Vijay Madanlal Choudhary and others vs Union Of India and others

Case Summary

Full Case Details

A.M. Khanwilkar, Dinesh Maheshwari and C.T. Ravi Kumar , JJ

In the present batch of petition(s)/appeal(s)/case(s), we are called upon to deal with the
pleas concerning validity and interpretation of certain provisions of the Prevention of
Money- Laundering Act, 2002 and the procedure followed by the Enforcement Directorate
while inquiring into/investigating offences under the PMLA, being violative of the
constitutional mandate.

2. It is relevant to mention at the outset that after the decision of this Court in Nikesh
   Tarachand Shah vs. Union of India & Anr. (2018) 11 SCC 1, the Parliament amended
   Section 45 of the 2002 Act vide Act 13 of 2018, so as to remove the defect noted in the
   said decision and to revive the effect of twin conditions specified in Section 45 to offences
   under the 2002 Act. This amendment came to be challenged before different High Courts
   including this Court by way of writ petitions. In some cases where relief of bail was
   prayed, the efficacy of amended Section 45 of the 2002 Act was put in issue and answered
   by the concerned High Court. Those decision(s) have been assailed before this Court and
   the same is forming part of this batch of cases. At the same time, separate writ petitions
   have been filed to challenge several other provisions of the 2002 Act and all those cases
   have been tagged and heard together as overlapping issues have been raised by the parties.
   Submissions of the Private Parties
3. Mr. Kapil Sibal, learned senior counsel appearing for the private parties/petitioners in the
   concerned matter(s) submitted that the procedure followed by the ED in registering the
   Enforcement Case Information Report is opaque, arbitrary and violative of the constitutional
   rights of an accused. It was submitted that the procedure being followed under the PMLA is
   draconian as it violates the basic tenets of the criminal justice system and the rights enshrined
   in Part III of the Constitution of India, in particular Articles 14, 20 and 21 thereof.
4. It was argued that as per definition of Section 3 of the PMLA, the accused can either
   directly or indirectly commit money- laundering if he is connected by way of any process or
   activity with the proceeds of crime and has projected or claimed such proceeds as untainted
   property. In light of this, it was suggested that the investigation may shed some light on such
   alleged proceeds of crime, for which, facts must first be collected and there should be a
   definitive determination whether such proceeds of crime have actually been generated from
   the scheduled offence. Thus, there must be at least a prima facie quantification to ensure that
   the threshold of the PMLA is met and it cannot be urged that the ECIR is an internal
   document. Therefore, in the absence of adherence to the requirements of the Cr.P.C. and the
   procedure established by law, these are being violated blatantly.
5. Mr. Sibal, while referring to the definition of “money- laundering” under Section 3 of the
   PMLA, submitted that the ED must satisfy itself that the proceeds of crime have been
   projected as untainted property for the registration of an ECIR or the application of the
   PMLA. It has been vehemently argued that the offence of money-laundering requires the
   proceeds of crime to be mandatorily „projected or claimed‟ as untainted property. Meaning
   thereby that Section 3 is applicable only to the generation of proceeds of crime, such proceeds
   being projected or claimed as untainted property. It is stated that the pertinent condition of
   „and‟ projecting or claiming cannot be ousted and made or interpreted to be „or‟ by the
   Explanation that has been brought about by way of the amendment made vide Finance (No.2)
   Act, 2019. It has been submitted that such an act would also be unconstitutional, as being
   enlarging the ambit of a principal section by way of adding an Explanation.
6. It is also stated that the general practice is that the ED registers an ECIR immediately
   upon an FIR of a predicate offence being registered. The cause of action being entirely
   different from the predicate offence, as such, can lead to a situation where there is no
   difference between the predicate case offence and money laundering. In support of the said
   argument, reliance was placed on the Article 3 of the Vienna Convention, where the words
   like “conversion or transfer of property”, “for the purpose of concealing or disguising the
   illicit origin of the property or of assisting any person who is involved in the commission of
   such an offence or offences to evade the legal consequences of his actions”, have been used.
   It is urged that what was sought to be criminalised was not the mere acquisition and use of
   proceeds of crime, but it was the conversion or transfer for the purpose of either concealing or
   disguising the illicit origin of the property to evade the legal consequences of ones actions.
   Reference was also made to the Preamble of the PMLA which refers to India‟s global
   commitments to combat the menace of money-laundering. Learned counsel has then referred
   to the definition of “money- laundering” as per the Prevention of Money-Laundering Bill,
   1999 to show how upon reference to the Select Committee of the Rajya Sabha, certain
   observations were made and, hence, the amendment was effected, wherein the words “and
   projecting it as untainted” were added to the definition which was finally passed in the form
   of PMLA. Reliance has also been placed on the decision of Nikesh Tarachand Shah.
7. Our attention is also drawn to the provisions which have now been replaced in the statute.
   Prior to 2013 amendment, Section 8(5) of the PMLA was to the following effect:
   “8. Adjudication –
   …(5) Whereon conclusion of a trial for any scheduled offence, the person
   concerned is acquitted, the attachment of the property or retention of the seized
   property or record under sub-section (3) and net income, if any, shall cease to have
   effect.”
8. However, vide amendment in 2013, the words „trial for any scheduled offence‟ were
   replaced with the words „trial of an offence under this Act.‟ It is urged that for the property to
   qualify as proceeds of crime, it must be connected in some way with the activity related to the
   scheduled offence. Meaning thereby that if there is no scheduled offence, there can be no
   property derived directly or indirectly; thus, an irrefutable conclusion that a scheduled offence
   is a pre-requisite for generation of proceeds of crime.
9. Next in line for submissions on behalf of private parties is Dr. Abhishek Manu Singhvi,
   learned senior counsel. He firstly argued the point of burden of proof under Section 24 of the
   PMLA. He has pointed out that prior to amendment, the entire burden of proof right from
   investigation till the judgment was on the accused. Even though this has changed post 2013
   amendment and some balance has been restored, it has not fully cured this section of its
   unconstitutional nature. He has gone into the legislative history of the Act and stated that
   originally the presumption was raised even prior to the trial and state of charge, this was
   diluted by the amendment of 2013 thereafter the presumption would only apply after the
   framing of charges.
10. The next point of attack for Dr. Singhvi, learned senior counsel is the constitutionality of
    Sections 17 and 18. The absence of safeguards in lieu of searches and seizures is canvassed.
    It has been pointed out that such searches or seizures can take place even without an FIR
    having been registered or a complaint being filed before a competent Court.
11. Next leg of submissions challenges the vires of the second proviso of Section 5(1), as it
    allows for attachment independent of the existence of a predicate offence, given that such
    property might not even be proceeds of crime. Though an emergency procedure, no threshold
    had to be met and the first proviso has no application. It is also submitted that the proviso
    cannot travel beyond the scope of the main provision. Our attention is drawn to the legislative
    history; it is stated that the PMLA did not originally contain the second proviso. Attachment
    was only to be done after filing of chargesheet in the predicate offence. For the first time, in
    2009, this proviso was added, to avoid frustration of the proceedings. It is submitted that this
    proviso has no anchor to either the scheduled offence or the proceeds of crime. It is at the
    mere satisfaction of the officer. In this way, it is submitted, attachment of property of any
    person can be made, with no fetters. Our attention is also drawn to the use of word „any‟ for
    person and property and its distinction from the term „proceeds of crime‟, having a direct
    nexus with the ambit of the main Section. It is argued that it is not to be mixed with any
    offence but only scheduled offences. The ED is alleged to employ this language in attaching
    property purchased much before the commission of scheduled offences, to the extent not
    having any nexus. It is submitted that there has to be a link between the second proviso to the
    proceeds of crime and scheduled offence being investigated under a specific ECIR before the
    ED.
12. Submissions with respect to Section 8 of the PMLA maintain that Section 8(4) allows the
    ED to take possession of the attached property at the stage of confirmation of provisional
    attachment made by the Adjudicating Authority. It is submitted that this deprivation of a
    persons right to property at such an early stage without the due process of law, is
    unconstitutional. Further the period of attachment under Section 8(3)(a) of the PMLA is also
    arbitrary and unreasonable. To make good the point, the relevant legislative history is pointed
    out. The original enactment where provisional attachment would continue during the
    pendency of proceedings related to „any scheduled offence‟. Thereafter in 2012, the same was
    changed to „any offence under the PMLA‟, followed by 2018 amendment- „a period of ninety
    days during investigation of the offence or during pendency of proceedings under the PMLA‟,
    and finally by 2019 amendment the increase from „ninety days‟ to „three hundred and sixty-
    five days‟. We are also taken through the elaborate process of attachment of property.
    Thereby, it is highlighted that the ED can take possession of property after a single
    adjudicatory process, wherein there is no oversight over the ED. It is stated that such
    alienation of property without any proceedings having been brought before the Court is
    undoubtedly an unconstitutional act. As for Section 8(3)(a) clarification is sought in light of
    the confusion that it allows for a continuation of the confirmed provisional attachment for
    three hundred and sixty-five days or during the pendency of proceedings under the PMLA.
    This might lead to a reading where the ED has a period of three hundred and sixty-five days
    to file its complaint.
    SUBMISSIONS OF THE UNION OF INDIA
13. Mr. Tushar Mehta, learned Solicitor General led the arguments on behalf of the Union of
    India, followed by Mr. S.V. Raju, learned Additional Solicitor General.
14. At the outset, it is submitted by the learned Solicitor General that as on date, around 4,700
    cases are being investigated by the ED, which is a small number as compared to annual
    registration of the cases under the Money Laundering Act in UK (7,900), USA (1,532), China
    (4,691), Austria (1,036), Hongkong (1,823), Belgium (1,862), Russia (2,764). Further, only
    2086 cases were taken up for investigation in last five years under the PMLA out of
    registration of approximately 33 lakh FIRs relating to predicate offences by police and other
    enforcement agencies.
15. It is asserted that the validity of the PMLA shall have to be judged in the background of
    international development and obligation of India to prevent money-laundering, as moneylaundering impacts not only the country in which the predicate offence takes place, but also
    the economy of other countries where “proceeds of crime” is laundered.
16. It is submitted that the object of the PMLA which affect the economic fabric of the nation,
    is to prevent money-laundering, regulate certain activities relatable to money-laundering,
    confiscate the “proceeds of crime” and the property derived therefrom and punish the
    offenders. The development of international consensus towards the offence of moneylaundering has been highlighted. It is submitted that prior to 1988, there was no concept of
    “proceeds of crime” and the same was recognized for the first time in Regina vs. Cuthbertson
    & Ors. [1981] A.C. 470 by the House of Lords. England was one of the first countries to take
    legislative action against proceeds of crime on the recommendations of the Hodgson
    Committee by enacting Drug Trafficking Offences Act, 1986 (later replaced by the Drug
    Trafficking Act, 1994) which empowered the Courts to confiscate the proceeds of drug
    trafficking.
17. Later, the Vienna Convention imposed obligation on each participating country to
    criminalize offences related to drug trafficking and money-laundering, to which India is a
    party.
18. It is submitted that the provisions of the Palermo Convention were delineated to ensure
    that participating countries should have appropriate legislation to prevent money-laundering
    and further, the Convention also placed obligation on the participating nations to utilize
    relevant international anti-money laundering initiatives in establishing their domestic
    regulatory and supervisory regimes.
19. Further, it is submitted that on 31.10.2003, the UN General Assembly adopted United
    Nations Convention Against Corruption, whose Preamble recognized the importance of
    preventing, detecting and deterring international transfers of illicitly acquired assets, and 180
    Article 3(1)(a)&(b) of the Vienna Convention, 1988 strengthening international cooperation
    in asset recovery. The Convention mandated the participating States to conduct enhanced
    scrutiny of accounts sought or maintained by politically exposed persons and their associates
    and to implement measures to monitor the movement of cash and other instruments across
    their borders so that a „paper trail‟ be created which could assist law enforcement authorities
    in investigating the transfers of illicit assets.
20. Thus, relying on the international Conventions, the Union of India has submitted that it is
    the international obligations of the State to not only recognize the crime of money-laundering
    but also to take steps for preventing the same.
21. To highlight the role played by the FATF in combating the menace of money-laundering,
    the respondent has traced the origin of FATF and stated its process of reviewing the
    compliance with its recommendations by every State and the consequences of noncompliance. It is submitted that the FATF was established by the Heads of State or
    Government of the seven major industrial nations (Group of Seven, G-7) joined by the
    President of the European Commission in a summit in Paris in July, 1989 which is famous for
    its „Forty Recommendations‟ to combat money-laundering and, hence, carry out its own
    evaluation and enforcement on the issue of money-laundering across the world. Thus, it acts
    as a dedicated body dealing with this issue. It is submitted that FATF has recognized dynamic
    nature of money-laundering and thus attempted to respond to the money-laundering
    techniques that are constantly evolving, by reviewing its recommendations…
22. It is submitted that the measures against money-laundering have evolved over the period
    of time. Further, FATF has taken preventive, regulatory and monitoring steps through
    keeping a watch on suspicious or doubtful transactions by amending its Forty
    Recommendations in 2003 and 2012.
23. It is further submitted that FATF assess the progress of its members in complying with the
    FATF recommendations through assessments performed annually by the individual members
    and through mutual evaluations which provides an in-depth description and analysis of a
    country‟s system for preventing criminal abuse of the financial system, as well as, by focused
    recommendations to the country to further strengthen its system.
24. It is submitted that upon evaluation, a country will be placed immediately into enhanced
    follow-up if it does not comply with the FATF technical and big six recommendations or has
    a low effectiveness outcome.
25. It is further submitted that jurisdictions under monitoring then, based on their
    commitments and compliances, are put in two types of list viz., grey list and black list, which
    serve as a signal to the global financial and banking system about heightened risks in
    transactions with the country in question which not only severely affect its international
    reputation but also impose economic challenges, such as impacting the bond/credit market of
    the country, impacting the banking and financial sector of the country, affecting cross-border
    capital flows, especially for the trade sector, documentary requirements for export and import
    payments, such as letters of credit may become more challenging to fulfil, potentially raising
    costs and hampering business for companies engaged in trade, adversely affecting the
    economy due to a lack of investment opportunities which may further deteriorate the financial
    health of the country and the country may also be deemed as a „high-risk country‟.
26. It is further submitted that the goal of money-laundering is to conceal the predicate
    offences and to ensure that the criminals „enjoy‟ their proceeds. Further, the moneylaundering takes place through „a complex process often using the latest technology, of
    sanitizing money in such a manner that its true nature, source or use is concealed, thereby
    creating an apparent justification for controlling or possessing the laundered money‟ in a
    number of intermediate steps.
27. It is stated that the reasons for fighting money-laundering, firstly, is to enable law
    enforcement authorities to confiscate the proceeds of predicate criminal activities so as to
    undermine organized crime by taking away the incentive for these criminal activities relatable
    to offences. Secondly, to apprehend high level criminals as they themselves stay aloof from
    criminal activities but do come into contact with the proceeds of these activities, thereby
    creating a „paper trail‟. Thirdly, to prevent criminals from destabilizing the national economy
    because of its corruptive influence on financial markets and the reduction of the publics
    confidence in the international financial system and lastly to deter the money launderers from
    impacting the growth rate of the world economies.
28. It is stated that the principal sources of illegal proceeds are collar crimes (tax, fraud,
    corporate crimes, embezzlement and intellectual property crimes), drug related crimes and
    smuggling of goods, evasion of excise duties, corruption and bribery (and the embezzlement
    of public funds).
29. To show the global impact of money-laundering, it is submitted that the IMF and the
    FATF have estimated that the scale of money-laundering transactions is between 2% and 5%
    of the global GDP… Thus, the operation of money-laundering has international dimension. It
    is submitted that measures being taken at the national level would be inadequate, which made
    it necessary to establish effective international co-operation mechanisms to allow national
    authorities to co-operate in the prevention and prosecution of money-laundering and in
    international „proceeds-hunting‟.
30. Further, it is submitted that the measures to combat money- laundering have evolved
    from post facto criminalization to preventive approach with its stress on the reporting
    obligations. The definition of “money-laundering” is now no more restricted to the elements
    of projection and untainted property.
31. It is stated that India, and its version of the PMLA, is „merely a cog in this international
    vehicle‟ and as India is a signatory to these treaties, therefore, is bound legally and morally, to
    adopt the best global practices and respond to the changing needs of the times. It is, therefore,
    submitted that the constitutionality of the PMLA has to be adjudicated from the stand point of
    the country‟s obligations and evolving responsibilities internationally.
