PMLA's Impact on Victims of Crime: A Judicial Shield against Secondary Victimization

The Prevention of Money Laundering Act, 2002 (PMLA), while aimed at a laudable global objective, often operates with a draconian character that can inadvertently victimize innocent third parties. These "Victims of Crime" include not only those targeted by predicate offenses but also bona fide co-owners and residents whose lives are upended by summary property attachments.

The "Victim Paradox" and the Kamarunisa Precedent

A significant lacuna in the PMLA is its potential to punish the victim alongside the offender. As highlighted in the landmark judgment by the Madras High Court in the case of Kamarunisa Ghori vs. The Chairperson, victims of crimes like kidnapping for ransom, dacoity, or robbery (where the value exceeds Rs.30 lakhs) face a double loss. If the State recovers and confiscates this money as "proceeds of crime" under Section 8(6), the victim – who already lost the money to the criminal – now loses it permanently to the Central Government. This creates a perverse incentive for victims to turn hostile in criminal trials simply to prevent their assets from vesting in the State. Furthermore, the Kamarunisa judgment clarified that Section 8(4) should not be interpreted as a mandate for actual physical dispossession; the authorities can achieve the Act's objectives through "symbolic possession," allowing innocent parties to continue enjoying their property until a final conviction.

The High Court: Opening the Doors to Aggrieved Persons

Victims often find themselves "strangers" to the adjudication proceedings, as the Directorate of Enforcement frequently fails to serve mandatory notices under Section 8(1) to all joint holders. In the case of Lucian Louis Fonseca vs. Union of India & Ors., the Bombay High Court provided a critical check on this administrative overreach. The Court ruled that under Section 26(1) of the PMLA, the remedy of an appeal is available to any "aggrieved person," even if they were not originally a party to the proceedings before the Adjudicating Authority. This ruling ensures that innocent third parties are not rendered "remediless" and can challenge arbitrary attachments that threaten their constitutional right to property under Article 300-A.

The Appellate Authority: Enforcing Natural Justice

The Appellate Authority has consistently reaffirmed that scrupulous compliance with statutory requirements is imperative when applying such stringent laws. In the Fonseca matter, the Tribunal found that the Appellants (co-owners of an ancestral property since 1953), were dispossessed without notice despite registered deeds clearly noting their "occupancy" and "claims". The Tribunal held that such an omission constitutes a total breach of the principles of natural justice, specifically the audi alteram partem rule. By setting aside the attachment and ordering the restoration of possession, the Authority signaled that the State cannot assume an accused person owns 100% of a property when legal documents suggest otherwise.

Jacob Kadantot

Advocate