Initiation Of PMLA Proceedings & Issuance Of Show Cause Notice U/s 8(1) PMLA Not Illegal During Pendency Of Trial In Vigilance Case: Orissa HC

The Court dismissed a petition filed by the petitioner challenging the initiation of proceedings under Section 8 of the Prevention of Money Laundering Act, 2002 (PMLA) and a consequential show-cause notice issued on June 19, 2015. The petitioner had sought to keep the proceedings in abeyance until the completion of a pending trial (VGR No.05 of 2013) in the Special Judge's Court, Vigilance, Keonjhar.

A Single Bench of Justice K.R. Mohapatra observed, “Neither initiation of the proceeding under Section 8 of the Act, 2002 nor issuance of notice to show cause under Section 8(1) of the said Act…is illegal.”

Advocate Gouri Mohan Rath appeared for the petitioner, while Subrat Sarangi represented the opposite parties.

The petitioner argued that the initiation proceeding under Section 8 of the PMLA was illegal as the petitioner being an accused in the proceeding under PMLA is compelled to disclose the sources of income, earnings or assets, out of which or by means of which, he has acquired the property, provisionally attached.

Such a disclosure, he argued, could only be made at the stage of recording the accused's statement during trial. The petitioner feared that disclosing his defense at this stage would violate his constitutional right under Article 20(3) of the Constitution of India, which protects against self-incrimination.

The High Court clarified that the vires of the PMLA, which were in question before the Supreme Court in the case of Vijay Madanlal Choudhary v Union of India (2022), were held intra vires.

The Bench noted that pursuant to the provisional order of attachment of the property of the petitioner under Section 5(1) of the Act, 2002, a proceeding under Section 8 of the PMLA had been initiated. The Court further noted that the petitioner was required under Section 8(1) of the PMLA to indicate his sources of income, earning or assets, out of which or through which, he has acquired the property attached under Sub-Section (1) of Section 5 of the PMLA.

“Thus, after provisional attachment of the property under Section 5(1) of the Act, 2002, it is incumbent on the Adjudicating Authority to issue notice to the person whose property has been provisionally attached calling upon him to show cause in terms of Section 8(1) of the Act. As such, there is no procedural error in issuing of such notice,” the Court stated.

Therefore, the Court clarified that pending trial had nothing to do with the initiation or continuance of the proceeding under Section 8(1) of the Act, 2002 as the Adjudicating Authority is under legal obligation to issue such notice.

“It has been clarified that if his/her statement is recorded after a formal arrest by the Enforcement Directorate Official, the consequences of Article 20(3) of the Constitution of India or Section 25 of the Evidence Act may come into play to urge that the same, being in nature of confession, shall not be proved against him,” the Court remarked.

The Court also pointed out that the petitioner had conceded to never being taken to custody by the Enforcement Directorate. “As such, the question of the violation of Article 20 (3) of the Constitution of India or section 25 of the Evidence Act does not arise at all,” the Court explained.

Consequently, the Court held, “Accordingly, this writ petition, being devoid of any merit, stands dismissed. The Adjudicating Authority is at liberty to proceed with the proceeding under Section 8 of the Act, 2002.”

Accordingly, the High Court dismissed the petition.

Cause Title: Deepak Gupta v. The Adjudicating Authority & Ors.

Appearance:

Petitioner: Advocate Gouri Mohan Rath

Opposite Parties: Advocate Subrat Sarangi; CGC Bibekananda Nayak and B.K. Padhi

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