32. The learned Solicitor General invited our attention to the introduction to the PMLA.
    Making reference to the Statement of Objects and Reasons of the Act, he submits that the Act
    was enacted with the intent of establishing a strict and stringent framework to address the
    global menace of money-laundering. Refuting the private parties attempt to classify the Act as
    being a purely penal statute, he submits that the PMLA is an amorphous or hybrid statute,
    which has regulatory, preventive and penal aspects. Learned Solicitor General then walked us
    through the various provisions of the PMLA, and submitted that categorizing the Act as being
    merely penal in nature, would not only defeat the purpose of the Act, but would also be
    against the express provisions enshrined therein.
33. It is further submitted by the Union of India that the PMLA is a complete Code in itself,
    and establishes a specific separate procedure to the extent necessary and to be followed in
    proceedings under the Act. Laying down a brief summary of the legislative scheme of the
    Act, the respondent submits that there has been a conscious legislative departure from
    conventional penal law in India. Considering the peculiar nature of money-laundering which
    requires prevention, regulation and prosecution, a completely different scheme is framed by
    the Legislature…
34. The respondent then sheds some light on the offences being investigated by the
    Directorate of Enforcement. It is submitted that the number of cases taken up for investigation
    each year has risen from 111 cases in 2015-16 to 981 in 2020-21. Comparing the number of
    cases registered annually under money-laundering legislations, it is submitted that the low
    registration of cases in India is due to the robust mechanism for risk-based selection of cases
    for investigation. The ED is focusing its attention on cases involving high value of proceeds
    of crime and cases involving serious predicate offence involving terror financing, narcotics,
    corruption, offence involving national security, etc. To that effect, it is highlighted that
    attachment proceedings concerning some of the fugitives, who are facing action, were done
    and assets worth Rs.19,111.20 crores out of a total fraud of Rs.22,585.83 crores were
    attached. Furthermore, the investigation in 57 cases of terror and Naxal financing has resulted
    in identification of proceeds of crime worth over Rs.1,249 crores and attachment of proceeds
    of crime of Rs.982 crores (256 properties) and filing of 37 prosecution complaints and
    conviction of two terrorists under PMLA. Lastly, it is stated that the quantum of proceeds of
    crime involved in the bunch cases under the PMLA which are under consideration in these
    matters is Rs.67,104 crores.
35. Having laid down the basic scheme of the PMLA, learned Solicitor General proceeded to
    discuss the definition of money- laundering as per Section 3 of the Act. Tracing its origin, it
    is submitted that the term “money-laundering” finds its initial definition in Article 3.1(b)(i)(ii)
    and (c)(i) of the Vienna Convention. However, the Vienna Convention limited the predicate
    offences to drug trafficking offences, and, consequently, led to the adoption of an expansive
    definition covering the widest range of predicate offences under the Palermo Convention.
    Building upon the definitions contained in the Vienna Convention and the Palermo
    Convention, the FATF recommended member countries to expand the predicate offences to
    include serious crimes. The same was made binding on the member countries by way of
    Recommendation No. 1 and Recommendation No. 3 of the FATF. Subsequent to its
    enactment, the PMLA became subject to evaluation by the FATF based on the Forty
    Recommendations formulated by the FATF. In 2010, the FATF adopted the Mutual
    Evaluation of the Anti-Money Laundering (AML) and Combating the Financing of Terrorism
    (CFT) Regime of India Report. As per Recommendation No. 1 of the Mutual Evaluation
    Report, the concealment, possession, disposition and use of proceeds of crime were not
    criminalized by PMLA, and India was, thus, held to be not fully compliant. Thus, with a view
    to address the legal deficiency as pointed out by FATF and to make it globally compliant, the
    Prevention of Money-Laundering (Amendment) Act, 2012 amended Section 3 to include
    these activities.
36. Summing up the recommendations of the FATF, it is clarified by the learned Solicitor
    General that even in an act of mere concealment, mere possession or mere use of “proceeds of
    crime” or “activity” connected with the proceeds of crime, per se, is an offence. In other
    words, if a person conceals the proceeds of crime, keeps it in his possession or uses it, he is
    guilty of money-laundering irrespective of as to whether he is projecting it as untainted or not.
    This is for the simple reason that if a person conceals something (proceeds of crime), it is an
    act committed knowingly and, thus, the question of that person projecting that very thing
    either as tainted or untainted does not arise.
37. It is further explained that the anomaly resulting from an erroneous drafting was
    successfully explained during the 2013 review of FATF by categorically contending that all
    expressions following the term “including” are mere illustrative and independently constitute
    an offence of money-laundering without being dependent upon each other. Thus, so long as a
    person knowingly becomes a party or is actually involved in any process or activity connected
    with proceeds of crime, such a person is guilty of money-laundering.
38. In order to lend further credibility to the sanctity of the FATF Mutual Evaluation Report
    and the recommendations contained therein, the learned Solicitor General took us through the
    numerous amendments incorporated in the PMLA by way of the 2012 Amendment Act which
    was largely based on the recommendation of the FATF. Special emphasis is laid on the
    amendments carried out in Sections 5 and 8 of the Act pursuant to FATF recommendations.
39. It is further submitted that the Explanation to Section 3 inserted vide Finance (No.2) Act,
    2019, is merely clarificatory in nature and elucidates the legislative intent behind the
    provision. Reliance is placed on the background/justification of the amendments to PMLA as
    contained in the debate on the Finance Bill, 2019.
40. Strong emphasis is laid on the use of the word „any’ in the phrase „any process or
    activity‟. A careful reading of Section 3 of the PMLA clearly provides that any process or
    activity which itself has a wider meaning also includes the process or activity of concealment,
    possession, acquisition, use and/ or projecting, claiming it as untainted property. Placing
    reliance on Shri Balaganesan Metals vs. M.N. Shanmugham Chetty & Ors. (1987) 2 SCC
    707, it is submitted that all or every type/ species of process or activity connected with
    proceeds of crime shall be included while interpreting the nature of process or activities
    connected with the proceeds of crime.
41. It is further submitted that all and any activities relating to proceeds of crime including
    solitary possession, concealment, use or acquisition, constitute and offence of moneylaundering, independent of the final projection. It is submitted that such an interpretation is
    necessary to effectively implement the Act in its true spirit. It is submitted that considering
    the definition prevailing in India, it is necessary that any and all of the activity or process
    occurring in the definition after the word including is considered to be merely illustrative and
    not restrictive.
42. Depending upon the facts of the case, he submits that it is quite likely that accused of
    money-laundering may fall in more than one of the above categories. Therefore, the focus of
    investigation should be on identification of all the process or activity connected with proceeds
    of crime including the specific processes and activities, which have been included as
    illustrations in Section 3.
43. It is urged that the „projection‟ of proceeds of crime cannot be held as a mandatory
    requirement under Section 3 of the Act; otherwise, it will become impossible to punish a
    person for the offence of money-laundering who “knowingly assists” or who is “knowingly a
    party” or who is “actually involved” in any process or activity connected with the proceeds of
    crime. It is, therefore, submitted that the correct interpretation of the word “and” should be
    “or” as it was always intended by the legislature. Further, it is stated that any interpretation
    contrary to this will render the provision meaningless. To bolster this argument, reliance is
    placed on the decision of this Court in Sanjay Dutt vs. State through C.B.I., Bombay (II)
    (1994) 5 SCC 410. In that case the Court held that the word „and’ should be interpreted as
    „or‟ and the words “arms and ammunition” should not be read conjunctively; otherwise, the
    object of the Act will be defeated. Therefore, on a similar line, it is argued that mere
    concealment or use or possession of the proceeds of crime would amount to an offence of
    money-laundering and any other interpretation of the Section would be contrary to the India‟s
    international obligation and FATF recommendations. It is submitted that such interpretation
    of the word „and‟ would not amount to judicial legislation, as such exercise is only done to
    give effect to the legislative intent by correcting faultiness of expression.
44. It is argued that the amendment of Section 45 only clarifies that the offence under the
    Act is cognizable in nature so far as the power of arrest without warrant is concerned. It is
    further submitted that the amendment being clarificatory in nature would operate
    retrospectively. To bolster this argument, reliance has been placed on Commissioner of
    Income Tax, Bhopal vs. Shelly Products & Anr (2003) 5 SCC 461.
45. …It is further submitted that a stringent condition of bail is relatable to the object of
    creating a deterrent effect on persons who may commit the offence of money-laundering
    which is also manifest in the Preamble of the Act. To give effect to the international standards
    of preventing money-laundering prescribed by FATF and other international treaties,
    stringent bail conditions are necessary and the Legislature has provided enough safeguards
    under Section 19 so as to balance the rights of the accused and to protect the interest of the
    investigation as well. It is urged that the legislative policy of the country has consistently
    treated money-laundering as a serious offence affecting the microeconomic strength of the
    country. Further, it is stated that the twin conditions under Section 45 of the PMLA are
    reasonable from the stand point of the accused and his rights under Article 21 of the
    Constitution, which provides an objective criteria and intelligible differentia, hence, does not
    violate Article 14 of the Constitution. Further it is submitted that there are only some issues
    on which the international community is building consensus and money-laundering is one of
    them, others being terrorism, drug related offences and organized crime and the twin
    conditions are provided in all three categories of laws by the Legislature.
46. It is submitted that persons involved in the offence of money- laundering are influential,
    intelligent and resourceful and the crime is committed with full pre-meditation, which ensures
    that the offence is not detected and even if it is detected, investigation agency cannot trace
    the evidence. Further, it is stated that the offence is committed with the help of advanced
    technology so as to conceal the transaction, which makes the stringent bail conditions
    justified. Twin conditions of bail under Section 45 protects the interests of the accused as well
    as that of the prosecution. Reliance has been placed on Talab Haji Hussain vs. Madhukar
    Purshottam Mondkar & Anr. (1958) SCR 1226, to state that the fair trial must not only be
    fair to the accused but also be fair to the prosecution, so that a person guilty of the offence
    may not be acquitted.
47. It is submitted that in case of offence of money-laundering, mere routine conditions
    which ensure presence of the accused during trial or protect the evidence, are not enough
    because of the trans-border nature of the offence of money-laundering and influence which
    may be exercised by the accused. An accused can anonymously remove the money trail using
    the technology, which is available today so as to make the investigation infructuous.
    Therefore, even deposit of the passport of the accused may not deter the accused from fleeing
    the course of justice or to eliminate the evidence.
48. It is submitted that economic offences constitute a class apart and need to be visited with
    different approach in the matter of bail. Further, the fact that the economic offences are
    considered as a different class of offences, recognizes the grave and serious nature of the
    offence with deep rooted conspiracy, as they involve huge loss of public funds, thus, affecting
    the economy of the country as a whole. It is submitted that the Court while granting bail must
    keep in mind the nature of accusations, the nature of evidence in support thereof, the severity
    of the punishment which conviction will entail, the character of the accused, circumstances
    which are peculiar to the accused, reasonable possibility of securing the presence of the
    accused, reasonable apprehension of the witnesses being tampered with and the larger
    interests of the public/State. It is submitted that granting or refusal to grant bail depends on
    the nature of offence, needs of investigation, status of the accused and other factors. The
    Legislature, being aware of the need of the day, is competent to provide a special procedure
    for grant of bail. It would be wrong to say that the Court has unfettered discretion in granting
    or refusal to grant the bail. It is true that the Court exercises discretion while granting or
    refusing bail, but that exercise of power has to be within the legislative framework. It is stated
    that the requirement of the Court being satisfied that the “accused is not guilty of an offence”
    is not a novel legislative device. Section 437 of Cr.P.C. also imposes a similar condition.
    Moreover, the twin conditions have been provided for by the Parliament in numerous other
    enactments as well. It is submitted that the Parliament is competent to classify offences and
    offenders in different categories. The Parliament has classified the offence of moneylaundering as a separate class of offence from ordinary criminal laws. The said classification
    was necessary because the PMLA was framed in a specific international context, providing
    for separate and special architecture for investigation.
49. The offence of money-laundering is a new offence created by the PMLA, which has a
    high threshold of arrest as given under Section 19, which itself justifies high threshold for
    grant of bail. Nature of the offence being peculiar, makes manner of investigation far more
    difficult than in ordinary penal offences. The PMLA is a complete Code in itself, which
    creates a separate machinery to tackle the social menace, having adequate safeguards. It is
    submitted that Legislature has on numerous occasions made departures from the ordinary
    penal and procedural laws as and when the situation arrived. The classification of the offence
    on the basis of public policy and underlying purpose of the Act cannot be said to be
    unreasonable or arbitrary. Therefore, the Parliament is fully competent to deal with special
    type of cases by providing a distinct and different procedure which in the circumstances,
    cannot be said to be unreasonable. Therefore, it is submitted that a different standard for bail
    can be provided in an offence which serves a special purpose.
50. It is submitted that the mandatory twin conditions of bail contained in Section 45 of the
    PMLA prescribe a reasonable restriction which has a reasonable nexus with the object sought
    to be achieved viz., creating deterrence from committing the offence of money-laundering
    and, therefore, cannot be treated as arbitrary or unreasonable or violative of Article 14 or 21
    of the Constitution.
51. Learned Solicitor General has argued that the decision in Nikesh Tarachand Shah was
    based on the fact that the twin conditions of bail, as per the unamended provision, would
    apply to cases of bail in respect of both the predicate offence and also the offence of moneylaundering. It is submitted that the reasons due to which the Court in Nikesh Tarachand
    Shah held the twin conditions to be unconstitutional, are firstly because the unamended
    provision had a classification which was based on sentencing of the scheduled offence, and
    secondly, because the applicability of the twin conditions was restricted only to a particular
    class of offences within the PMLA i.e., offences punishable for a term of imprisonment of
    more than three (3) years under Part A of the Schedule and not to all the offences under the
    PMLA. It is stated that both the above defects have been removed by the amendment post
    Nikesh Tarachand Shah. Therefore, the basis and the element of arbitrariness, as pointed out
    by the Court in Nikesh Tarachand Shah, has been taken away by the Parliament so as to cure
    the defect.
52. It is submitted that, concededly, a law which is struck down by the Court due to
    legislative incompetence can never be made operative by the logic of curing the defect.
    However, if a law has been struck down by the Court as being violative of Part III of the
    Constitution, then the Legislature has the power to cure the reason or defect which persuaded
    the Constitutional Court to hold it to be violative of Part III of the Constitution and, thereafter,
    the provision will be back in its full force, as the declaration by the Constitutional Court of
    the provision being unconstitutional mainly results in making the provision inoperative and
    unenforceable while the provision remains on the statute book.
53. It is, thus, submitted that the law laid down in Nikesh Tarachand Shah is per incuriam.
    For, it failed to take notice of the international background of the PMLA. Further, the
    judgment completely ignores the fact that economic offences form separate class and the twin
    conditions for money-laundering is a reasonable classification. The Court had no occasion to
    consider the question of legitimate State interest in providing for twin conditions for a
    separate class of offences.
    CONSIDERATION
54. We have heard Mr. Kapil Sibal, Dr. Abhishek Manu Singhvi, Mr. Sidharth Luthra, Mr.
    Mukul Rohatgi, Mr. Vikram Chaudhari, Mr. Amit Desai, Mr. S. Niranjan Reddy, Ms. Menaka
    Guruswami, Mr. Siddharth Aggarwal, Mr. Aabad Ponda, Mr. N. Hariharan and Mr. Mahesh
    Jethmalani, learned senior counsel appearing for private parties and Mr. Tushar Mehta,
    learned Solicitor General of India and Mr. S.V. Raju, learned Additional Solicitor General of
    India, appearing for the Union of India.
    THE 2002 ACT
55. The Act was enacted to address the urgent need to have a comprehensive legislation inter
    alia for preventing money- laundering, attachment of proceeds of crime, adjudication and
    confiscation thereof including vesting of it in the Central Government, setting up of agencies
    and mechanisms for coordinating measures for combating money-laundering and also to
    prosecute the persons indulging in the process or activity connected with the proceeds of
    crime. This need was felt world over owing to the serious threat to the financial systems of
    the countries, including to their integrity and sovereignty because of money-laundering. The
    international community deliberated over the dispensation to be provided to address the
    serious threat posed by the process and activities connected with the proceeds of crime and
    integrating it with formal financial systems of the countries. The issues were debated
    threadbare in the United Nation Convention Against Illicit Traffic in Narcotic Drugs and
    Psychotropic Substances, Basle Statement of Principles enunciated in 1989, the FATF
    established at the summit of seven major industrial nations held in Paris from 14th to 16th
    July, 1989, the Political Declaration and Noble Programme of Action adopted by United
    Nations General Assembly vide its Resolution No.S-17/2 of 23.2.1990, the United Nations in
    the Special Session on countering World Drug Problem Together concluded on the 8th to the
    10th June, 1998, urging the State parties to enact a comprehensive legislation. This is evident
    from the introduction and Statement of Objects and Reasons accompanying the Bill which
    became the 2002 Act.
