This article is written by Samriddha Ray, St. Xavier’s University, Kolkata
The Prevention of Money-Laundering Act, 2002 (PMLA), has undergone significant transformation since its inception. Originally enacted as a specialised statute to curb the laundering of proceeds of crime, PMLA has gradually expanded in scope and procedural intensity through successive amendments. The 2019 and 2022 amendments, in particular, have created substantial debate around the balance between individual liberties and the State’s interest in combating money laundering, a crime increasingly linked with terror financing, financial fraud, and organised crime.
In Vijay Madanlal Choudhary v. Union of India (2022), the Supreme Court upheld the constitutionality of most contentious provisions of PMLA, cementing the Enforcement Directorate’s (ED) vast investigative and prosecutorial powers. However, in 2023, the Supreme Court agreed to review key aspects of this judgment after criticism from constitutional scholars, senior advocates, and civil liberties organisations. The review signalled that issues related to due process, reverse burden of proof, bail restrictions, and ED’s unregulated powers required deeper scrutiny.
This article analyses the contemporary significance of the PMLA Amendments Case Review (2023), its implications for due process under Articles 14, 20, and 21, and how the judiciary is attempting to reconcile individual rights with the sovereign objective of combating economic crime.
Case Laws & Judicial Evolution
1. Vijay Madanlal Choudhary v. Union of India (2022): The Foundation
The 2022 judgment is the starting point for understanding the 2023 review. A three-judge bench upheld:
- The broad definition of “proceeds of crime”
- ED’s power to arrest, search, and attach property without FIR or judicial warrant
- Validity of the twin bail conditions under Section 45
- Non-supply of ECIR (Enforcement Case Information Report) to the accused
- Reverse burden of proof under Sections 23 and 24
The Court relied heavily on:
- India’s international obligations under FATF
- The need for stringent enforcement to prevent financial crimes
However, the ruling was heavily criticised for allegedly diluting personal liberty and ignoring established criminal jurisprudence.
2. PMLA Amendments Review Petitions (2023): A Judicial Reconsideration
In 2023, a series of review petitions were filed, urging the Supreme Court to reconsider its earlier judgment. A few central concerns were highlighted:
a. Whether ED is a “police agency” and must follow CrPC safeguards
Petitioners argued that:
- ED performs functions identical to police investigations
- ED’s powers must therefore be subject to Articles 20(3), 21, and CrPC protections
- Treating ED officers as “other than police officers” undermines constitutional safeguards
b. Nature and validity of the ECIR
The 2022 judgment allowed ED to not provide a copy of the ECIR to the accused.
The review questioned:
- How can an accused defend themselves without knowing the allegations?
- Is ECIR analogous to FIR under CrPC?
- Can secrecy override fair trial rights?
c. Twin bail conditions under Section 45
This is one of the most controversial aspects of PMLA.
The review challenged:
- The near-impossibility of satisfying the two-part bail test
(i) Court must believe the accused is not guilty
(ii) Accused is not likely to commit an offence if released - The inconsistency with the proportionality doctrine post Puttaswamy
- The conflict with presumption of innocence
d. Retrospective application of amendments
Petitioners argued:
- Amending “proceeds of crime” retrospectively criminalises past conduct
- Violates Article 20(1)—no person shall be convicted for an act not an offence when committed
e. Parliamentary process concerns
Arguments included:
- Amendments passed as Money Bills dilute bicameralism
- Violates Article 110 and principles of separation of powers
(Petitioners relied on Rojer Mathew v. South Indian Bank)
3. Enforcement Directorate v. K. Kavitha (2023–24): Bail and Gender Rights
This politically charged case added pressure on courts to revisit PMLA safeguards.
K. Kavitha argued:
- Grounds of arrest were not provided
- ED misused powers for political targeting
- Section 45’s bail restrictions unnecessarily prolonged custody
The Supreme Court, for the first time post-2022, made strong observations that ED must disclose “grounds of arrest”, signalling a shift toward transparency.
