PUBLIC INTEREST LITIGATION (PIL)

PUBLIC INTEREST LITIGATION (PIL) - AN OVERVIEW

By KPC Rao.,
LLB., FCS., FICWA

Practising Company Secretary

kpcrao.india@gmail.com

“Public interest litigation has become the people’s tool fashioned by judges to enforce the obligations of the state, its institutions, and its functionaries to explore and discover ways and means of giving life and soul to the preambular assurances via the judicial process.”

-Justice O.Chinnappa Reddy

What is Public Interest Litigation?

Public Interest Litigation (PIL) or ‘Pro bono public litigation’ is a litigation at the instance of a Public spirited citizen espousing cause of others.  It is a strategic arm of the legal aid movement and which is intended to bring justice within the reach of poor masses who constitute the low visibility area of humanity.[1] Public Interest litigation is essentially a co-operative or collaborative effort on the part of the petitioner, the State or Public Authority and the court to secure observance of the constitutional or legal rights, benefits or privileges conferred upon the vulnerable sections of the community and to reach social justice to them.

Justice Krishna Iyer, one of the pioneering judges who legitimized and popularized the Public Interest Litigation in India considers Public Interest Litigation as the product of creative judicial engineering. According to the eminent judge, “the jurisdiction of the Indian Supreme Court is the widest in the world; the challenges of India’s social changes are the sharpest; the dynamics of a functional jurisprudence is the creative expression of judicial response to the crisis of hunger for justice. Public Interest Litigation is the off spring of these social forces. This burgeoning process, seminal and innovative, makes the court a catalyst of social justice, a defender of the constitutional faith and the protagonist in the drama of human rights for the common man. Justice Iyer views Public Interest Litigation as a part of the participative justice[2].

In India, Public Interest Litigation is an innovative strategy which has been invented by the Supreme Court for the purpose of providing easy access to justice to the weaker sections of Indian humanity and it is a powerful tool in the hands of public spirited individuals and social action groups for combating exploitation and injustice and securing for the under privileged segments of society, their social and economic entitlements.  It is a highly effective weapon in the armory of the law for reaching social justice to the common man.[3]

The Public Interest Litigation is concerned primarily with the constitutional remedies sought under Article 32 or Article 226 of the Constitution of India. The Public Interest Litigation in India is a consequence of the relaxation of ‘locus standi’ principle which is an inherent part of the adversarial system of justice. Its main aim is to provide justice within the reach of the needy, irrespective of their back-ground like the status, literacy and other factors. That is the precise reason, why the Public Interest Litigation has been called an arm of the legal aid movement in India. In United States of America , it is popularly known as the ‘Public Interest Law’ where the law firms , environmentalists , consumer activists and social scientists play an important role in protecting the rights of the unrepresented sections of the citizens who are not in a position to do the same. Apart from legal interest, in the U.S.A. the rights of persons to move the Court challenging the governmental or its agency action, on the basis of ‘general interest criteria’, statutory standing, competitor and consumer standing and also environmental standing are recognized.

Thus, Public interest litigation (PIL) is important facet of participative justice. It is a signpost which signals the decent of the judiciary from the confines of the ivory towers to the crowded mud huts and the littered pavements, flowing drains and the World of naked street walkers, street urchins, and ragamuffins. With the advent of public interest litigation, realisation is appearing to drawn on the poor, the oppressed, and the exploited that they too have a place under the some and a right to live with dignity, that the constitution protects their rights with the Supreme Court as the custodian of such rights, and their weapon is the new invention called public interest litigation, described by some as 'social action litigation'.

First case of PIL filed in India

Among the memorable legal cases fought by the way of PIL was by the People's Union for Democratic Rights (PUDR), a petition concerning the Asiad 1982 construction workers in the Supreme Court. The case had not been filed by the workers but by the PUDR which technically was not an aggrieved party. Yet considering the fact that the workers themselves were not in a position to file a case, the court agreed to accept the locus standi of the PUDR.

