VVIP Chopper Scam Vis-À-Vis Section 45 Of PMLA

KEY TAKEAWAYS

1. VVIP Chopper Scam is a fraud bribery case relating to the procurement of 12 were Agusta Westland AW101 helicopters for the purpose of providing Air transportation to VVIPs in India.
2. Christian Michael James is a Britisher who had acted as a middleman in the scam and has been in prison since 2018.The bail plea of Christian Michael was rejected in 2018 and a fresh bail plea was filled.
3. Section 45 of PMLA provides that the offences under the Act are cognizable and unbailable. It contains twin conditions that are to be met with for the bail under the Act.
4. Section 45 was declared unconstitutional as it ultra vires Article 14 and 21 of the Indian Constitution. The said provision was being challenged in the proceeding.
5. There is a settled rule that the Court would favour the Legislature while the issue of the constitutionality of an enactment is raised before it. The burden of proof to prove the unconstitutionality of enactment would lie upon the petitioner.

INTRODUCTION

Corruption is not a new phenomenon in India and it is spread in a cancerous manner. It is an unethical means of acquiring personal benefits mostly monetary in nature. In the public sector, public office and position are abused whereas, in the private sector, employees and consumers are exploited. Even in the two epics of India- Ramayana and Mahabharat corruption existed. Some of the worst corruption cases in India are- 2010 2G spectrum, 2011 Tatra truck scam, 2012 Coal block allocation scam, 2013 Chopper Scam. Some anti-corruption legislation enacted in India are Prevention of Corruption Act, Service Rules for government officials, Foreign Contribution Regulation Act, Right to Information Act, Central Vigilance Commission Act, Lokpal and Lokayuktas Act, Companies Act, Prevention of Money Laundering Act (PMLA), Black Money (Undisclosed Foreign Incomes & Assets) and Imposition of Tax Acct and Fugitive Economic Offender Act.

The offence of money laundering is a serious economic offence. The Supreme Court has noted that the economic offences have deep-rooted conspiracies and involved a huge loss of public funds that were needed to be viewed seriously and considered as grave offences that affect the economy of the country entirely.Therefore,the economic offences pose an eminent threat to the financial health of the country. PMLA criminalizes money laundering as stated in the Statement of Objects and Reasons of the act that was passed by the Parliament in the year 2002 and had come into effect from 2005.

VVIP CHOPPER SCAM

Since the existing MI-8 VIP fleet of aircraft and helicopters which was maintained by the Indian Air Force for providing air transportation to VVIPs had operational limitations, they were proposed to be replaced in 1999. In 2010, a contract between the Ministry of Defence, the Government of India and M/s Agusta Westland International Ltd was concluded for the procurement of 12 Agusta Westland AW101 helicopters for an amount of 3727 Crores. 30% of the payment was done in advance and when the allegations surfaced centrally that the former IAF chief had accepted a bribe to give the contract, 3 AW101 Helicopters(VVIP helicopter) had already been delivered. The Government had suspended further deliveries and held back the remaining payments.

In the August of 2013, the Comptroller and Auditor General (CAG) of India had submitted the report regarding the acquisition of these VVIP Helicopters. The Report had primarily examined whether, during the acquisition,the Defence Procurement Procedure (DPP) was complied with. The DPP was the prescribed procedure which was required to be complied with while procuring defence services. Following faulty measures were pointed out in the Report:

1. Reduction of the altitude requirement;
2. Competition was more or less restricted;
3. Field Evaluation Trial of the AW-101, which was then at the development stage, was conducted on representative helicopters rather than on the actual helicopter;
4. The Trial was conducted abroad;
5. Additional 4 VVIP helicopters to the actual required quantity were procured;
6. The Contract Negotiation Committee had bench marked higher cost than the one offered; and
7. Certain offset clauses which were made did not comply with the general rule provided by DPP.

The key players of this scam were Agusta Westland company, Former IAF chief SP Tyagi & his cousins, Politicians, and several middlemen. The former CEOs of Italian arms giant Finmeccanica and its helicopter-making subsidiary Agusta Westland and some higher-level Italian executives were even convicted and sentenced to jail in 2014 for bribery.