56. The petitioners have questioned the amendments brought about by the Parliament by
    taking recourse to Finance Bill/Money Bill. At the outset, it was made clear to all concerned
    that the said ground of challenge will not be examined in the present proceedings as it is
    pending for consideration before the Larger Bench of this Court (seven Judges) in view of the
    reference order passed in Rojer Mathew v. South Indian Bank Ltd. (2020) 6 SCC 1 . We are
    conscious of the fact that if that ground of challenge is to be accepted, it may go to the root of
    the matter and amendments effected vide Finance Act would become unconstitutional or
    ineffective. Despite that, it had become necessary to answer the other contentions which may
    otherwise require consideration in the event of the principal ground of challenge is answered
    against the petitioners. In any case, until the larger Bench decides that issue authoritatively,
    the authorities and the Adjudicating Authority as well as the Courts are obliged to give effect
    to the amended provisions. Resultantly, the other issues raised in this batch of cases being
    recurring and as are involved in large number of cases to be dealt with by the authorities and
    the Adjudicating Authority under the Act and the concerned Courts on daily basis, including
    the Constitutional Courts, it has become necessary to answer the other grounds of challenge
    in the meantime. On that understanding, we proceeded with the hearing of the batch of cases
    before us to deal with the other challenges regarding the concerned provision(s) being
    otherwise unconstitutional and ultra vires.
    SECTION 3 OF THE 2002 ACT
57. Coming to Section 3 of the 2002 Act, the same defines the offence of money-laundering.
    The expression “money-laundering”, ordinarily, means the process or activity of placement,
    layering and finally integrating the tainted property in the formal economy of the country.
    However, Section 3 has a wider reach. The offence, as defined, captures every process and
    activity in dealing with the proceeds of crime, directly or indirectly, and not limited to the
    happening of the final act of integration of tainted property in the formal economy to
    constitute an act of money-laundering. This is amply clear from the original provision, which
    has been further clarified by insertion of Explanation vide Finance (No.2) Act, 2019. Section
    3, as amended, reads thus:
    “3. Offence of money-laundering.Whosoever directly or indirectly attempts to indulge or
    knowingly assists or knowingly is a party or is actually involved in any process or activity
    connected with the[proceeds of crime including its concealment, possession, acquisition or
    use and projecting or claiming] it as untainted property shall be guilty of offence of moneylaundering.
    [Explanation.For the removal of doubts, it is hereby clarified that, —
    (i) a person shall be guilty of offence of money- laundering if such person is found to have
    directly or indirectly attempted to indulge or knowingly assisted or knowingly is a party or is
    actually involved in one or more of the following processes or activities connected with
    proceeds of crime, namely:-
    (a) concealment; or
    (b) possession; or
    (c) acquisition; or
    (d) use; or
    (e) projecting as untainted property; or
    (f) claiming as untainted property,
    in any manner whatsoever;
    (ii) the process or activity connected with proceeds of crime is a continuing activity and
    continues till such time a person is directly or indirectly enjoying the proceeds of crime by its
    concealment or possession or acquisition or use or projecting it as untainted property or
    claiming it as untainted property in any manner whatsoever.]”
58. This section was first amended vide Act 2 of 2013. The expression “proceeds of crime
    and projecting” was substituted by expression “proceeds of crime including its concealment,
    possession, acquisition or use and projecting or claiming.” We are not so much concerned
    with this change introduced vide Act 2 of 2013. In other words, the provision as it stood prior
    to amendment vide Finance Act, 2019, remained as it is. Upon breaking-up of this provision,
    it would clearly indicate that it is an offence of money- laundering, in the event of direct or
    indirect attempt to indulge or knowingly assist or being knowingly party or being actually
    involved in “any process or activity” connected with the proceeds of crime. The latter part of
    the provision is only an elaboration of the different process or activity connected with the
    proceeds of crime, such as its concealment, possession, acquisition, use, or projecting it as
    untainted property or claiming it to be as untainted property. This position stands clarified by
    way of Explanation inserted in 2019. If the argument of the petitioners is to be accepted, that
    projecting or claiming the property as untainted property is the quintessential ingredient of the
    offence of money-laundering, that would whittle down the sweep of Section 3. Whereas, the
    expression “including” is a pointer to the preceding part of the section which refers to the
    essential ingredient of “process or activity” connected with the proceeds of crime. The
    Explanation inserted by way of amendment of 2019, therefore, has clarified the word and
    preceding the expression “projecting or claiming” as “or”. That being only clarificatory,
    whether introduced by way of Finance Bill or otherwise, would make no difference to the
    main original provision as it existed prior to 2019 amendment. Indeed, there has been some
    debate in the Parliament about the need to retain the clause of projecting or claiming the
    property as untainted property. However, the Explanation inserted by way of amendment of
    2019 was only to restate the stand taken by India in the proceedings before the FATF, as
    recorded in its 8th Follow-Up Report Mutual Evaluation of India June 2013 under heading
    “Core Recommendations”. This stand had to be taken by India notwithstanding the
    amendment of 2013 vide Act 2 of 2013 (w.e.f. 15.2.2013) and explanation offered by the then
    Minister of Finance during his address in the Parliament on 17.12.2012 as noted above.
    Suffice it to note that the municipal law (Act of 2002) had been amended from time to time to
    incorporate the concerns and recommendations noted by the international body.
59. … Thus, the principal provision (as also the Explanation) predicates that if a person is
    found to be directly or indirectly involved in any process or activity connected with the
    proceeds of crime must be held guilty of offence of money- laundering. If the interpretation
    set forth by the petitioners was to be accepted, it would follow that it is only upon projecting
    or claiming the property in question as untainted property, the offence would be complete.
    This would undermine the efficacy of the legislative intent behind Section 3 of the Act and
    also will be in disregard of the view expressed by the FATF in connection with the
    occurrence of the word “and” preceding the expression “projecting or claiming” therein.
60. The Explanation as inserted in 2019, therefore, does not entail in expanding the purport
    of Section 3 as it stood prior to 2019, but is only clarificatory in nature. Inasmuch as Section 3
    is widely worded with a view to not only investigate the offence of money laundering but also
    to prevent and regulate that offence. This provision plainly indicates that any (every) process
    or activity connected with the proceeds of crime results in offence of money laundering.
    Projecting or claiming the proceeds of crime as untainted, in itself, is an attempt to indulge in
    or being involved in money laundering, just as knowingly concealing, possessing, acquiring
    or using of proceeds of crime, directly or indirectly.
61. Independent of the above, we have no hesitation in construing the expression “and” in
    Section 3 as “or”, to give full play to the said provision so as to include “every” process or
    activity indulged into by anyone, including projecting or claiming the property as untainted
    property to constitute an offence of money-laundering on its own. The act of projecting or
    claiming proceeds of crime to be untainted property presupposes that the person is in
    possession of or is using the same (proceeds of crime), also an independent activity
    constituting offence of money-laundering. In other words, it is not open to read the different
    activities conjunctively because of the word „and‟. If that interpretation is accepted, the
    effectiveness of Section 3 of the 2002 Act can be easily frustrated by the simple device of one
    person possessing proceeds of crime and his accomplice would indulge in projecting or
    claiming it to be untainted property so that neither is covered under Section 3 of the 2002 Act.
62. From the bare language of Section 3 of the 2002 Act, it is amply clear that the offence of
    money-laundering is an independent offence regarding the process or activity connected with
    the proceeds of crime which had been derived or obtained as a result of criminal activity
    relating to or in relation to a scheduled offence. The process or activity can be in any form be
    it one of concealment, possession, acquisition, use of proceeds of crime as much as projecting
    it as untainted property or claiming it to be so. Thus, involvement in any one of such process
    or activity connected with the proceeds of crime would constitute offence of moneylaundering. This offence otherwise has nothing to do with the criminal activity relating to a
    scheduled offence —except the proceeds of crime derived or obtained as a result of that
    crime.
63. Needless to mention that such process or activity can be indulged in only after the
    property is derived or obtained as a result of criminal activity (a scheduled offence). It would
    be an offence of money-laundering to indulge in or to assist or being party to the process or
    activity connected with the proceeds of crime; and such process or activity in a given fact
    situation may be a continuing offence, irrespective of the date and time of commission of the
    scheduled offence. In other words, the criminal activity may have been committed before the
    same had been notified as scheduled offence for the purpose of the 2002 Act, but if a person
    has indulged in or continues to indulge directly or indirectly in dealing with proceeds of
    crime, derived or obtained from such criminal activity even after it has been notified as
    scheduled offence, may be liable to be prosecuted for offence of money-laundering under the
    2002 Act for continuing to possess or conceal the proceeds of crime (fully or in part) or
    retaining possession thereof or uses it in trenches until fully exhausted. The offence of
    money-laundering is not dependent on or linked to the date on which the scheduled offence or
    if we may say so the predicate offence has been committed. The relevant date is the date on
    which the person indulges in the process or activity connected with such proceeds of crime.
    These ingredients are intrinsic in the original provision (Section 3, as amended until 2013 and
    were in force till 31.7.2019); and the same has been merely explained and clarified by way of
    Explanation vide Finance (No.2) Act, 2019. Thus understood, inclusion of Clause (ii) in
    Explanation inserted in 2019 is of no consequence as it does not alter or enlarge the scope of
    Section 3 at all.
64. As mentioned earlier, the rudimentary understanding of money-laundering is that there
    are three generally accepted stages to money-laundering, they are:
    (a) Placement: which is to move the funds from direct association of the crime.
    (b) Layering: which is disguising the trail to foil pursuit.
    (c) Integration: which is making the money available to the criminal from what seem to be
    legitimate sources.
65. It is common experience world over that money-laundering can be a threat to the good
    functioning of a financial system. However, it is also the most suitable mode for the criminals
    to deal in such money. It is the means of livelihood of drug dealers, terrorist, white collar
    criminals and so on. Tainted money breeds discontent in any society and in turn leads to more
    crime and civil unrest. Thus, the onus on the Government and the people to identify and seize
    such money is heavy. If there are any proactive steps towards such a cause, we cannot but
    facilitate the good steps. However, passions aside we must first balance the law to be able to
    save the basic tenets of the fundamental rights and laws of this country. After all, condemning
    an innocent man is a bigger misfortune than letting a criminal go.
66. On a bare reading of Section 3, we find no difficulty in encapsulating the true ambit,
    given the various arguments advanced. Thus, in the conspectus of things it must follow that
    the interpretation put forth by the respondent will further the purposes and objectives behind
    the 2002 Act and also adequately address the recommendations and doubts of the
    international body whilst keeping in mind the constitutional limits. It would, therefore, be just
    to sustain the argument that the amendment by way of the Explanation has been brought
    about only to clarify the already present words, “any” and “including” which manifests the
    true meaning of the definition and clarifies the mist around its true nature.
67. Accordingly, the phrase “and projecting it as untainted property” was added the initial
    definition in the 2002 Act. However, it can also be inferred from here that since the initial
    strokes of drafting the Act, the intention was always to have a preventive Act and not simply
    a money-laundering (penal) Act. Today, if one dives deep into the financial systems,
    anywhere in the world, it is seen that once a financial mastermind can integrate the
    illegitimate money into the bloodstream of an economy, it is almost indistinguishable. In fact,
    the money can be simply wired abroad at one click of the mouse. It is also well known that
    once this money leaves the country, it is almost impossible to get it back. Hence, a simplistic
    argument or the view that Section 3 should only find force once the money has been
    laundered, does not commend to us.That has never been the intention of the Parliament nor
    the international Conventions.
68. We may also note that argument that removing the necessity of projection from the
    definition will render the predicate offence and money-laundering indistinguishable. This, in
    our view, is ill founded and fallacious. This plea cannot hold water for the simple reason that
    the scheduled offences in the 2002 Act as it stands (amended upto date) are independent
    criminal acts. It is only when money is generated as a result of such acts that the 2002 Act
    steps in as soon as proceeds of crime are involved in any process or activity. Dealing with
    such proceeds of crime can be in any form being process or activity. Thus, even assisting in
    the process or activity is a part of the crime of money-laundering. We must keep in mind that
    for being liable to suffer legal consequences of ones action of indulging in the process or
    activity, is sufficient and not only upon projection of the ill-gotten money as untainted money.
    Many members of a crime syndicate could then simply keep the money with them for years to
    come, the hands of the law in such a situation cannot be bound and stopped from proceeding
    against such person, if information of such illegitimate monies is revealed even from an
    unknown source.
69. The next question is: whether the offence under Section 3 is a standalone offence?
    Indeed, it is dependent on the wrongful and illegal gain of property as a result of criminal
    activity relating to a scheduled offence. Nevertheless, it is concerning the process or activity
    connected with such property, which constitutes offence of money-laundering. The property
    must qualify the definition of proceeds of crime under Section 2(1)(u) of the 2002 Act. As
    observed earlier, all or whole of the crime property linked to scheduled offence need not be
    regarded as proceeds of crime, but all properties qualifying the definition of proceeds of
    crime under Section 2(1)(u) will necessarily be crime properties. Indeed, in the event of
    acquittal of the person concerned or being absolved from allegation of criminal activity
    relating to scheduled offence, and if it is established in the court of law that the crime
    property in the concerned case has been rightfully owned and possessed by him, such a
    property by no stretch of imagination can be termed as crime property and ex-consequenti
    proceeds of crime within the meaning of Section 2(1)(u) as it stands today. On the other hand,
    in the trial in connection with the scheduled offence, the Court would be obliged to direct
    return of such property as belonging to him. It would be then paradoxical to still regard such
    property as proceeds of crime despite such adjudication by a Court of competent jurisdiction.
    It is well within the jurisdiction of the concerned Court trying the scheduled offence to
    pronounce on that matter.
70. Be it noted that the authority of the Authorised Officer under the 2002 Act to prosecute
    any person for offence of money- laundering gets triggered only if there exists proceeds of
    crime within the meaning of Section 2(1)(u) of the 2002 Act and further it is involved in any
    process or activity. Not even in a case of existence of undisclosed income and irrespective of
    its volume, the definition of proceeds of crime under Section 2(1)(u) will get attracted, unless
    the property has been derived or obtained as a result of criminal activity relating to a
    scheduled offence. It is possible that in a given case after the discovery of huge volume of
    undisclosed property, the authorised officer may be advised to send information to the
    jurisdictional police (under Section 66(2) of the 2002 Act) for registration of a scheduled
    offence contemporaneously, including for further investigation in a pending case, if any. On
    receipt of such information, the jurisdictional police would be obliged to register the case by
    way of FIR if it is a cognizable offence or as a non-cognizable offence (NC case), as the case
    may be. If the offence so reported is a scheduled offence, only in that eventuality, the
    property recovered by the authorised officer would partake the colour of proceeds of crime
    under Section 2(1)(u) of the 2002 Act, enabling him to take further action under the Act in
    that regard.
71. Even though, the 2002 Act is a complete Code in itself, it is only in respect of matters
    connected with offence of money- laundering, and for that, existence of proceeds of crime
    within the meaning of Section 2(1)(u) of the Act is quintessential. Absent existence of
    proceeds of crime, as aforesaid, the authorities under the 2002 Act cannot step in or initiate
    any prosecution.
72. In other words, the Authority under the 2002 Act, is to prosecute a person for offence of
    money-laundering only if it has reason to believe, which is required to be recorded in writing
    that the person is in possession of proceeds of crime. Only if that belief is further supported
    by tangible and credible evidence indicative of involvement of the person concerned in any
    process or activity connected with the proceeds of crime, action under the Act can be taken
    forward for attachment and confiscation of proceeds of crime and until vesting thereof in the
    Central Government, such process initiated would be a standalone process.
    SECTION 5 OF THE 2002 ACT
73. Section 5 forms part of Chapter III dealing with attachment, adjudication and
    confiscation. This provision empowers the Director or officer not below the rank of Deputy
    Director authorised by the Director for the purposes of attachment of property involved in
    money-laundering. Such authorised officer is expected to act only if he has reason to believe
    that any person is in possession of proceeds of crime. This belief has to be formed on the
    basis of material in his possession and the reasons therefor are required to be recorded in
    writing. In addition, he must be convinced that such proceeds of crime are likely to be
    concealed, transferred or dealt with in any manner which is likely to result in frustrating any
    proceedings concerning confiscation thereof under the 2002 Act. The Section 5 as amended
    reads thus:
    CHAPTER III ATTACHMENT, ADJUDICATION AND CONFISCATION
74. Attachment of property involved in money- laundering.
    (1) Where the Director, or any other officer not below the rank of Deputy Director authorised
    by him for the purposes of this section, has reason to believe (the reason for such belief to be
    recorded in writing), on the basis of material in his possession, that
    (a) any person is in possession of any proceeds of crime; and
    (b) such proceeds of crime are likely to be concealed, transferred or dealt with in any
    manner which may result in frustrating any proceedings relating to confiscation of such
    proceeds of crime under this Chapter he may, by order in writing, provisionally attach such property for a period not exceeding one
    hundred and eighty days from the date of the order, in such manner as may be prescribed:
    Provided that no such order of attachment shall be made unless, in relation to the
    scheduled offence, a report has been forwarded to a Magistrate under section 173 of the Code
    of Criminal Procedure, 1973 (2 of 1974), or a complaint has been filed by a person authorised
    to investigate the offence mentioned in that Schedule, before a Magistrate or court for taking
    cognizance of the scheduled offence, as the case may be, or a similar report or complaint has
    been made or filed under the corresponding law of any other country:
    Provided further that, notwithstanding anything contained in [first proviso], any property
    of any person may be attached under this section if the Director or any other officer not below
    the rank of Deputy Director authorised by him for the purposes of this section has reason to
    believe (the reasons for such belief to be recorded in writing), on the basis of material in his
    possession, that if such property involved in money- laundering is not attached immediately
    under this Chapter, the non-attachment of the property is likely to frustrate any proceeding
    under this Act.].
