The Legal Empowerment of Political Enforcement Directorate

The recent judgment delivered on July 27 in a batch of petitions titled Vijay Madanlal Choudhary & Others versus Union of India, which upheld amendments to the provisions of the Prevention of Money Laundering Act, 2002, has led to grave concerns across the board- including among politicians, journalists, businessman, bureaucrats, activists, sitting and retired judges and lawyers, for its far-reaching consequences on further erosion of constitutional protections of personal and civil liberties. Many believe, argue and have even expressed deep anguish on the potential impact it may have on the very foundations of democracy; borne out of partisan functioning of the ED in the last few years. The judgment, by upholding the amendments, has emboldened the ED by retaining a lot of brazen powers conferred on it such as the powers of arrest, raids, attachment, search, seizure and recording of self-incriminatory statements on one hand, and disadvantaged citizens by its stringent conditions for bail and reverse burden of proof, which has been exercised and may still be exercised in an arbitrary and partisan manner thereby undermining constitutional protection and India’s rich jurisprudence on civil liberties.

What causes this concern?

The first concern arises out of the fact that a person accused under the PMLA does not have access to the Enforcement Case Report, as the court has held that recording an ECIR is not mandatory and, therefore, does not know why he is being investigated or whether he is being summoned as a witness or an accused. Further exacerbating the concern is the fact that the PMLA provides for a statement, at times coerced, to be recorded under Section 50 (including those which may be self-incriminating), which may be an admissible evidence in the court of law. It allows ED to lodge a criminal case against the person for what the statement reveals. There is no right of silence, no scope for volition, and no direction about the manner of the use of such statements in a criminal prosecution or as to their evidentiary status. The judgment by innocuously terming it a judicial proceeding though it is done by Enforcement Directorate (ED) officers, has erred gravely when tested on the anvil of criminal jurisprudence. ED officials are not equated with police officers and, therefore, any statement given to them as part of an inquiry can be used as evidence against the person. By upholding self-Incrimination and the presumption of guilt, the bench has put the personal liberties of citizens at grave risk.

Secondly, the judgment pertains to ED’s power to carry out arrests without the ECIR and the provisions of securing bail under Section 45 of the PMLA mandates extremely onerous conditions for bail. The accused has to virtually prove his or her innocence and assure the court s/he will not commit any offence while on bail.

Thirdly, the ED, under Sections 17 or 5 of the PMLA, is authorized to freeze/attach any movable or immovable property of any person if it feels that the property is involved in money laundering or constitutes ‘Proceeds of Crime’ for a lengthy span of time. Though, any such order by the ED is subject to confirmation by the Adjudicating Authority. Once the Adjudicating Authority confirms such attachment, the property will remain attached for the entire duration of the trial for money laundering before a criminal court because the burden of proving that the property attached does not constitute proceeds of crime, is upon the accused. As the burden of proof falls upon the accused in proceedings for attachment of property, it becomes extremely difficult to get the property unattached at the judicial level for many years. The act provides for a safeguard by requiring ED to record reasons to believe that the property is connected to money laundering. But because there is no mandate to maintain a written record of the entire investigation, in the absence of an ECIR, any broad-based reasons and some semblance of a connection with the main offence would suffice, thus making the safeguard a nullity in effect.

Why does it matter?

The rationale for the validity of the amendments in the judgment is against the basic tenets of the Constitution of India and criminal jurisprudence, hence suffers from series of flaws. The Constitution of India under article 21 permits curtailment of personal liberty only through ‘procedure established by law’- which has been held to mean that the procedure ‘Must’ be ‘right and just and fair’ and ‘not arbitrary, fanciful or oppressive’ otherwise, it would be no procedure at all and the requirement of Article 21 would not be satisfied” as held in Maneka Gandhi vs Union of India. Presumption of innocence and the right to silence are not ‘mere procedure’. They are vital rights affecting life and liberty which have been upheld by numerous constitutional courts but cursorily overlooked in the judgment. These principles are kept on a higher pedestal because serious crimes can be prosecuted only by the state and may entail imprisonment of the accused during and after the process. Safeguards are therefore devised in order that the state power, wielded by fallible women and men, does not run amuck when personal liberty is at stake. These are time-honored norms of criminal justice and due process. The myopic view taken in the judgment that due process is dispensable in the pursuit of legislative policy is not why nations have Constitutions. The Supreme Court, while abridging due process in deference to what parliament considers expedient, should have heeded to the minority judgment in Kartar Singh vs State of Punjab (1994) that due process is not in thrall to “policy or rationale or object of the Act” and that “mere law is not sufficient. It must be fair and just law”. Mindful of the courts own past from the case of Maneka Gandhi to the case of K.S. Puttaswamy, the Court should have been conscious of the fact that personal liberty will only enjoy the pride of place it is accorded in the Constitution when it is undergirded by procedural safeguards.

