The Prevention of Money Laundering Act, 2002 (PMLA) is one of India’s most stringent anti-financial crime statutes. Enacted to combat the laundering of proceeds of crime and to confiscate tainted assets, it vests wide-ranging investigative, arrest, and attachment powers in the Directorate of Enforcement (ED). However, these powers have frequently raised concerns about procedural fairness, the right to liberty under Article 21 of the Constitution, and the balance between effective enforcement and the accused’s fundamental rights. Over the years, the Supreme Court has interpreted PMLA provisions to preserve its core objectives while reinforcing procedural safeguards. The latest landmark ruling in Sarla Gupta v. Directorate of Enforcement (2025 INSC 645, decided on 7 May 2025) marks a significant step forward in strengthening the accused’s right to fair disclosure and a meaningful defence.
Core Procedural Framework of PMLA
PMLA proceedings differ markedly from ordinary criminal trials under the Code of Criminal Procedure (CrPC, now largely replaced by the Bharatiya Nagarik Suraksha Sanhita, 2023 or BNSS). Key distinctions include:
- Reverse burden of proof (Section 24): Once the ED establishes that the accused possessed or dealt with “proceeds of crime,” the burden shifts to the accused to prove they are not guilty.
- Stringent bail conditions (Section 45): Bail is not a rule; the court must be satisfied that there are “reasonable grounds” to believe the accused is not guilty and is unlikely to commit any offence while on bail.
- Attachment powers (Sections 5 and 8): Provisional attachment of property linked to money laundering, followed by confirmation after an Adjudicating Authority hearing.
- Arrest and investigation (Sections 19 and 50): ED officers (not below Deputy Director rank) can arrest on the basis of “reasons to believe” and record statements under oath.
These features make PMLA a “special statute” with built-in procedural rigour, yet the absence of certain CrPC safeguards (such as automatic supply of all investigation materials) had earlier led to criticism of opacity and potential misuse.
Key Procedural Rights and Judicial Safeguards
1. Right Against Arbitrary Arrest and Prompt Production Before Magistrate
Section 19 empowers arrest, but the Supreme Court has repeatedly emphasised constitutional limits. In Pankaj Bansal v. Union of India (2023), the Court mandated that grounds of arrest must be communicated in writing “as soon as may be.” Subsequent clarification in Ram Kishor Arora v. Union of India (2023) required oral intimation at arrest and written grounds within 24 hours.
A 2025 ruling in Enforcement Directorate v. Subhash Sharma further clarified that Section 57 CrPC (now BNSS equivalent) — mandating production of an arrested person before a Magistrate within 24 hours — applies to PMLA cases through Section 65 of the Act. This ensures judicial oversight and prevents prolonged custody without magisterial scrutiny.
2. Right to Challenge Provisional Attachment
Before provisional attachment under Section 5, the ED must have “reason to believe” that property is proceeds of crime. The person concerned receives a show-cause notice and an opportunity of hearing before the Adjudicating Authority confirms the attachment under Section 8. The Supreme Court has upheld these as adequate safeguards, noting that they prevent arbitrary deprivation of property while allowing swift action against laundered assets. Appeals lie to the Appellate Tribunal and ultimately to the High Court.
3. Bail and the Right to Speedy Trial
Section 45’s twin conditions remain intact post the landmark Vijay Madanlal Choudhary v. Union of India (2022) judgment, which upheld their constitutional validity. However, the Court has increasingly read Article 21’s guarantee of speedy trial into bail considerations. In cases of prolonged pre-trial incarceration with no realistic prospect of early trial commencement, courts have granted bail, recognising that the nature of the offence cannot eclipse fundamental liberty rights. Recent decisions have reiterated that delay in trial can tilt the balance in favour of release, particularly where evidence is largely documentary.
4. Right to Disclosure of Investigation Materials – The Sarla Gupta Breakthrough (2025)
This is the most significant recent development concerning procedural rights. Prior practice often limited disclosure to documents the ED relied upon in its complaint filed under Section 44(1)(b). Accused persons frequently complained of being kept in the dark about the full scope of seized material.
In Sarla Gupta v. Directorate of Enforcement (decided 7 May 2025), a three-Judge Bench comprising Justices Abhay S. Oka, Ahsanuddin Amanullah, and Augustine George Masih ruled decisively in favour of transparency:
- A person from whom documents/records are seized under Sections 17/18 has a statutory right under Section 21(2) to obtain true copies of all such documents.
- Once cognizance is taken, the Special Court must supply copies of all documents and statements produced along with the complaint (including supplementary complaints).
- Crucially, the accused is entitled to a list of all unrelied documents, statements, material objects, and exhibits collected during the investigation. While copies of unrelied material need not be supplied at the framing-of-charge stage, the list enables the accused to apply for their production later under Section 91 CrPC (or BNSS equivalent) at the defence stage.
- Such applications must be considered liberally, given the reverse burden under Section 24. Denial is permissible only in exceptional circumstances.
The Court grounded this right squarely in Article 21’s guarantee of a fair trial. It harmonised PMLA’s special procedures with CrPC/BNSS principles, noting that the statute does not expressly bar fair disclosure. The judgment also clarified that seizure of “instruments evidencing title” (though classified as property) must be treated as “records” for the purpose of supplying copies.
This ruling fundamentally alters pre-trial disclosure practice in PMLA cases, empowering the defence to prepare effectively and reducing the risk of surprise at trial.
Continuing Nature of the Offence and Other Clarifications
In Pradeep Nirankarnath Sharma v. Enforcement Directorate (2025), the Supreme Court reaffirmed that money laundering under Section 3 is a continuing offence. It does not conclude with the predicate scheduled offence but persists as long as proceeds of crime are concealed, used, or projected as untainted. This interpretation has implications for limitation, retrospectivity, and attachment timelines.
The Road Ahead: Review of Vijay Madanlal and Balance
The 2022 Vijay Madanlal Choudhary judgment remains the foundational precedent upholding PMLA’s constitutional validity and ED powers. A review petition is pending before the Supreme Court, with focus reportedly on issues such as sharing of the Enforcement Case Information Report (ECIR) and aspects of burden of proof. Any outcome will further refine procedural rights.
Conclusion
PMLA’s procedural regime is deliberately robust to combat sophisticated financial crimes that threaten economic sovereignty. Yet, as the Supreme Court has consistently emphasised, draconian powers must be accompanied by commensurate safeguards. The Sarla Gupta judgment (2025) represents the latest and perhaps most practical advancement in this direction — translating the abstract right to a fair trial into concrete disclosure obligations that level the playing field without compromising the ED’s investigative mandate.
Accused persons now enjoy clearer rights to know the full extent of material gathered against them, to challenge arrests promptly, and to seek bail when trials drag on indefinitely. These developments reaffirm that even in the fight against money laundering, constitutional values of fairness, transparency, and liberty remain non-negotiable. As future rulings (including the pending review) unfold, the delicate equilibrium between enforcement efficacy and individual rights will continue to evolve — ensuring that PMLA remains a potent weapon against crime while staying firmly within the bounds of justice.
Contributed By: Akshat Jain