The nature and philosophy of public interest litigation was expounded by Justice P.N.Bhagwati in this case (well-known as  Asaid Case)[4] in the following manner:

“Public interest litigation which is a strategic arm of the legal aid moment and which is intended to bring justice within the reach of the poor masses, who constitute the low visibility area of humanity, is a totally different kind of litigation from the ordinary tradition litigation which is essentially of an adversary character. Public interest litigation is brought before the court not of the purpose of enforcing the right of one individual against other, but it is intended to promote and vindicate public interest which demands that violations of constitutional or legal rights of larger number of people who are poor, ignorant or in a socially or economically disadvantaged position should not go unnoticed and un redressed. That would be destructive of the rule of law which forms one of the essential elements of public interest in any democratic form of government. The rule of law does not mean that the protection of the law must be available only a fortunate few or that the law should be allowed to be prostituted by the vested interests for protecting and upholding the status quo under the guise of enforcement of the civil and political rights. The poor too have civil and political rights and the rule of law is meant for them also, though today it exists only on paper and not in reality.”

Concept of locus standi in PIL

Public Interest Litigation is very closely linked with the relaxation of ‘locus standi’ and providing easy access to justice. It is also concerned with the protection of the countless and unrepresented masses of India, a third world country, who are not in position to protect their rights due to poverty, illiteracy, indigence  and other social, economic and political factors.

As regards the civil remedies, the courts recognize the ‘locus standi’ of only the aggrieved persons, to seek a remedy in a civil court. A minor concession is made under the Code of Civil Procedure, providing for class or representative action. Under the Criminal Procedure, only an affected or aggrieved person is competent to maintain an accusation or complaint, and generally not a stranger. As regards the Constitutional remedies provided under Article 32 before the Supreme Court and under Article 226 before the High Courts there is nothing contained in these two Articles to suggest that the ‘locus standi’  of only the aggrieved person is to be recognized, while issuing appropriate orders, directions or writs.  In spite of glaring silence, the Constitutional Courts in India have followed the traditional principle of ‘locus standi’ and permitted only the aggrieved person to initiate proceedings under Article 32 and 226. Probably this is due to the influence of the Anglo Saxon jurisprudence which has had a sway over the Indian judicial system in almost all the areas of administration of justice. ‘Locus standi’ concept was not an exception to this phenomenon. This rigid procedural barricade has been broken by the Supreme Court of India only in the 1980’s through the concept of Public Interest Litigation, popularized by judges like Justice V.R.Krishna Iyer and Justice P.N. Bhagwati.

The above traditional rule of locus standi that a petition under Art. 32 can only be filed by a person whose fundamental right is infringed has now been considerably relaxed by the Supreme Court in its recent rulings. The court now permits public interest litigations (PIL) or social interest litigation at the instance of ''public spirited citizens'' for the enforcement of Constitutional and other legal rights of any person or group of persons who because of their poverty or socially or economically disadvantaged position are unable to approach the Court for relief. The same also applied to writ petitions filed in the High Courts under the Art. 226.

Rule laid down in the Judges Transfer Case

A seven member bench of the Supreme Court has firmly established the rule of public interest litigation in the Judges Transfer Case[5]. The court held that any member of the public having sufficient interest can approach the court for enforcing constitutional or legal rights of other persons and redressal of common grievance.

In another landmark judgment in the case of M. C. Mehta vs. Union of India^[6]  the Supreme

Court further widened the scope of PIL and :

1)     The court held that the poor in India can seek enforcement of their fundamental rights from the Supreme Court by writing a letter accompanied by an affidavit addressed to any judge.

2)     The court held that under Art. 32 it has the power to grant remedial relief which includes the power to grant compensation in appropriate cases where the fundamental rights of the poor and disadvantaged person are violated.

