PMLA 7/8 - Terrorism

“Teeja tera rang tha main to...”

— Chak De! India

How does terrorism start? Does it start with a bomb? Or a gun? Or words scribbled in rage?

Terrorism starts in a courtroom where justice doesn’t show up.

Terrorism starts in a prison cell where an innocent man waits for a trial that never comes.

Terrorism starts in a country where the law, once a shield, is used as a weapon.

This isn’t hyperbole. This is happening. Right here, right now – under the banner of a law called the Prevention of Money Laundering Act (PMLA). A law designed, we were told, to go after drug traffickers, mobsters, terror financiers. And yet, here it is – chasing journalists, raiding opposition leaders, freezing businesses, and most importantly, imprisoning people without bail or trial.

The law was meant to stop terror. But ask anyone who’s lived through it – they’ll tell you: this law is becoming the terror.

 

Tools of violence

Let’s talk about Section 45 of the PMLA – the infamous twin conditions for bail. The first condition? The court must be satisfied that the accused is not guilty. The second? That the accused won’t commit any crime if released. Now, unless you’ve been living in a Kafka novel, you’ll realize what this means: you're presumed guilty. You have to prove your innocence. Before trial. Before charges. Before a single shred of evidence has been examined.

The Supreme Court struck it down. Called it unconstitutional. So the government brought it back – through a Money Bill, because why let debate get in the way of extortion?

And what about the ECIR – the Enforcement Case Information Report? The PMLA’s version of an FIR? You don’t get a copy. The courts don’t insist. You're supposed to defend yourself against a case you’re not even allowed to know of. That’s not a flaw in the system. That IS the system.

 

Process as Punishment

Make no mistake – this is not justice. This is procedure as punishment. This is arrest first, investigate later. This is detain, destroy, delay – and hope that no one notices.

·        Medical examination after arrest? A rubber stamp.

·        Time-bound trials? A broken promise.

·        Bail? Not a right, but a luxury.

·        Constitutional rights? Only if the state feels generous.

And when judges raise their eyebrows – when they pull up the ED for overreach – nothing changes. The Supreme Court passes landmark judgments like Satender Kumar Antil on bail. The ED ignores it. High Courts ask questions. The ED doesn’t show up. Or worse – they double down on the accused. Because power unchecked doesn’t retreat. It expands.

 

How the Republic Fails

You want to know how does terrorism start? It starts when democratic institutions stop working. It starts when justice is replaced with convenience, and accountability with PR. When you punish whistleblowers, silence journalists, and call every critic a criminal.

Terrorism starts not with radical ideas, but with radical despair. It begins with a businessman watching his life's work collapse because someone on the other side of the country misfiled a document in 2010. It begins with a family whose home is seized because a relative once did business with the wrong person. It begins when an honest man is told to prove he is innocent – while the law ties a blindfold around his eyes and throws the key away.

Terrorism starts when citizens stop believing the state is on their side. When they start seeing themselves not as constituents, but as targets. When the courtroom becomes a joke, the constitution becomes an ornament, and the law becomes a thing to be feared, not respected.

And the tragedy – the real tragedy – is that we’ve been here before.

We saw it with TADA. With POTA. With sedition laws that lingered like ghosts from the colonial past. And every time, we told ourselves: “Never again.”

But this time, we didn’t just allow it. We normalized it. We dressed it up in legalese, wrapped it in national security, and told ourselves this was the price of order.

But lets ask this: what is order if it's built on fear? What is security if it means sacrificing your neighbours’ rights? What is law if it no longer serves the innocent? We are not protecting the republic. We are breaking it – from within. We are not deterring terrorism. We are giving it a user manual.

Lessons from the Neighbour

Winston Churchill and his fellow imperial cynics gloated that an independent India would be lost in political squabbles, its power seized by rascals, rogues and freebooters. Any democracy following a first-past-the-post system of elections inevitably leads to a bi-party system. In a healthy democracy, the two parties live by the same ideals, have the same goals, and disagree on how to best reach them.

