PMLA Judgment: Powers Of Enforcement Directorate Upheld

On July 27, the Supreme Court upheld the Constitutional validity of certain crucial provisions of the Prevention of Money Laundering Act 2002 (PMLA), which has been in the storm of controversy since Enforcement Directorate has begun prosecution of various opposition leaders throughout the nation. 

Bench of Justices AM Khanwilkar, Dinesh Maheshwari and CT Ravi Kumar gave the verdict that has reaffirmed the powers which PMLA confers upon Enforcement Directorate.

PMLA constructs an architecture distinguishable from the Criminal Procedure Code (Cr.P.C.) and can therefore be termed as a sui generis legislation.

PMLA was enacted in 2002 to deal with the special category of offence - money laundering.

The Act delineates its own procedure and prosecuting agencies need not adhere to the Cr.P.C.

The Act has been amended on several occasions in the past to restrict the supervening powers of arrest, summoning of accused, search and seizure and confessional statements.

ED’s Powers Affirmed

The Apex Court held ED’s powers to arrest, summon and carry out search and seizure as constitutional. According to the court, the provisions did not suffer from the vice of arbitrariness.

The Court stated that the legislation provided enough safeguards to prevent misuse or abuse of powers by the ED.

ECIR Not An FIR

Just as an FIR is registered in an ordinary criminal case, an Enforcement Case Information Report (ECIR) is registered by the ED in a case wherein the provisions of PMLA are attracted. 

The Court has upheld the ECIR and declared it as an internal departmental document which is not necessarily required to be supplied to the accused. 

This assumes great significance as just like the FIR, an ECIR is the document that explains the basic set of allegation against the accused person. Without the ECIR, it would become extremely difficult for defence lawyers to argue on behalf of the accused.

Ultimately, what would suffer is the seminal principle of – “innocent until proven guilty.”

The Court held that an ECIR cannot be equated with an FIR and the accused being informed about the grounds of his arrest is enough.

Confessional Statements

The Indian Evidence Act 1872 makes statements made before the police inadmissible before the Court. Article 20(3) of the Constitution also envisages the right against self-incrimination.

The premise from which this tenet has been derived is that police can coerce accused persons to sign on a statement. Therefore such statements cannot be termed as ones obtained through freewill of the accused, hence rendering them as inadmissible.

Contra distinctly, the statements made before ED officers under Section 50 of PMLA have been upheld as admissible.

The Court has affirmed that ED officers are not police officers and therefore the provision is not marred by the Constitutional guarantee of right against self-incrimination.

In Tofan Singh v. State of Tamil Nadu (2020), the Supreme Court dealt with the NDPS Act, another stringent statute just like the PMLA.

The Court in the above noted judgment held that statements made before NDPS officers were inadmissible and equated them to police officers. 

The Supreme Court’s verdict in the PMLA judgment resoundingly departs from this cardinal proposition.

Twin Tests of Bail

As per numerous Supreme Court dictums, bail has been pronounced as the rule and jail an exception.

However, PMLA and its extremely onerous twin tests turn the tables upside down on the aspect of bail.

As per this test, bail can only be granted to an individual if the court is of the prima facie opinion that the accused is not guilty of the offence and will not engage in any criminality on being enlarged on bail.

The Court has upheld the twin tests and has given the highest imprimatur to the reluctance of special courts’ in grant bail.

Although review petitions have only remote possibilities of succeeding, one might be in the offing.