    Provided also that for the purposes of computing the period of one hundred and eighty
    days, the period during which the proceedings under this section is stayed by the High Court,
    shall be excluded and a further period not exceeding thirty days from the date of order of
    vacation of such stay order shall be counted.]
    (2) The Director, or any other officer not below the rank of Deputy Director, shall,
    immediately after attachment under sub-section (1), forward a copy of the order, along with
    the material in his possession, referred to in that sub-section, to the Adjudicating Authority, in
    a sealed envelope, in the manner as may be prescribed and such Adjudicating Authority shall
    keep such order and material for such period as may be prescribed.
    (3) Every order of attachment made under sub-section (1) shall cease to have effect after the
    expiry of the period specified in that sub-section or on the date of an order made under [subsection (3)] of section 8, whichever is earlier.
    (4) Nothing in this section shall prevent the person interested in the enjoyment of the
    immovable property attached under sub-section (1) from such enjoyment.
    Explanation.For the purposes of this sub- section, “person interested”, in relation to any
    immovable property, includes all persons claiming or entitled to claim any interest in the
    property.
    (5) The Director or any other officer who provisionally attaches any property under subsection (1) shall, within a period of thirty days from such attachment, file a complaint stating
    the facts of such attachment before the Adjudicating Authority.
75. From the plain language of this provision, it is evident that several inbuilt safeguards
    have been provided by the Parliament while enacting the 2002 Act. This provision has been
    amended vide Act 21 of 2009, Act 2 of 2013, Finance Act, 2015 and Act 13 of 2018, to
    strengthen the mechanism keeping in mind the scheme of the 2002 Act and the need to
    prevent and regulate the activity of money- laundering. As regards the amendments made
    vide Act 21 of 2009 and Act 2 of 2013, the same are not matters in issue in these cases. The
    challenge is essentially to the amendment effected in the second proviso in sub-section (1),
    vide Finance Act, 2015.
76. Be that as it may, as aforesaid, sub-section (1) delineates sufficient safeguards to be
    adhered to by the authorised officer before issuing provisional attachment order in respect of
    proceeds of crime. It is only upon recording satisfaction regarding the twin requirements
    referred to in sub-section (1), the authorised officer can proceed to issue order of provisional
    attachment of such proceeds of crime. Before issuing a formal order, the authorised officer
    has to form his opinion and delineate the reasons for such belief to be recorded in writing,
    which indeed is not on the basis of assumption, but on the basis of material in his possession.
    The order of provisional attachment is, thus, the outcome of such satisfaction already
    recorded by the authorised officer. Notably, the provisional order of attachment operates for a
    fixed duration not exceeding one hundred and eighty days from the date of the order. This is
    yet another safeguard provisioned in the 2002 Act itself.
77. As per the first proviso, in ordinary situation, no order of provisional attachment can be
    issued until a report has been forwarded to a Magistrate under Section 173 of the 1973 Code
    in relation to the scheduled offence, or a complaint has been filed by a person authorised to
    investigate the offence mentioned in that Schedule, before a Magistrate or Court for taking
    cognizance of the scheduled offence, as the case may be. It further provides that a similar
    report or complaint has been made or filed under the corresponding law of any other country.
    In other words, filing of police report or a private complaint in relation to the scheduled
    offence had been made a precondition for issuing an order of provisional attachment.
78. The second proviso, as it existed prior to Finance Act, 2015, had predicated that
    notwithstanding anything contained in Clause (b) of sub-section (1) any property of any
    person may be attached in the same manner and satisfaction to be recorded that nonattachment of property likely to frustrate any proceeding under the 2002 Act. By amendment
    vide Finance Act, 2015, the words “clause (b)” occurring in the second proviso came to be
    substituted to read words “first proviso”. This is the limited change, but an effective one to
    give full play to the legislative intent regarding prevention and regulation of process or
    activity concerning proceeds of crime entailing in offence of money-laundering. Prior to the
    amendment, the first proviso was rightly perceived as an impediment. In that, to invoke the
    action of even provisional attachment order, registration of scheduled offence and completion
    or substantial progress in investigation thereof were made essential. This was notwithstanding
    the urgency involved in securing the proceeds of crime for being eventually confiscated and
    vesting in the Central Government. Because of the time lag and the advantage or
    opportunities available to the person concerned to manipulate the proceeds of crime, the
    amendment of 2015 had been brought about to overcome the impediment and empower the
    Director or any other officer not below the rank of Deputy Director authorised by him to
    proceed to issue provisional attachment order. In terms of the second proviso, the authorised
    officer has to record satisfaction and reason for his belief in writing on the basis of material in
    his possession that the property (proceeds of crime) involved in money-laundering if not
    attached “immediately”, would frustrate proceedings under the 2002 Act. This is a further
    safeguard provided in view of the urgency felt by the competent authority to secure the
    property to effectively prevent and regulate the offence of money-laundering. In other words,
    the authorised officer cannot resort to action of provisional attachment of property (proceeds
    of crime) mechanically. Thus, there are inbuilt safeguards provided in the main provision as
    well as the second proviso to be fulfilled upto the highest ranking ED official, before
    invoking such urgent or “immediate” action. We fail to understand as to how such a provision
    can be said to be irrelevant much less manifestly arbitrary, in the context of the purposes and
    objects behind the enactment of the 2002 Act. Such provision would strengthen the
    mechanism of prevention and regulation of process or activity resulting into commission of
    money-laundering offence; and also, to ensure that the proceeds of crime are properly dealt
    with as ordained by the 2002 Act, including for vesting in the Central Government.
79. As a matter of fact, prior to amendment of 2015, the first proviso acted as an impediment
    for taking such urgent measure even by the authorised officer, who is no less than the rank of
    Deputy Director. We must hasten to add that the nuanced distinction must be kept in mind
    that to initiate “prosecution” for offence under Section 3 of the Act registration of scheduled
    offence is a prerequisite, but for initiating action of “provisional attachment” under Section 5
    there need not be a pre-registered criminal case in connection with scheduled offence. This is
    because the machinery provisions cannot be construed in a manner which would eventually
    frustrate the proceedings under the 2002 Act. Such dispensation alone can secure the proceeds
    of crime including prevent and regulate the commission of offence of money-laundering. The
    authorised officer would, thus, be expected to and, also in a given case, justified in acting
    with utmost speed to ensure that the proceeds of crime/property is available for being
    proceeded with appropriately under the 2002 Act so as not to frustrate any proceedings
    envisaged by the 2002 Act. In case the scheduled offence is not already registered by the
    jurisdictional police or complaint filed before the Magistrate, it is open to the authorised
    officer to still proceed under Section 5 of the 2002 Act whilst contemporaneously sending
    information to the jurisdictional police under Section 66(2) of the 2002 Act for registering
    FIR in respect of cognizable offence or report regarding non-cognizable offence and if the
    jurisdictional police fails to respond appropriately to such information, the authorised officer
    under the 2002 Act can take recourse to appropriate remedy, as may be permissible in law to
    ensure that the culprits do not go unpunished and the proceeds of crime are secured and dealt
    with as per the dispensation provided for in the 2002 Act. Suffice it to observe that the
    amendment effected in 2015 in the second proviso has reasonable nexus with the object
    sought to be achieved by the 2002 Act.
80. The third proviso in Section 5(1) of the 2002 Act is another safeguard introduced vide
    Act 13 of 2018 about the manner in which period of one hundred and eighty days need to be
    reckoned thereby providing for fixed tenure of the provisional attachment order. Before the
    expiry of the statutory period relating to the provisional attachment order, the Director or any
    other officer not below the rank of Deputy Director immediately after attachment under subsection (1) is obliged to forward a copy of the provisional attachment order to the threemember Adjudicating Authority (appointed under Section 6(1) of the 2002 Act, headed by,
    amongst other, person qualified for appointment as District Judge), in a sealed envelope under
    Section 5(2), which is required to be retained by the Adjudicating Authority for the period as
    prescribed under the rules framed in that regard. This ensures the fairness in the action as also
    accountability of the Authority passing provisional attachment order. Further, in terms of
    Section 5(3), the provisional attachment order ceases to operate on the date of an order passed
    by the Adjudicating Authority under Section 8(3) or the expiry of the period specified in subsection (1), whichever is earlier. In addition, under Section 5(5) the authorised officer is
    obliged to file a complaint before the Adjudicating Authority within a period of thirty days
    from such provisional attachment. Going by the scheme of the 2002 Act and Section 5 thereof
    in particular, it is amply clear that sufficient safeguards have been provided for as
    preconditions for invoking the powers of emergency attachment in the form of provisional
    attachment.
81. The background in which the amendment of 2013 became necessary can be culled out
    from the Report titled Anti-Money Laundering and Combating the Financing of Terrorism
    dated 25.6.2010. The relevant paragraphs of the said report read thus:
82. It is no formal and express legal condition that a conviction for the predicate
    offence is required as a precondition to prosecute money laundering, although some
    practitioners the assessment team met with felt that only a conviction would
    satisfactorily meet the evidentiary requirements. The definition of property in the
    PMLA (see supra) however requires property to be “related to a scheduled offence”.
    Consequently, the section 3 ML offence not being an “all crimes offence”, in the
    absence of case law, it is generally interpreted as requiring at the very minimum
    positive proof of the specific predicate offence before a conviction for money
    laundering can be obtained, be it for third party or self- laundering.
    168.The linkage and interaction of the ML offence with a specific predicate criminality
    is historically very tight in the Indian AML regime. The concept of stand-alone money
    laundering is quite strange to the practitioners, who cannot conceive pursuing money
    laundering as a sui generis autonomous offence. Some interlocutors were even of the
    (arguably erroneous) opinion that only a conviction for the predicate criminality would
    effectively satisfy the evidential requirements. As said, this attitude is largely due to the
    general practice in India to start a ML investigation only on the basis of a predicate
    offence case. Even if the ML investigation since recently can run concurrently with the
    predicate offence enquiry, there is no inter-agency MOU or arrangement to deal with
    evidentiary issues between the various agencies in investigating predicates and ML
    offences. Also, the way the interaction between the law enforcement agencies is
    presently structured carries the risk that ML prosecutions could be delayed while the
    other predicate offence investigation agencies try to secure convictions.
    Although recently an increased focus on the ML aspect and use of the ML
    provisions is to be acknowledged, there are still some important and often longstanding legal issues to be resolved. To that end following measures should be taken:

• The monetary threshold limitation of INR 3 million for the Schedule Part B predicate
  offences should be abolished.
• The section 3 PMLA definition of the ML offence should be brought in line with the
  Vienna and Palermo Conventions so as to also fully cover the physical concealment
  and the sole acquisition, possession and use of all relevant proceeds of crime.
• The present strict and formalistic interpretation of the evidentiary requirements in
  respect of the proof of the predicate offence should be put to the test of the courts to
  develop case law and receive direction on this fundamental legal issue.
• The level of the maximum fine imposable on legal persons should be raised or left at
  the discretion of the court to ensure a more dissuasive effect.
• The practice of making a conviction of legal persons contingent on the concurrent
  prosecution/conviction of a (responsible) natural person should be abandoned.
• Consider the abolishment of the redundant section 8A NDPS Act drug-related ML
  offence or, if maintained, bring the sanctions at a level comparable to that of the PMLA
  offence.

233.Confiscation under Chapter III of the PMLA is only possible when it relates to
“proceeds of crime” as defined in s. 2(1)(u), i.e. resulting from a scheduled offence,
and when there is a conviction of such scheduled (predicate) offence. In addition, in
such cases, only proceeds of the predicate offence can be confiscated and not the
proceeds of the ML offence itself.
234.The predicate offence conviction condition creates fundamental difficulties when
trying to confiscate the proceeds of crime in the absence of a conviction of a predicate
offence, particularly in a stand-alone ML case, where the laundered assets become the
corpus delicti and should be forfeitable as such. In the international context, the
predicate conviction requirement also seriously affects the capacity to recover criminal
assets where the predicate offence has occurred outside India and the proceeds are
subsequently laundered in India (see also comments in Section 2.1 above).

235. The definition of proceeds of crime and property in the PMLA are broad enough
     to allow for confiscation of property derived directly or indirectly from proceeds of
     crime relating to a scheduled (predicate) offence, including income, profits and other
     benefits from the proceeds of crime. These definitions also allow for value
     confiscation, regardless of whether the property is held or owned by a criminal or a
     third party. As section 65 of the PMLA refers to the rules in CrPC, instrumentalities
     and intended instrumentalities can be confiscated in accordance with section 102 and
     451 of the CrPC. However, there is no case law in this respect.
236. Also, the procedural provisions of Chapter III make confiscation of the proceeds
     of crime contingent on a prior seizure of attachment of the property by the
     Adjudicating Authority, and consequently substantially limit the possibilities for
     confiscation under the PMLA.
     
     General comments
237. Since confiscation is linked to a conviction it is not possible to confiscate criminal
     proceeds when the defendant has died during the criminal proceedings. However, it is
     possible to attach and dispose of any property of a proclaimed offender when that
     person has absconded. The absence of a regulation when the defendant has died may
     have a negative impact on the effectiveness of the confiscation regime in place in India.
238. As aforesaid, in this backdrop the amendment Act 2 of 2013 came into being.
     Considering the purport of the amended provisions and the experience of
     implementing/enforcement agencies, further changes became necessary to strengthen the
     mechanism regarding prevention of money-laundering. It is not right in assuming that the
     attachment of property (provisional) under the second proviso, as amended, has no link with
     the scheduled offence. Inasmuch as Section 5(1) envisages that such an action can be initiated
     only on the basis of material in possession of the authorised officer indicative of any person
     being in possession of proceeds of crime. The precondition for being proceeds of crime is that
     the property has been derived or obtained, directly or indirectly, by any person as a result of
     criminal activity relating to a scheduled offence. The sweep of Section 5(1) is not limited to
     the accused named in the criminal activity relating to a scheduled offence. It would apply to
     any person (not necessarily being accused in the scheduled offence), if he is involved in any
     process or activity connected with the proceeds of crime. Such a person besides facing the
     consequence of provisional attachment order, may end up in being named as accused in the
     complaint to be filed by the authorised officer concerning offence under Section 3 of the 2002
     Act.
239. Be it noted that the attachment must be only in respect of property which appears to be
     proceeds of crime and not all the properties belonging to concerned person who would
     eventually face the action of confiscation of proceeds of crime, including prosecution for
     offence of money-laundering. As mentioned earlier, the relevant date for initiating action
     under the 2002 Act be it of attachment and confiscation or prosecution, is linked to the
     inclusion of the offence as scheduled offence and of carrying on the process or activity in
     connection with the proceeds of crime after such date. The pivot moves around the date of
     carrying on the process and activity connected with the proceeds of crime; and not the date on
     which the property has been derived or obtained by the person concerned as a result of any
     criminal activity relating to or relatable to the scheduled offence.
240. The argument of the petitioners that the second proviso permits emergency attachment in
     disregard of the safeguard provided in the first proviso regarding filing of report (chargesheet)
     clearly overlooks that the second proviso contains non-obstante clause and, being an
     exceptional situation, warrants “immediate” action so that the property is not likely to
     frustrate any proceeding under the 2002 Act. Concededly, there is stipulation fastened upon
     the authorised officer to record in writing reasons for his belief on the basis of material in his
     possession that such “immediate” action is indispensable. This stipulation has reasonable
     nexus with the purposes and objects sought to be achieved by the 2002 Act.