India and Pakistan started out as democracies. But in Pakistan, every government – civilian or military – viewed state institutions as spoils to be wielded against rivals. State power was used to stay in power and silence the press. Courts, laws, and intelligence agencies were employed to enforce laws that defeated the concepts of democracy. Civil liberties and fair trial guarantees crumbled. Ultimately, Every swing of power in Rawalpindi was justified as remedying the last government’s crimes, but instead it poisoned democratic norms.

India faced a similar challenge in the 1970s during the emergency.  Indira Gandhi’s government did suspend elections, imprison thousands, muzzle the press and even amend the Constitution to neuter the courts. It was the resilience of the Indian institutional system that it allowed democracy to persist. India’s democratic norms had deepened through the consolidation of civilian rule over the military and decades of vibrant multiparty competition.

India faces the same challenge once more. However, this time we do not have the support of our institutions. Over time, faith in Indian institutions has been on a decline. The election commission faces regular allegations of corruption in the very electoral process that forms the basis of our democracy. The Supreme Court has made a number of observations on the erosion of public faith in the judiciary.  The Freedom of the Press index has been on a steady decline in recent years. The concepts of democracy and constitutionalism are under threat and we don't know if we shall survive this time.

The Final Warning

Because here’s the thing: terrorism doesn’t begin with a gunshot. It begins when a law stops being just. When a government stops listening. When a people stop trusting.

And when that happens – when that trust erodes, when that fear calcifies, when that injustice becomes policy – someone, somewhere, will look at that law, at that jail cell, at that confiscated property, and say: “If the system doesn’t work for us, maybe we stop working for the system.”

That, right there – is the ignition point.

So when someone tells you we need to trade liberty for security, quote them Franklin.

Tell them that every democracy dies a little when it lets fear make its laws.

Tell them that the rule of law means nothing if it does not protect the innocent as fiercely as it prosecutes the guilty.

Tell them that we’ve tried this before – and we know how it ends. Because when the law becomes terror, terrorism becomes law.

PMLA 6/8 - Architecture

‘How many men and women have you watched die?’

‘Lately, only those whom I could not save,’ said Snape.

-        Harry Potter and the Deathly Hallows

The Prevention of Money Laundering Act, 2002 (PMLA) was introduced with the stated intent of combating the menace of financial crime and protecting the financial integrity of India. Over the years, however, what was intended as a law of international harmony has morphed into a tool of systemic coercion. What makes this transformation especially troubling is not merely the text of the law, but the institutional ecosystem built to implement it – a web of entities that are supposed to check each other, but in practice, form a self-reinforcing loop of executive dominance and judicial abdication. Let’s unpack the institutions one by one.

 

1.      Enforcement Directorate

At the heart of the PMLA's machinery is the Enforcement Directorate (ED) – an agency that was once a specialized unit for probing foreign exchange violations and has now become arguably the most powerful wing of the executive.

In theory, the ED is merely an investigative agency. But in reality, it has been granted powers of arrest, seizure, raids, and the authority to record statements which are admissible as evidence – unlike those recorded by the police. The ED is not bound by the procedural constraints of the CrPC in many respects, nor is it subject to judicial checks in the way traditional law enforcement is.

The most common defence for these extraordinary powers is that ED's actions are subject to judicial oversight. But this is a flawed premise. The judiciary is not a substitute for legislature. The courts are there to adjudicate disputes, not to supervise agencies. When the ED acts as investigator, prosecutor, and de facto judge, and when its actions take years to be meaningfully reviewed by courts, the oversight is illusory at best and cosmetic at worst. 

2.      Public Prosecutor

In an ideal world, the Public Prosecutor (PP) serves as an officer of the court, tasked with presenting facts and assisting the court in arriving at a fair conclusion – not with “winning” cases. But under the PMLA framework, the PP is seen less as an impartial actor and more as a legal extension of the ED.

Instead of an officer ensuring justice, the PP often becomes an advocate for the ED’s narrative. This dynamic is reinforced by the performance incentives implicitly or explicitly tied to conviction rates and favourable outcomes. In such a framework, the PP’s allegiance tends to lie with the agency instructing it, not with the ideal of justice. As a result, the burden of restoring balance shifts heavily to the defence counsel.

3.      Defence Counsel

In the PMLA ecosystem, the defence counsel is not just a lawyer – they are often the only lifeline the accused has. They must navigate an aggressively stacked system, where the ED has vast powers, and where procedural rights like bail are harder to obtain than convictions.

