{"id":101373,"date":"2008-09-30T00:00:00","date_gmt":"2008-09-29T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/pareena-swarup-vs-union-of-india-on-30-september-2008"},"modified":"2016-12-20T15:02:03","modified_gmt":"2016-12-20T09:32:03","slug":"pareena-swarup-vs-union-of-india-on-30-september-2008","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/pareena-swarup-vs-union-of-india-on-30-september-2008","title":{"rendered":"Pareena Swarup vs Union Of India on 30 September, 2008"},"content":{"rendered":"
Supreme Court of India<\/div>\n
Pareena Swarup vs Union Of India on 30 September, 2008<\/div>\n
Author: P Sathasivam<\/div>\n
Bench: K.G. Balakrishnan, Lokeshwar Singh Panta, P. Sathasivam<\/div>\n
                                                                    REPORTABLE\n\n               IN THE SUPREME COURT OF INDIA\n\n                  CIVIL ORIGINAL JURISDICTION\n\n                  WRIT PETITION NO.634 OF 2007\n\n\nPareena Swarup                                     .... Petitioner (s)\n\n           Versus\n\nUnion of India                                     .... Respondent(s)\n\n                            JUDGMENT\n<\/pre>\n
P. Sathasivam, J.\n<\/p>\n
1)   Ms. Pareena Swarup, member of the Bar, has filed this<\/p>\n
writ petition under Art. 32 of the Constitution of India by way<\/p>\n
of Public Interest Litigation seeking to declare various sections<\/p>\n
of the Prevention of Money Laundering Act, 2002 such as<\/p>\n
Section    6   which       deals   with   adjudicating    authorities,<\/p>\n
composition, powers etc., Section 25 which deals with the<\/p>\n
establishment of Appellate Tribunal, Section 27 which deals<\/p>\n
with composition etc. of the Appellate Tribunal, Section 28<\/p>\n
which     deals     with    qualifications   for   appointment         of<\/p>\n
Chairperson and Members of the Appellate Tribunal, Section<\/p>\n
                                                                   1<\/span>
\n32 which deals with resignation and removal, Section 40<\/p>\n
which deals with members etc. as ultra vires of Arts. 14, 19 (1)<\/p>\n
(g), 21, 50, 323B of the Constitution of India.        It is also<\/p>\n
pleaded that these provisions are in breach of scheme of the<\/p>\n
Constitutional provisions and power of judiciary.<\/p>\n
2)   Brief facts in a nutshell are:\n<\/p>\n
The Prevention of Money Laundering Act, 2002 (hereinafter<\/p>\n
referred to as “the Act”) was introduced for providing<\/p>\n
punishment for offence of Money Laundering.         The Act also<\/p>\n
provides measures of prevention of money laundering.         The<\/p>\n
object sought to be achieved is by provisional attachment of<\/p>\n
the proceeds of crime, which are likely to be concealed,<\/p>\n
transferred or dealt with in any manner which may result in<\/p>\n
frustrating any proceedings relating to confiscation of such<\/p>\n
proceeds under the Act.      The Act also casts obligations on<\/p>\n
banking companies, financial institutions and intermediaries<\/p>\n
to maintain record of the transactions and to furnish<\/p>\n
information of such transactions within the prescribed time.<\/p>\n
In exercise of powers conferred by clause (s) of sub-section (2)<\/p>\n
of Section 73 read with Section 30 of the Prevention of Money-<\/p>\n
                                                             2<\/span>
\nLaundering Act, 2002 (15 of 2003), the Central Government<\/p>\n
framed rules regulating the appointment and conditions of<\/p>\n
service of persons appointed as Chairperson and Members of<\/p>\n
the Appellate Tribunal.     These rules are the Prevention of<\/p>\n
Money-Laundering (Appointment and Conditions of Service of<\/p>\n
Chairperson and Members of Appellate Tribunal) Rules, 2007.<\/p>\n
The Central Government has also framed rules called the<\/p>\n
Prevention of Money Laundering (Appointment and Conditions<\/p>\n
of Service of Chairperson and Members of Adjudicating<\/p>\n
Authorities) Rules, 2007.\n<\/p>\n
3)   It is highlighted that the provisions of the Act are so<\/p>\n
provided that there may not be independent judiciary to<\/p>\n
decide the cases under the Act but the Members and the<\/p>\n
Chairperson are to be selected by the Selection Committee<\/p>\n
headed by the Revenue Secretary.     It is further pointed out<\/p>\n
that the Constitutional guarantee of a free and independent<\/p>\n
judiciary, and the constitutional scheme of separation of<\/p>\n
powers can be easily and seriously undermined, if the<\/p>\n
