The ED is a financial investigation agency under the Union Government’s Department of Revenue responsible for enforcing the provisions of the PMLA. To conduct investigations, the ED is empowered to issue summons, record statements, make arrests, and search and seize property.
Despite having powers of investigation, the ED has not been classified as a ‘police agency’. This is also true for other specialized bodies, including the Serious Fraud Investigation Office (SFIO) and the Directorate of Revenue Intelligence (DRI), which are empowered to investigate economic offences under other legislation. These bodies are not obliged to follow the Code of Criminal Procedure Code, 1973 (CrPC).
Nearly 200 petitioners have challenged the powers of these specialized investigation agencies that deal with economic offences. The earliest petitions have been pending since 2014. More than 80 of these petitions deal with the PMLA. These include petitions filed by several politicians accused of money laundering, such as Lok Sabha Member Karti Chidambaram, former Punjab MP Sarwan Singh Phillaur and former Jammu and Kashmir CM Mehbooba Mufti.
Section 45 of the Act takes away the presumption of innocence usually afforded to accused persons under criminal law. To be granted bail the accused must prove prima facie that they were not guilty, and satisfy the court that they will not commit any further offence. These ‘twin bail conditions’ under PMLA are central to this case.
The Supreme Court declared this provision unconstitutional in Nikesh Tarachand Shah v Union of India (2017). The Union government then amended the provision in 2018. The ED claims that this amendment brought the provision in line with Nikesh Tarachand Shah. The petitioners argue that the amendment undermines the judgement, and reestablishes the original twin conditions.
The petitioners also contend that the investigation agencies effectively exercise police powers. Hence, they should be obligated to follow the CrPC while conducting investigations. Crucially, since the ED is not a police agency, statements made by the accused to ED members in the course of an investigation can be used against the accused in judicial proceedings. During investigations by police agencies, such statements are inadmissible, since it would violate the fundamental right against self-incrimination to use them against the accused.