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Written by: Prashant Jaiswal (Intern)

Edited by: Anubhav Yadav (Content Head & Developer)

 

In a recent judgment, Delhi High Court held that if the provision was declared unconstitutional earlier, it does not get repealed but can be reinforced after the required amendment. If the faults are corrected by amendment, then it will be enforceable. The Court further stated that if the flaws are cured through amendment, then the whole section should not be re-enacted to re-enforce again. In the present case, Petitioner is demanding bail under the Prevention of Money Laundering Act, 2002 by stating Section 45 of the act as unconstitutional as declared by SC in 2018.  Court refers to the decision of Nagaland Senior Govt. Employees Welfare Assn. v. State of Nagaland (2010) while delivering the judgement.

Facts of the Case

On 1st July 2017, Respondent started an inquiry against Naresh Jain (Petitioner) and others under the foreign exchange management act, 1999. Petitioner alleged that Enforcement Directorate (Respondent) has conducted the enquiry for 2 years against the Petitioner as per Section 47 of the act. After that ED registered an FIR with the Economic Offences Wing (EOW) cell for scheduled offences under the PMLA, 2002 which led to the arrest of the accused. The counsel on behalf of the Petitioner contended that –

  • While arresting the Petitioner, the prescribed procedure given under Section 19 of PMLA, 2002 was not followed.
  • The ED cannot be the complainant and the Investigating Officer at the same time.
  • Effect of a declaration of twin conditions under Section 45 of PMLA has been declared unconstitutional and ultra vires in the judgment of Nikesh Tarachand Shah v. Union of India, 2018.

Findings of the Court

Refuting the above claims by the Petitioner, the Court held in the Mukesh Kumar v. the State of Delhi that just because the informant is the investigator, the investigation process has to be fair and unbiased.

On the argument of Section 45, validity was challenged by the petitioner which the apex court declared as unconstitutional in 2018 in the case of Nikesh Tarachand Shah v. Union of India, 2018 by stating that it was violating Article 14 and 21 of the Constitution. In reference to this, the Court held that the legislature has the authority to correct the underlying defect which was pointed out by the Court while repealing the law and pass an appropriate judgment. The Court observed that solely because the whole section was not re-enacted that doesn’t lead to any consequences as since the provision is still present in the statute book even after being declared as unconstitutional, it only becomes unenforceable. So, when the Parliament is involved and amends the defect mentioned by the respective Court, the defect seems to be cured and the assumption of constitutionality is to apply to such provision. Court refers to the case of State of Karnataka vs. Karnataka Pawn Brokers Association, 2018 while passing the judgment.

The Court also refused to grant bail to both the Petitioners, based on Section 439 CrPC ignoring Section 45 of the Prevention of Money Laundering Act, 2002. The Court considers the facts, gravity of offence and evidence while passing the judgment.

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