‘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.
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.
