ED’s hurried probes, arrests affecting rights: Delhi court's excise policy verdict flags PMLA regime

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.

“In such situations, while the proceedings under the PMLA are set in motion, the investigation in the predicate offence continues to remain inconclusive, and in many cases even the filing of a charge-sheet therein is awaited. This Court itself is a witness to a case where the proceedings relating to money laundering have reached the final stage of arguments on charge, whereas, in the predicate offence, the investigation is still underway to determine whether any offence has been committed at all,” the Court said.

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, while the very substratum of the offence remains under investigation, 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. 

“While provisional attachment of alleged proceeds of crime may be justified to preserve the subject-matter of investigation, the coercive measure of arrest and the consequent application of onerous bail conditions cannot be permitted to operate mechanically in the absence of a crystallised and judicially cognisable predicate offence,” the judge said.

The Court further opined that the legitimacy of the PMLA regime depends not merely on the severity of its provisions, but on their fair, proportionate, and constitutionally informed application. 

“The balance between the power of the investigating agency and the right to life and personal liberty is not a matter of legislative grace, but a constitutional command. Any failure to maintain this balance is likely to undermine both the rule of law and public confidence in the administration of criminal justice,” it stressed.

Additional Solicitor General and Special Public Prosecutor DP Singh, Senior Public Prosecutor Satish Kumar Garg and counsels Manu Mishra, Garima Saxena, Shreya Dutt Imaan Khera and Dig Vijay Singh appeared for the CBI. 

Arvind Kejriwal appeared through Senior Advocate N Hariharan with Mudit Jain, Mohd Irshad, Mohd Asgar Ali, Rudraksh Nakra, Ayush Goswami, Lakshya Aggarwal, Harjas Singh Gujral, Samta Sharma, Sona Singh, Vasudhra Raj Tyagi, Aman Akhtar, Arjun Singh Mandla, Vasundhara N, Punya Rekha Angora, Amaan Shreyas, Sana Singh and Mahima Malhotra.

Manish Sisodia was represented by Senior Advocate Rebecca John along advocates with Vivek Jain, Sadiq Noor, Rohit Nair and Mohd Irshad.

Durgesh Pathak was represented by Senior Advocate Mohit Mathur with Karan Sharma, Rajan Jain, Mohit Siwach, Harsh Gautam and Vignesh.

 Kuldeep Singh was represented by advocates SS Rana Naveen Kumar and Abhishek Mahal while Narender Singh appeared through Pardeep Rana, Gagan Bhatnagar, Tushar Rohmetra and Vibhor Choudhary. 

Vijay Nair was represented by Senior Advocate Madhav Khurana along with advocates Stuti Gujral Vrinda Bhandari Piyush Kumar Nishant Sharma Syed Miran Ahmad Vidushi Sabharwal Arjun V Harihar and Vipin Kumar

Abhishek Boinpally was represented by advocates Sumer Singh Boparai Surya Pratap Singh Abhilash Kumar Pathak Shubham Raj Anand and Sirhaan Seth.

 Arun Ramchandra Pillai appeared through Senior Advocate Pramod Kumar Dubey with advocates Nitesh Rana, Joy Banerjee, Amrita Vatsa, Satyam Sharma, Aditi Singh, Aditya Narayan, Raksha Tripathi, Suyash Pandey, RB Siddhartha, Muskan Sharma, Yash Saxena, Samarth Panwar and Khushi Arora.

Mootha Gautam was represented by Senior Advocate Maneka Guruswamy with advocates Shivendra Dwivedi, Onmichon Ramrar, Lavkesh Bhambani, Bhumika Yadav and Anmol Gupta.

Sameer Mahandru was represented by advocates Dhruv Gupta, Anubhav Garg, and Yash Raj Mehran. 

Amandeep Singh Dhall was represented by Adit S Pujari, Shaswat Sarin, Shaurya Mittal and Dhanya Visweswaran, while Arjun Pandey appeared through Senior Advocate Shadan Farasat with Shivendra Dwivedi, Varisha Sharma and Onmichon Ramrar.

Butchibabu Gorantla was represented by Senior Advocate Arshdeep Singh Khurana along with Abhishek Singh, Talib Mustafa, Anmol Aggarwal, Ketan Kumar Roy, Vishvendra Tomar, Harsh Srivastava, Dikksha Ramnani and Chetan Nagpal. 

Rajesh Joshi, Damodar Prasad Sharma, Prince Kumar and Arvind Kumar Singh were represented by Rajat Bhardwaj and Dushyant Chaudhary.

Chanpreet Singh Rayat was represented by Senior Advocate Ramesh Gupta with Shailendra Singh, Baani Khanna, Robin Singh, Kapil Balwani and Komal Thakkar.

K Kavitha was represented by P Mohit Rao and Eugene S Philomene.

Amit Arora was represented by Prabhav Ralli, Dev Vrat Arya, Samraat Saxena and Deeya Mittal.

Vinod Chauhan was represented by Senior Advocate Rebecca M John along with Gagan Minocha, Tusharika Mattoo, Pravir and Shivani Sehrawat.

Ashish Mathur appeared through Harsh Bora, Sahil Ghai and Aekansh Agarwal, while P Sarath Chandra Reddy was represented by Senior Advocate Vikas Pahwa with Mayank Jain, Madhur Jain, Navlendu Kumar, Vivek Chandra Jaiswal, Sahil Yadav and Arpit Goel.

[Read Judgment]