Guidelines for entertaining letters/ petitions received as PIL.

a)     No petition involving individual/ personal matter shall be entertained as a PIL matter except as indicated hereinafter.

b)     Letter-petitions falling under the following categories alone will ordinarily be entertained as Public Interest Litigation:-

1)      Bonded Labour matters.

2)      Neglected Children.

3)     Non-payment of minimum wages to workers and exploitation of casual workers and complaints of violation of Labour Laws (except in individual cases).

4)     Petitions from jails complaining of harassment, for (pre-mature release) and seeking release after having completed 14 years in jail, death in jail, transfer, release on personal bond, speedy trial as a fundamental right.  For example, Petitions for premature release, parole etc. are not matters which deserve to be treated as petitions under Article 32 as they can effectively be dealt with by the concerned High Court. To save time, Registry may simultaneously call for remarks of the jail Superintendent and ask him to forward the same to High Court. The main petition may be forwarded to the concerned High Court for disposal in accordance with law.

      Even in regard to petitions containing allegations against Jail Authorities there is no reason why it cannot be dealt with by the High Court. But petitions complaining of torture, custody death and the like may be entertained by Supreme Court directly if the allegations are of a serious nature.

5)     Petitions against police for refusing to register a case, harassment by police and death in police custody.

6)     Petitions against atrocities on women, in particular harassment of bride, bride-burning, rape, murder, kidnapping etc.  In such cases where office calls for police report if letter petitioner asks for copy the same may be supplied, only after obtaining permission of the Hon'ble Judge    nominated by the Hon'ble Chief Justice of India for PIL matters.

7)      Petitions complaining of harassment or torture of villagers by co- villagers or by police, from persons belonging to Scheduled Caste and Scheduled Tribes and economically backward classes.

8)      Petitions pertaining to environmental pollution, disturbance of ecological balance, drugs, food adulteration, maintenance of heritage and culture, antiques, forest and wild life and other matters of public importance.

9)      Petitions from riot -victims.

10) Family Pension.

All letter-petitions received in the PIL Cell will first be screened in the Cell and only such petitions as are covered by the above mentioned categories will be placed before a Judge to be nominated by Hon'ble Chief Justice of India for directions after which the case will be listed before the Bench concerned.

If a letter-petition is to be lodged, the orders to that effect should be passed by Registrar (Judicial) (or any Registrar nominated by the Hon'ble Chief Justice of India), instead of Additional Registrar, or any junior officer.

To begin with only one Hon'ble Judge may be assigned this work and number increased to two or three later depending on the workload.

Submission of notes be put up before the Hon'ble Judge nominated for such periods as may be decided by the Hon'ble Chief Justice of India from time to time.

If on scrutiny of a letter petition, it is found that the same is not covered under the PIL guidelines and no public interest is involved, then the same may be lodged only after the approval from the Registrar nominated by the Hon'ble Chief Justice of India.

It may be worthwhile to require an affidavit to be filed in support of the statements contained in the petition whenever it is not too onerous a requirement.

The matters which can be dealt with by the High Court or any other authority may be sent to them without any comment whatsoever instead of all such matters being heard judicially the Supreme Court only.

c)     Cases falling under the following categories will not be entertained as Public Interest Litigation and these may be returned to the petitioners or filed in the PIL Cell, as the case may be:

1)     Landlord-Tenant matters.

2)     Service matter and those pertaining to Pension and Gratuity.

3)     Complaints against Central/ State Government Departments and Local Bodies except  those relating to item Nos. (1) to (10) above.

4)     Admission to medical and other educational institution.

5)     Petitions for early hearing of cases pending in High Courts and Subordinate Courts.

d)     In regard to the petitions concerning maintenance of wife, children and parents, the petitioners may be asked to file a Petition under sec. 125 of Cr. P.C. or a Suit in the Court of competent jurisdiction and for that purpose to approach the nearest Legal Aid Committee for legal aid and advice.

