AUTHOR: Kartik Madhu, Presidency University, Bangalore
To the Point
The Prevention of Money Laundering Act (PMLA) was enacted with the primary objective of preventing the financial proceeds of crime from being integrated into the national economy. The act empowers the central government and its designated authorities to conduct investigations, searches, and seizures to combat the offence of money laundering. While such stringent provisions are necessitated by the grave nature of the offense, they also raise significant humanitarian concerns. In particular, the PMLA poses challenges to the human rights of accused persons due to provisions that depart from general principles of criminal law. These include the reversal of the presumption of innocence, the imposition of stringent bail conditions under Section 45, and the broad and potentially arbitrary powers of search and seizure granted under Section 17. The act’s language, particularly the ambiguity surrounding terms such as “belief,” allows enforcement authorities to act without judicial oversight, thereby creating a high potential for misuse. The constitutionality of these provisions, especially with regard to bail, has been a subject of continued legal debate.
Abstract
The Prevention of Money Laundering Act has been enacted by the parliament with the core objective of preventing the “financial proceeds of crime” from being integrated with the economy of the country. The act gives power to the central government and its authorities to conduct investigations and seizures in order to prevent the crime of money laundering. While the stringent measures provided under the act are necessary given the nature of the crime, they also create the probability for misuse and violation of the human rights of suspected perpetrators, raising several humanitarian concerns. By analyzing the case laws and the potential challenges to human rights posed by the act, this article aims to provide an understanding of the challenges to human rights posed by the act.
Use of Legal Jargon
Presumption of innocence is the general rule in criminal prosecution; this principle is based on the right to a fair trial for the accused. The principle means that a person charged with a crime should be treated as innocent unless and until the prosecution proves their guilt beyond a reasonable doubt. However, the PMLA stands as an exception to this principle, as it places the responsibility on the accused to establish their innocence. The act has also got very stringent bail conditions under section 45, as bail is the exception and not the general rule in PMLA cases. This is understandable, as the nature of the offense covered in the act is grave and becomes difficult to prosecute if the accused is not suitably detained; however, on the other hand of the scale, it raises the question about the violation of human rights. Section 17 of the act grants power to the director of the enforcement directorate to conduct a search and seizure on any premises where he believes the crime of money laundering to be taking place. This provision granted arbitrary powers to the enforcement authorities due to the ambiguity surrounding the term “belief.” Meaning that if the literal interpretation of the act is considered, an enforcement officer under the supervision of his director can conduct search and seizure without the cognizance of the magistrate and upon mere suspicion of such director, needless to say such a provision has great ambiguity surrounding it which can be exploited.
The Proof
The unamended version of section 45 of the act laid down 2 additional conditions for bail for the offenses committed under this act; this was known as the “twin tests.” However, due to these twin tests, the section was later declared violative of articles 14 and 21 of the constitution, thus held unconstitutional. This led the parliament to amend the act; however, the constitutionality of the conditions for bail under this act was brought into question in multiple instances before the Supreme Court, The Court deferred the matter to Parliament, allowing it to determine the appropriate conditions as per its wisdom for bail under the act enacted by it. Clearly this decision of the court perturbed many advocates of human rights, as the role of the court was precisely to determine whether the “wisdom” of the parliament through its enactments upholds the constitution. Even today this debate has been ongoing and puzzling the legal fraternity. The law surrounding the bail jurisprudence of PMLA is constantly evolving due to its exceptional nature as compared to the norms given under CRPC.
Case Laws
Nikesh Tarachand shah v. Union of India
The constitutionality of the initial unamended version of section 45 was challenged in this case before the Supreme Court. The court held that the twin tests as additional conditions for bail were unconstitutional. The conditions were held violative of article 21 and 14 of the constitution.
Manish Sisodia v. Directorate of Enforcement, 2024
The Hon’ble Supreme Court emphasized that prolonged incarceration due to delays in the trial process cannot be justified, as it infringes upon the fundamental right to personal liberty guaranteed under Article 21 of the Constitution. The Court highlighted that denying bail solely on the basis of ongoing investigation or trial, especially when significantly delayed, would amount to an unjust deprivation of liberty.
