PMLA Review: Supreme Court Confronts ED on Low Convictions, Prolonged Custody

New Delhi – The Supreme Court of India has initiated a critical re-examination of its own 2022 verdict that had cemented the extensive powers of the Enforcement Directorate (ED) under the Prevention of Money Laundering Act (PMLA). In a series of sharp observations during a hearing on review petitions against the Vijay Madanlal Choudhary judgment, a three-judge bench expressed deep concerns over the agency's operational methods, alarmingly low conviction rates, and the prolonged incarceration of accused individuals who are often acquitted after years in custody.

The hearing, which could potentially recalibrate the landscape of economic-offense jurisprudence in India, saw the bench, comprising Justices Surya Kant, Ujjal Bhuyan, and N. Kotiswar Singh, directly question the efficacy and fairness of the ED's functioning. "We are equally concerned with the image of the ED," the bench remarked, setting a tone of stringent judicial oversight.

A Reckoning with Statistics: Convictions vs. Cases

The central theme of the court's critique was the stark disparity between the number of cases initiated by the ED and the number of successful prosecutions. Justice Ujjal Bhuyan highlighted the damning statistics, noting that of the thousands of cases registered, the conviction rate remains staggeringly low.

"I observed in one of my judgments that the ED has registered around 5,000 ECIRs in the past five years but the conviction rate is less than 10 per cent," Justice Bhuyan stated, adding that this was a factual statement substantiated by a minister in Parliament.

The bench posed a pointed question that cuts to the heart of the due process debate surrounding the PMLA: "At the end of five or six years, when they’ve remained in custody and are acquitted… What happens then?" This query underscores the immense personal cost and the potential for irreversible injustice when lengthy pre-trial detention, facilitated by the PMLA's stringent bail conditions, does not culminate in a conviction.

The sentiment was echoed on the same day by a separate bench headed by Chief Justice of India B.R. Gavai, which observed in a different matter that the ED had been "successful" in incarcerating people for years without convictions. This convergence of judicial opinion from two separate benches signals a growing institutional concern over the PMLA's real-world application.

"You Can't Act Like a Crook": A Call for Procedural Propriety

Representing the Union and the ED, Additional Solicitor General (ASG) S.V. Raju sought to defend the agency's record. He argued that the ED's "poor investigators" were "terribly handicapped" and overburdened, facing "influential crooks" who employ a "battery of lawyers" and "procedural weaponisation" to delay trials. The ASG contended that accused persons often park their assets abroad and file numerous applications to protract proceedings, preventing trials from commencing.

The bench, however, was unmoved by this defense, delivering a powerful rebuke that emphasized the fundamental distinction between a law enforcement agency and the offenders it pursues.

"You can’t act like a crook. You have to act within the four corners of the law. There is a difference between law-enforcing authorities and law-violating bodies," the bench retorted.

Justice Bhuyan further clarified that systemic failures could not be blamed on the Constitution or the legal framework. "One cannot blame the law or the Constitution for the delay in ED cases," he remarked, shifting the focus back to investigative quality and procedural efficiency. The bench advised the agency to "improve your investigation, improve your witnesses."

Structural Solutions: The Case for Dedicated PMLA Courts

Moving from critique to constructive solutions, the Supreme Court strongly advocated for systemic reforms to address the chronic delays and procedural logjams. Justice Surya Kant championed the establishment of dedicated special courts, akin to the erstwhile TADA and POTA courts, to exclusively handle cases under the PMLA, as well as the UAPA and NIA Act.

"Unless you ensure this, all these malpractices — good or bad — will continue," Justice Kant asserted.

The bench envisioned these special courts conducting day-to-day trials, a move it believes would neutralize the delaying tactics employed by accused persons. "Yes, influential accused will still file numerous applications but these accused and their lawyers will know that since it is day-to-day trial their application will be decided the very next day," the bench observed. "Time has come to hit them hard. We can't have sympathy for them."

This proposal for structural reform acknowledges the challenges cited by the ASG but frames the solution not in granting more unchecked power to the agency, but in creating a more efficient, robust, and dedicated judicial infrastructure to ensure swift and fair trials.

The Shadow of Vijay Madanlal Choudhary

The current proceedings are a review of the controversial 2022 Vijay Madanlal Choudhary v. Union of India judgment. That verdict had upheld several contentious PMLA provisions, including those relating to the definition of money laundering, the ED's powers of arrest and seizure, the stringent twin conditions for bail, and the reversal of the burden of proof. It also held that the Enforcement Case Information Report (ECIR) is an internal document and not equivalent to an FIR, meaning it need not be supplied to the accused.

The judgment was widely criticized by legal scholars and practitioners for significantly diluting due process safeguards and creating an imbalance in the state-citizen relationship. The Supreme Court's decision to hear review petitions was seen as a crucial opportunity to reconsider these aspects.

While the ASG argued that the review petitions were not maintainable and were merely "appeals in disguise," the bench's probing questions and critical stance suggest a genuine intent to scrutinize the practical consequences of its earlier verdict. The current hearing, which began with preliminary objections to maintainability, has evolved into a broader judicial audit of the ED's conduct and the PMLA's impact on individual liberty.

As the hearings continue, the legal community will be watching closely. The outcome could lead to a significant course correction in PMLA jurisprudence, potentially re-instituting stronger procedural safeguards, or it could spur major legislative and administrative reforms, such as the creation of a dedicated cadre of courts to expedite justice in complex financial crime cases.