A good defence counsel under PMLA must be a master of complex law, an administrator, a litigation strategist, and, increasingly, a crusader against procedural injustice. They must contend not just with hostile prosecutors, but with overburdened judges, missing case papers, delayed listings, and frequent non-appearances by the ED. In this context, the lawyer becomes not just legal counsel, but often the only functioning institution standing between the accused and institutional annihilation. The defence counsel must be a master of law as well as person of integrity. Sadly, in the increasingly corrupt structure, this is becoming a rare find.

 

4.      Special Court

The Special Court under PMLA, designated for trials and bail matters, is supposed to be the first line of judicial review – when it comes to arrests, bails, trials, and the hundred things in between. But in reality, it often functions as a reluctant gatekeeper. Burdened with other responsibilities and functioning in an atmosphere where granting bail under PMLA is considered taboo, these courts have developed a culture of deference – not to the Constitution, but to the ED. In one case, the special court has even remarked “ED matters mein kaunsi bail hoti hai.”

In cities like Patna, there has not been a single bail granted in PMLA matters during 2017-25, across 115 cases. Bail hearings are treated as formalities leading to inevitable rejection. Lawyers often joke grimly that the goal is to get rejected fast, so they can appeal to the High Court. This process itself takes months. In the meantime, the accused languishes in jail – unconvicted, unheard, unseen.

Lower courts have, in some instances, even been scolded by High Courts for acting as an extended arm of the ED rather than an independent judicial body. Yet, nothing changes. The fear of appearing “soft on crime” outweighs the duty to uphold fundamental rights.

 

5.      High Court

The High Court is where real bail relief is often granted, but getting there is not easy. It’s expensive. It's time-consuming. Arguments take time to be heard. And unlike lower courts where one can repeatedly mention a case for early hearing, High Courts are slow-moving giants. That coupled with the idea that bail still needs to pass through some of the most stringent bail provisions ever enacted in the history of independent India.

The High Court may offer some balance, but by the time it does, the damage is already done. Businesses are ruined. Properties are gone. Months – sometimes years – are lost. As a forum of appeal, the High Court offers correction, but not protection.

 

6.      Supreme Court

The Supreme Court is the ultimate interpreter of law and the final forum of appeal. It is also the only court empowered to examine the constitutionality of the PMLA itself. Over the years, it has made several significant pronouncements, including on the need for reasons to believe for arrest and attachment, and on the admissibility of statements recorded under Section 50.

Yet, these interventions have often resulted in symbolic victories with minimal real-world impact. “Reasons to believe” is now a cut-and-paste boilerplate paragraph in most ED documents. Judgments have not altered conduct. The Vijay Madanlal Choudhary case upheld most of the law’s controversial features, sparking widespread criticism among legal scholars.

Yes, the Supreme Court remains a ray of hope. But hope is not a system. It cannot compensate for institutional collapse at every lower level.

 

7.      Adjudicating Authority

The Adjudicating Authority (AA) under the PMLA is not a court, and not even composed of judges. It is usually headed by IRS officers – executive appointees – functioning under the administrative control of the same Ministry that runs the ED.

The ED prepares a “reason to believe” document, which is lifted almost verbatim into the AA’s Show Cause Notice. The AA then issues an order – often a copy-paste of the original submission, invoking the presumption of culpability under Section 24. There is no meaningful hearing. No reasoned application of mind. Just a bureaucratic loop dressed up as adjudication.

 

8.      Appellate Tribunal

The Appellate Tribunal under PMLA hears challenges to orders of the Adjudicating Authority. It is supposed to be a more judicial forum, but suffers from massive delays, frequent vacancies, and procedural inefficiencies.

The tribunal is not equipped with the infrastructure or independence necessary to handle sensitive and high-stakes cases involving the seizure of assets and livelihoods. Furthermore, it often ends up rubber-stamping the lower orders, relying heavily on the presumptions under Section 24, rather than conducting a de novo review of evidence.

 

What we have is not a few bad apples. What we have is an orchard designed to rot.

