Special Court Denounces ED's 'Cart Before Horse' Approach in PMLA Cases
A special MP/MLA court in New Delhi delivered a sharp rebuke to the Enforcement Directorate (ED) on Friday, condemning its tendency to arrest and prosecute individuals under the Prevention of Money Laundering Act (PMLA) before courts have tested the main foundational case. Judge Jitendra Singh described this practice as "placing the cart before the horse," highlighting a systemic issue in the application of anti-money laundering laws.
Prolonged Incarceration Without Legal Foundation
The court emphasized that once a person is booked under PMLA, securing bail becomes exceptionally difficult, leading to "prolonged incarceration even at the pre-trial stage." It underscored that an offence under PMLA is not autonomous but is "inextricably linked to the existence of a legally sustainable scheduled offence." The foundational case, or predicate offence, serves as the essential basis for money laundering allegations. "If the foundation crumbles, the superstructure must necessarily fall," the court stated, stressing that arrest and prolonged detention should be exceptions, not the rule.
Liberty Cannot Be Restored by Acquittal
Judge Singh articulated a profound concern for personal liberty, noting, "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." This observation came as the court discharged all accused in the liquor policy case, which involved former Chief Minister Arvind Kejriwal and his deputy Manish Sisodia, among others. The ED had arrested them first, invoking money laundering charges based on a CBI corruption case, without awaiting judicial testing of the foundational facts.
Supreme Court Precedent Ignored
The court cited the Supreme Court's position in Vijay Madanlal Chaudhary v Union of India (2022), which established that if the predicate offence does not survive, the money laundering offence cannot independently subsist. Despite this settled legal principle, Judge Singh noted, "the prevailing practice reveals a disturbing inversion of the statutory scheme." He pointed out that coercive powers of arrest and prolonged custody are often invoked before the foundational facts of the scheduled offence are judicially examined, creating a scenario where individuals are deprived of liberty based on allegations of uncertain legal sustainability.
Call for Balance Between Investigation and Liberty
Advocating for a "careful balance" between effective investigation of economic offences and the "inviolable right of an individual to personal liberty," the court warned that continuing incarceration in such circumstances allows "the consequence to precede the cause." It cautioned that pre-trial detention should not substitute punishment, and any process permitting prolonged or indefinite incarceration on provisional allegations risks "degenerating into a punitive process rather than a regulatory or investigative one."
Constitutional Safeguards Must Prevail
While acknowledging that Parliament has vested wide powers in the ED to combat money laundering, including attachment, arrest, and prosecution, due to the transnational and clandestine nature of such offences, the court stressed that the legitimate object of PMLA "cannot eclipse" constitutional safeguards. "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," it observed. Failure to maintain this balance could undermine both the rule of law and public confidence in the criminal justice system.
The court's ruling serves as a critical reminder of the need for proportionality and fairness in applying stringent laws like PMLA, ensuring that investigative zeal does not override fundamental rights.
