Presumptions and Burden of Proof Under PMLA
Where Money-Laundering involves two or more inter-connected transactions and one or more such transactions is or are proved to be connected with Money-Laundering, then for the purposes of Adjudication or Confiscation, under Section 8 or for the trial of the Money-Laundering offence, it shall unless otherwise proved, be presumed that the remaining transactions form part of such inter-connected transactions associated with Money-Laundering
Under Section 24 of PMLA, in any proceeding relating to the proceeds of crime a presumption is raised by the authority or court against any person charged with the offence of Money-Laundering, unless the contrary is proved by the accused, that such proceeds of crime are involved in money-laundering; and in the case of any third person, such authority or court may also presume that such proceeds of crime are involved in Money-Laundering.
Essentially, under PMLA, the burden of proof lies on the person who claims that the proceeds of crime alleged to be involved in Money-Laundering, are not involved in Money-Laundering. The presumption against the accused or any 3rd party is good enough to discharge the onus of the authorities under PMLA. Even in the case of Records, and Properties, which are found in the possession or control of any person in the course of a survey or search under the Act (Section 16, Section 17 and Section 18 of PMLA), under a presumption is raised that such records or property belongs to such person, and the contents of such records are true, and further that signatures and any part of such records in hand-writing of a particular person or in the hand-writing of such person, the presumptions as to the records in property are absolute, and the onus to prove the same otherwise, lies on such person.
It is clear that, a person accused of an offence under Section 3 of PMLA, whose property is attached and proceeded against for Confiscation, shall discharge the onus of proof (Section 24) vested in him by disclosing the sources of his Income, Earnings or Assets, out of which or means by which he has acquired the property attached, to discharge the burden that the property does not constitute proceeds of crime.
Where a transaction of acquisition of property is part of inter-connected transactions, the onus of establishing that the property acquired is not connected to the activity of Money-Laundering, is on the person in ownership, control or possession of the property, though not accused of a Section 3 offence under PMLA, provided one or more of the interconnected transactions is or are proved to be involved in Money-Laundering (Section 23).
Presumption under Section 23 of PMLA:
In the case of B. Rama Raju, S/o B. Ramalinga Raju Vs. Union of India (UOI), [MANU/TN/1696/2011]; [(2012)1MLJ419], it was held that:
115. The presumption enjoined by Section 23 is clearly a rebuttable presumption i.e., presumptio pro tantum.116. In Izhar Ahmad v. Union of India MANU/SC/0094/1962 : AIR 1962 SC 1052, Gajendragadkar, J (as his Lordship then was) observed (in the majority opinion of the Constitution Bench) that: The term "Presumption" in its largest and most comprehensive signification, may be defined to be an inference, affirmative or disaffirmative of the truth of false-hood of a doubtful fact or proposition drawn by a process of probable reasoning from something proved or taken for granted. Quoting with approval the statement of principle set out in the Principles of the Law of Evidence by Best, his Lordship observed that when the rules of evidence provide for the raising of a rebuttable or irrebuttable presumption, they are merely attempting to assist the judicial mind in the matter of weighing the probative or persuasive force of certain facts proved in relation to other facts presumed or inferred.
To invoke the presumption under Section 23 of the PMLA, at least one of the transactions has to be proved to the “proceeds of crime” transaction.
Burden of Proof under Section 24 of PMLA
PMLA is a special Act which provides for reverse burden of proof. A person who is in possession of proceeds of crime involved in money laundering has to prove that the property has been acquired out of licit means.
In the case of Sarosh Munir Khan Vs.The Deputy Director, [534/MUM/2013], it was held as under:
An order confirming the provisional attachment can be passed only on the adjudicating authority being satisfied, on considering the material on record including material or evidence furnished in response to the notice issued under Section 8(1), the reply furnished in response thereto, and taking all and other relevant material into consideration, to record a finding that the property or so much of it, is involved in money-laundering.
Further, in the case of B. Rama Raju, S/o B. Ramalinga Raju Vs. Union of India (UOI), [MANU/TN/1696/2011]; [(2012)1MLJ419], it was held that:
123. Section 24 shifts the burden of proving that proceeds of crime are untainted property onto person(s) accused of having committed the offence under Section 3.
126. In response to a notice issued under Section 8(1) and qua the legislative prescription in Section 24 of the Act the person accused of having committed the offence under Section 3 must show with supporting evidence and material that he has the requisite means by way of income, earning or assets, out of which or by means of which he has acquired the property alleged to be proceeds of crime. Only on such showing would the accused be able to rebut the statutorily enjoined presumption that the alleged proceeds of crime are untainted property.
Burden of Proof under the Indian Evidence Act, 1872
The normal law relating to the Burden of Proof and its onus is given under the provisions of the Indian Evidence Act, 1872.
Under Indian law, until and unless an exception is created by law, the burden of proof lies on the person making any claim or asserting any fact. Reference should be made to the following provisions of the Indian Evidence Act, 1872 with some illustrations to understand the proposition.
Indian Evidence Act, 1872
Section 101 - Burden of proof
Whoever desires any Court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts, must prove that those facts exist.
When a person is bound to prove the existence of any fact, it is said that the burden of proof lies on that person.
(a) A desires a Court to give judgment that B shall be punished for a crime which A says B has committed.
A must prove that B has committed the crime.
(b) A desires a Court to give judgment that he is entitled to certain land in the possession of B, by reason of facts which he asserts, and which B denies, to be true.
A must prove the existence of those facts.
Section 102 - On whom burden of proof lies
The burden of proof in a suit or proceeding lies on that person who would fail if no evidence at all were given on either side.
(a) A sues B for land of which B is in possession, and which, as A asserts, was left to A by the will of C, B's father.
If no evidence were given on either side, B would be entitled to retain his possession.
Therefore the burden of proof is on A.
(b) A sues B for money due on a bond.
The execution of the bond is admitted, but B says that it was obtained by fraud, which A denies.
If no evidence were given on either side, A would succeed, as the bond is not disputed and the fraud is not proved.
Therefore the burden of proof is on B.
Section 103 - Burden of proof as to particular fact
The burden of proof as to any particular fact lies on that person who wishes the Court to believe in its existence, unless it is provided by any law that the proof of that fact shall lie on any particular person.
1 [(a) A prosecutes B for theft, and wishes the Court to believe that B admitted the theft to C. A must prove the admission.
B wishes the Court to believe that, at the time in question, he was elsewhere. He must prove it.
Section 106 - Burden of proving fact especially within knowledge
When any fact is especially within the knowledge of any person, the burden of proving that fact is upon him.
(a) When a person does an act with some intention other than that which the character and circumstances of the act suggest, the burden of proving that intention is upon him.
(b) A is charged with travelling on a railway without a ticket. The burden of proving that he had a ticket is on him