The PMLA institutional architecture – from ED to PP, from Adjudicating Authority to Appellate Tribunal – is a closed-loop system. It investigates, adjudicates, punishes, and delays – all within a framework where checks and balances are either symbolic or absent.

We must stop pretending that a flawed system can be justified by the promise of eventual appeals. A good law is not one that can be corrected by the Supreme Court. A good law is one that does not need correction at all.

If we want to protect the rule of law – if we want the fight against crime to be credible – we must fix the system that prosecutes it. Because when the law itself becomes a threat, the nation has already lost its first war.

PMLA 5/8 - Oversight

“Quis custodiet ipsos custodes?”

– Satire VI, 347-348

In any constitutional democracy, especially one as large and diverse as India, enforcement agencies that wield coercive powers must be subject to independent oversight – both parliamentary and administrative. Yet, in the case of the Pevention of Money Laundering Act, 2002 (PMLA), there is virtually no external check. In this chapter, we review the common checks and balances claimed for the PMLA, and the ways they are sidestepped.

 

1. “Any attachment under the Prevention of Money Laundering Act, 2002 (PMLA) needs to be confirmed by the Adjudicating Authority (AA). The AA is a quasi-judicial forum and hence impartial by nature.”

Section 6 of the PMLA envisages that the AA shall consist of a Chairperson and two members – at least one of whom will have experience in the field of law. In reality, the Adjudicating Authority consists of a single-member bench who is an IRS – not from the field of law.

Most tribunals in the country operate under the Ministry of Law, to prevent any conflict of interest. For example, the Income Tax Appellate Tribunal (ITAT) comes under the Ministry of Law. However, the AA takes administrative support from the Ministry of Finance – the same as the ED. This is not just oversight – it’s institutional incest.

A Right to Information request revealed that only 2.1% of 1,518 Provisional Attachment Orders filed by the ED have been struck down by the AA. This is not “independent application of mind.” This is rubber-stamp adjudication. And the consequences are dire – properties are seized, bank accounts are frozen, businesses collapse – all before a court trial even begins.

The Supreme Court, in cases like Union of India v. R. Gandhi and Swiss Ribbons v. Union of India, has made it abundantly clear: adjudicatory bodies must not be under the administrative thumb of the ministries that appear before them.

The Supreme Court warned in L. Chandra Kumar v. Union of India (1997), judicial independence is not just a matter of structure – it’s about function. Tribunals, especially those dealing with life-altering powers like asset seizure and forfeiture, must be both independent and perceived to be independent.

Telangana High Court observed in VANPIC Ports Pvt. Ltd. v. ED, the AA often issues mechanical, copy-pasted orders, lifting language directly from the ED’s “reasons to believe” and reproducing them word-for-word in its Show Cause Notice and attachment confirmation. In plain English: the ED writes the script, and the Adjudicating Authority reads it out loud.

Article 50 of the Constitution, part of the Directive Principles of State Policy, mandates that the judiciary be separated from the executive. Because justice demands independence. It demands that no one be a judge in their own cause — nemo judex in causa sua.

The Adjudicating Authority, as it currently exists, is not a safeguard. It’s a bureaucratic backroom posing as a courtroom.

 

2. “There’s an appellate. If someone is unhappy with the tribunal’s decision, they can always appeal to a higher forum. There’s the Appellate Tribunal after the AA, and the High Courts after that, and the Supreme Court after that.”

Judicial appeals are not a substitute for fairness. Appeals are expensive, time-consuming, and emotionally exhausting. The very fact that one has to appeal to get a fair hearing is the problem. If the lower-level adjudication is biased or compromised, the damage is already done – especially when businesses are shut down, assets are seized, and reputations are destroyed in the meantime. Oversight that arrives only after injustice is not oversight. It is eulogy.

The damage here isn't just legal. It's moral. When business owners and professionals see their properties taken, not after a fair trial, but through an administrative order issued by someone who isn’t even required to have legal training – faith in the system crumbles. We don't need more layers of appeal. We need first-instance fairness.

And perhaps most importantly, we need to remember that a truly democratic state doesn't just prosecute crime – it protects its citizens from abuse of power.

