ED’s dismal prosecution record flies in face of its hyperactivity since Modi govt took over

The Supreme Court verdict, delivered last week, upholding the validity of inquiry, arrest and bail provisions of the Enforcement Directorate (ED) under the Prevention of Money Laundering Act (PMLA), has come at a time when as many as 122 sitting and ex-legislators are facing money laundering cases in the country.

The apex court upheld the power of ED to arrest under the PMLA saying that the procedure for arrest is not arbitrary. A three-judge bench heard for more than 23 days well over 100 petitions challenging various provisions of the law.

The judgement is expected to have far-reaching consequences for Indian democracy. Presently, a large majority of the political targets under the ED scanner are from opposition parties. They include Congress interim chief Sonia Gandhi and former party president Rahul Gandhi. The Congress had alleged that the money laundering law has been weaponised to target and humiliate people.

Underlining that “the principle of innocence of the accused/offender is regarded as a human right” but “that presumption can be interdicted by a law made by the Parliament/legislature”, the apex court upheld the constitutional validity of the PMLA, 2002, as amended from time to time including those dealing with the powers of ED regarding arrest, search, attachment and seizure in money laundering offences. The Centre had told the Court that “it cannot be said that presumption of innocence is a constitutional guarantee”.

Ruling on a batch of 242 petitions that raised questions on different provisions of the PMLA including Section 3 that defines what constitutes money laundering, a three-judge bench of Justices A M Khanwilkar, Dinesh Maheshwari and C T Ravikumar, while upholding the provisions, left the question whether some of the amendments could have been brought by way of Finance Acts, to a seven-judge bench which is already seized of a similar question in the matter of some other legislations.

The bench refused to accept the contention that the procedure followed by ED in registering an ECIR is opaque, arbitrary and violative of the constitutional rights of an accused and that the procedure followed under PMLA is draconian since it violates the basic tenets of the criminal justice system and the rights enshrined in Part III of the Constitution of India, in particular Articles 14, 20 and 21.

Rejecting the argument of the petitioners that it will amount to an offence of money laundering only if the proceeds of crime are projected as untainted property, the bench said, “Section 3 of the 2002 Act has a wider reach and captures every process and activity, direct or indirect, in dealing with the proceeds of crime and is not limited to the happening of the final act of integration of tainted property in the formal economy.”

The bench held that “from the bare language of Section 3 of the 2002 Act, it is amply clear that the offence of money laundering is an independent offence regarding the process or activity connected with the proceeds of crime which had been derived or obtained as a result of criminal activity relating to or in relation to a scheduled offence. The process or activity can be in any form — be it one of concealment, possession, acquisition, use of proceeds of crime as much as projecting it as untainted property or claiming it to be so. Thus, involvement in any one of such processes or activity connected with the proceeds of crime would constitute an offence of money laundering”.

The bench approved the validity of Section 24 which puts the onus on the accused to prove that the proceeds of crime are untainted property. The judgment said this “has reasonable nexus with the purposes and objects sought to be achieved by the 2002 Act and cannot be regarded as manifestly arbitrary or unconstitutional”. It said “the purposes and objects of the 2002 Act for which it has been enacted, is not limited to punishment for offence of money laundering, but also to provide measures for prevention of money laundering. It is also to provide for attachment of proceeds of crime, which are likely to be concealed, transferred or dealt with in any manner which may result in frustrating any proceeding relating to confiscation of such proceeds under the 2002 Act.

However, opposition parties seem to have reasons to be concerned about ED’s increasing crackdown and harassment of their leaders. Compared to the number of cases filed and searches and arrests made, ED showed little success in prosecution. The glaring media publicity only succeeded in tarnishing the image of alleged violators of PMLA and the Foreign Exchange Management Act (FEMA) which replaced the Foreign Exchange Regulation Act (FERA) of 1973.

Going by Union Minister of State for Finance Pankaj Chaudhary’s recent statement in Parliament, since the NDA came to power in 2014, ED has filed charge-sheets in as many as 888 cases and attached proceeds of crime worth Rs 99,356 crore. They resulted in the conviction of only 23 accused. The minister said ED carried out 3,010 search operations between 2014-2022. Last year alone, it picked up over 1,100 money laundering cases. The number was only 113 between 2004-2014 or during the earlier UPA government's ten-year tenure.

Few will disagree that the prosecution rate is hardly commensurate with the number of charge sheets filed by ED and the raids and searches conducted by the agency leading to massive harassment and face loss of the suspects in public.

Among the several prominent opposition leaders to face the ED heat are the Congress party’s Sonia Gandhi and Rahul Gandhi, Palaniappan Chidambaram and his son Karti, Nationalist Congress Party’s Ajit Pawar, Shiv Sena leader Sanjay Raut, J&K National Conference’s Farooq Abdullah, Aam Aadmi party’s Satyendra Jain, former Maharashtra minister Nawab Malik, Tamil Nadu-based Amma Makkal Munnetra Kazhagam party’s top leader TTV Dhinakaran and Trinamool Congress party’s powerful leader Abhishek Banerjee and his wife Rujira.

And now, TMC’s secretary general and West Bengal’s Commerce, Industry and IT Minister Parth Chatterjee is in the ED custody for days. Chatterjee was finally divested of all portfolios by TMC on July 28 for alleged culpability in the money laundering case. ED had raided the residences of Partha Chatterjee’s alleged ‘paramour’ Arpita Mukherjee to unearth over Rs.50 crore in cash in addition to five kilos worth gold and jewellery and a good amount of foreign exchange. Arpita has allegedly turned against the TMC bigwig before ED, blaming Chatterjee behind the huge cash piles detected in her flats.

The PMLA and FEMA have come handy for ED to pursue high level political corruption cases in the country. Incidentally, ED comes under the Union Finance Ministry. It is possible for the ruling political party at the Centre to selectively use ED, enjoying blanket power and authority without much accountability, to target select leaders of the opposition. Few question ED’s dismal prosecution record of the alleged offenders despite the existence of such strong laws and the support at the highest levels of the government and judicature.

(IPA Service)

Views are personal