Prevention of Money Laundering Act, 2002
Miscellaneous Provisions: Sections 62 to 75
Chapter X holds the provisions that make the rest of the Act work: penalties for abuse of power and for obstructing it, the sharing of information between agencies, protection for action in good faith, the recovery of penalties, the Act's overriding effect, and the rule-making powers. Several of them, particularly Section 66 on disclosure and Section 71 on overriding effect, have become important in practice. This note goes through each.
The Chapter X toolbox, section by section
1. Penalties for Abuse and Obstruction: Sections 62 to 64
Section | Provision |
|---|---|
s. 62: vexatious search | An authority who, without reasons recorded in writing, searches or causes a search of any building or place, or detains or searches or arrests any person, is punishable with imprisonment up to two years, or fine up to fifty thousand rupees, or both |
s. 63(1): false information | A person who wilfully and maliciously gives false information and so causes an arrest or search is punishable with imprisonment up to two years, or fine up to fifty thousand rupees, or both |
s. 63(2): failure to cooperate | A person who, being legally bound, refuses to answer questions, refuses to sign a statement, or fails to attend or produce documents as directed under s. 50, is liable to a penalty of not less than five hundred rupees and up to ten thousand rupees for each default |
s. 64: cognizance | No court takes cognizance of offences under s. 62 or s. 63(1) without the previous sanction of the Central Government |
- Why Section 62 matters. It is the Act's own safeguard against abuse of search and arrest, and reinforces that recorded reasons are not a formality.
2. Disclosure of Information: Section 66
§ Sharing information with other authorities Section 66(1). The Director or other authority may furnish information in its possession to officers, authorities or bodies performing functions under other laws, or to others notified by the Central Government. Section 66(2). If the Director has reason to believe, on information in his possession, that a provision of any other law has been contravened, he shall share the information with the concerned agency for necessary action. Notifications. The list of agencies with which information may be shared has been expanded by notification, including, in 2023, the Goods and Services Tax Network. Significance. It allows the ED's findings to trigger action under the tax, customs, corruption and other laws, and can lead to registration of a predicate offence by the police. |
3. Protection, Validity and Recovery: Sections 67 to 69
Section | Provision |
|---|---|
s. 67: bar of suits | No suit lies in a civil court to set aside or modify any proceeding or order under the Act, and no prosecution, suit or proceeding lies against the Government or any officer for anything done in good faith under it |
s. 68: errors not fatal | No notice, summons, order or other proceeding is invalid merely because of a mistake, defect or omission, if it is in substance and effect in conformity with the Act |
s. 69: recovery of fine or penalty | Unpaid fines or penalties may be recovered in the manner provided for recovery of arrears under the Income-tax law's recovery schedule |
4. Overriding Effect: Section 71
§ The PMLA prevails, within its field The provision. The Act has effect notwithstanding anything inconsistent in any other law for the time being in force. Other non-obstante clauses. SARFAESI s. 35, the RDB Act s. 34 and the IBC s. 238 also override inconsistent laws. How conflicts are resolved. Courts ask whether the laws genuinely conflict, what each is designed to achieve, and which is the later or more specific law on the point. The PMLA targets proceeds of crime; recovery laws enforce debts. Neither is intended to benefit the launderer, and bona fide creditors' interests are weighed. Statutory resolution. IBC s. 32A, inserted in 2019 and upheld in Manish Kumar v. Union of India, (2021) 5 SCC 1, specifically frees the corporate debtor and its assets from action for prior offences once a qualifying resolution plan is approved. |
5. Death, Insolvency, Rules and Difficulties: Sections 72 to 75
Section | Provision |
|---|---|
s. 72: death or insolvency | Proceedings continue against the legal representative of a deceased person, or the representative in insolvency, as regards the property |
s. 73: rules | The Central Government may make rules on matters including the maintenance of records, reporting, and procedures under the Act |
s. 73A: regulations | Regulations may be made by the authorities empowered, consistent with the Act and rules |
s. 74: laying before Parliament | Rules and regulations are laid before each House, which may modify or annul them |
s. 75: removal of difficulties | The Central Government may, by order, remove difficulties in giving effect to the Act, within the limited period provided |
6. Frequently Asked Questions
What is the penalty for a vexatious search under the PMLA?
Under Section 62, imprisonment up to two years, or fine up to fifty thousand rupees, or both, for searching or arresting without recorded reasons.
What is the penalty for not responding to an ED summons?
Under Section 63(2), a penalty of five hundred to ten thousand rupees for each default.
Can the ED share information with other agencies?
Yes. Under Section 66, it may share information, and must where it believes another law has been contravened.
Does the PMLA override all other laws?
Section 71 gives it overriding effect over inconsistent laws, but courts reconcile it with other non-obstante clauses by field and purpose, and IBC s. 32A specifically governs resolution plans.