Review of the Money Laundering Judgment
Karti P. Chidambaram v Enforcement Directorate
The Supreme Court will decide if the Enforcment Directorate is obligated to provide the accused with the EDIR filed against them, and if the reversal of the presumption of innocence in money laundering cases is constitutional. The outcome of this review will have an impact on the rights of an accused person in India’s criminal jurisprudence. It will decide if an accused can be presumed guilty until proven otherwise.
Petitioner: Karti Chidambaram
Lawyers: Kapil SIbal
Respondent: Enforcement Directorate; Union of India
Is the Enforcement Directorate obligated to provide the accused with the ECIR filed against them?
Is the reversal of the presumption of innocence in money laundering cases constitutionally valid?
On July 27th, 2022 a 3-Judge Bench led by Justice A.M. Khanwilkar comprising Justices Dinesh Maheshwari and C.T. Ravikumar upheld all the challenged provisions of the Prevention of Money Laundering Act, 2002 (PMLA). On August 22nd, 2022, Congress member Karti Chidambaram, filed a petition at the SC requesting a review of the Judgment. Mr. Chidambaram was one of several Opposition party politicians accused of money laundering who originally challenged the PMLA. The Act grants wide powers of investigation and arrest to the Enforcement Directorate (ED).
The Judgment notably held that ED inquiries are different from criminal investigations. This means that a host of procedural requirements and safeguards that apply to the police under the Code of Criminal Procedure, 1973 (CrPC) do not apply to the ED. For instance, the ED may compel accused persons to make statements and then use these statements against them in trial. The Police are barred from doing so by the constitutional right against self-incrimination in criminal trials. Further, the ED is not required to provide an accused with the Enforcement Case Information Report (ECIR). The Judgment held this was an ‘internal document’ and not the money laundering equivalent of a First Information Report that must be supplied to an accused under the CrPC.
The PMLA also provides onerous conditions that the accused must fulfil to get bail. The accused must prove their innocence before the trial begins based on a surface-level consideration of the facts of the case. In most criminal cases, there is a ‘presumption of innocence’ for the accused and the burden is on the prosecution to prove their guilt. The PMLA effectively reverses this burden of proof.
The PMLA Judgment upheld this reversal, stating it was necessary to deal with the ‘heinous’ crime of money laundering. On the day the Judgment was delivered, the Bench expressed their satisfaction at having concluded this long case which spanned over 20 days of hearings. Senior Advocate Kapil Sibal, who argued against the PMLA, presciently responded ‘My experience tells me, milords, matters are never concluded’. Mr. Sibal represented Mr. Chidambaram in the challenge, who eventually filed a review petition against the Judgement.
On August 25th, 2022, a 3-Judge Bench led by the now-retired Chief Justice N.V. Ramana and comprising Justices Dinesh Maheshwari and C.T. Ravikumar—who were both members of the Bench which upheld the challenged provisions—decided to review the Judgment. The review is limited to two questions:
- Is the Enforcement Directorate obligated to provide the accused with the ECIR filed against them?
- Is the reversal of the presumption of innocence constitutionally valid?
CJI Ramana retired on August 26th, 2022, the day after deciding to list the review petition for hearings. A new Bench will be constituted to hear the case.