Money Laundering Law: 5 Petitioners vs Centre Arguments

The Enforcement Directorate's powers to search, seize and arrest received a big boost today from the Supreme Court, which rejected petitions that alleged unchecked and arbitrary use of power by the probe agency in money laundering cases.

Petitions had challenged the tough provisions of the Prevention of Money Laundering Act (PMLA) on proceeds of crime, search and seizure, power of arrest, seizing of properties and bail.

The Supreme Court confirmed the Enforcement Directorate's powers of search and arrest under the law and said the procedure for arrest is not arbitrary.

The Enforcement Directorate is "not required to share the ECIR (Enforcement Case Information Report) copy", the court said, adding that it cannot be equated with an FIR (First Information Report).

"It's an internal document and supply of copy of ECIR is not mandatory," the Supreme Court said.

"It is enough if Enforcement Directorate, at time of arrest, discloses grounds of such arrest," said the judges.

The arguments in court revolved around five powers of the Enforcement Directorate.

1)Special power of arrest

Petitioners: Unchecked power to arrest the accused without informing them of the grounds for arrest or evidence is unconstitutional.

Centre: Special powers are vested with a Director or Deputy Director rank officer, it places the Enforcement Directorate official's accountability on a higher pedestal than that of police official.

2) Statements during investigation as evidence

Petitioners: Enforcement Directorate can record incriminating statements from an accused during questioning under the threat of being fined for withholding information. This amounts to compulsion.

Centre: Statutory threat of a fine is not sufficient to compel an accused to incriminate themselves

3) ECIR (Enforcement Case Information Report) copy not needed

Petitioners: It is like an FIR and the accused is entitled to a copy of the ECIR.

Centre: ECIR is not a statutory document. ECIR is an internal document for ED, need not be furnished to the accused.

4) Burden of proof on accused

Petitioners: Putting the burden of proof on the accused violates fundamental rights like right to equality and right to life.

Centre: Owing to the serious nature of the money laundering offences and the societal need to curb it, putting the burden of proof on the accused is justified

5) Applying the law retrospectively

Petitioners: Filing PMLA charges on cases that occurred before 2002 (when PMLA came into existence) is unconstitutional.

Centre: Money laundering is a continuing offence, not a single act but a chain. Proceeds of crime could have been generated before 2002 but could have still been in possession or in use by accused post 2002.