The provisions permitting recording of self-incriminating testimonies during the stage of investigation, while giving a statement to the ED, the person’s testimony may be affected by several factors, including absence of awareness of one’s position in the case (they can assume they will remain witnesses and only later find out that they stand in the character of an accused). The judgment’s reasoning that it is not in contravention of Article 20 of the Constitution (right against self-incrimination), as Article 20 applies only to accused persons and those who are summoned are not in the capacity of accused is not based on sound principles when the whole scheme of the act is read together. Section 24 of the Evidence Act bars any confession born of compulsion, especially if the compulsion proceeds from a person in authority. Section 50, PMLA is a textbook example of such compulsion. Sections 161(2) and 162 CrPC, and Sections 25 and 26 of the Evidence Act further the rule against compelled self-incrimination that is found in Article 20(3) of the Constitution and are viewed as essential due process. Deviations from these wise rules in special laws have always resulted in misuse.

The court should have been alive to its own condemnation of abuse of the power conferred on prosecuting agencies to record confessions as zealously and abhorrently demonstrated in NCT vs Navjot Sandhu (2005), wherein the Supreme Court discarded as involuntary, the ‘confessions’ recorded by the Deputy Commissioner of Police. The court also expressed doubts on the wisdom of empowering policemen, whatever their rank, to record confessions. The reasoning employed in Tofan Singh vs State of Tamil Nadu (2021), which held NCB official akin to a policeman, should have guided the court in their assessment of ED officials. Since ED officials are in a position to extort confessions, present a complaint, arrest an accused, oppose bail and argue for conviction and imprisonment, therefore, those prosecuted by the ED ought to have been afforded the protections in the CrPC and Evidence Act.

In the absence of a copy of the ECIR, which the ED is not mandated to record, it is difficult to satisfy any Court that the accused has not committed the offence of money laundering, as he does not even know the scope of allegations against him compounding the woe is the reverse burden of proof. This seems to be against the established principles of criminal law, where it has been seen that some or the other document must be recorded by the investigating agency, which contains details of the offences that an accused is suspected to have committed. Unless you have a document like that, the accused suffers the threat of being prosecuted without having a proper chance to defend himself. Every citizen, even if he is guilty, is entitled to the protection of the law, he is under a rule of law, the judgment has overlooked this vital principle clothing the ED with unfettered opaque powers. Hence, the right to personal liberty stands heavily compromised.

Political Implications

While deciding the constitutionality of the act, especially when it affects personal liberty, the court should have taken judicial notice of the operation of the PMLA and its offshoot, the ED. Specifically in this age when data primarily informs policy decisions, courts oblivion to such facts will ultimately undermine their own legitimacy, because the ivory tower of yore in the age of social media and lightning spread of information will not spare any institution from redundancy. Partisan and selective use of ED to attack the political opposition should have made the court circumspect. It was imperative for the court to ask itself why the cases filed by CBI and ED go into limbo the moment an opposition leader joins the ruling party. It should have noticed that how ED is called into action before any political development such as during elections, engineering defections and toppling a government. Instances of harassment of political opposition misusing ED may have skipped the judicial mind but cannot be screened away from public glare.

It should have borne in mind the fact that so far 5,422 money laundering cases have been registered but only 23 people convicted – a conviction rate of less than 0.5%. This raises serious questions about the quality of cases and also the quality of investigation. The manner in which the amendment was brought combined with the fact that 65% of money laundering cases were initiated by the current ruling government in the last eight years, and also abysmal record of conviction, it looks as if the policy intent behind the amendments were solely punishment through the process which the court has emphatically approved. Was further weaponizing, by conferring it (ED) with such draconian powers, needed when we have reason to believe that the power is only being abused by the ED for the last couple of years? The term of the present ED Director was extended by the Central Government despite express reprimand from the court itself. Law was enacted to usurp power of extension with brazenness in contempt of the order. The extensions will be whimsically determined by the ruling party subject to the obedience of the incumbent making a mockery of the autonomy of such institutions. When viewed in light of the fact that this institution is at the helm of toppling governments, harassing and coercing opposition to toe the line of the ruling party, it was expected of the court to scrutinize the amendments with extreme caution. The imprimatur this judgment provides to ED to abuse the weakening democratic processes will forever be etched in public memory.

As individual liberties guaranteed under the Constitution shrink, it is chilling to realize the judiciary, guardian of rights, is now a significant threat to it. The ruse of international law to back its reading of PMLA bares the disdain of the court to personal freedom and the rule of law, as international agreements and frameworks on money laundering do not relieve states of the responsibility of fair trial and of complying with due process. Mandated to uphold constitutional values and principles and protect citizens from excesses of the state; courts apparent zeal to align with the executive and perpetuate invasion of liberty is an alarming trend in the last few years. The author is a Senior Advocate & Member of Parliament (Rajya Sabha)