V. Senthil Balaji v. The Deputy Director, Directorate of Enforcement,
The Supreme Court cannot disregard constitutional rights for the accused under PMLA just because of stringent bail conditions. It took note of the fact that the investigation had started back in 2019 and involved a large number of accused. persons, 156 accused individuals, and cited 82 witnesses, making the timely conclusion of the trial highly unlikely. The Court held that Section 45 of the PMLA must not be used in a manner that undermines the fundamental right to life and liberty. If there is a conflict between this provision and Article 21 of the Constitution, Article 21 will take precedence.
Conclusion
The PMLA’s departure from fundamental criminal law principles, such as the presumption of innocence and standard bail jurisprudence, has led to ongoing constitutional scrutiny. The original “twin tests” for bail under Section 45 were struck down for violating Articles 14 and 21, only for the provision to be amended and revived by Parliament. The Supreme Court, while considering challenges to
the amended provision, left it to the wisdom of Parliament to frame conditions for bail, causing concern among human rights advocates. The judiciary’s reluctance to directly intervene in the legislative framing of bail provisions has generated debate within the legal fraternity. The evolving nature of the law surrounding bail under the PMLA, given its exceptional framework compared to the Code of Criminal Procedure, continues to raise questions about how the balance between effective implication and protection of fundamental rights will be achieved.
FAQs
Why does the PMLA raise human rights concerns?
The Prevention of Money Laundering Act (PMLA) raises concerns because it departs from fundamental principles of criminal law, such as the presumption of innocence and the right to liberty. The act allows for strict bail conditions under Section 45 and broad powers of search and seizure under Section 17. These provisions operate without the usual judicial oversight, making it possible for
authorities to act solely on their “belief,” which is undefined and vague. This opens the door to possible abuse and infringement of the accused’s rights.
How does Section 45 impact the granting of bail under the PMLA?
Section 45 of the PMLA originally imposed two additional conditions for granting bail, often referred to as the “twin tests.” These included a requirement that the court must be satisfied that the accused did not commit the offense and is unlikely to engage in any criminal activity while released on bail. These twin tests were struck down by the Supreme Court in Nikesh Tarachand Shah v. Union of India for violating articles 21 and 14 of the constitution. The provision was later amended by the legislature, reviving the debate on the constitutionality of such bail restrictions.
What did the Supreme Court say in Manish Sisodia v. Directorate of Enforcement regarding bail and delays?
In Manish Sisodia v. Directorate of Enforcement, the Supreme Court ruled that extended imprisonment caused by delays in trial proceedings is unjustifiable, as it infringes upon the fundamental right to personal liberty guaranteed by Article 21. The court stressed that denying bail merely because the investigation or trial is ongoing—when the process itself is delayed—results in unjust deprivation of liberty. The decision underscores the need for bail jurisprudence to remain sensitive to the time-bound nature of justice.
What did the Court highlight in V. Senthil Balaji v. Deputy Director, Directorate of Enforcement?
In V. Senthil Balaji v. Deputy Director, Directorate of Enforcement, the Supreme Court noted that the investigation began in 2019 and involved 156 accused and 82 witnesses, making early conclusion of the trial unlikely. It held that Section 45 should not be used to curtail the fundamental right to life and liberty, and that in any conflict between Section 45 and Article 21, the latter would prevail. The case highlighted the importance of constitutional safeguards even in cases of serious economic offences.
What makes Section 17 of the PMLA a cause for concern?
Section 17 gives enforcement officers the power to conduct searches and seizures based on their belief that money laundering is occurring on a particular premise. The term “belief” is not clearly defined, allowing officers to act on mere suspicion without prior permission from a magistrate. This lack of judicial oversight and the vagueness of language grant enforcement authorities wide discretion, which can lead to arbitrary use of power and possible infringement on individual rights.
