Flagging ‘shortcomings’ in the PMLA regime and its way of functioning, a Delhi court on Friday expressed concern over the Enforcement Directorate’s (ED) practice of making arrests and filing prosecution complaints in money laundering cases even before the facts of the corresponding predicate offence cases undergo judicial scrutiny.
Special Judge (PC Act) Jitendra Singh noted that the cases under Prevention of Money Laundering Act (PMLA) imperil an individual’s liberty on the basis of a presumption of “proceeds of crime” arising out of the scheduled offences. The accused is then required to meet stringent conditions for bail to avoid prolonged incarceration even at the pre-trial stage, the judge added.
Referring to the settled legal position that money laundering offences do not survive in the event of closure of the predicate offence, the Court observed,“Despite this settled legal position, the prevailing practice reveals a disturbing inversion of the statutory scheme, wherein coercive powers of arrest and prolonged custody are invoked even before the foundational facts relating to the scheduled offence are judicially tested. This results in a situation where an individual is deprived of personal liberty on the strength of an allegation whose legal sustainability remains uncertain and contingent upon a future outcome in a parallel investigation.”
The Court made these observations in the order discharging all accused including former Delhi Chief Minister Arvind Kejriwal, Deputy Chief Minister Manish Sisodia and Telangana Jagruthi President K Kavitha. It noted that ED often proceeds to file prosecution complaints without the completion of investigation into the scheduled offences by the other agency.
Commenting further on this “anomalous situation”, the Court said it gives rise to serious legal and constitutional concerns, considering that the continuation of PMLA proceedings remains contingent upon the very survival of the scheduled offence.While noting that the right to life and personal liberty under Article 21 of the Constitution mandates that any deprivation of liberty must be just, fair, and reasonable, not merely in form but in substance, the Court said,
“A procedure which permits prolonged or indefinite incarceration on the basis of a provisional and untested allegation, risks degenerating into a punitive process rather than a regulatory or investigative one. Liberty, once curtailed, cannot be meaningfully restored by a subsequent acquittal, nor can the passage of time compensate for the loss occasioned by unwarranted pre-trial detention.”
However, the Court also acknowledged that the legislature has vested wide powers in the ED to combat the menace of money laundering, including powers of attachment, arrest and prosecution, while recognising the transnational and clandestine nature of such offences.
The object of the statute is undoubtedly legitimate and compelling, the judge said. Nevertheless, he added that statutory power, however wide, cannot eclipse constitutional safeguards.“The exercise of such power must therefore be harmonised with the settled principle that arrest and prolonged incarceration are exceptions, and not the rule,” the judge said.Considering his views and experience, the Court flagged the need to evolve a framework for striking a careful balance between an effective investigation of economic offences and the inviolable right of an individual to personal liberty.
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