Conclusion

The jurisprudential philosophy and the need for public interest litigation has been summarised by Justice Krishna Iyer in an extrajudicial writing as follows;

“Class actions, public interest litigation, test cases, interventions by public organisations and the like in civil and criminal cases are facets of participate justice on behalf of the poor. This involves jurisprudential changes including redefinition of 'cause of action',  'aggrieved person' and many other concepts. For instance, the horrendous escalation of automobile accidents causes indescribable misery, and no-fault liability, now that insurance is nationalised, is simple social justice. And yet Callous governments and docket crowded courts with no regard to human relief, leave this principle in the code, despite a long ago report of the law commission for its partial acceptance. Therefore, if the poor are to have a stake in the rule of law we may now to create a new jurisprudence. Shall I call it people oriented jurisprudence so necessitous in the third world conditions?

Public interest litigation is, of course, an important and vital branch of public law and the Supreme Court has ruled that in a public law proceeding, there is constitutional obligation imposed on the court to forge new tools necessary to give relief for doing complete justice and to preserve and protect the rule of law. The court is ready to invoke the power available to the Supreme Court under article 142 of the constitution[7].”

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   [Published in Corporate Secretary of ICSI, February, 2011]

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[1] PUDR vs U.O.I. AIR 1982 SC 173

[2] Fertiliser Corp. Kamgar Union Vs U.O.I. AIR 1981 SC 344 at p 355.

[3] State of H.P. vs Parent of a student of Medical College AIR 1985 SC 910 (914)

[4]  Peoples union for democratic rights v. Union of India, AIR 1982 SC 1473.

[5] S.P.Gupta v. The President of India and others, AIR 1982 SC 149

[6] M. C. Mehta vs. Union of India; AIR 1987 SC 1087

[7]  Neelabati Bahera v. State of Orissa, AIR 1993 SC 1960

WHAT IS MONEY LAUNDERING?

WHAT IS MONEY LAUNDERING?

_______________________________________________________________________

By K P C Rao.,
LLB., FCS., FICWA
Kpcrao.india@gmail.com

Money laundering allows crime to pay by permitting criminals to hide and legitimize proceeds derived from illegal activities. According to one recent estimate, worldwide money laundering activity amounts to roughly $1 trillion a year. These illicit funds allow criminals to finance a range of additional criminal activities. Moreover, money laundering abets corruption, distorts economic decision-making, aggravates social ills, and threatens the integrity of financial institutions.

Money launderers now have access to the speed and ease of modern electronic finance. Given the staggering volume of this crime, broad international cooperation between law enforcement and regulatory agencies is essential in order to identify the source of illegal proceeds, trace the funds to specific criminal activities, and confiscate criminals’ financial assets.

Money laundering means different things in different places. This is because only proceeds of crime (or criminal conduct) can be laundered. Many countries have restricted the classification of crimes that are regarded as underlying crimes for money laundering purposes such as drug trafficking. In some countries any conduct which, if a person were convicted, would lead to a sentence of imprisonment will be regarded as a predicate crime. The final point here is that in most countries having countermoney laundering laws, a person can be guilty of the offence of laundering the proceeds of someone else’s criminal conduct.

There are various definitions available which describe the phrase ‘money laundering’. The conversion or transfer of property, knowing that such property is derived from serious crime, for the purpose of concealing or disguising the illicit origin of the property or of assisting any person who is involved in committing such an offence or offences to evade the legal consequences of his action and the concealment or disguise of the true nature, source, location, disposition, movement, rights with respect to, or ownership of property, knowing that such property is derived from serious crime. Powis (1992) asserts that money laundering is the use of money derived from illegal activity by concealing the identity of the individual who obtained the money and converted it to assets that appear to have been derived from the legitimate source. However, probably, the simplest definition is the washing of dirty money to make it appear to be legitimate.