     
241. It was also urged before us that the attachment of property must be equivalent in value of
     the proceeds of crime only if the proceeds of crime are situated outside India. This argument,
     in our opinion, is tenuous. For, the definition of „proceeds of crime‟ is wide enough to not
     only refer to the property derived or obtained as a result of criminal activity relating to a
     scheduled offence, but also of the value of any such property. If the property is taken or held
     outside the country, even in such a case, the property equivalent in value held within the
     country or abroad can be proceeded with. The definition of property as in Section 2(1)(v) is
     equally wide enough to encompass the value of the property of proceeds of crime. Such
     interpretation would further the legislative intent in recovery of the proceeds of crime and
     vesting it in the Central Government for effective prevention of money-laundering.
242. We find force in the stand taken by the Union of India that the objectives of enacting the
     2002 Act was the attachment and confiscation of proceeds of crime which is the quintessence
     so as to combat the evil of money-laundering. The second proviso, therefore, addresses the
     broad objectives of the 2002 Act to reach the proceeds of crime in whosoever‟s name they are
     kept or by whosoever they are held.
243. The procedural safeguards provided in respect of provisional attachment are effective
     measures to protect the interest of the person concerned who is being proceeded with under
     the 2002 Act, in the following manner as rightly indicated by the Union of India:
     i. For invoking the second proviso, the Director or any officer not below the rank of
     Deputy Director will have to first apply his mind to the materials on record before
     recording in writing his reasons to believe is certainly a sufficient safeguard to the
     invocation of the powers under the second proviso to Section 5(1) of the 2002 Act.
     ii. There has to be a satisfaction that if the property involved in money-laundering or
     proceeds of crime are not attached immediately, such non-attachment might frustrate
     the confiscation proceedings under the 2002 Act.
     iii. The order passed under Section 5(1) of the 2002 Act is only provisional in nature.
     The life of this provisional attachment order passed under Section 5(1) of the 2002 Act
     is only for 180 days, subject to confirmation by an independent Adjudicating.
     iv. Under Section 5(2) officer passing provisional attachment order has to immediately
     forward a copy of this order to the Adjudicating Authority in a sealed envelope.
     v. Under Section 5(5) of the 2002 Act, the officer making such order must file a
     complaint before the Adjudicating Authority within 30 days of the order of provisional
     attachment being made.
     vi. Section 5(3) of the 2002 Act provides that the provisional attachment order shall
     cease to have effect on the expiry of the period specified in Section 5(1) i.e. 180 days
     or on the date when the Adjudicating Authority makes an order under Section 8(2),
     whichever is earlier.
     
     vii. Under Section 8(1), once the officer making the provisional attachment order files a
     complaint and if the Adjudicating Authority has a reason to believe that any person has
     committed an offence under Section 3 or is in possession of the proceeds of crime, the
     Adjudicating Authority may serve a show cause notice of not less than 30 days on such
     person calling upon him to indicate the sources of his income, earning or assets or by
     means of which he has acquired the property attached under Section 5(1) of the 2002
     Act.
     viii. The above SCN would require the noticee to produce evidence on which he relies
     and other relevant information and particulars to show cause why all or any of the
     property should not be declared to be the properties involved in money- laundering and
     confiscated by the Central Government.
     ix. Section 8(2) requires the Adjudicating Authority to consider the reply to the SCN
     issued under Section 8(1) of the 2002 Act. The Section further provides to hear the
     aggrieved person as well as the officer issuing the order of provisional attachment and
     also take into account all relevant materials placed on record before the Adjudicating
     Authority. After following the above procedure, the Adjudicating Authority will record
     its finding whether all the properties referred to in the SCN are involved in moneylaundering or not.
     x. While passing order under Section 8(2) read with Section 8(3) there are two
     possibilities which might happen: a. the Adjudicating Authority may confirm the order
     of provisional attachment, in which case again, the confirmation will continue only up
     to i. the period of investigation not exceeding 365 days, or ii. till the pendency of any
     proceedings relating to any offence under the 2002 Act or under the corresponding law
     of any other country before the competent Court of criminal jurisdiction outside India.
     b. Adjudicating Authority may disagree and not confirm the provisional attachment, in
     which case attachment over the property ceases.
     xi. Under Section 8(4) of the 2002 Act, upon confirmation of the order of provisional
     attachment, the Director or other officer authorized by him shall take the possession of
     property attached.
     xii. Under Section 8(5) of the 2002 Act, on the conclusion of a trial for an offence
     under the 2002 Act if the Special Court finds that the offence of money-laundering has
     been committed it will order that the property involved in money-laundering or the
     property which has been involved in the commission of the offence of moneylaundering shall stand confiscated to the Central Government.
     xiii. However, under Section 8(6) if the Special Court on the conclusion of the trial
     finds that no offence of money- laundering has taken place or the property is not
     involved in money-laundering it will release the property which has been attached to
     the person entitled to receive it.
     xiv. Under Section 8(7), if the trial before the Special Court cannot be conducted
     because of the death of the accused or because the accused is declared proclaimed
     offender, then the Special Court on an application of the Director or a person claiming
     to be entitled to possession of a property in respect of which an order under Section
     8(3) is passed either to confiscate the property or release the property to the claimant,
     after considering the material before it.
     xv. Under Section 8(8), when a property is confiscated, Special Court may direct the
     central government to restore the property to a person with the legitimate interest in the
     property, who may have suffered a quantifiable loss as a result of money- laundering.
     Provided that the person must not have been involved in money-laundering and must
     have acted in a good faith and has suffered a considerable loss despite taking all
     reasonable precautions.
     xvi. The order passed by the Adjudicating Authority is also subject to appeal before the
     Appellate Tribunal which is constituted under Section 25 of the 2002 Act. Thus, the
     Adjudicating Authority is not the final authority under the 2002 Act as far as the
     attachment of proceeds of crime or property involved in money-laundering is
     concerned. xvii. Any person aggrieved of an order confirming the provisional
     attachment order can file an appeal before the Appellate Tribunal under Section 26(1)
     of the 2002 Act. The Appellate Tribunal on receipt of an appeal after giving the parties
     an opportunity of being heard will pass an order as it thinks fit either confirming or
     modifying or setting aside the provisional attachment order appealed against.
     xviii. Further, the order passed by the Appellate Tribunal is further appealable before
     the High Court under Section 42 of the 2002 Act on any question of fact or question of
     law arising out of the order passed by the Appellate Tribunal.
     It is, thus, clear that the provision in the form of Section 5 provides for a balancing
     arrangement to secure the interest of the person as well as to ensure that the proceeds of crime
     remain available for being dealt with in the manner provided by the 2002 Act. This provision,
     in our opinion, has reasonable nexus with the objects sought to be achieved by the 2002 Act
     in preventing and regulating money-laundering effectively. The constitutional validity
     including interpretation of Section 5 has already been answered against the petitioners by
     different High Courts. We do not wish to dilate on those decisions for the view already
     expressed hitherto.
     SECTION 8 OF THE 2002 ACT
244. This section is part of Chapter III dealing with attachment, adjudication and confiscation.
     It provides for the procedure and safeguards to be adhered to by the Authorities referred to in
     Section 48 and in particular the Adjudicating Authority appointed by the Central Government
     under Section 6, for dealing with the complaint filed by the authorised officer under Section
     5(5) of the 2002 Act or applications made under Section 17(4) or 18(10) of the 2002 Act. This
     is a wholesome provision, not only protecting the interest of the person concerned, but
     affording him/her fair opportunity during the adjudication process. (Refer to section 8 of the
     Act)
245. The grievance of the petitioners in respect of this provision is broadly about the period of
     attachment specified under Section 8(3)(a) and the modality of taking possession of the
     property under Section 8(4) of the 2002 Act. As a result, we will confine our discussion to the
     dispensation provided in the stated sub-sections. Reverting to sub-section (3), it postulates
     that where the Adjudicating Authority records a finding whether all or any of the properties
     referred to in the show cause notice issued under sub- section (1) by the Adjudicating
     Authority consequent to receipt of a complaint/application that the property in question is
     involved in money-laundering, he shall, by an order in writing confirm the attachment
     (provisional) of property made under Section 5(1) or retention of property or record seized or
     frozen under Section 17 or Section 18, and direct continuation of the attachment or retention
     or freezing of the concerned property for a period not exceeding three hundred and sixty-five
     days or the pendency of the proceedings relating to any offence under the 2002 Act before a
     Court or under the corresponding law of any country outside India and become final after an
     order of confiscation is passed under sub-section (5) or sub- section (7) of Section 8 or
     Section 58B or Section 60(2A) by the Special Court. The Explanation added there at vide Act
     7 of 2019 stipulates the method of computing the period of three hundred and sixty-five days
     after reckoning the stay order of the Court, if any. The argument proceeds that the period of
     attachment mentioned in Section 8(3)(a) of the 2002 Act does not clearly provide for the
     consequence of non-filing of the complaint within three hundred and sixty-five days from the
     date of attachment (provisional). This argument clearly overlooks the obligation on the
     Director or any other officer who provisionally attaches any property under Section 5(1), to
     file a complaint stating the fact of such attachment before the Adjudicating Authority within
     thirty days in terms of Section 5(5) of the 2002 Act. Concededly, filing of complaint before
     the Adjudicating Authority in terms of Section 5(5) within thirty days from the provisional
     attachment for confirmation of such order of provisional attachment is different than the
     complaint to be filed before the Special Court under Section 44(1)(b) for initiating criminal
     action regarding offence of money-laundering punishable under Section 4 of the 2002 Act.
     Furthermore, the provisional attachment would operate only for a period of one hundred and
     eighty days from the date of order passed under Section 5(1) of the 2002 Act in terms of that
     provision. Whereas, Section 8(3) refers to the period of three hundred and sixty-five days
     from the passing of the order under sub- section (2) of Section 8 by the Adjudicating
     Authority and confirming the provisional attachment order and the order of confirmation of
     attachment operates until the confiscation order is passed or becomes final in terms of order
     passed under Section 8(5) or 8(7) or 58B or 60(2A) by the Special Court. The order of
     confirmation of attachment could also last during the pendency of the proceedings relating to
     the offence of money-laundering under the 2002 Act, or before the competent Court of
     criminal jurisdiction outside India, as the case may be. We need not elaborate on this aspect
     any further and leave the parties to agitate this aspect in appropriate proceedings as it is not
     about the constitutional validity of the provision as such.
246. The other grievance of the petitioners is in reference to the stipulation in sub-section (4)
     of Section 8 providing for taking possession of the property. This provision ought to be
     invoked only in exceptional situation keeping in mind the peculiar facts of the case. In that,
     merely because the provisional attachment order passed under Section 5(1) is confirmed, it
     does not follow that the property stands confiscated; and until an order of confiscation is
     formally passed, there is no reason to hasten the process of taking possession of such
     property. The principle set out in Section 5(4) of the 2002 Act needs to be extended even after
     confirmation of provisional attachment order until a formal confiscation order is passed.
     Section 5(4) clearly states that nothing in Section 5 including the order of provisional
     attachment shall prevent the person interested in the enjoyment of immovable property
     attached under sub-section (1) from such enjoyment. The need to take possession of the
     attached property would arise only for giving effect to the order of confiscation. This is also
     because sub-section (6) of Section 8 postulates that where on conclusion of a trial under the
     2002 Act which is obviously in respect of offence of money- laundering, the Special Court
     finds that the offence of money- laundering has not taken place or the property is not involved
     in money-laundering, it shall order release of such property to the person entitled to receive it.
     Once the possession of the property is taken in terms of sub-section (4) and the finding in
     favour of the person is rendered by the Special Court thereafter and during the interregnum if
     the property changes hands and title vest in some third party, it would result in civil
     consequences even to third party. That is certainly avoidable unless it is absolutely necessary
     in the peculiar facts of a particular case so as to invoke the option available under sub-section
     (4) of Section 8.
247. Indisputably, statutory Rules have been framed by the Central Government in exercise of
     powers under Section 73 of the 2002 Act regarding the manner of taking possession of
     attached or frozen properties confirmed by the Adjudicating Authority in 2013, and also
     regarding restoration of confiscated property in 2019. Suffice it to observe that direction
     under Section 8(4) for taking possession of the property in question before a formal order of
     confiscation is passed merely on the basis of confirmation of provisional attachment order,
     should be an exception and not a rule. That issue will have to be considered on case-to-case
     basis. Upon such harmonious construction of the relevant provisions, it is not possible to
     countenance challenge to the validity of sub-section (4) of Section 8 of the 2002 Act.
248. The learned counsel appearing for the Union of India, had invited our attention to the
     recommendations made by FATF in 2003 and 2012 to justify the provision under
     consideration. The fact that non-conviction based confiscation model is permissible, it does
     not warrant an extreme and drastic action of physical dispossession of the person from the
     property in every case which can be industrial/commercial/business and also residential
     property, until a formal order of confiscation is passed under Section 8(5) or 8(7) of the 2002
     Act. As demonstrated earlier, it is possible that the Special Court in the trial concerning
     money-laundering offence may eventually decide the issue in favour of the person in
     possession of the property as not being proceeds of crime or for any other valid ground.
     Before such order is passed by the Special Court, it would be a case of serious miscarriage of
     justice, if not abuse of process to take physical possession of the property held by such
     person. Further, it would serve no purpose by hastening the process of taking possession of
     the property and then returning the same back to the same person at a later date pursuant to
     the order passed by the Court of competent jurisdiction. Moreover, for the view taken by us
     while interpretating Section 3 of the 2002 Act regarding the offence of money-laundering, it
     can proceed only if it is established that the person has directly or indirectly derived or
     obtained proceeds of crime as a result of criminal activity relating to or relatable to a
     scheduled offence or was involved in any process or activity connected with proceeds of
     crime.
249. It is unfathomable as to how the action of confiscation can be resorted to in respect of
     property in the event of his acquittal or discharge in connection with the scheduled offence.
     Resultantly, we would sum up by observing that the provision in the form of Section 8(4) can
     be resorted to only by way of an exception and not as a rule.
     SEARCH AND SEIZURES
250. After having traversed through the provisions of Chapter I to III, we may now turn to
     other contentious provision in Chapter V of the 2002 Act, dealing with summons, searches
     and seizures, etc. Section 16 provides for power of survey bestowed upon the Authorities
     under the 2002 Act. They have been empowered to enter upon any place within the limits of
     the area assigned to them or in respect of which, has been specifically authorised for the
     purposes of Section 16 by the competent authority, for inspection of records or other matters,
     in the event, it has reason to believe on the basis of material in possession that an offence
     under Section 3 of the 2002 Act has been committed. However, when it comes to search and
     seizure, Section 17 of the 2002 Act permits only the Director or any other officer not below
     the rank of Deputy Director authorised by him to exercise that power on the basis of
     information in his possession and having reason to believe that any person has committed
     some act which constitutes money-laundering or is in possession of proceeds of crime
     involved in money-laundering, including the records and property relating to moneylaundering. (Refer to Section 16 and 17 of the Act).
251. As noticed from the amended provision, it has been amended vide Act 21 of 2009, Act 2
     of 2013, and finally by the Finance (No. 2) Act 2019. The challenge is essentially in respect
     of deletion of proviso vide Finance (No.2) Act, 2019 which provides that no search shall be
     conducted unless, in relation to the scheduled offence, a report has been forwarded to a
     Magistrate under Section 157 of the 1973 Code or a complaint has been filed by a person,
     authorised to investigate the offence mentioned in the Schedule, before a Magistrate or Court
     for taking cognizance of the scheduled offence, as the case may be, or in cases where such
     report is not required to be forwarded, a similar report of information received or otherwise
     has been submitted by an officer authorised to investigate a scheduled offence to an officer
     not below the rank of Additional Secretary to the Government of India or equivalent being
     Head of the Office or Ministry or Department or Unit, as the case may be, or any other officer
     who may be authorised by the Central Government, by notification, for this purpose. Further,
     the challenge is about no safeguards, as provided under the 1973 Code regarding searches and
     seizures, have been envisaged and that such drastic power is being exercised without a formal
     FIR registered or complaint filed in respect of scheduled offence. The provision is, therefore,
     unconstitutional.
     310 . These challenges have been rightly refuted by the Union of India on the argument that
     the 2002 Act is a self-contained Code and the dispensation envisaged thereunder, must prevail
     in terms of Section 20A of the 2002 Act, which predicates that the provisions of the 2002 Act
     have effect notwithstanding anything inconsistent therewith contained in any other law for the
     time being in force, which includes the provisions of the 1973 Code.