legislatures were to divest the regular Courts of their<\/p>\n
jurisdiction in all matters, entrust the same to the newly<\/p>\n
                                                          3<\/span>
\ncreated Tribunals. According to the petitioner, the statutory<\/p>\n
provisions of the Act and the Rules, more particularly, relating<\/p>\n
to constitution of Adjudicating Authority and Appellate<\/p>\n
Tribunal are violative of basic constitutional guarantee of free<\/p>\n
and independent judiciary, therefore, beyond the legislative<\/p>\n
competence of the Parliament. The freedom from control and<\/p>\n
potential domination of the executive are necessary pre-<\/p>\n
conditions for the independence.        With these and various<\/p>\n
other grounds, the petitioner has filed this public interest<\/p>\n
litigation seeking to issue a writ of certiorari for quashing the<\/p>\n
abovesaid   provisions   which    are   inconsistent   with   the<\/p>\n
separation of power and interference         with the judicial<\/p>\n
functioning of the Tribunal as ultra vires of the Constitution of<\/p>\n
India.\n<\/p>\n
4)   The respondent-Union of India has filed counter affidavit<\/p>\n
repudiating the claim of the petitioner.       The Department<\/p>\n
highlighted that the impugned Act has not ousted the<\/p>\n
jurisdiction of any courts and sufficient safeguards are<\/p>\n
provided in the appointment of officers of the Adjudicating<\/p>\n
                                                              4<\/span>
\nAuthorities, Members and Chairperson of the Appellate<\/p>\n
Tribunal.\n<\/p>\n
5)   We have carefully verified the provisions of the Act and<\/p>\n
the Rules, particularly, relating to constitution and selection of<\/p>\n
Adjudicating Authorities, Members and Chairperson of the<\/p>\n
Appellate Tribunal.          Considering the stand taken by the<\/p>\n
petitioner with reference to those provisions, we requested Mr.<\/p>\n
K.K. Venugopal, learned senior counsel, to assist the Court.<\/p>\n
Pursuant to the suggestion made by the Court, Mr. K.K.<\/p>\n
Venugopal and Mr. Gopal Subramaniam, learned Additional<\/p>\n
Solicitor     General,    discussed      the    above    issues    and     by<\/p>\n
consensus submitted certain proposals.\n<\/p>\n
6)   The petitioner has highlighted the following defects in the<\/p>\n
Adjudicating Authority Rules, 2007 and the Appellate Tribunal<\/p>\n
Rules, 2007:-\n<\/p>\n
1.          Rule 3(3) of Adjudicating Authority Rules, 2007 does not
\n            explicitly specify the qualifications of member from the field of
\n            finance or accountancy.\n<\/p>\n
2.          Rule 4 of Appellate Tribunal Rules, 2007 which provided for
\n            Method of Appointment of Chairperson do not give adequate
\n            control to Judiciary.\n<\/p>\n
                                                                          5<\/span>\n<\/p>\n
3.      Rule 6(1) of Appellate Tribunal Rules, 2007 which defines the
\n        Selection Committee for recommending appointment of
\n        Members of the Tribunal, would undermine the constitutional
\n        scheme of separation of powers between judiciary and
\n        executives.\n<\/p>\n<\/p>\n
4.      Rule 32(2) of PMLA which provides for removal of
\n        Chairperson\/Members of Tribunal under PMLA does not
\n        provide   adequate  safety    to  the tenure of the
\n        Chairperson\/Members of the Tribunal.\n<\/p>\n
5.      Rule 6(2) of Appellate Tribunal Rules is vague to the extent
\n        that it provides for recommending names after “inviting
\n        applications   thereof   by   advertisement    or   on   the
\n        recommendations of the appropriate authorities.”<\/p>\n
6.      Section 28(1) of PMLA, which allows a person who “is qualified
\n        to be a judge of the High Court” to be the Chairperson of the
\n        Tribunal, should be either deleted or the Rules may be
\n        amended to provide that the Chief Justice of India shall
\n        nominate a person for appointment as Chairperson of
\n        Appellate Tribunal under PMLA “who is or has been a Judge
\n        of the Supreme Court or a High Court” failing which a person
\n        who “is qualified to be a judge of the High Court.”<\/p>\n
7.      The qualifications for Legal Member of the Adjudicating
\n        Authority should exclude “those who are qualified to be a
\n        District Judge” and only serving or retired District Judges
\n        should be appointed. The Chairperson of the Adjudicating
