IMPORTANT SECTIONS OF PMLA ACT (Syllabus: GS Paper 3 – Internal Security)

Context: In a series of decisions, the Supreme Court has highlighted the rights of people accused of money laundering, even in the face of stringent provisions on arrest and bail under the Prevention of Money Laundering Act, 2002 (PMLA).

Important Sections Related to Arrest and Bail

• Section 19 of the PMLA: It gives the ED the power of arrest if the material it possesses gives it reason to believe an individual is guilty of money laundering. The accused must be informed of the grounds of arrest “as soon as may be”.
• Section 19(1) of the PMLA: It provides that the ED must have “reason to believe” that the accused is “guilty”, the court stated that these reasons must meet a high threshold and effectively be in the form of “evidence admissible in court”.
• Section 45 of the PMLA: It provides stringent “twin conditions” for bail, requiring an accused to prove that he has not committed an offence under the PMLA (reversing the standard burden of proof in criminal cases) and is not likely to commit any offence while on bail.
  • Section 50 of the PMLA: It allows the ED to summon “any person” and require them to make statements during an investigation.
  • Section 25 of the Evidence Act, 1872 (now Section 23 of the Bharatiya Sakshya Adhiniyam, 2023): It confessions made to police officers are not admissible as evidence during trial.
  • Section 436A of the Code of Criminal Procedure, 1973: It states that if a person has been detained for up to half the maximum period of imprisonment for that offence while the trial or investigation is underway, they shall be released on bail.
  • Section 479 of the Bharatiya Nagarik Suraksha Sanhita: It states that if more than one offence or multiple cases are pending against someone common in money laundering cases the section on bail will not apply.

  Important Judgements

  • Vijay Madanlal Choudhary v. Union of India (2022): a three-judge bench led by upheld all the challenged PMLA provisions, including the restrictive bail conditions and the wide powers of investigation and arrest granted to the Enforcement Directorate (ED). 

  oThe court held that this did not violate the right against self-incrimination under Article 20(3) of the Constitution.

  • Pankaj Bansal v Union of India (2023): It found that the grounds were informed orally in some cases and in writing in others. The court said an accused has a fundamental right to be informed of the grounds of arrest under Article 20 of the Constitution of India.