4. Senthil Balaji Case (2023): Custodial Interrogation & ED Powers
In V. Senthil Balaji v. State (2023), the Supreme Court held:
- ED can seek custodial interrogation for money-laundering investigations
- But procedural fairness must be ensured
- Accused has the right to be informed of the “grounds of arrest” in writing
This case is a vital precursor to the 2023 review as it:
- Acknowledged the potential for misuse
- Reaffirmed procedural rights within the PMLA framework
5. Pankaj Bansal v. Union of India (2023): A Game-Changer for Due Process
This landmark 2023 judgment significantly altered the ED landscape. The Supreme Court held:
- Accused must be given written “grounds of arrest”
- Non-supply violates Article 22(1)
- Arrest becomes unlawful if grounds are not furnished
Impact:
- Massive reduction in arbitrary arrests
- Multiple accused granted bail on this basis
- ED forced to revise arrest protocols nationwide
This judgment is one of the strongest signals that the Court is rebalancing due process under PMLA.
6. Practical Impact of the 2023 Review
Although the review is still ongoing, the judiciary has already:
- Clarified that ED is accountable under constitutional norms
- Strengthened Article 22 arrest rights
- Restricted arbitrary use of Section 19 powers
- Encouraged transparent procedures
- Questioned the integrity of amendments passed as Money Bills
- Expressed concern about disproportionate restrictions on bail
Collectively, these developments indicate judicial recognition that PMLA is not immune from constitutional checks.
Contemporary Significance: Due Process vs. State Interests
The PMLA review exemplifies a constitutional tension:
1. State Interests
- Preventing money laundering is essential to national security
- India must abide by FATF standards
- Financial crimes are more sophisticated, requiring specialised tools
- ED must have independence to investigate political and economic offences
2. Due Process Concerns
Critics argue PMLA:
- Deprives liberty without adequate safeguards
- Presumes guilt instead of innocence
- Allows attachment of property without judicial oversight
- Lacks transparency in ECIR and arrest procedures
- Gives ED disproportionate discretion
- Is often used selectively in politically sensitive cases
The Supreme Court’s willingness to revisit its earlier stance signals that:
National security and economic integrity cannot override fundamental rights without meeting the test of proportionality.
Conclusion
The PMLA Amendments Case Review (2023) represents a pivotal moment in India’s constitutional jurisprudence. While the Supreme Court in 2022 upheld the statute’s rigour, the 2023 review reveals a judiciary increasingly conscious of the dangers of unchecked executive power. By scrutinising ED’s vast authority and reinforcing arrest-related safeguards, the Court is attempting to strike a constitutional balance.
The debate is not about weakening the fight against money laundering, but about ensuring it does not come at the cost of personal liberty, fair procedure, and constitutional protections. As India continues to strengthen its financial systems, it must also ensure that the enforcement mechanisms operate within the bounds of the rule of law.
The final outcome of the review will likely define the future contours of India’s criminal justice system, especially in cases involving white-collar crime and economic offences. It will decide whether PMLA remains an extraordinary law with extraordinary powers, or whether constitutional due process will reshape its framework.
FAQs
1. What is the main issue in the PMLA Amendments Case Review (2023)?
The review focuses on whether 2022 amendments and ED powers violate fundamental rights, including the right to fair investigation, bail, privacy, and protection from arbitrary arrest.
2. Why is the ECIR controversial?
Because the accused is not provided a copy, making it difficult to know the exact allegations, unlike an FIR under CrPC.
3. What is the significance of the Pankaj Bansal judgment (2023)?
It mandates that ED must provide written “grounds of arrest,” ensuring transparency and protecting liberty.
4. Does PMLA violate the presumption of innocence?
Sections 23 and 24 impose a reverse burden of proof, which many argue affects presumption of innocence. The Supreme Court is reviewing its validity.
5. Is ED bound by CrPC?
The Supreme Court held ED is not a police agency, but the 2023 review is reconsidering whether ED’s investigative powers need CrPC-like safeguards.
Sources & Cases
- Vijay Madanlal Choudhary v. Union of India (2022)
https://indiankanoon.org/doc/14485072
- Pankaj Bansal v. Union of India (2023)
https://indiankanoon.org/doc/189692408
- V. Senthil Balaji v. State (2023)
chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://api.sci.gov.in/supremecourt/2024/12721/12721_2024_6_1501_56009_Judgement_26-Sep-2024.pdf
- K. Kavitha ED Case (2023–24 Proceedings)
chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://api.sci.gov.in/supremecourt/2024/35524/35524_2024_3_19_55112_Judgement_27-Aug-2024.pdf
- PMLA (Amendments) Act, 202chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/ https://sansad.in/getFile/BillsTexts/RSBillTexts/Asintroduced/8%20E%20258%20Session1213202275246PM.pdf?source=legislation