\n        Authority should be the Legal member.\n<\/p>\n<\/p>\n
7)   As regards the above defects in the rules, as observed<\/p>\n
earlier, on the request of this Court, Mr. K.K. Venugopal,<\/p>\n
learned senior counsel, Mr. Gopal Subramaniam, learned ASG<\/p>\n
as well as Ms. Pareena Swarup who has filed this PIL<\/p>\n
                                                                   6<\/span>
\nsuggested certain amendments in the line of the constitutional<\/p>\n
provisions as interpreted by this Court in various decisions.<\/p>\n
8)   It is necessary that the Court may draw a line which the<\/p>\n
executive may not cross in their misguided desire to take<\/p>\n
over bit by bit and judicial functions and powers of the State<\/p>\n
exercised by the duly constituted Courts. While creating new<\/p>\n
avenue of judicial forums, it is the duty of the Government to<\/p>\n
see that they are not in breach of basic constitutional scheme<\/p>\n
of separation of powers and independence of the judicial<\/p>\n
function.   We agree with the apprehension of the petitioner<\/p>\n
that the provisions of Prevention of the Money Laundering Act<\/p>\n
are so provided that there may not be independent judiciary to<\/p>\n
decide the cases under the Act but the Members and the<\/p>\n
Chairperson to be selected by the Selection Committee headed<\/p>\n
by Revenue Secretary. It is to be noted that this Court in the<\/p>\n
case of L. Chandra Kumar vs. Union of India and Ors.,<\/a><\/p>\n
(1997) 3 SCC 261 has laid down that power of judicial review<\/p>\n
over legislative action vested in the High Courts under Article<\/p>\n
226 as well as in this Court under Article 32 of the<\/p>\n
                                                            7<\/span>
\nConstitution is an integral and essential feature of the<\/p>\n
Constitution constituting part of the its structure.                The<\/p>\n
Constitution guarantees free and independent judiciary and<\/p>\n
the constitutional scheme of separation of powers can be<\/p>\n
easily and seriously undermined, if the legislatures were to<\/p>\n
divest the regular courts of their jurisdiction in all matters,<\/p>\n
entrust the same to the newly created Tribunals which are not<\/p>\n
entitled to protection similar to the constitutional protection<\/p>\n
afforded to the regular Courts.           The independence and<\/p>\n
impartiality which are to be secured not only for the Court but<\/p>\n
also for Tribunals and their members, though they do not<\/p>\n
belong to the `Judicial Service’ are entrusted with judicial<\/p>\n
powers.     The safeguards which ensure independence and<\/p>\n
impartiality are not for promoting personal prestige of the<\/p>\n
functionary but for preserving and protecting the rights of the<\/p>\n
citizens and other persons who are subject to the jurisdiction<\/p>\n
of the Tribunal and for ensuring that such Tribunal will be<\/p>\n
able to command the confidence of the public. Freedom from<\/p>\n
control   and    potential   domination      of   the   executive   are<\/p>\n
necessary       pre-conditions   for   the        independence      and<\/p>\n
                                                                    8<\/span>
\nimpartiality of judges. To make it clear that a judiciary free<\/p>\n
from control by the Executive and Legislature is essential if<\/p>\n
there is a right to have claims decided by Judges who are free<\/p>\n
from potential domination by other branches of Government.<\/p>\n
With this background, let us consider the defects pointed out<\/p>\n
by the petitioner and amended\/proposed provisions of the Act<\/p>\n
and the Rules.\n<\/p>\n
9)   Mr. Gopal Subramaniam has informed this Court that<\/p>\n
the suggested actions have been completed by amending the<\/p>\n
Rules.   Even other wise, according to him, the proposed<\/p>\n
suggestions formulated by Mr. K.K. Venugopal would be<\/p>\n
incorporated on disposal of the above writ petition.      For<\/p>\n
convenience, let us refer the doubts raised by the petitioner<\/p>\n
and amended\/proposed provisions as well as the remarks of<\/p>\n
the department in complying with the same.<\/p>\n
S.No Issues               Amended\/Proposed provision    Remarks<\/p>\n
.\n<\/p>\n
                                                          9<\/span>\n<\/p>\n
1.   Rule         3(3)   of     Rule     3(3)    of    Adjudicating    Action
\n     Adjudicating Authority     Authority Rules, 2007 have been        completed.
