Why in news?

The Supreme Court in Vijay Madanlal Choudhary v. Union of India (2022) upheld several provisions of the Prevention of Money Laundering Act (PMLA), affirming the broad powers of the Enforcement Directorate (ED) in investigating and arresting individuals accused of money laundering. In this judgement, the apex court supported stringent bail conditions under the PMLA, reinforcing the Act's robust framework to tackle money laundering.

However, despite this ruling, the Supreme Court has also made smaller interventions that have gradually moderated some of these stringent provisions. These interventions aim to balance the need for stringent anti-money laundering measures with the protection of individual rights, particularly concerning arrest and bail.

This reflects the Court's ongoing efforts to ensure that the enforcement of the PMLA does not infringe on the fundamental rights of the accused.

What’s in today’s article?

• Various relaxations extended by the Supreme Court to the PMLA Accused

Various relaxations extended by the Supreme Court to the PMLA Accused

• On grounds of arrest
  • Section 19 of the PMLA gives the ED the power of arrest if the material it possesses gives it reason to believe an individual is guilty of money laundering.
  • The accused must be informed of the grounds of arrest “as soon as may be”.
  • In Vijay Madanlal Choudhary v. Union of India (2022), the Supreme Court ruled that the ED is not required to provide a copy of the Enforcement Case Information Report (similar to an FIR) to the accused, but only needs to inform them of the reasons for their arrest.
  • However, in Pankaj Bansal v. Union of India (2023), the Supreme Court emphasized that the accused have a fundamental right under Article 20 of the Constitution to be informed of the grounds of their arrest.
  • The Court observed that, in practice, the grounds were sometimes provided orally and sometimes in writing.
  • It clarified that the grounds of arrest must always be given in writing, without exception. Failure to provide written grounds would render the arrest illegal and invalid.
  • This verdict underscores the importance of protecting the rights of the accused while ensuring the enforcement of the law.
• On bail for undertrials
  • Section 436A of the Code of Criminal Procedure (CrPC) allowed for the release on bail of individuals detained for up to half the maximum period of imprisonment for an offense while their trial or investigation was ongoing.
  • In Vijay Madanlal Choudhary v. Union of India (2022), the Supreme Court extended this provision to apply to cases under the PMLA.
    • This interpretation was reaffirmed by the Court in May 2024 in Ajay Ajit Peter Kerkar v. Directorate of Enforcement.
  • However, Section 436A has been replaced by Section 479 of the Bharatiya Nagarik Suraksha Sanhita, which may impact PMLA cases.
    • A key change is a new explanation that excludes the application of the bail provision if multiple offenses or cases are pending against the accused—a scenario common in money laundering cases.
    • This amendment potentially limits the benefit of bail under the PMLA, making it more challenging for accused individuals to secure release under the revised legal framework.
  • However, in August 2024, while delivering a verdict, SC reiterated that the legal principle “bail is the rule and jail is the exception” will apply even in cases registered under the PMLA.
• On ‘need and necessity to arrest’
  • In July 2024, the SC granted interim bail to Delhi CM Arvind Kejriwal in the Delhi excise policy case, where the ED had arrested him under Section 19 of the PMLA.
  • Kejriwal challenged the legality of his arrest, arguing that there was no "necessity" for it.
    • He claimed that the material on which the ED based his arrest was available in July 2023, but he was only arrested in March 2024.
  • Section 19(1) of the PMLA requires the ED to have reason to believe that the accused is guilty, which the court noted must meet a high threshold, implying that these reasons should be based on "evidence admissible in court.
  • The Supreme Court also referred the question of whether the "need and necessity to arrest" can be a valid ground for challenging an arrest under the PMLA to a five-judge bench for further consideration.
    • This referral indicates the court's intention to scrutinize the conditions under which arrests are made under the PMLA, potentially influencing future interpretations of the law.
• On relaxing twin conditions
• In August 2024, the SC granted bail to former Delhi Deputy Chief Minister Manish Sisodia in the Delhi excise policy case.
• Under Section 45 of the PMLA, the "twin conditions" for bail are stringent: the accused must prove that they did not commit an offense under the PMLA and are unlikely to commit any offense while on bail.
  • This effectively reverses the standard burden of proof in criminal cases.
• However, the bench ruled that these conditions could be relaxed in cases where the accused has been incarcerated for a long period without trial proceedings commencing.
  • In Sisodia's case, he had been imprisoned for approximately 17 months without the trial starting.
• This decision underscores the Court's recognition of prolonged pre-trial detention as a factor warranting the relaxation of otherwise stringent bail conditions under the PMLA.
• On bail exception for women
  • In August 2024, the apex Court granted bail to BRS leader K Kavitha in the Delhi excise policy case, citing the exception in Section 45 of the PMLA, which allows for the release on bail of women if the Special Court so directs.
  • The Supreme Court overturned the Delhi High Court's earlier decision to deny Kavitha bail, where the High Court had argued that because she was "well educated," she did not qualify as a "vulnerable woman" under the exception.
  • The ruling reaffirms that the exception in Section 45 is applicable to women regardless of their educational background, ensuring that the provision is interpreted in a manner consistent with its intent.
• On confession to ED officer
  • Section 50 of the PMLA empowers the ED to summon individuals and require them to make statements during investigations.
  • In Vijay Madanlal Choudhary v. Union of India (2022), the SC ruled that this provision does not violate the right against self-incrimination under Article 20(3) of the Constitution.
  • However, under Section 25 of the Evidence Act, 1872 (now Section 23 of the Bharatiya Sakshya Adhiniyam, 2023), confessions made to police officers are inadmissible as evidence during a trial.
    • In Prem Prakash v. Union of India (2024), a case was presented where the accused admitted guilt while in judicial custody.
    • In this case, the SC said that a person in custody cannot be considered as operating with a free mind, suggesting that such an individual might be under duress or coercion.
  • In past judgments, the apex court held that evidence obtained through compelled testimony or coercive methods violates the right against self-incrimination.
  • This reasoning emphasizes that confessions or admissions made while in custody, especially if they are compelled or coerced, cannot be considered voluntary.
  • Hence, they are inadmissible as evidence, reinforcing the protection against self-incrimination.