252. …We have already noted in the earlier part of this judgment that before resorting to
     action of provisional attachment, registration of scheduled offence or complaint filed in that
     regard, is not a precondition. The authorised officer can still invoke power of issuing order of
     provisional attachment and contemporaneously send information to the jurisdictional police
     about the commission of scheduled offence and generation of property as a result of criminal
     activity relating to a scheduled offence, which is being made subject matter of provisional
     attachment. Even in the matter of searches and seizures under the 2002 Act, that power can be
     exercised only by the Director or any other officer not below the rank of Deputy Director
     authorised by him. They are not only high-ranking officials, but have to be fully satisfied that
     there is reason to believe on the basis of information in their possession about commission of
     offence of money- laundering or possession of proceeds of crime involved in moneylaundering. Such reason(s) to believe is required to be recorded in writing and
     contemporaneously forwarded to the Adjudicating Authority along with the material in his
     possession in a sealed envelope to be preserved by the Adjudicating Authority for period as is
     prescribed under the Rules framed in that regard. Such are the inbuilt safeguards provided in
     the 2002 Act. The proviso as it existed prior to 2019 was obviously corresponding to the
     stipulation in the first proviso in Section 5. However, for strengthening the mechanism,
     including regarding prevention of money-laundering, the Parliament in its wisdom deemed it
     appropriate to drop the proviso in sub-section (1) of Section 17 of the 2002 Act, thereby
     dispensing with the condition that no search shall be conducted unless in relation to the
     scheduled offence a report has been forwarded to a Magistrate under Section 157 of the 1973
     Code or a complaint has been filed before a Magistrate in regard to such offence. As it is
     indisputable that the 2002 Act is a special Act and is a self-contained Code regarding the
     subject of searches and seizures in connection with the offence of money-laundering under
     the 2002 Act, coupled with the fact that the purpose and object of the 2002 Act is prevention
     of money-laundering; and the offence of money-laundering being an independent offence
     concerning the process and activity connected with the proceeds of crime, the deletion of the
     first proviso has reasonable nexus with the objects sought to be achieved by the 2002 Act for
     strengthening the mechanism of prevention of money-laundering and to secure the proceeds
     of crime for being dealt with appropriately under the 2002 Act.
253. As aforementioned, Section 17 provides for inbuilt safeguards, not only mandating
     exercise of power by high ranking officials, of the rank of Director (not below the rank of
     Additional Secretary to the Government of India who is appointed by a Committee chaired by
     the Central Vigilance Commissioner in terms of Section 25 of the CVC Act) or Deputy
     Director authorised by the Director in that regard, but also to adhere to other stipulations of
     recording of reasons regarding the belief formed on the basis of information in his possession
     about commission of offence of money-laundering and possession of proceeds of crime
     involved in money-laundering. Further, such recorded reasons along with the materials is
     required to be forwarded to the three-member Adjudicating Authority (appointed under
     Section 6 of the 2002 Act headed by a person qualified for appointment as District Judge) in a
     sealed cover to be preserved for specified period, thus, guaranteeing fairness, transparency
     and accountability regarding the entire process of search and seizure. This is unlike the
     provision in the 1973 Code where any police officer including the Head Constable can
     proceed to search and seize records or property merely on the basis of allegation or suspicion
     of commission of a scheduled offence.
254. Concededly, the 2002 Act provides for an inquiry to be conducted by the Authorities and
     with power to collect evidence for being submitted to the Adjudicating Authority for
     consideration of confirmation of provisional attachment order passed by the Authorities in
     respect of properties being proceeds of crime involved in the offence of money-laundering. In
     that sense, the provisions in 2002 Act are not only to investigate into the offence of moneylaundering, but more importantly to prevent money-laundering and to provide for confiscation
     of property related to money-laundering and matters connected therewith and incidental
     thereto.
255. The process of searches and seizures under the 2002 Act are, therefore, not only for the
     purposes of inquiring into the offence of money-laundering, but also for the purposes of
     prevention of money- laundering. This is markedly distinct from the process of investigating
     into a scheduled offence.
256. It is pertinent to note that if the action taken by the Authority under the 2002 Act,
     including regarding searches and seizures, is eventually found to be without reasons recorded
     in writing, would entail punishment for vexatious search under Section 62 of the 2002 Act.
     Such being the stringent safeguards provided under Section 17 of the 2002 Act and Rules
     framed regarding the process of searches and seizures concerning the offence of moneylaundering and for prevention of money-laundering including attachment of proceeds of
     crime, it is unfathomable as to how the challenge under consideration can be countenanced.
257. As noticed earlier, in terms of Section 17(2) of the 2002 Act immediately after the search
     and seizure, the Authority conducting the search is obliged to forward a copy of the reasons
     recorded and materials in his possession to the Adjudicating Authority in a sealed envelope.
     This sealed envelope is required to be preserved for period as specified under the Rules
     framed in that regard so that it is not tempered with in any manner and to ensure fairness of
     the procedure including accountability of the Authority. Not only that, in terms of Section
     17(4) of the 2002 Act the Authority seizing the record or property is obliged to submit an
     application before the Adjudicating Authority within a period of thirty days therefrom for the
     retention of the said record and Adjudicating Authority in turn gives opportunity to be heard
     by issuing show cause notice to the person concerned before passing order of retention of
     record or property, as the case may be, under the 2002 Act and the Rules framed therefor. The
     Authorities carrying out search and seizure is also made accountable by providing for
     punishment under Section 62 of the 2002 Act for vexatious search and giving false
     information. All these inbuilt safeguards prevent arbitrary exercise or misuse of power by the
     authorities appointed under the 2002 Act.
258. The emphasis placed on Section 102 of the 1973 Code regarding seizure procedure by
     the petitioners, is of no avail. That provision does not provide for any safeguard prior to a
     seizure as is provided under Section 17 of the 2002 Act and the Rules framed thereunder. As
     noted earlier, it can be made even by a Head Constable as the expression used is “any police
     officer” that too merely on the basis of an allegation or suspicion of commission of an
     offence. In case of search, Section 165 of the 1973 Code empowers the officer in-charge of a
     police station or a police officer making an investigation to take recourse to that in the event
     he has reasonable grounds for believing that it would be necessary to do so for investigating
     into any offence. This power can be exercised by any police officer (irrespective of his rank)
     investigating into an offence. Suffice it to observe that the power of search and seizure
     entrusted to the Authorities under Section 17 of the 2002 Act, is a special self- contained
     provision and is different from the general provisions in the 1973 Code, which, therefore,
     ought to prevail in terms of Section 71 of the 2002 Act. Further, in view of the inbuilt
     safeguards and stringent stipulations to be adhered to by the Authorities under the 2002 Act, it
     ought to be regarded as reasonable provision having nexus with the purposes and objects
     sought to be achieved by the 2002 Act. It is certainly not an arbitrary power at all.
259. It was urged that the Rule 3(2) proviso in the 2005 Rules regarding forms, search and
     seizure or freezing and the manner of forwarding the reasons and material to the Adjudicating
     Authority, impounding and custody of records and the period of retention, remained
     unamended despite deletion of the proviso in Section 17(1) of the 2002 Act vide Finance
     (No.2) Act, 2019. In the first place, it is unfathomable that the effect of amending Act is being
     questioned on the basis of unamended Rule. It is well-settled that if the Rule is not consistent
     with the provisions of the Act, the amended provisions in the Act must prevail. The statute
     cannot be declared ultra vires on the basis of Rule framed under the statute. The precondition
     in the proviso in Rule 3(2) cannot be read into Section 17 of the 2002 Act, more so contrary
     to the legislative intent in deleting the proviso in Section 17(1) of the 2002 Act. In any case, it
     is open to the Central Government to take necessary corrective steps to obviate confusion
     caused on account of the subject proviso, if any.
     SEARCH OF PERSONS
260. The subject of search of persons is dealt with in Section 18 of the 2002 Act forming part
     of Chapter V. Even in respect of this provision, the challenge is essentially founded on the
     deletion of proviso in sub-section (1) of Section 18 vide Finance (No.2) Act, 2019 which was
     pari materia with the proviso in Section 17(1) of the 2002 Act stipulating that no search of
     any person shall be made unless in relation to the scheduled offence a report has been
     forwarded to a Magistrate under Section 157 of the 1973 Code, etc. The Section 18, as
     amended reads thus:
261. Search of persons.(1) If an authority, authorised in this behalf by the Central
     Government by general or special order, has reason to believe (the reason for such
     belief to be recorded in writing) that any person has secreted about his person or in
     anything under his possession, ownership or control, any record or proceeds of crime
     which may be useful for or relevant to any proceedings under this Act, he may search
     that person and seize such record or property which may be useful for or relevant to
     any proceedings under this Act:
     [] 183 (2) The authority, who has been authorised under sub- section (1) shall, immediately after search and seizure, forward a copy of the reasons so recorded along with material in his possession, referred to in that sub- section, to the Adjudicating Authority in a sealed envelope, in the manner, as may be prescribed and such Adjudicating Authority shall keep such reasons and material for such period, as may be prescribed. (3) Where an authority is about to search any person, he shall, if such person so requires, take such person within twenty-four hours to the nearest gazetted officer, superior in rank to him, or a Magistrate: Provided that the period of twenty-four hours shall exclude the time necessary for the journey undertaken to take such person to the nearest gazetted officer, superior in rank to him, or Magistrate‟s Court. (4) If the requisition under sub-section (3) is made, the authority shall not detain the person for more than twenty-four hours prior to taking him before the Gazetted Officer, superior in rank to him, or the Magistrate referred to in that sub-section: Provided that the period of twenty-four hours shall exclude the time necessary for the journey from the place of detention to the office of the Gazetted Officer, superior in rank to him, or the Magistrates Court. (5) The Gazetted Officer or the Magistrate before whom any such person is brought shall, if he sees no reasonable ground for search, forthwith discharge such person but otherwise shall direct that search be made. (6) Before making the search under sub-section (1) or sub-section (5), the authority shall call upon two or more persons to attend and witness the search, and the search shall be made in the presence of such persons. (7) The authority shall prepare a list of record or property seized in the course of the search and obtain the signatures of the witnesses on the list. (8) No female shall be searched by any one except a female. (9) The authority shall record the statement of the person searched under sub-section (1) or sub-section (5) in respect of the records or proceeds of crime found or seized in the course of the search: []
     (10) The authority, seizing any record or property under sub-section (1) shall, within a
     period of thirty days from such seizure, file an application requesting for retention of
     such record or property, before the Adjudicating Authority.
262. For the reasons noted to negate the challenge to the deletion of proviso in Section 17(1)
     of the 2002 Act, the same would apply with full force for rejecting the same argument in
     respect of deletion of proviso in Section 18(1) of the 2002 Act. Suffice it to observe that even
     under Section 18 of the 2002 Act, the Authority authorised to exercise power of search of
     person is obliged to adhere to identical inbuilt safeguards as in the case of exercise of power
     under Section 17 of the 2002 Act. In addition to the similar safeguards in terms of Section
     18(3) of the 2002 Act, the Authority is obliged to take the person who is about to be searched
     to a Gazetted Officer or a Magistrate before the search of such person is carried out. The
     Constitution Bench of this Court while dealing with similar provisions of NDPS Act in State
     of Punjab vs. Baldev Singh (1999) 6 SCC 172 upheld the search of person procedure being a
     fair and reasonable procedure. In paragraph 25 of the said decision, this Court observed as
     follows:
263. To be searched before a gazetted officer or a Magistrate, if the suspect so requires,
     is an extremely valuable right which the legislature has given to the person concerned
     having regard to the grave consequences that may entail the possession of illicit articles
     under the NDPS Act. It appears to have been incorporated in the Act keeping in view
     the severity of the punishment. The rationale behind the provision is even otherwise
     manifest. The search before a gazetted officer or a Magistrate would impart much more
     authenticity and creditworthiness to the search and seizure proceeding. It would also
     verily strengthen the prosecution case. There is, thus, no justification for the
     empowered officer, who goes to search the person, on prior information, to effect the
     search, of not informing the person concerned of the existence of his right to have his
     search conducted before a gazetted officer or a Magistrate, so as to enable him to avail
     of that right. It is, however, not necessary to give the information to the person to be
     searched about his right in writing. It is sufficient if such information is communicated
     to the person concerned orally and as far as possible in the presence of some
     independent and respectable persons witnessing the arrest and search. The prosecution
     must, however, at the trial, establish that the empowered officer had conveyed the
     information to the person concerned of his right of being searched in the presence of a
     Magistrate or a gazetted officer, at the time of the intended search. Courts have to be
     satisfied at the trial of the case about due compliance with the requirements provided in
     Section 50. No presumption under Section 54 of the Act can be raised against an
     accused, unless the prosecution establishes it to the satisfaction of the court, that the
     requirements of Section 50 were duly complied with.
264. Additionally, under Section 18(5) of the 2002 Act, if the person to be searched is
     taken to a Gazetted Officer or the Magistrate, then such Officer or Magistrate may
     release the person if there is no ground for search and under Section 18(6), the
     Authority is obliged to call at least two witnesses to attend to witness the search, in
     whose presence, the search is to be carried out. In terms of Section 18(7), the Authority
     seizing any property during the search of such a person has to prepare a list of the
     record or the property seized which is required to be signed by the witnesses to ensure
     that no tempering thereof takes place later on. In case, search of a female is to be
     carried out, in terms of Section 18(8), it could be done only by a female. Significantly,
     the Authority seizing any record or property during the search of the person, is obliged
     to submit an application to the Adjudicating Authority within thirty days for permitting
     retention of record or property. On such application, the Adjudicating Authority gives
     opportunity of hearing to the person concerned as to why record or property should not
     be retained in terms of Section 18(10). Such inbuilt safeguards are provided to secure
     the interest of the person being subjected to search, at the same time for strengthening
     the mechanism regarding prevention of money-laundering and attachment of proceeds
     of crime. Merely because Section 165 of the 1973 Code provides for a different
     mechanism regarding search by the police officer, that will be of no consequence for
     dealing with the inquiry/investigation and adjudication including prosecution under the
     2002 Act. Suffice it to observe that the provision in the form of Section 18, as
     amended, is a special provision and is certainly not arbitrary much less manifestly
     arbitrary. Instead, we hold that the amended provision in Section 18 has reasonable
     nexus with the purposes and objects sought to be achieved by the 2002 Act of
     prevention of money- laundering and attachment and confiscation of property
     (proceeds of crime) involved in money-laundering, as also prosecution against the
     person concerned for offence of money-laundering under Section 3 of the 2002 Act.
     BURDEN OF PROOF
265. The validity of Section 24 of the 2002 Act has been assailed. This section has been
     amended in 2013 vide Act 2 of 2013. Before that amendment, it read thus:
266. Burden of Proof. When a person is accused of having committed the
     offence under section 3, the burden of proving that proceeds of crime are
     untainted property shall be on the accused.
267. The amendment of 2013 was necessitated because of the recommendations made by
     FATF in 2012, wherein it was noted that the countries should adopt measures similar to those
     set forth in the Vienna Convention, Palermo Convention and Terrorist Financing Convention.
     The Objects and Reasons for effecting amendment as appended to the Amendment Bill read
     thus:
     The Prevention of Money Laundering Act, 2002 was enacted to prevent moneylaundering and to provide for confiscation of property derived from, or involved in,
     money-laundering and for matters connected therewith or incidental thereto. The
     aforesaid Act also addresses the international obligations under the Political
     Declaration and Global Programme of Action adopted by General Assembly of the
     United Nations to prevent money-laundering. The Act was amended in the year 2005
     and 2009 to remove the difficulties arisen in implementation of the Act.
     The problem of money-laundering is no longer restricted to the geo-political boundaries of
     any country. It is a global menace that cannot be contained by any nation alone. In view of
     this, India has become a member of the Financial Action ask Force and Asia Pacific Group on
     money-laundering, which are committed to the effective implementation and enforcement of
     internationally accepted standards against money- laundering and the financing of terrorism.
     Consequent to the submission of an action plan to the Financial Action Task Force to bring
     anti money-laundering legislation of India at par with the international standards and to
     obviate some of the deficiencies in the Act that have been experienced by the implementing
     agencies, the need to amend the Prevention of Money-Laundering Act, 2002 became
     necessary.
268. The Amendment Bill had proposed substitution of Section 24 as under:
     
269. In any proceedings relating to proceeds of crime under this Act, unless the contrary
     is proved, it shall be presumed that such proceeds of crime is involved in moneylaundering.
270. The Standing Committee of Finance then made some recommendations as follows:
     The Committee recommend that the prescribed onus of proof that the property in question is
     not out of proceeds of money-laundering crime, being not only on the accused but also on
     anyone who is in possession of the proceeds of crime, should be subject to adequate
     safeguards to protect the innocent.
271. Finally, the provision came to be amended by Act 2 of 2013 which came into force with
     effect from 15.2.2013 and reads thus:
     [24. Burden of proof. In any proceeding relating to proceeds of crime under this Act,
     (a) in the case of a person charged with the offence of money-laundering under section 3,
     the Authority or Court shall, unless the contrary is proved, presume that such proceeds of
     crime are involved in money-laundering; and
     (b) in the case of any other person the Authority or Court, may presume that such proceeds
     of crime are involved in money-laundering.]
