of the Act);

(iii) Section 45 of PMLA, which provides "twin-conditions" for bail (in this regard, it was said that the Parliament was competent to amend the provision in 2018 even after the Supreme Court's judgment in Nikesh Tarachand Shah, which struck down the conditions).

Subsequent to this decision, the instant review petitions (8 in number) were filed. With the retirement of Justice Khanwilkar, then CJI NV Ramana presided over the bench to consider the petitions.

While issuing notice on August 25, 2022, CJI Ramana-led bench orally observed that at least two conclusions of the judgment required relook - first, that the copy of the Enforcement Case Information Report (ECIR; equivalent of FIR in money laundering cases) need not be given to the accused, and second, the upholding of the reversal of presumption of innocence.

Thereafter, the Court allowed an application for open court hearing of the review petitions. Since issuance of notice, the petitions were listed for hearing for the first time on August 7, 2024. On this date, the matter had to be adjourned at request of SG Tushar Mehta, who sought some time to prepare and argue. Subsequently, pursuant to a mentioning, the matter was listed on September 18 but got re-listed for October 16, 2024. On the said date, it could not be taken up as Justice Kant was on leave.

Case Title : Karti P Chidambaram v. The Directorate of Enforcement | RP(Crl) 219/2022 (and connected cases)

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