Criminals commit three basic types of crime – crimes of passion or honour, crimes of violence or vandalism and economic crimes. Ignoring minor vandalism, most crime is economic crime – that is this crime is committed to make money. They commit crime for two reasons – one is for kicks – to prove that they can get away with it; the other is because they think they can make more money from the crime than they can make from the same amount of legitimate endeavour.

Simply stated, the process of money laundering basically implies cleansing of money earned through illegal activities like extortion, drug trafficking and gun running etc. The tainted money is projected as clean money through intricate processes of placement, layering and laundering. In Black’s Law of Lexicon the term ‘laundering’ is referred to as being used to describe investment or other transfer of money flowing from racketeering, drug transactions and other illegal sources into legitimate channels so that its original source cannot be traced.

When they make money from crime, criminals use it for one of three purposes – to invest in another crime, to hide to use later or to spend now.

One of the most tried, tested and successful methods of investigating crime is to follow the money. So criminals want to move the money further and faster than investigators can follow it – and from time to time they want to put it into a black hole so that investigators simply cannot follow it. Also, investigators who think that someone may have been involved in a crime may start with that person’s known finances and work backwards. So, the criminal needs to get the money out of the black hole in such a way that he can explain where he got it.

Tax evaders launder money so that they can lie about where money and assets came from in order to evade tax. Or they hide money in bank accounts that they think the revenue authorities think will not be found out sometimes in the names of children or elderly relatives. Or they simply operate outside that part of the economy where records are kept. How often have you been offered a discount for cash, provided you don’t want a receipt? According to some estimates, some 80% of property crime, for example, theft, is committed to fund drugs habits. But in financial crime, increasingly, there is no physical representation of the crime. The money is no more than information on a computer screen, or to be more precise it is bits and bytes stored in a computer’s memory. So, no one handles stolen goods because there is nothing to touch. The result of this is that criminal laws that were framed to address the physical holding of something that had been stolen did not apply (or courts found it did not apply) to non-physical money or other “dematerialized” assets. There is a phrase often used by those who draw up laws or have to enforce them – they say that one way of reducing crime is to “take the profit out of crime.” This means to identify assets that represent proceeds of crime and to seize them under a Court Order or administrative power.

All this means that if money laundering could be made an unrewarding or as risky as handling stolen goods, then there would be an impact upon financial crime. Financial crime affects everyone. It results in higher costs to businesses, which means a combination of less profits and higher prices to consumers and it means the vulnerable such as the elderly are at risk from frauds such as doorstep frauds. It means shopping on the Internet or even at your local supermarket is more risky because the trader may be fraudster and it means that money flows into the hands of corrupt politicians and businessmen, including those engaged in trafficking in drugs, arms and people. Money laundering also was developed in order to facilitate trade. Nigeria is the money-laundering centre of Africa and that Nigerians around the world are engaged in large-scale crime and laundering. Money laundering techniques are restricted only by the imagination of the criminals – and there are a lot of criminals trying to find ways to launder.

Who launders money?

Criminals launder money. Money launderers are to be found in all walks of life, many acting entirely innocently. However, anyone who helps a criminal to launder the proceeds of his crime is, in most jurisdictions, also a money launderer. This means bankers, lawyers, accountants, car dealers and others are money launderers if they allow their businesses to be used by someone else to launder the proceeds of a crime. Generally, the only defence is that the businessman was unaware of what was happening. This defence will not stand as the burden of proving innocence will be on the defendants.

Persons possessing assets out of the proceeds of crime are also money launderers. A girlfriend of a criminal who knows that her boyfriend used proceeds of criminal conduct to buy her a car is a striking example in this regard. So an accountant who recommends a tax evasion scheme is himself a money launderer. Tax evaders launder money and hide it in banks’ numbered and ‘benami’ accounts. Banks are regarded as safe hiding places for slush funds.

How does money laundering help to fight crime?

1)     Money laundering is anarchical in nature. Good governance is the death warrant of criminal activity.

2)     A close scrutiny of financial transaction records leads not only to the discovery of hidden assets but also unmasks the criminals and their groups.