272. From the plain language of the amended provision, which is subject matter of assail
     in these cases being unconstitutional, clearly indicates that it concerns (all) proceeding(s)
     relating to proceeds of crime under the 2002 Act. The expression “proceeding” has not
     been defined in the 2002 Act or the 1973 Code. However, in the setting in which it has
     been placed in this provision, as rightly argued by the learned Additional Solicitor General
     for the Union of India, it must relate to the proceeding before the Adjudicating Authority
     or the Special Court. The proceeding before the authorities (referred to in Chapter VIII)
     relates to action taken regarding prevention of offence of money-laundering and ordering
     provisional attachment of property derived or obtained, directly or indirectly, by any
     person as a result of criminal activity relating to a scheduled offence; and to inquire into
     all matters connected therewith and collect evidence to be presented before the
     Adjudicating Authority for consideration of application regarding confirmation of
     provisional attachment order as per Section 8 of the 2002 Act. This provision (Section 24)
     must, however, apply to proceeding before the Adjudicating Authority regarding
     confirmation of provisional attachment order and eventually for ordering confiscation of
     the attached property for vesting in the Central Government under Section 9 of the 2002
     Act. This is reinforced from the purport of Section 23 of the 2002 Act. Further, it would
     also apply to proceeding before the Special Court empowered to try the offence of moneylaundering under Section 3 of the 2002 Act upon presentation of a complaint by the
     authority authorised as per Section 44(1)(b) of the 2002 Act.
273. It is, thus, clear that this special provision regarding burden of proof in any proceeding
     relating to proceeds of crime under this Act would apply to stated proceeding before the
     Adjudicating Authority and not limited to the proceeding before the Special Court. That is
     evident from the plain language, indicative of applicability of the provision to “any”
     proceeding before the “Authority” or the “Court”. The expression “Authority” occurring in
     this provision must be given its proper meaning indicative of the Adjudicating Authority
     appointed under Section 6 of the 2002 Act to adjudicate on matters concerning confirmation
     of provisional attachment order and eventual confiscation and vesting of the property, if the
     fact situation so warrant. It is an independent body, free from the control of the Executive It is
     ordained to deal with civil aspects of the action of attachment and confiscation of the
     proceeds of crime and not about the criminality of the offence under Section 3 of the 2002
     Act. When this provision is made applicable to the proceeding before the Authority, it would
     not be necessary to follow the strict principle of standard of proof beyond reasonable doubt,
     as applicable in criminal trials. That principle will have no bearing on the proceeding before
     the Authority. However, when the same evidence and provision is relied upon in the
     proceeding before the Special Court regarding trial of offence of money-laundering under
     Section 3 of the 2002 Act, it would have a different connotation in the context of a criminal
     trial.
274. Be that as it may, this Section 24 deals with two situations. The first part concerns the
     person charged with the offence of money-laundering under Section 3. The second part
     [Clause (b)] concerns any other person. Taking the second part first, such other person would
     obviously mean a person not charged with the offence of money-laundering under Section 3
     of the 2002 Act. The two parts, in one sense, are mutually exclusive. If a person is charged
     with the offence of money-laundering under Section 3 of the 2002 Act owing to a complaint
     filed by the authority authorised before the Special Court, Clause (a) would trigger in. As
     regards the second category [Clause (b)] of person, the expression used is may presume.
     Whereas, qua the first category [covered under Clause (a)] the expression used is shall, unless
     the contrary is proved, presume. In this category, if a charge is already framed against the
     person for having committed offence of money-laundering, it would presuppose that the
     Court framing charge against him was prima facie convinced that the materials placed before
     it had disclosed grave suspicion against such person. In such a case, once the issue of
     admissibility of materials supporting the factum of grave suspicion about the involvement of
     the person in the commission of crime under the 2002 Act, is accepted, in law, the burden
     must shift on the person concerned to dispel that suspicion. It would then not be a case of
     reversal of burden of proof as such, but one of shifting of burden on him to show that no
     offence of money-laundering had been committed and, in any case, the property (proceeds of
     crime) was not involved in money-laundering.
275. Suffice it to observe that the change effected in Section 24 of the 2002 Act is the
     outcome of the mandate of international Conventions and recommendations made in that
     regard. Further, keeping in mind the legislative scheme and the purposes and objects sought
     to be achieved by the 2002 Act coupled with the fact that the person charged or any other
     person involved in money-laundering, would get opportunity to disclose information and
     evidence to rebut the legal presumption in respect of facts within his personal knowledge
     during the proceeding before the Authority or the Special Court, by no stretch of imagination,
     provision in the form of Section 24 of the 2002 Act, can be regarded as unconstitutional. It
     has reasonable nexus with the purposes and objects sought to be achieved by the 2002 Act. In
     any case, it cannot be perceived as manifestly arbitrary as is sought to be urged before us.
276. Be that as it may, we may now proceed to decipher the purport of Section 24 of the 2002
     Act. In the first place, it must be noticed that the legal presumption in either case is about the
     involvement of proceeds of crime in money-laundering. This fact becomes relevant, only if,
     the prosecution or the authorities have succeeded in establishing at least three basic or
     foundational facts. First, that the criminal activity relating to a scheduled offence has been
     committed. Second, that the property in question has been derived or obtained, directly or
     indirectly, by any person as a result of that criminal activity. Third, the person concerned is,
     directly or indirectly, involved in any process or activity connected with the said property
     being proceeds of crime. On establishing the fact that there existed proceeds of crime and the
     person concerned was involved in any process or activity connected therewith, itself,
     constitutes offence of money-laundering. The nature of process or activity has now been
     elaborated in the form of Explanation inserted vide Finance (No.2) Act, 2019. On establishing
     these foundational facts in terms of Section 24 of the 2002 Act, a legal presumption would
     arise that such proceeds of crime are involved in money-laundering. The fact that the person
     concerned had no causal connection with such proceeds of crime and he is able to disprove
     the fact about his involvement in any process or activity connected therewith, by producing
     evidence in that regard, the legal presumption would stand rebutted.
277. The person falling under the first category being person charged with the offence of
     money-laundering, presupposes that a formal complaint has already been filed against him by
     the authority authorised naming him as an accused in the commission of offence of moneylaundering. As observed in P.N. Krishna Lal v. Government of Kerala 1995 Supp (2) SCC
     187, the Court cannot be oblivious about the purpose of the law. Further, the special
     provisions or the special enactments as in this case is required to tackle new situations created
     by human proclivity to amass wealth at the altar of formal financial system of the country
     including its sovereignty and integrity. While dealing with such provision, reading it down
     would also defeat the legislative intent.
278. Be it noted that the legal presumption under Section 24(a) of the 2002 Act, would apply
     when the person is charged with the offence of money-laundering and his direct or indirect
     involvement in any process or activity connected with the proceeds of crime, is established.
     The existence of proceeds of crime is, therefore, a foundational fact, to be established by the
     prosecution, including the involvement of the person in any process or activity connected
     therewith. Once these foundational facts are established by the prosecution, the onus must
     then shift on the person facing charge of offence of money-laundering to rebut the legal
     presumption that the proceeds of crime are not involved in money-laundering, by producing
     evidence which is within his personal knowledge. In other words, the expression presume is
     not conclusive. It also does not follow that the legal presumption that the proceeds of crime
     are involved in money-laundering is to be invoked by the Authority or the Court, without
     providing an opportunity to the person to rebut the same by leading evidence within his
     personal knowledge.
279. Such onus also flows from the purport of Section 106 of the Evidence Act. Whereby, he
     must rebut the legal presumption in the manner he chooses to do and as is permissible in law,
     including by replying under Section 313 of the 1973 Code or even by cross- examining
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     prosecution witnesses. The person would get enough opportunity in the proceeding before the
     Authority or the Court, as the case may be. He may be able to discharge his burden by
     showing that he is not involved in any process or activity connected with the proceeds of
     crime. In any case, in terms of Section 114 of the Evidence Act, it is open to the Court to
     presume the existence of any fact which it thinks likely to have happened, regard being had to
     the common course of natural events, human conduct, and public and private business, in
     their relation to the facts of the particular case. Considering the above, the provision under
     consideration [Section 24(a)] by no standards can be said to be unreasonable much less
     manifestly arbitrary and unconstitutional.
280. Reverting to Section 24(b) of the 2002 Act, that concerns person other than the person
     charged with the offence of money- laundering under Section 3 of the 2002 Act. In his case,
     the expression used in Clause (b) is may presume.
281. Notably, the legal presumption in the context of Section 24(b) of the 2002 Act is
     attracted once the foundational fact of existence of proceeds of crime and the link of such
     person therewith in the process or activity is established by the prosecution. The stated legal
     presumption can be invoked in the proceeding before the Adjudicating Authority or the Court,
     as the case may be. The legal presumption is about the fact that the proceeds of crime are
     involved in money-laundering which, however, can be rebutted by the person by producing
     evidence within his personal knowledge.
282. Be it noted that the presumption under Section 24(b) of the 2002 Act is not a mandatory
     legal presumption, unlike in the case falling under the other category, namely Section 24(a).
     If the person has not been charged with the offence of money-laundering, the legal
     presumption under Section 24(b) can be invoked by the Adjudicating Authority or the Court,
     as the case may be. More or less, same logic as already noted while dealing with the efficacy
     of Section 24(a) of the 2002 Act, would apply even to the category of person covered by
     Section 24(b), in equal measure.
283. We, therefore, hold that the provision under consideration namely Section 24 has
     reasonable nexus with the purposes and objects sought to be achieved by the 2002 Act and
     cannot be regarded as manifestly arbitrary or unconstitutional.
     BAIL
284. The relevant provisions regarding bail in the 2002 Act can be traced to Sections 44(2),
     45 and 46 in Chapter VII concerning the offence under this Act. The principal grievance is
     about the twin conditions specified in Section 45 of the 2002 Act. (Refer to amended Sec
     45).
285. Section 45 has been amended vide Act 20 of 2005, Act 13 of 2018 and Finance (No.2)
     Act, 2019. The provision as it obtained prior to 23.11.2017 read somewhat differently. The
     constitutional validity of Sub-section (1) of Section 45, as it stood then, was considered in
     Nikesh Tarachand Shah. This Court declared Section 45(1) of the 2002 Act, as it stood then,
     insofar as it imposed two further conditions for release on bail, to be unconstitutional being
     violative of Articles 14 and 21 of the Constitution. The two conditions which have been
     mentioned as twin conditions are:
     190
     (i) that there are reasonable grounds for believing that he is not guilty of such
     offence; and
     (ii) that he is not likely to commit any offence while on bail.
286. According to the petitioners, since the twin conditions have been declared to be void and
     unconstitutional by this Court, the same stood obliterated.
287. The first issue to be answered by us is: whether the twin conditions, in law, continued to
     remain on the statute book post decision of this Court in Nikesh Tarachand Shah and if yes,
     in view of the amendment effected to Section 45(1) of the 2002 Act vide Act 13 of 2018, the
     declaration by this Court will be of no consequence. This argument need not detain us for
     long.
288. A priori, it is not open to argue that Section 45 of the 2002 Act post decision in Nikesh
     Tarachand Shah stood obliterated from the statute book as such. Indubitably, it is not
     unknown that even after declaration of unconstitutionality by the Court owing to violation of
     rights guaranteed under Part III of the Constitution, it is open to the Parliament/Legislature to
     cure the defect reckoned by the Constitutional Court in relation to the concerned provision
     whilst declaring it as unconstitutional.
289. In the case of Nikesh Tarachand Shah, as aforesaid, this Court declared the twin
     conditions in Section 45(1) of the 2002 Act as unconstitutional being violative of Articles 14
     and 21 of the Constitution. That conclusion reached by this Court is essentially on account of
     two basic reasons. The first being that the provision, as it existed at the relevant time, was
     founded on a classification based on sentencing of the scheduled offence and it had no nexus
     with objectives of the 2002 Act; and secondly, because the twin conditions were restricted
     only to a particular class of offences within the 2002 Act, such as offences punishable for a
     term of imprisonment for more than three years under Part A of the Schedule, and not to all
     the offences under the 2002 Act. In paragraph 1 of the same decision, the Court had noted
     that the challenge set forth in the writ petition was limited to imposing two conditions for
     grant of bail wherein an offence punishable for a term of imprisonment for more than three
     years under Part A of the Schedule to the Act is involved. This aspect has been thoroughly
     analysed by the Court in the said decision. The Court also noted the legislative history for
     enacting such a law and other relevant material from paragraph 11 onwards upto paragraph
290. It adverted to several circumstances and illustrations to conclude that the provision, as it
     stood then, on the face of it, was discriminatory and manifestly arbitrary. Eventually in the
     operative order, being paragraph 54 of the decision, the Court declared that Section 45(1) of
     the 2002 Act, as it stood then, insofar as it imposes two further conditions for release on bail,
     to be unconstitutional as it violated Articles 14 and 21 of the Constitution.
291. By the amendment vide Act 13 of 2018, the defects noted by this Court in the
     aforementioned decision have been duly cured by deleting the words punishable for a term of
     imprisonment of more than three years under Part A of the Schedule in Section 45(1) of the
     2002 Act and substituted by words “under this Act”. The question is: whether it was open to
     the Parliament to undo the effect of the judgment of this Court declaring the twin conditions
     unconstitutional? On a fair reading of the judgment, we must observe that although the Court
     declared the twin conditions as unconstitutional, but it was in the context of the opening part
     of the sub-section (1) of Section 45, as it stood then, which resulted in discrimination and
     arbitrariness as noticed in the judgment. But that opening part referring to class of offences,
     namely punishable for a term of imprisonment of more than three years under Part A of the
     Schedule having been deleted and, instead, the twin conditions have now been associated
     with all the offences under the 2002 Act, the defect pointed out in the stated decision, stands
     cured. To answer the question posed above, we may also usefully refer to the enunciation of
     the Constitution Bench of this Court, which recognises power of the Legislature to cure the
     defect when the law is struck down by the Constitutional Court as violative of some
     fundamental rights traceable to Part-III of the Constitution. It has been consistently held that
     such declaration does not have the effect of repealing the relevant provision as such. For, the
     power to repeal vests only in the Parliament and none else. Only upon such repeal by the
     Parliament, the provision would become non est for all purposes until re-enacted, but it is
     open to the Parliament to cure the defect noticed by the Constitutional Court so that the
     provision, as amended by removing such defect gets revived. This is so because, the
     declaration by the Constitutional Court and striking down of a legal provision being violative
     of fundamental rights traceable to Part III of the Constitution, merely results in the provision,
     as it existed then, becoming inoperative and unenforceable, even though it may continue to
     remain on the statute book.
292. …We must now address the challenge to the twin conditions as applicable post
     amendment of 2018. That challenge will have to be tested on its own merits and not in
     reference to the reasons weighed with this Court in declaring the provision, (as it existed at
     the relevant time), applicable only to offences punishable for a term of imprisonment of more
     than three years under Part A of the Schedule to the 2002 Act. Now, the provision (Section
     45) including twin conditions would apply to the offence(s) under the 2002 Act itself. The
     provision post 2018 amendment, is in the nature of no bail in relation to the offence of
     money-laundering unless the twin conditions are fulfilled. The twin conditions are that there
     are reasonable grounds for believing that the accused is not guilty of offence of moneylaundering and that he is not likely to commit any offence while on bail. Considering the
     purposes and objects of the legislation in the form of 2002 Act and the background in which it
     had been enacted owing to the commitment made to the international bodies and on their
     recommendations, it is plainly clear that it is a special legislation to deal with the subject of
     money- laundering activities having transnational impact on the financial systems including
     sovereignty and integrity of the countries. This is not an ordinary offence. To deal with such
     serious offence, stringent measures are provided in the 2002 Act for prevention of moneylaundering and combating menace of money-laundering, including for attachment and
     confiscation of proceeds of crime and to prosecute persons involved in the process or activity
     connected with the proceeds of crime. In view of the gravity of the fallout of moneylaundering activities having transnational impact, a special procedural law for prevention and
     regulation, including to prosecute the person involved, has been enacted, grouping the
     offenders involved in the process or activity connected with the proceeds of crime as a
     separate class from ordinary criminals. The offence of money-laundering has been regarded
     as an aggravated form of crime “world over”. It is, therefore, a separate class of offence
     requiring effective and stringent measures to combat the menace of money- laundering.
