The Prevention of Money Laundering Act (PMLA), 2002, has emerged as one of the most powerful and frequently contested pieces of legislation in India’s legal landscape. The Enforcement Directorate (ED), which enforces the PMLA, has investigated some of India’s most high-profile financial crimes and political controversies. Courts have been called upon repeatedly to define the boundaries of ED’s powers under the PMLA.
The PMLA Framework
The PMLA was enacted to prevent money laundering and to provide for confiscation of property derived from, or involved in, money laundering. The Act defines “money laundering” broadly as the process of projecting any proceeds of crime as untainted property. The ED, which functions under the Ministry of Finance, is the primary agency for investigating PMLA offences.
The PMLA operates on the basis of “scheduled offences” — predicate crimes listed in the Schedule to the Act. Offences under PMLA can only be investigated if there is a corresponding scheduled offence registered by the relevant police agency.
Landmark Judgment: Vijay Madanlal Choudhary v. Union of India (2022)
The Supreme Court’s landmark judgment in Vijay Madanlal Choudhary v. Union of India (2022) comprehensively upheld many of the PMLA’s controversial provisions. The Court upheld the twin conditions for bail under Section 45 PMLA, validated the power of ED officers to arrest without referring to a Magistrate, and upheld the admissibility of statements recorded by ED officers.
The judgment was controversial and was subsequently reviewed, with the Court in subsequent orders modifying certain aspects of the ruling.
ED Arrest Powers and Personal Liberty
The ED’s power to arrest under Section 19 PMLA has been extensively litigated. The Supreme Court has held that the ED must have “reasons to believe” that the person is guilty of money laundering before making an arrest, and that these reasons must be recorded in writing. The Court has also addressed the scope of bail under the stringent twin conditions of Section 45, which require the Court to be satisfied that there are reasonable grounds to believe the accused is not guilty and that he is unlikely to commit any offence while on bail.
Current Challenges
Courts continue to grapple with difficult questions about the PMLA, including: the validity of attaching property before conviction, the scope of “proceeds of crime,” the rights of accused persons during investigation, and the independence of the Special Courts designated under the Act. These issues are likely to remain the subject of significant litigation in the coming years.
Source: Supreme Court of India | Analysis: Justice Order | June 2026
