New Delhi: The special MP/MLA court on Friday termed the Enforcement Directorate’s tendency to arrest and prosecute under Prevention of Money Laundering Act (PMLA) before courts test the main foundational case as “placing the cart before the horse”.The special court noted that once a person is booked under PMLA, bail becomes difficult, “resulting in prolonged incarceration even at the pre-trial stage” and underlined that an offence under the PMLA is not autonomous, “but is inextricably linked to the existence of a legally sustainable scheduled offence”.The foundational case, or the predicate offence, the court said, “constitutes the foundational edifice upon which the allegation of money laundering rests; if the foundation crumbles, the superstructure must necessarily fall.”It said arrest and prolonged incarceration must be exceptions, not the rule.“Liberty, once curtailed, cannot be meaningfully restored by a subsequent acquittal, nor can the passage of time compensate for the loss occasioned by unwarranted pre-trial detention,” judge Jitendra Singh said, discharging all the accused in the liquor policy case, where former CM Arvind Kejriwal and his deputy Manish Sisodia, apart from others, were all arrested first by ED, which invoked money laundering charge on the basis of the CBI’s corruption case.Judge Singh cited the position of the Supreme Court in Vijay Madanlal Chaudhary v Union of India (2022) that where the predicate offence does not survive… the offence of money laundering cannot independently subsist. He said despite this settled legal position, “the prevailing practice reveals a disturbing inversion of the statutory scheme, wherein coercive powers of arrest and prolonged custody are invoked even before the foundational facts relating to the scheduled offence are judicially tested. This results in a situation where an individual is deprived of personal liberty on the strength of an allegation whose legal sustainability remains uncertain and contingent upon a future outcome in a parallel investigation.”Calling for a “careful balance” between an effective investigation of economic offences and the “inviolable right of an individual to personal liberty”, the court said it “remains alive to the fact that the continuation of incarceration in such circumstances amounts to placing the cart before the horse, allowing the consequence to precede the cause, so that pre-trial detention does not itself substitute the punishment.“The special court said any process which permits prolonged or indefinite incarceration “on the basis of a provisional and untested allegation” where the foundation of the offence remains under investigation, risks “degenerating into a punitive process rather than a regulatory or investigative one.”It acknowledged that Parliament “has vested wide powers in the Enforcement Directorate to combat the menace of money laundering, including powers of attachment, arrest, and prosecution, recognising the transnational and clandestine nature of such offences.”While the object of PMLA is “undoubtedly legitimate and compelling”, it “cannot eclipse” constitutional safeguards, the court noted.“Ultimately, the legitimacy of the PMLA regime depends not merely on the severity of its provisions, but on their fair, proportionate, and constitutionally informed application. The balance between the power of the investigating agency and the right to life and personal liberty is not a matter of legislative grace, but a constitutional command. Any failure to maintain this balance is likely to undermine both the rule of law and public confidence in the administration of criminal justice,” it observed.