 

3. Press Releases by the ED

The illusion of judicial oversight is further shattered when one examines the ED’s conduct outside the courtroom. The ED routinely issues press releases naming accused persons and alleging money laundering even before filing prosecution complaints (chargesheets). Meaning – the ED makes a public declaration of guilt before an investigation. A declaration of arrest is also a declaration of success – before any trial has even begun.

This openly prejudices the courts, violates the principle of presumption of innocence (a bedrock of Article 21, Constitution of India), and constitutes potential criminal contempt under Section 2(c) of the Contempt of Courts Act, 1971.

In Re: P.C. Sen (1969), the Supreme Court held that prejudicial media commentary can constitute contempt of court.

Yet, no restraint is visible when the ED publicly narrates cases like completed stories, pre-empting judicial findings. The watchdog has become the storyteller – and the verdict writer. ED trials often end only in increased TRPs, while the legal trial never begins.

 

4. Summons

Another method the ED uses to circumvent fairness is through abusive issuance of summons. Summons under Section 50 of PMLA (invoking powers of a civil court under the CPC) are issued without reasonable notice. In multiple cases, notices were served after the time of appearance had already lapsed. Summons are issued across city and state borders, violating Order V, Rule 19A of the CPC, which limits such practices to prevent harassment. The ED hence, routinely operates outside of its jurisdiction.

The result: the accused are forced into logistical impossibilities, made to travel across states at short notice, and labelled non-cooperative when they fail. "Due process," in this system, has been reduced to a theatrical formalism.

 

5. Vigilance

Unlike the CBI, which is at least notionally under the supervision of the Central Vigilance Commission (CVC), the ED enjoys a freedom from accountability that is unmatched. It functions under the Ministry of Finance, and yet none of its procedural norms, internal audits, or patterns of investigation are subject to regular legislative review. No parliamentary committee examines the ED’s performance, misuse of powers, pendency of cases, conviction rates, or complaints from citizens. It is a black box wrapped in impunity.

We now turn to the internal vigilance mechanism – a system so flawed that it would be ridiculous if it weren’t so dangerous. In most government departments, vigilance is overseen by a Chief Vigilance Officer (CVO) – typically operating independent of the agency, tasked with reviewing misconduct, procedural violations, and abuse of power. But in the ED, the CVO is the Director of Enforcement himself.

Let that sink in: the chief of the ED is also in charge of investigating complaints against the ED. In other words, the watchdog reports to itself.

This is not just an administrative quirk – it is a violation of every known principle of natural justice, constitutional governance, and basic common sense. It undermines the very idea of vigilance, which is built on independence, insulation, and the ability to scrutinize without fear or favor.

A system where the ED is both the actor and the auditor creates a total collapse of internal accountability. Complaints from citizens, lawyers, and even other departments about procedural abuse – such as misuse of arrest powers, failure to provide ECIRs, or arbitrary attachment of property – are either ignored or dismissed summarily. There is no credible investigation, no transparency, and certainly no action.

When the person being abused by the system asks for redress, the system responds with silence. Because the judiciary will take months. The tribunal is toothless. The High Court is slow. The CVO? He’s the one who signed the arrest warrant.

What we’re looking at here is not just a lack of vigilance – it’s a deliberate design to avoid it. A system where the ED is accountable to no one but itself, and where the government has no institutional interest in reform, because the ED serves political ends far more effectively than it serves public justice.

In any healthy democracy, a law with such extraordinary powers — powers to arrest, to seize, to interrogate — must be accompanied by extraordinary safeguards. But here, we have the opposite: extraordinary powers and no safeguards. The fox is guarding the henhouse and the farmer has stopped asking questions. This is not how oversight works. This is how unconstitutional fiefdoms are born.

 

Not a single detailed report on ED’s performance has ever been tabled before Parliament. No whitepaper. No independent audit. What PMLA offers today is not real judicial or parliamentary oversight. It is a self-reinforcing administrative machinery, disguised in the trappings of law. The ED investigates. The ED's colleague adjudicates. The ED narrates guilt to the media. And when challenged, the ED says: Appeal if you dare.

Until there is first-instance fairness, until investigative and adjudicatory functions are separated, and until the courts demand and enforce real accountability, the PMLA will not just punish the guilty – it will destroy faith in justice itself.