293. There is no challenge to the provision on the ground of legislative competence. The
     question, therefore, is: whether such classification of offenders involved in the offence of
     money- laundering is reasonable? Considering the concern expressed by the international
     community regarding the money-laundering activities world over and the transnational impact
     thereof, coupled with the fact that the presumption that the Parliament understands and reacts
     to the needs of its own people as per the exigency and experience gained in the
     implementation of the law, the same must stand the test of fairness, reasonableness and
     having nexus with the purposes and objects sought to be achieved by the 2002 Act. Notably,
     there are several other legislations where such twin conditions have been provided for. Such
     twin conditions in the concerned provisions have been tested from time to time and have
     stood the challenge of the constitutional validity thereof. The successive decisions of this
     Court dealing with analogous provision Central Legislations, have stated that the Court at the
     stage of considering the application for grant of bail, is expected to consider the question from
     the angle as to whether the accused was possessed of the requisite mens rea. The Court is not
     required to record a positive finding that the accused had not committed an offence under the
     Act. The Court ought to maintain a delicate balance between a judgment of acquittal and
     conviction and an order granting bail much before commencement of trial. The duty of the
     Court at this stage is not to weigh the evidence meticulously but to arrive at a finding on the
     basis of broad probabilities. Further, the Court is required to record a finding as to the
     possibility of the accused committing a crime which is an offence under the Act after grant of
     bail.
294. For understanding whether such twin conditions can be regarded as reasonable
     condition, we may usefully refer to the decision of the Constitution Bench of this Court in
     Kartar Singh v State of Punjab (1994) 3 SCC 569 While dealing with the challenge to
     Section 20(8) of TADA Act, the Court rejected the argument that such provision results in
     deprivation of liberty and violates Articles 14 and 21 of the Constitution. It noted that such
     provision imposes complete ban on release of accused on bail involved in the stated offence
     under the special legislation, but that ban stands diluted by virtue of twin conditions. It noted
     that rest of the provision, as in the case of the Section 45 of the 2002 Act, is comparable with
     the conditions specified in the 1973 Code for release of accused on bail concerning ordinary
     offence under general law. The Constitution Bench approved the dictum in Usmanbhai
     Dawoodbhai Memon (1988) 2 SCC 271 and in paragraph 349 noted thus:
295. The conditions imposed under Section 20(8)(b), as rightly pointed out by the
     Additional Solicitor General, are in consonance with the conditions prescribed under
     clauses (i) and (ii) of sub-section (1) of Section 437 and clause (b) of sub-section (3) of
     that section. Similar to the conditions in clause (b) of sub- section (8), there are
     provisions in various other enactments such as Section 35(1) of Foreign Exchange
     Regulation Act and Section 104(1) of the Customs Act to the effect that any authorised
     or empowered officer under the respective Acts, if, has got reason to believe that any
     person in India or within the Indian customs waters has been guilty of an offence
     punishable under the respective Acts, may arrest such person. Therefore, the condition
     that there are grounds for believing that he is not guilty of an offence, which condition
     in different form is incorporated in other Acts such as clause (i) of Section 437(1) of
     the Code and Section 35(1) of FERA and 104(1) of the Customs Act, cannot be said to
     be an unreasonable condition infringing the principle of Article 21 of the Constitution.
     (emphasis supplied).
296. Again, in paragraph 351, the Constitution Bench observed thus:
297. No doubt, liberty of a citizen must be zealously safeguarded by the courts;
     nonetheless the courts while dispensing justice in cases like the one under the TADA
     Act, should keep in mind not only the liberty of the accused but also the interest of the
     victim and their near and dear and above all the collective interest of the community
     and the safety of the nation so that the public may not lose faith in the system of
     judicial administration and indulge in private retribution. (emphasis supplied)
298. We may immediately note that this judgment has been considered by the two-Judge
     Bench of this Court in Nikesh Tarachand Shah in paragraph 47 and distinguished in the
     following words:
299. It is clear that this Court upheld such a condition only because the offence under
     TADA was a most heinous offence in which the vice of terrorism is sought to be
     tackled. Given the heinous nature of the offence which is punishable by death or life
     imprisonment, and given the fact that the Special Court in that case was a Magistrate
     and not a Sessions Court, unlike the present case, Section 20(8) of TADA was upheld
     as being in consonance with conditions prescribed under Section 437 of the Code of
     Criminal Procedure. In the present case, it is Section 439 and not Section 437 of the
     Code of Criminal Procedure that applies. Also, the offence that is spoken of in Section
     20(8) is an offence under TADA itself and not an offence under some other Act. For all
     these reasons, the judgment in Kartar Singh cannot apply to Section 45 of the present
     Act. (emphasis supplied)
300. With utmost humility at our command, we do not agree with this (highlighted)
     observation. The reason for distinguishing the enunciation of the Constitution Bench noted
     above, is not only inapposite, but it is not consistent with the provisions in both the Acts.
     Even the TADA Act, the appointment of Designated Court is from amongst the Sessions
     Judge or Additional Sessions Judge in any State and the offences under that Act were made
     exclusively triable before such Designated Court and not the Magistrate. The powers of the
     Magistrate were required to be bestowed on the Designated Court being the Sessions Judge
     for the limited purpose of proceeding with the case directly before it.
301. …Further, we do not agree with the observations suggestive of that the offence of
     money- laundering is less heinous offence than the offence of terrorism sought to be tackled
     under TADA Act or that there is no compelling State interest in tackling offence of moneylaundering. The international bodies have been discussing the menace of money- laundering
     on regular basis for quite some time; and strongly recommended enactment of stringent
     legislation for prevention of money-laundering and combating with the menace thereof
     including to prosecute the offenders and for attachment and confiscation of the proceeds of
     crime having direct impact on the financial systems and sovereignty and integrity of the
     countries. That concern has been duly noted even in the opening part of the introduction and
     Statement of Objects and Reasons, for which the 2002 Act came into being. This declaration
     by the Parliament itself is testimony of compelling necessity to have stringent regime
     (enactment) for prevention and control of the menace of money-laundering. Be it noted that
     under Article 38 of the Constitution of India, it is the duty of the State to secure social,
     economic and political justice and minimize income inequalities. Article 39 of the
     Constitution mandates the State to prevent concentration of wealth, thus, to realize its
     socialist goal, it becomes imperative for the State to make such laws, which not only ensure
     that the unaccounted money is infused back in the economic system of the country, but also
     prevent any activity which damages the economic fabric of the nation. It cannot be gainsaid
     that social and economic offences stand on a graver footing as they not only involve an
     individual direct victim, but harm the society as a whole. Thus, the Law Commission also in
     its 47th report recommended an increase in punishment for most of the offences considered
     therein. Further, the quantum of punishment for money-laundering offence, being only seven
     years, cannot be the basis to undermine the seriousness and gravity of this offence. The
     quantum of sentence is a matter of legislative policy. The punishment provided for the
     offence is certainly one of the principles in deciding the gravity of the offence, however, it
     cannot be said that it is the sole factor in deciding the severity of offence as contended by the
     petitioners. Money-laundering is one of the heinous crimes, which not only affects the social
     and economic fabric of the nation, but also tends to promote other heinous offences, such as
     terrorism, offences related to NDPS Act, etc. It is a proven fact that international criminal
     network that support home grown extremist groups relies on transfer of unaccounted money
     across nation States, thus, by any stretch of imagination, it cannot be said that there is no
     compelling State interest in providing stringent conditions of bail for the offence of moneylaundering. In Ram Jethmalani & Ors. vs. Union of India & Ors. (2011) 8 SCC 1, the Court
     expounded the theory of soft state which is used to describe a nation which is not capable of
     preventing the offence of money- laundering. The Court held thus:
302. The concept of a “soft state” was famously articulated by the Nobel Laureate,
     Gunnar Myrdal. It is a broad-based assessment of the degree to which the State, and its
     machinery, is equipped to deal with its responsibilities of governance. The more soft
     the State is, greater the likelihood that there is an unholy nexus between the law maker,
     the law keeper, and the law breaker. (emphasis supplied)
303. In State of Gujarat v. Mohanlal Jitamalji Porwal (1987) 2 SCC 364, while explaining
     the impact of economic offences on the community, the Court observed that usually the
     community view the economic offender with a permissive eye, although the impact of the
     offence is way greater than that of offence of murder. The Court held thus:
     5..The entire Community is aggrieved if the economic offenders who ruin the economy
     of the State are not brought to books. A murder may be committed in the heat of
     moment upon passions being aroused. An economic offence is committed with cool
     calculation and deliberate design with an eye on personal profit regardless of the
     consequence to the Community. A disregard for the interest of the Community can be
     manifested only at the cost of forfeiting the trust and faith of the Community in the
     system to administer justice in an even handed manner without fear of criticism from
     the quarters which view white collar crimes with a permissive eye unmindful of the
     damage done to the National Economy and National Interest. (emphasis supplied)
304. Thus, it is well settled by the various decisions of this Court and policy of the State as
     also the view of international community that the offence of money-laundering is committed
     by an individual with a deliberate design with the motive to enhance his gains, disregarding
     the interests of nation and society as a whole and which by no stretch of imagination can be
     termed as offence of trivial nature. Thus, it is in the interest of the State that law enforcement
     agencies should be provided with a proportionate effective mechanism so as to deal with
     these types of offences as the wealth of the nation is to be safeguarded from these dreaded
     criminals. As discussed above, the conspiracy of money-laundering, which is a three-staged
     process, is hatched in secrecy and executed in darkness, thus, it becomes imperative for the
     State to frame such a stringent law, which not only punishes the offender proportionately, but
     also helps in preventing the offence and creating a deterrent effect.
305. In the case of the 2002 Act, the Parliament had no reservation to reckon the offence of
     money-laundering as a serious threat to the financial systems of our country, including to its
     sovereignty and integrity. Therefore, the observations and in particular in paragraph 47 of
     Nikesh Tarachand Shah, are in the nature of doubting the perception of the Parliament in
     that regard, which is beyond the scope of judicial review. That cannot be the basis to declare
     the law manifestly arbitrary.
306. It is important to note that the twin conditions provided under Section 45 of the 2002
     Act, though restrict the right of the accused to grant of bail, but it cannot be said that the
     conditions provided under Section 45 impose absolute restraint on the grant of bail. The
     discretion vests in the Court which is not arbitrary or irrational but judicial, guided by the
     principles of law as provided under Section 45 of the 2002 Act.
307. We are conscious of the fact that in paragraph 53 of the Nikesh Tarachand Shah, the
     Court noted that it had struck down Section 45 of the 2002 as a whole. However, in paragraph
     54, the declaration is only in respect of further (two) conditions for release on bail as
     contained in Section 45(1), being unconstitutional as the same violated Articles 14 and 21 of
     the Constitution. Be that as it may, nothing would remain in that observation or for that
     matter, the declaration as the defect in the provision [Section 45(1)], as existed then, and
     noticed by this Court has been cured by the Parliament by enacting amendment Act 13 of
     2018 which has come into force with effect from 19.4.2018. We, therefore, confined
     ourselves to the challenge to the twin conditions in the provision, as it stands to this date post
     amendment of 2018 and which, on analysis of the decisions referred to above dealing with
     concerned enactments having similar twin conditions as valid, we must reject the challenge.
     Instead, we hold that the provision in the form of Section 45 of the 2002 Act, as applicable
     post amendment of 2018, is reasonable and has direct nexus with the purposes and objects
     sought to be achieved by the 2002 Act to combat the menace of money-laundering having
     transnational consequences including impacting the financial systems and sovereignty and
     integrity of the countries.
308. It was urged that the scheduled offence in a given case may be a non-cognizable offence
     and yet rigors of Section 45 of the 2002 Act would result in denial of bail even to such
     accused. This argument is founded on clear misunderstanding of the scheme of the 2002 Act.
     As we have repeatedly mentioned in the earlier part of this judgment that the offence of
     money-laundering is one wherein a person, directly or indirectly, attempts to indulge or
     knowingly assists or knowingly is a party or is actually involved in any process or activity
     connected with the proceeds of crime. The fact that the proceeds of crime have been
     generated as a result of criminal activity relating to a scheduled offence, which incidentally
     happens to be a non- cognizable offence, would make no difference. The person is not
     prosecuted for the scheduled offence by invoking provisions of the 2002 Act, but only when
     he has derived or obtained property as a result of criminal activity relating to or in relation to
     a scheduled offence and then indulges in process or activity connected with such proceeds of
     crime. Suffice it to observe that the argument under consideration is completely misplaced
     and needs to be rejected.
     ECIR VIS-À-VIS FIR
309. Suffice it to observe that being a special legislation providing for special mechanism
     regarding inquiry/investigation of offence of money-laundering, analogy cannot be drawn
     from the provisions of 1973 Code, in regard to registration of offence of money-laundering
     and more so being a complaint procedure prescribed under the 2002 Act. Further, the
     authorities referred to in Section 48 of the 2002 Act alone are competent to file such
     complaint. It is a different matter that the materials/evidence collected by the same authorities
     for the purpose of civil action of attachment of proceeds of crime and confiscation thereof
     may be used to prosecute the person involved in the process or activity connected with the
     proceeds of crime for offence of money-laundering. Considering the mechanism of
     inquiry/investigation for proceeding against the property (being proceeds of crime) under this
     Act by way of civil action (attachment and confiscation), there is no need to formally register
     an ECIR, unlike registration of an FIR by the jurisdictional police in respect of cognizable
     offence under the ordinary law. There is force in the stand taken by the ED that ECIR is an
     internal document created by the department before initiating penal action or prosecution
     against the person involved with process or activity connected with proceeds of crime. Thus,
     ECIR is not a statutory document, nor there is any provision in 2002 Act requiring Authority
     referred to in Section 48 to record ECIR or to furnish copy thereof to the accused unlike
     Section 154 of the 1973 Code. The fact that such ECIR has not been recorded, does not come
     in the way of the authorities referred to in Section 48 of the 2002 Act to commence
     inquiry/investigation for initiating civil action of attachment of property being proceeds of
     crime by following prescribed procedure in that regard.
310. The next issue is: whether it is necessary to furnish copy of ECIR to the person
     concerned apprehending arrest or at least after his arrest? Section 19(1) of the 2002 Act
     postulates that after arrest, as soon as may be, the person should be informed about the
     grounds for such arrest. This stipulation is compliant with the mandate of Article22(1) of the
     Constitution. Being a special legislation and considering the complexity of the
     inquiry/investigation both for the purposes of initiating civil action as well as prosecution,
     non-supply of ECIR in a given case cannot be faulted. The ECIR may contain details of the
     material in possession of the Authority and recording satisfaction of reason to believe that the
     person is guilty of money- laundering offence, if revealed before the inquiry/investigation
     required to proceed against the property being proceeds of crime including to the person
     involved in the process or activity connected therewith, may have deleterious impact on the
     final outcome of the inquiry/investigation. So long as the person has been informed about
     grounds of his arrest that is sufficient compliance of mandate of Article 22(1) of the
     Constitution. Moreover, the arrested person before being produced before the Special Court
     within twenty-four hours or for that purposes of remand on each occasion, the Court is free to
     look into the relevant records made available by the Authority about the involvement of the
     arrested person in the offence of money-laundering. In any case, upon filing of the complaint
     before the statutory period provided in 1973 Code, after arrest, the person would get all
     relevant materials forming part of the complaint filed by the Authority under Section
     44(1)(b) of the 2002 Act before the Special Court.
311. Viewed thus, supply of ECIR in every case to person concerned is not mandatory. From
     the submissions made across the Bar, it is noticed that in some cases ED has furnished copy
     of ECIR to the person before filing of the complaint. That does not mean that in every case
     same procedure must be followed. It is enough, if ED at the time of arrest,
     contemporaneously discloses the grounds of such arrest to such person. Suffice it to observe
     that ECIR cannot be equated with an FIR which is mandatorily required to be recorded and
     supplied to the accused as per the provisions of 1973 Code. Revealing a copy of an ECIR, if
     made mandatory, may defeat the purpose sought to be achieved by the 2002 Act including
     frustrating the attachment of property (proceeds of crime). Non-supply of ECIR, which is
     essentially an internal document of ED, cannot be cited as violation of constitutional right.
     Concededly, the person arrested, in terms of Section 19 of the 2002 Act, is
     contemporaneously made aware about the grounds of his arrest. This is compliant with the
     mandate of Article 22(1) of the Constitution. It is not unknown that at times FIR does not
     reveal all aspects of the offence in question. In several cases, even the names of persons
     actually involved in the commission of offence are not mentioned in the FIR and described as
     unknown accused. Even, the particulars as unfolded are not fully recorded in the FIR. Despite
     that, the accused named in any ordinary offence is able to apply for anticipatory bail or
     regular bail, in which proceeding, the police papers are normally perused by the concerned
     Court. On the same analogy, the argument of prejudice pressed into service by the petitioners
     for non-supply of ECIR deserves to be answered against the petitioners. For, the arrested
     person for offence of money-laundering is contemporaneously informed about the grounds of
     his arrest; and when produced before the Special Court, it is open to the Special Court to call
     upon the representative of ED to produce relevant record concerning the case of the accused
     before him and look into the same for answering the need for his continued detention. Taking
     any view of the matter, therefore, the argument under consideration does not take the matter
     any further