\n     Rules, 2007 does not       amended to specify the `academic       Amended
\n     explicitly specify the     qualification’ for the Member          Rule as per
\n     qualifications      of     from the field of finance and          annexure A
\n     member from the field      accounting by inserting a sub-\n<\/p>\n
     of       finance    or     clause (b) as follows:\n     accountancy.               \"(b) From among such persons,\n                                the Selection Committee shall\n                                have due regard to the academic\n                                qualifications      of    chartered\n                                accountancy or a degree in\n                                finance,        economics         or\n                                accountancy or having special\n                                experience in finance or accounts\n                                by virtue of having worked for at\n                                least two years in the finance or\n                                revenue department of either the\n                                Central Government or a State\n                                Government or being incharge of\n                                the finance or accounting wing of\n                                a corporation for a like period.\"\n2.   Rule 4 of Appellate        Rule 4 of Appellate Tribunal           Action\n     Tribunal Rules, 2007       Rules, 2007 has been amended           completed.\n     which provided for         to unambiguously provide that          Amended\n     Method                of   the appointment of Chairperson         Rule as per\n     Appointment           of   shall    be     made      on    the    annexure B\n     Chairperson do not         recommendation of the Chief\n     give adequate control      Justice of India.\n     to Judiciary.\n3.   Rule 6(1) of Appellate     Rule 6(1) of Appellate Tribunal        Action\n     Tribunal Rules, 2007       Rules, 2007 has been amended           completed.\n     which     defines    the   to provide that the Chairperson        Amended\n     Selection Committee        of    Appellate    Tribunal     is     Rule as per\n     for     recommending       appointed         on          the      annexure C\n     appointment           of   recommendation of the CJI and\n     Members       of     the   the composition of the Selection\n     Tribunal,         would    Committee to select Members of\n     undermine            the   the Tribunal has been amended\n     constitutional scheme      to provide for a Judge of the\n     of    separation      of   Supreme Court, nominated by\n     powers         between     the Chief Justice of India, to be\n     judiciary           and    the Chairperson of the Selection\n     executives.                Committee.\n\n\n\n\n                                                                          10<\/span>\n4.   Rule 32(2) of PMLA           Appropriate amendment to the Draft Bill is\n     which provides for           Statute is being proposed to under\n     removal                of    unambiguously      provide  that preparation.\n     Chairperson\/Members          Chairperson\/Members appointed\n     of    Tribunal     under     in    consultation   with  Chief\n     PMLA       does       not    Justice of India, shall not be\n     provide        adequate      removed     without    mandatory\n     safety to the tenure of      consultation with Chief Justice\n     the       Chairperson\/       of India.\n     members       of      the\n     Tribunal.\n5.   Rule 6(2) of Appellate       Rule 6(2) of the Appellate May            be\n     Tribunal     Rules      is   Tribunal Rules, 2007 may be deleted.\n     vague to the extent          amended to delete the words \"or\n     that it provides for         on   recommendation     of  the\n     recommending names           appropriate   authorities\",   a\n     after           \"inviting    proposal endorsed by ASG, Shri\n     applications      thereof    Gopal Subramaniam.\n     by advertisement or\n     on                    the\n     recommendations        of\n     the         appropriate\n     authorities.\"\n\n\n\n\n                                                                      11<\/span>\n6.   Section 28(1) of PMLA,     There are several Acts under          There is no\n     which allows a person      which     Judges     and     those    requirement\n     who \"is qualified to be    `qualified to be a judge' are         to    amend\n     a judge of the High        equally eligible for selection like   either   the\n     Court\" to be the           for Chairman under NDPS Act           Statute or\n     Chairperson of the         and SAFEMA; Judicial member           the Rules.\n     Tribunal, should be        under Administrative Tribunal\n     either deleted or the      Act; Chairperson under FEMA\n     Rules       may      be    etc. The eligibility criteria, for\n     amended to provide         appointment as a judge of a High\n     that the Chief Justice     Court,     provided      in     the\n     of      India      shall   Constitution of India under\n     nominate a person for      Article 217(2)(b), is that the\n     appointment          as    person should have been \"for at\n     Chairperson          or    least 10 years as an advocate of\n     Appellate      Tribunal    a High Court...