CHRISTIAN MICHEL JAMES V. DIRECTORATE OF ENFORCEMENT [2022] BAIL APPLN. 2566/2021

Christian Michelis a British national who owned the Global Services FZE company. In 2010, the Court of Appealsof Milan in the course of its adjudication over the bribery scam had disclosed that Agusta Westland had paid €18 million to Global Services FZE by subsequent sale and purchase of some junk Agusta Westland helicopter. This sum was used by Christian Michel to bribe officials to swing the VVIP chopper deal in the favour of Agusta Westland.

After the Court of Appeals of Dubai had ruled favouring Michel’s extradition, Michael was brought to India in 2018. By then, the Central Bureau of Investigation (CBI) of India had collected sufficient evidence against Michael through bank account statements and he was incriminated under Sections 3 and 4 of the Prevention of Money Laundering Act. A bail plea by Michel was rejected by the High Court of Delhi.

In July of 2021, bail application no 2566 was filed under Section 439 Cr.P.C. The said provision granted High Courts or Court of Session with special power relating to bail. The grounds on which the bail plea was sought were:

1. Michael was exonerated of all chargesin the Copper Scam case by the Italian Court.
2. Challengesto the constitutionality of the provision of PMLA.

Section 45 of PMLA had outlined twin conditions for bail in case of offences under the Act. It was stated that the primary condition was that the Public Prosecutor was entitled to an opportunity to oppose the bail plea. Further for the grant of bail, the Court was required to be satisfied with the following two conditions:

1. The accused was not guilty of the offence and
2. The accused would most likely not commit the offence while being on bail.

The twin conditions were required to be satisfied and dissatisfaction of even one would lead to rejection of the bail. In Nikesh Tarach and Shah vs Union Of India,[2017] AIR (SC) 5500, the Bench of R.F. Nariman and Sanjay Kishan Kaul of Supreme court of India had held that Section 45 of PMLA was unconstitutional as it violated Articles 14 and 21 of the Constitution of India. Therefore, the said provision was struck down and an amendment was introduced.

It was a fairly well-settled proposition that the presumption of constitutionality of an enactment favoured the legislation and the burden was upon the petitioner challenging it. In Mohd. Hanif Quareshi & Ors. V. State of Bihar,[1959] S.C.R. 629 at 660, it was established that the courts presumed that the legislature understood and correctly appreciated the needs of the people. Therefore, the laws enacted by the legislature was also presumed to be directed towards problems made manifest by their experience and the discrimination was thus, based on adequate grounds.

It was noted after the Nikesh Tarachand Shah case, the Supreme Court had not struck down the Amendment Act that had introduced Section 45 of the PMLA. Thus, it could be still presumed that the said provision was constitutional as it was enacted by the legislature. In Pathumma & Ors. v. State of Kerala & Ors., [1978] 2 S.C.R. 537, it was held that the Legislature was in the best position to understand and appreciate the needs of the people as mandated by the Constitution.

It must be noted that the bail petition was filed under Section 439 Cr.P.C and it would be impossible to challenge a statutory provision like PMLA under the said provision.Additionally, at that time,the Supreme Court of India was interpreting various provisions of PMLA which included Section 45 also. In D.K. Trivedi And Sons And Ors. V. State Of Gujarat And Ors. Etc., AIR 1986 SC 1323, it was held that while a subject was in pendency before the Supreme Court, the High Court would not adjudicate the proceeding related to that subject. It was held that the Court had ought to have stayed the hearing of the writ petitions until the Supreme Court had disposed of the matter.

The bail was not granted by the High Court of Delhi and the Central Bureau of Investigation (CBI) and Enforcement Directorate (ED) had firmly argued that Michel would not be granted bail as he did not fit the criteria of regular bail. His bail plea fell within the ambit of Section 45 of PMLA and the challenges put forth by his Counsel to the said act were over-ruled.

CONCLUSION

In the bail plea of Christian Michael, the Counsel for the petitioner had put forth the argument on the ground that Supreme Court had declared that Section 45 of the PMLA ultra vires Article 14 and 21 of Constitution of Indiain Nikesh Tarachand Shah case. However, the argument was rejected by the High Court of Delhi and the bail was not granted. Further, the case was adjourned for future deliberation. The challenges against the Prevention of Money Laundering Act were dismissed on three grounds:

• The assumption of the constitutionality of an enactment favoured the legislation.
• Section 439 Cr.P.C did not invoke the power of the High Court of Judicial Review.
• The PMLA was interpreted by the Supreme Court of India at that time.