ED's Overreach Checked: Supreme Court Warns Against PMLA Misuse

Constitutional courts will not permit prolonged pretrial detention under the anti-money laundering statute, the Supreme Court said on Thursday, sharply disapproving of using the Prevention of Money Laundering Act (PMLA) "as a tool" to lengthen the incarceration of an accused person.

The Court issued a harsh warning regarding the misuse of PMLA provisions by the Enforcement Directorate (ED) and harshly criticised the use of the law to keep people in Jail without charge or trial for unjustifiably long periods of time, even as it granted bail to former Tamil Nadu Minister V. Senthil Balaji, who was arrested in June 2023 on money-laundering charges related to the cash-for-Jobs scam.

The bench agreed that there was a prima facie case against Balaji, but they were strongly in favour of his release due to his protracted incarceration without a clear end in sight to the trial. A bench of judges A.S. Oka and A.G. Masih ruled, "The constitutional courts cannot allow provisions like Section 45(1)(ii) to become instruments in the hands of the ED (Enforcement Directorate) to continue incarceration for a long time when there is no possibility of the trial concluding within a reasonable time."

Section 45 of the PMLA sets a high standard that Judges must meet in order to find that the accused is not guilty of the crime and is not likely to commit it while they are free on bond.

In addition, the court voiced its profound distress at the extended detention of people in situations involving harsh penal laws and warned that the strict provisions of the PMLA must not be used as tools of arbitrary detention. The bench held, highlighting the fact that strict PMLA provisions cannot lead to an endless loss of personal liberty.

"These stringent provisions regarding the grant of bail, such as Section 45(1)(iii) of the PMLA, cannot become a tool which can be used to incarcerate the accused without trial for an unreasonable long time," the bench stated. It declared that a well-established tenet of Indian criminal law is that "Bail is the rule, and Jail is the exception."

The decision is made at a time when the Supreme Court's two special benches have not yet convened a formal hearing on petitions contesting the legality of certain PMLA provisions, most notably those pertaining to summons, arrest, search, and seizure. A subset of these petitions has challenged the Supreme Court's 2022 ruling in the Vijay Madanlal Choudhary case, which maintained a number of contentious PMLA provisions that have a significant impact on the legal authority conferred to the ED.

Article 21 of the Constitution provides the right to life and personal liberty. Justice Oka's ruling on Thursday indicated rising judicial concern that the statute could be weaponised in a way that breaches these fundamental rights. This criticism came after some recent rulings that emphasised the value of individual freedom, particularly the right to bail, as guaranteed by the Constitution, even in situations when there are stringent legal limits.

According to PMLA Section 45, the public prosecutor needs to be given a chance to refute the accused's request for release. It stated that the rights of those who are awaiting trial under Article 21 of the Indian Constitution will be undermined if constitutional courts fail to exercise their Jurisdiction in these situations. Senior counsel Sidharth Luthra and Mukul Rohatgi represented Balaji in the case.

The Court noted that the minimum punishment for money laundering under Section 4 of the PMLA is three years, with the possibility of an extension to seven years, and ordered his release on bail. The Court was aware of Balaji's lengthy pre-trial confinement because he had previously been behind bars for almost a year.

The Court placed strict conditions on bail in response to the ED's concerns about potential witness or evidence tampering. These conditions included Balaji's regular appearances before the ED deputy director in Chennai every Monday and Friday, his appearance before the scheduled offences’ investigating officer, his prohibition from contacting any prosecution witnesses or victims connected to the scheduled offences, his full cooperation with the trial, and his refusal to request adjournments.

Author:
Aarya Kadam (News Writer) is a final-year BBA student and a creative writer with a passion for current affairs and legal Judgments.