The Supreme Court verdict on July 27, upholding the validity of inquiry, arrest, and bail provisions of the Enforcement Directorate (ED) under the Prevention of Money Laundering Act (PMLA), could not have come at a more appropriate time when as many as 122 sitting and ex-legislators are facing money laundering cases in the country. The apex court upheld the power of ED to arrest under the PMLA saying that the procedure for arrest is not arbitrary. A three-judge bench heard for more than 23 days well over 100 petitions challenging various provisions of the law. The judgment is expected to have far-reaching consequences for Indian democracy. Presently, a large majority of the political targets under the ED scanner are from Opposition parties. They include Congress interim chief Sonia Gandhi and former party president Rahul Gandhi. They are being probed for alleged financial irregularities in the party-promoted Young Indian, which owns the National Herald newspaper. Congress had alleged that the money laundering law has been weaponised to target and humiliate people.
Ruling on a batch of 242 petitions that raised questions on different provisions of the PMLA including Section 3 that defines what constitutes money laundering, a three-judge bench of Justices AM Khanwilkar, Dinesh Maheshwari and CT Ravikumar, while upholding the provisions, left the question whether some of the amendments could have been brought by way of Finance Acts, to a seven-judge bench which is already seized of a similar question in the matter of some other legislations. The bench refused to accept the contention that the procedure followed by ED in registering an ECIR is opaque, arbitrary and violative of the Constitutional rights of an accused and that the procedure followed under PMLA is draconian since it violates the basic tenets of the criminal justice system and the rights enshrined in Part III of the Constitution of India, in particular Articles 14, 20 and 21. The bench approved the validity of Section 24 which puts the onus on the accused to prove that the proceeds of crime are untainted property. The judgement said, “The purposes and objects of the 2002 Act for which it has been enacted, is not limited to punishment for the offense of money laundering, but also to provide measures for prevention of money laundering. It is also to provide for attachment of proceeds of crime, which are likely to be concealed, transferred or dealt with in any manner which may result in frustrating any proceeding relating to the confiscation of such proceeds under the 2002 Act.”
However, Opposition parties seem to have reasons to be concerned about ED’s increasing crackdown and harassment of their leaders. Compared to the number of cases filed and searches and arrests made, ED showed little success in prosecution. The glaring media publicity only succeeded in tarnishing the image of alleged violators of PMLA and the Foreign Exchange Management Act (FEMA) which replaced the Foreign Exchange Regulation Act (FERA) of 1973. The PMLA and FEMA have come in handy for ED to pursue high-level political corruption cases in the country. Incidentally, ED comes under the Union Finance Ministry. It is possible for any ruling political party at the Centre to selectively use ED, enjoying blanket power and authority without much accountability, to target select leaders of the Opposition. Interestingly, few question ED’s dismal prosecution record of the alleged offenders despite the existence of such strong laws and the support at the highest levels of the Government and judiciary.