\" Furthermore,\n     under PMLA \"who is         since        appointment         of\n     or has been a Judge of     Chairperson of the Tribunal\n     the Supreme Court or       under PMLA is to be made on the\n     a High Court\" failing      recommendation of CJI, it is\n     which a person who         expected that an independent\n     \"is qualified to be a      person would be appointed to\n     judge of the High          head the Appellate Tribunal.\n     Court.\"\n\n\n\n\n                                                                         12<\/span>\n7.   The qualifications for    1. Persons `qualified to be a         There is no\n     Legal Member of the       district Judge' are treated at par    requirement\n     Adjudicating Authority    with District Judges for the          to    amend\n     should exclude \"those     purposes of qualification for         either   the\n     who are qualified to be   appointment as member in ATFE         Statute or\n     a District Judge\" and     under FEMA; as President of           the Rules.\n<\/pre>\n
     only serving or retired   District Forum under Consumer
\n     District Judges should    Protection Act, 1986 etc. The
\n     be appointed.      The    eligibility     criterion,      for
\n     Chairperson of the        appointment as a District Judge,
\n     Adjudicating Authority    provided in the Constitution of
\n     should be the Legal       India under Article 233(2), is that
\n     member.                   the person should have been an
\n                               advocate “for not less than seven
\n                               years”.\n<\/p>\n
                               2. PMLA is a specialized and new
\n                               Act and District Judges may not
\n                               be available with experience in
\n                               related issues whereas Advocates
\n                               or officers of Indian Legal
\n                               Service, who are eligible to be
\n                               District Judges, may often have
\n                               greater    knowledge     of   its
\n                               provisions and working.\n<\/p>\n
                               3. The Adjudicating Authority is
\n                               a body of experts from different
\n                               fields to adjudicate on the issue
\n                               of confirmation of provisional
\n                               attachment of property involved
\n                               in money laundering.          The
\n                               functions      of     Adjudicating
\n                               Authority are civil in nature to
\n                               the extent that it does not decide
\n                               on the criminality of the offence
\n                               nor does it have power to levy
\n                               penalties or impose punishment.<\/p>\n
\n\n                               4. Adjudication is a function\n                               which is performed by Executives\n                               under many statutes.         The\n                               Competent      Authority   under\n                               NDPS\/SAFEMA        have     been\n                               conducting          Adjudication\n                               proceedings routinely since 1978\n\n                                                                        13<\/span>\n<\/pre>\n
10)   Inasmuch as the amended\/proposed provisions, as<\/p>\n
mentioned in para 9, are in tune with the scheme of the<\/p>\n
Constitution as well as the principles laid down by this Court,<\/p>\n
we approve the same and direct the respondent-Union of India<\/p>\n
to implement the above provisions, if not so far amended as<\/p>\n
suggested, as expeditiously as possible but not later than six<\/p>\n
months from the date of receipt of copy of this judgment. The<\/p>\n
writ petition is disposed of accordingly. No costs. This Court<\/p>\n
records its appreciation for the valuable assistance rendered<\/p>\n
by Mr. K.K. Venugopal, learned senior counsel and Mr. Gopal<\/p>\n
Subramaniam, learned Addl. Solicitor General.<\/p>\n
                                     ………………………………..CJI.
\n                                    (K.G. BALAKRISHNAN)<\/p>\n
                                    ……………………………………J.
\n                                    (LOKESHWAR SINGH PANTA)<\/p>\n
                               ……………………………………J
\n                      (P. SATHASIVAM)<\/p>\n
NEW DELHI;\n<\/p>\n
September 30, 2008.\n<\/p>\n
                                                                           14<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India Pareena Swarup vs Union Of India on 30 September, 2008 Author: P Sathasivam Bench: K.G. Balakrishnan, Lokeshwar Singh Panta, P. Sathasivam REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL ORIGINAL JURISDICTION WRIT PETITION NO.634 OF 2007 Pareena Swarup …. Petitioner (s) Versus Union of India …. Respondent(s) JUDGMENT P. Sathasivam, J. […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-101373","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nPareena Swarup vs Union Of India on 30 September, 2008 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/pareena-swarup-vs-union-of-india-on-30-september-2008\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Pareena Swarup vs Union Of India on 30 September, 2008 - 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