Supreme Court Adjourns Hearing on Plea Challenging Constitutional Validity of PMLA


The Supreme Court of India recently adjourned a crucial hearing on the constitutional validity of various provisions under the Prevention of Money Laundering Act, 2002 (PMLA). A bench comprising Justices Surya Kant and N. Kotiswar Singh noted that the matter requires adjudication by a three-judge bench, leading to its postponement.

Background of the Case

The plea under review was filed by Congress MP Karti Chidambaram, challenging the July 2022 Supreme Court judgment, which upheld several provisions of the PMLA that grant wide-ranging powers to the Directorate of Enforcement (ED).

Senior Advocate Kapil Sibal, appearing for the petitioners, pointed out that a fixed date for the hearing has not been assigned by the Supreme Court registry. Meanwhile, Solicitor General Tushar Mehta and Additional Solicitor General SV Raju requested the Court to schedule the hearing in April or May 2025.

The Supreme Court has yet to announce the next hearing date and has assured all counsels that they will be notified accordingly.



Key Issues Raised in the Challenge

The 2022 Supreme Court judgment upheld several contentious provisions of the PMLA, including:

  1. ED’s Wide Investigative and Arrest Powers:

    • The judgment affirmed that ED’s investigative procedures differ from regular criminal investigations. As a result, the procedural safeguards under the Code of Criminal Procedure (CrPC) do not apply to the ED’s actions.

  2. Confidentiality of the Enforcement Case Information Report (ECIR):

    • Unlike an FIR, which must be shared with the accused, the Court ruled that the ECIR is an internal document and does not need to be disclosed to the accused under the CrPC.

  3. Stringent Bail Conditions:

    • The PMLA imposes strict bail conditions, requiring accused persons to prove their innocence before being granted bail—an approach that deviates from the general criminal law principle that considers an accused innocent until proven guilty.

Several review petitions have been filed challenging the July 2022 judgment, all of which have been clubbed together for a consolidated hearing.

What is the Prevention of Money Laundering Act, 2002 (PMLA)?

Objective of PMLA

The PMLA was enacted in 2002 to combat money laundering activities in India. It provides a legal framework to:

  • Prevent generation and circulation of illicit money.
  • Investigate and prosecute money laundering offenses.
  • Confiscate proceeds of crime linked to illegal activities.
  • Enforce global anti-money laundering standards.

Why Was the PMLA Enacted?

  • The PMLA was introduced to comply with international obligations, particularly India’s commitment to the Financial Action Task Force (FATF).
  • It was designed to tackle cases where money earned from criminal activities is disguised as legitimate earnings.

Key Provisions of PMLA

  1. Attachment of Property: Authorities can seize proceeds of crime before the trial concludes.
  2. Burden of Proof on Accused: The accused must prove that their wealth is legally acquired.
  3. ED’s Power to Summon and Arrest: The Enforcement Directorate (ED) has significant powers to investigate and detain individuals.

Why Is the Constitutional Validity of PMLA Being Challenged?

The petitioners argue that several provisions of the PMLA violate fundamental rights, including:

  1. Violation of Right to Equality (Article 14):

    • The law gives excessive power to the ED, leading to possible misuse.

  2. Violation of Right to Life & Personal Liberty (Article 21):

    • Stringent bail conditions reverse the presumption of innocence.
    • Accused are denied access to ECIR, affecting their right to a fair defense.

  3. Arbitrary Enforcement Mechanism:

    • Unlike other criminal laws, CrPC safeguards do not apply, raising concerns about transparency and fairness.

Current Status of the Case

The Supreme Court’s decision to adjourn the hearing indicates that further legal scrutiny is required. Given the sweeping powers granted under PMLA, the Court’s ruling on this challenge will have far-reaching implications for India's legal and financial system.

Conclusion

The Supreme Court’s upcoming hearing on the constitutional validity of PMLA is a crucial legal battle. While the government defends the law as a necessary tool to combat financial crimes, critics argue that it violates fundamental rights and needs amendments. The final verdict will shape the future of India’s anti-money laundering framework and define individual rights vs. state powers.

The legal community, businesses, and individuals accused under PMLA provisions await the Court’s decision, which will clarify whether these provisions stand the test of constitutional scrutiny.

Stay Updated

With the next hearing yet to be announced, legal experts and businesses should stay updated on this matter, as the Supreme Court’s decision will significantly impact financial regulation and criminal law enforcement in India.

Location: Pune, Maharashtra, India

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