3)     The criminally generated funds can be forfeited. This will hit the criminal hard and break the cycle of criminal activity.

The governments should:

1)     Enforce the money laundering Laws effectively.

2)      Enact laws for search, seizure and confiscation of criminally derived assets.

3)     Should share information about criminals.

4)     Bring the law enforcement and financial authorities together.

Money launderers are highly imaginative criminals and circumvent governments’ counter-measure. A dynamic detection system must be in place. Money laundering is the process by which large amount of illegally obtained money (from drug trafficking, terrorist activity or other serious crimes) is given the appearance of having originated from a legitimate source.

If done successfully, it allows the criminals to maintain control over their proceeds and ultimately to provide a legitimate cover for their source of income. Money laundering plays a fundamental role in facilitating the ambitions of the drug trafficker, the terrorist, the organized criminal, the insider dealer, the tax evader as well as many others who need to avoid the kind of attention from the authorities that sudden wealth brings from illegal activities. By engaging in this type of activity it is hoped to place the proceeds beyond the reach of any assets forfeiture laws. Attacking money laundering attacks the proceeds of crime; it also has the advantage of forcing those who are behind the trade in illicit drugs to fight in the open, on the same ground as the forces of law and order.

Money laundering is necessitated by the requirement for criminals, be they drug traffickers, organized criminals, terrorists, arms traffickers, blackmailers, or credit card swindlers, to disguise the origin of their criminal money so that they can use it more easily. Money laundering generally involves a series of multiple transactions used to disguise the source of financial assets so that those assets may be used without compromising the criminals who are seeking to use the funds. These transactions typically fall into three stages:

1)     Placement, the process of placing, through deposits, wire transfers, or other means, unlawful proceeds into financial institutions.

2)     Layering, the process of separating the proceeds of criminal activity from their origin through the use of layers of complex financial transactions

3)     Integration, the process of using an apparently legitimate transaction to disguise the illicit proceeds. Through this process the criminal tries to transform the monetary proceeds derived from illicit activities into funds with an apparently legal source.

Money laundering is the crime of the ‘90s. Money laundering is sleight of hand… a magic trick for wealth creation… the lifeblood of drug dealers, fraudsters, smugglers, arms dealers, terrorists, extortionists and taxevaders. It is also the world’s third largest business. Though a relatively new and in vogue subject, it (money laundering) has in fact been around for centuries. Criminals throughout history have had to hide the source of newly acquired wealth in order to escape prosecution for the predicate crime. However, the scale of the problem has escalated out of all proportion.

“Today’s criminals make the Al-Capone and the old Mafia look like small time crooks.” Money laundering is one of the major problems facing international economy. Technology has offered a very sophisticated and circuitous means to convert ill-gotten proceeds into legal tender and assets. Measures need to ensure that legislation keeps abreast of technology in order to understand and pick up on any new techniques that professional money launderers may come up with.

Money laundering is interlinked with crime. The allurement of huge profits from drug trafficking, international frauds, arms deals, trafficking in human organs, casinos and prostitution will facilitate the offence – leading to huge accumulation of wealth, prestige and respectability of those in control of criminal business. Drug trafficking is the largest single generator of illegal proceeds. Robinson (1994) stated that more money is spent worldwide on illicit drugs than on food.

The characteristics of organized crime are evident in money laundering. According to Billy Steel these characteristics are as below:

1)        It is a group activity, in that it is carried out often by more  than one person;

2)        It is a criminal activity which is long-term and continuing;

3)        It is a criminal activity which is carried out irrespective of national boundaries;

4)        It is large-scale; and

5)        It generates proceeds, which are often made available for licit use.

The serious criminal activity is highly complex and sophisticated. It is operated on a large scale and influences the legitimate business activity all over the world. A large number of conventions like the FATF have emerged to combat this growing menace.

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          [Published in Circuit Magazine (Monthly), ICWAI, February & March, 2011]