2012 (5) TMI 240 - HIGH COURT OF ANDHRA PRADESH

Money laundering - attachment of property - Constitutional validity - expressions - "person" ; "proceeds of crime" ; "property" and "transfer" - property owned by or in possession of a person, other than a person charged of having committed a scheduled offence - held that:- the provisions of the Act which clearly and unambiguously enable initiation of proceedings for attachment and eventual confiscation of property in possession of a person not accused of having committed an offence under section 3 as well, do not violate the provisions of the Constitution including articles 14, 21 and 300A and are operative proprio vigore.

The object of the Act is to prevent money-laundering and connected activities and confiscation of "proceeds of crime" and preventing legitimising of the money earned through illegal and criminal activities by investments in movable and immovable properties often involving layering of the money generated through illegal activities, i.e., by inducting and integrating the money with legitimate money and its species like movable and immovable property. Therefore, it is that the Act defines the expression "proceeds of crime" expansively to sub-serve the broad objectives of the Act. We thus do not find any infirmity in the provisions of the Act.

The huge quanta of illegally acquired wealth ; acquired from crime and economic and corporate malfeasance corrodes the vitals of rule of law ; the fragile patina of integrity of some of our public officials and State actors ; and consequently threatens the sovereignty and integrity of the Nation. Parliament has the authority to legislate and provide for forfeiture of proceeds of crime which is a produce of specified criminality acquired prior to the enactment of the Act as well. It has also the authority to recognise the degrees of harm an identified pejorative conduct has on the fabric of our society and to determine the appropriate remedy for the pathology.

The vagueness challenge - held that:- In view of the clear and unambiguous provisions of section 8 (analysed above), considered in the context of the other provisions of the Act, we discern no vagueness in the trajectory of the provisions of section 8. It is clear that the stage of confirmation of an order of provisional attachment or retention of the property or record seized is an intermediary stage, anterior to confiscation.

Challenge : Incoherence as to the onus and standards of proof - held that:- it is clear that the Legislature considered it appropriate to inhere different shades of presumptions and thus corollary burdens, on persons in the ownership, control or possession of property believed to be proceeds of crime, depending on whether the person is accused of a scheduled offence or not, necessitating such person to dislodge the presumption by probative evidence or material. The inherence of such presumptions is a matter of legal policy and no case is made out to hold, nor is it contended that the inherence of the burden by the enactment of presumptions is ultra vires the legislative power for being in transgression of any limitations on such legislative power in the Constitution of India.

Dispossession from immovable property is prescribed under section 8(4) to prevent wastage or spoilage of the property and thus dissipation of its value so as to preserve the integrity and value of the property till the stage of confiscation. Thus construed the provisions of section 8(4) are neither arbitrary nor disproportionate to the object sought to be achieved by the provisions of the Act. The provisions of section 8(4) are reasonable and unimpeachable. The challenge to section 8 of the Act must therefore fail.

Since section 23 enjoins a rule of evidence and a rebuttable presumption considered essential and integral to effectuation of the purposes of the Act in the legislative wisdom ; a rebuttable and not an irrebuttable presumption, we are not persuaded to conclude that the provision is unduly harsh, oppressive or arbitrary. After all a legislative remedy must correspond to the social pathology it professes to regulate.

A person other than one accused of having committed the offence under section 3 is not imposed the burden of proof enjoined by section 24. On a person accused of an offence under section 3 however, the burden applies, also for attachment and confiscation proceedings.