Supreme Court upholds PMLA

Syllabus: General Studies Paper 2

The Supreme Court upheld the provisions of the Prevention of Money Laundering Act (PMLA) and retained the powers of the Enforcement Directorate (ED).

• The core amendments made to the Prevention of Money Laundering Act (PMLA), which gives the government and the Enforcement Directorate (ED) virtually unbridled powers of summons, arrest, and raids, and makes bail nearly impossible while shifting the burden of proof of innocence on to the accused rather than the prosecution.
• The verdict came on an extensive challenge raised against the amendments introduced to the 2002 Act by way of Finance Acts.
• The PMLA a law against the “scourge of money laundering” and not a hatchet wielded against rival politicians and dissenters.

Extensive Challenge

• The verdict came on an extensive challenge raised against the amendments introduced to the 2002 Act by way of Finance Acts.
• Over 240 petitions were filed against the amendments, which the challengers claimed would violate personal liberty, procedures of law and the constitutional mandate.

EDs Power of Arrest: 

• The petitioners had argued that the ED could arrest a person even without informing him of the charges. This power was violative of the right to ‘due process’ enshrined in Article 21 of the Constitution. 
• However, the court rejected the notion that the ED has been given blanket powers of arrest, search of person and property and seizure. The court said there were in-built safeguards” within the Act, including the recording of reasons in writing while effecting an arrest.

Conditions of Bail

• The court upheld the stringent twin bail conditions required under the law for granting bail to an accused. The two conditions require a court to hear the public prosecutor against the bail plea and reach a satisfaction that there are reasonable grounds to believe that the accused is not guilty of the offense and that he is not likely to commit any offence while on bail.
• However, the court said undertrials could seek bail under Section 436A of the Code of Criminal Procedure if they had already spent one-half of the term of punishment in jail for the offence prescribed in law. But, again, this is not an “absolute right” and would depend from case to case.

Burden of Proof 

• The court upheld this provision and said that this provision did not suffer from the “vice of arbitrariness or unreasonableness”.

Attaching a property

• Petitioners’ argument: They objected the powers bestowed on the ED to attach a property as proceeds of crime.
• They had contended that even properties which were not proceeds of crime could be attached by the agency.
• SC: The court said Section 5 of the PMLA, which concerns with the provisional attachment of property, cannot be used by the agency “mechanically”.
• The court said the provision provided a “balancing arrangement” between the interests of the accused and that of the State.
• Further, if the accused was eventually absolved of the crime, no further action could be taken against the attached property suspected to have been linked to the crime.