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Renewed focus on Liberty - Delhi High Court upholds Constitutional Safeguards on Bail under PMLA

Securing bail under the Prevention of Money Laundering Act, 2002 (“PMLA“), is challenging due to the high threshold for bail stipulated by the Act. Section 45 of the PMLA stipulates that bail may be granted to an accused in a money laundering case only if two conditions are met: first, the Public Prosecutor must be given the opportunity to oppose the bail application; second, there must be prima facie satisfaction that the accused has not committed the offence and is not likely to commit any offence while on bail. It is frequently contended that these twin conditions pose a significant challenge to the prevailing legal principle in criminal jurisprudence that “bail is the rule and jail is the exception”. The Hon’ble Supreme Court has observed that the twin conditions challenge an accused’s right to liberty under Article 21 of the Constitution[1].Continue Reading Renewed focus on Liberty – Delhi High Court upholds Constitutional Safeguards on Bail under PMLA

The Prevention of Money Laundering Act, 2002 (“PMLA”), is a comprehensive law, dealing with aspects of money-laundering, attachment of proceeds of crime, adjudication, and confiscation thereof. The “proceeds of crime” is the fulcrum of the offence of money-laundering under the PMLA and all actions taken by the Enforcement Directorate (“ED”) under the PMLA invariably revolve around it. Accordingly, the definition of proceeds of crime under Section 2(1)(u) of the PMLA is of immense relevance. In terms of Section 2(1)(u) of the PMLA, “any property derived or obtained… by any person as a result of criminal activity relating to a scheduled offence…” is regarded as proceeds of crime. As held by the Hon’ble Supreme Court in Vijay Madanlal Choudhary & Ors. v. Union of India & Ors.[1] (“Vijay Madanlal”), the expression “derived or obtained” is indicative of a criminal activity, relating to a scheduled offence, already accomplished. The commission of a scheduled offense, whether registered with the jurisdictional police or under review by a competent forum through a complaint, constitutes the legal basis for any investigation conducted under the PMLA.Continue Reading Shifting Paradigms in PMLA Jurisprudence: Madras High Court reopens settled principles of Automatic Quashing of PMLA Proceedings

Is mere possession of proceeds of crime sufficient for trigerring PMLA?

Introduction:

A recent decision rendered by the Madras High Court in S. Srinivasan v. The Assistant Director, Directorate of Enforcement, Chennai[1], has held that being in possession of the proceeds of crime and claiming it to be untainted property can independently be perceived as money laundering under Section 3 of the Prevention of Money Laundering Act, 2002 (“PMLA”).

Although the said decision is in line with the principles previously enunciated by various courts while interpreting the PMLA provisions, such a simple interpretation may possibly lead to unintended situations. The primary reason being that anyone who is merely in possession of proceeds of crime without any genuine knowledge or any involvement therein can be prosecuted under PMLA. This perspective may prove to be counterproductive to the principle of presumption of innocence in criminal law.Continue Reading Is mere possession of proceeds of crime sufficient for trigerring PMLA?

Navigating the Crypto Maze: Delhi HC expands scope of predicate offences under PMLA

Introduction

A single judge bench of the Hon’ble High Court of Delhi delivered a significant ruling in the matter of Adnan Nisar v. Directorate of Enforcement and other connected matters[1], on September 17, 2024, holding that an offence committed in a foreign country can be classified as Predicate Offence, under the Prevention of…

Tarsem Lal v Directorate of Enforcement: Supreme Court further clarifies PMLA framework

OVERVIEW:

Through a series of recent judgements, the Hon’ble Supreme Court has outlined limits to the Directorate of Enforcement’s (“ED”) powers under the Prevention of Money Laundering Act, 2002 (“PMLA”). Resultantly, issues that were rather ambiguous are now a lot clearer.Continue Reading Tarsem Lal v Directorate of Enforcement: Supreme Court further clarifies PMLA framework

ED cannot arrest accused once cognizance is taken by the Special Court under PMLA: Supreme Court

Introduction:

In Tarsem Lal v. Directorate of Enforcement Jalandhar Zonal Office,[1] the bench comprising Justices Abhay S. Oka and Ujjal Bhuyan of the Supreme Court (“SC”) held on (i) the Enforcement Directorate’s (“ED”) powers of arrest under Section 19 of the Prevention of Money Laundering Act, 2002[2] (“PMLA”), once cognizance is taken of a PMLA complaint under Section 44(1)(b) of the PMLA,[3] and (ii) the applicability of the twin conditions of bail under Section 45 of the PMLA[4] in instances where the accused has furnished a bond in accordance with Section 88 of the Code of Criminal Procedure, 1973[5] (“CrPC”), for appearance in court following summons. In this significant decision, the SC essentially addresses the extent of the ED’s powers of arrest and applicability of the stringent twin conditions of bail under Section 45 of the PMLA once the Special Court has taken cognizance of a complaint under Section 44 of the PMLA.Continue Reading ED cannot arrest accused once cognizance is taken by the Special Court under PMLA: Supreme Court

Bombay High Court upholds NCLT’s decision to release ED attached properties after nod to IBC Resolution Plan

The High Court of Bombay (“Court”) in a recent judgment[1] has upheld the NCLT’s powers to direct the Directorate of Enforcement (“ED”) to release attached properties of a corporate debtor, once a resolution plan in respect of the corporate debtor had been approved. The Court’s decision was based on an interpretation of Section 32A of the Insolvency and Bankruptcy Code, 2016 (“IBC”).Continue Reading Bombay High Court upholds NCLT’s decision to release ED attached properties after nod to IBC Resolution Plan

Ensuring Transparency: The Imperative of Mandatory Furnishing of Written Grounds of Arrest by the Enforcement Directorate

Background:

In the realm of law enforcement, transparency and accountability are indispensable pillars upholding the democratic values of a society. The Directorate of Enforcement (“ED”), tasked with investigating and prosecuting economic offenses, plays a vital role in maintaining financial integrity. However, concerns surrounding the lack of transparency in some of the arrests made by the ED have been raised.Continue Reading Ensuring Transparency: The Imperative of Mandatory Furnishing of Written Grounds of Arrest by the Enforcement Directorate

Ensuring Transparency: The Imperative of Mandatory Furnishing of Written Grounds of Arrest by the Enforcement Directorate

Background:

In the realm of law enforcement, transparency and accountability are indispensable pillars upholding the democratic values of a society. The Directorate of Enforcement (“ED”), tasked with investigating and prosecuting economic offenses, plays a vital role in maintaining financial integrity. However, concerns surrounding the lack of transparency in some of the arrests made by the ED have been raised.Continue Reading Ensuring Transparency: The Imperative of Mandatory Furnishing of Written Grounds of Arrest by the Enforcement Directorate