SECTION 50 OF THE PREVENTION OF MONEY LAUNDERING ACT AS IT IS WORDED IS BEING MISUSED IN VIOLATION OF THE FUNDAMENTAL RIGHT AGAINST SELF INCRIMINATION UNDER ARTICLE 20(3) OF THE CONSTITUTION OF INDIA.

SECTION 50 OF THE PREVENTION OF MONEY LAUNDERING ACT AS IT IS WORDED  IS BEING MISUSED IN VIOLATION OF THE FUNDAMENTAL RIGHT AGAINST SELF INCRIMINATION UNDER ARTICLE 20(3) OF THE CONSTITUTION OF INDIA.

By:- Aabad Ponda advocate Bombay High Court practicing on the Criminal side. 

The scheme of the Prevention of Money Laundering Act is such that unless an offence is a scheduled offence and falling in parts A, B or C of the Schedule it would not attract the provisions of the Money Laundering Act. This is clear from the definition of money laundering  defined under Section 3 of the said Act which requires there to be proceeds of crime as defined under Section 2(u)  and which in turn relates to a scheduled offence. In other words the offence of money laundering is only in respect of offences found under the schedule to the Act which is located after Section 75 of the Act and has offences under various statutes which constitute the essential ingredient for an offence of money laundering.

The offences referred to in the schedule are certainly by and large cognizable or at any rate fall within the four corners of ones in which a private complaint can be filed. The cognizable offences are investigated by an FIR being first registered which is the first step in investigation under Chapter XII of the Criminal Procedure Code, 1973. The investigation in such cases culminates with the filing of the chargesheet. Similarly in cases where no chargesheet will be ultimately filed, the procedure governing such cases is by filing private complaints upon which cognizance is taken and process is issued.

The point that is being sought to be made is that in the case of a scheduled offence more than often there would be an FIR registered against the accused who are sought to be proceeded against ultimately under the provisions of the Prevention of Money Laundering Act. If not in the balance cases the scheduled offence would be in respect of those offences for which a private complaint would be filed before the Magistrate. There would yet be a third class of persons against whom the Magistrate would have issued process, so that the person gets arraigned as an accused and is summoned to answer the charge. In all the three eventualities referred to above indisputably the person stands in the character of an accused. 

It is profitable to quote the judgment of the constitutional bench of the Hon'ble Supreme Court of India in the case of Romesh Chandra Mehta vs State Of West Bengal reported in AIR 1970 SC 940 which reads as under:-

"Normally a person stands in the character of an accused when a First Information Report is lodged against him in respect of an offence before an officer competent to investigate it, or when a complaint is made relating to the commission of an offence before a Magistrate competent to try or send to another Magistrate for trial of the offence. Where a Customs Officer arrests a person and informs that person of the grounds of his arrest, [which he is bound to do under Article 22(1) of the Constitution] for the purpose of holding an inquiry into the infringement of the provisions of the Sea Customs Act which he has reason to believe has taken place, there is no formal accusation of an offence. In the case of an offence by infringement of the Sea Customs Act which is punishable at the trial before a Magistrate, there is an accusation when a complaint is lodged by an officer competent in that behalf before the Magistrate."

emphasis supplied.

Under Section 50 of the Prevention of Money Laundering Act, 2002, the Director, Additional Director, Joint Director, Deputy Director, Assistant Director has the power to summon any person to give evidence or to produce records during the course of any investigation or proceeding under the Act. Further all such persons so summoned shall be bound to attend in person or by authorized agents as directed and shall be bound to state the truth upon any subject respecting which they are examined or make statements and produce such documents as may be required. Further every proceeding under Section 50 shall be deemed to be judicial proceeding within the meaning of Sections 193 and 228 of the Indian Penal Code which relate to punishment for giving false evidence in judicial proceedings and interrupts or insults a public servant sitting in judicial proceedings.  This is clear from a bare reading of sections 50(2) , 50(3) and 50 (4)of the Prevention of Money Laundering Act which read as under:-

" 50. Powers of authorities regarding summons, production of documents and to give evidence, etc.—

(1) The Director shall, for the purposes of section 13, have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908) while trying a suit in respect of the following matters, namely:—

(a) discovery and inspection;

(b) enforcing the attendance of any person, including any officer of a banking company or a financial institution or a company, and examining him on oath;

(c) compelling the production of records;

(d) receiving evidence on affidavits;

(e) issuing commissions for examination of witnesses and documents; and

(f) any other matter which may be prescribed.

(2) The Director, Additional Director, Joint Director, Deputy Director or Assistant Director shall have power to summon any person whose attendance he considers necessary whether to give evidence or to produce any records during the course of any investigation or proceeding under this Act.

(3) All the persons so summoned shall be bound to attend in person or through authorised agents, as such officer may direct, and shall be bound to state the truth upon any subject respecting which they are examined or make statements, and produce such documents as may be required.

(4) Every proceeding under sub-sections (2) and (3) shall be deemed to be a judicial proceeding within the meaning of section 193 and section 228 of the Indian Penal Code, 1860 (45 of 1860).

(5) Subject to any rules made in this behalf by the Central Government, any officer referred to in sub-section (2) may impound and retain in his custody for such period, as he thinks fit, any records produced before him in any proceedings under this Act: Provided that an Assistant Director or a Deputy Director shall not—

(a) impound any records without recording his reasons for so doing; or

(b) retain in his custody any such records for a period exceeding three months, without obtaining the previous approval of the Director.

It is therefore clear that Section 50 comes into play when persons are already arraigned as accused. In such cases no accused can be compelled to answer questions relating to self incriminating material. Even the statute cannot compel them to give answers and on failure to give the answers truthfully or refusal to answer incriminating questions no such persons summoned under Section 50 can be punished under Section 193 or 228 of the Indian Penal Code 1860. This is a totally different scenario from persons summoned for enquiries under Section 108 of the Customs Act or analogous provisions of the Central Excise Act or any other similar statute which makes statements before the authorities empowered to investigate under those acts admissible not being hit by Section 25 of the Indian Evidence Act.

It is profitable to refer to the Constitutional Bench of the Supreme Court of India in the case of Ramanlal Bhogilal Shah And ... vs D. K. Guha And Others reported in AIR 1973 SC 1196. In that case when the person summoned under s. 19-F of the  Foreign  Exchange (Regulation)  Act, 1947 and in respect of the same allegations an FIR was registered under  sections. 120B read with s. 420 I.P.C., and under section. (2) read with s. 23(1) (b) of the Exchange Act. When he was summoned after the registration of the FIR the question arose about the applicability of Article 20 (3) of the Constitution of India which protects the right against self incrimination. It was held that since an FIR was registered against such a person so summoned, though the summons could not be quashed yet he was obliged to only appear and answer questions which did not incriminate him.

In blatant violation of the law all persons under the PMLA Act are compelled to answer incriminating questions under the threat of Section 50 (2) to 50(4) referred to above. In fact only calling such persons to answer non-incriminating material is an exercise which is a waste of time from the point of view of the investigating agency. On the contrary compelling a person who stands in the character of an accused to answer incriminating questions in the manner in which Section 50 of the PMLA Act is worded and  interpreted by the authorities clearly violates Article 20(3) of the Constitution of India. The Section should be amended to restrict the compulsion to non accused persons who are only witnesses and clarify that in the case of accused persons of a scheduled offence they need not answer incriminating questions. The Form V under rule 11 of the Prevention of Money Laundering Rules needs to be also amended accordingly.