Supreme Court Set To Examine Whether ED's Powers Under Money Laundering Act Needs Reconsideration By Larger Bench

On Wednesday (23 November), the Supreme Court addressed the limited scope of its review regarding the 2022 verdict affirming the Enforcement Directorate's (ED) authority to arrest and attach property related to money laundering.

The court considered whether a larger bench of five judges should reconsider the verdict.

The central government emphasised the importance of the Prevention of Money Laundering Act (PMLA), while the petitioners argued that the ED has become uncontrollable.

The three-judge bench, led by Justice Sanjay Kishan Kaul, acknowledged the need to determine if a review was necessary and whether the matter should be referred to a five-judge bench.

Senior advocate Kapil Sibal, representing the petitioners, asserted that the issues were fundamental to the rule of law and warranted reconsideration.

Solicitor general Tushar Mehta opposed an amendment challenging various aspects of the PMLA, stating that it went beyond the original challenge to sections 50 and 63.

The court indicated that the focus should be on whether the legal point settled by the three-judge bench required consideration by a larger bench.

Justice Kaul clarified that the court's mandate was limited to this process, emphasising the need to understand the arguments before addressing the amendment issue.

Sibal highlighted the importance of the rule of law, stating that individuals summoned by the investigating agency should know whether they are witnesses or accused.

The petitioners claimed that the ED applied anti-money laundering laws to cases like income tax evasion, using section 120-B of the Indian Penal Code. The court observed that the ED couldn't invoke PMLA with section 120-B when the alleged conspiracy wasn't related to a scheduled offense. The hearing remained inconclusive and would continue on Thursday (23 November).

In October, the court had expressed a willingness to examine whether the 2022 verdict required reconsideration.

The solicitor general argued that the PMLA was aligned with Financial Action Task Force recommendations, emphasising that it was not a standalone offence, but legislation addressing money laundering and terrorist financing.

Last year, the court had agreed to hear a plea seeking a review of its July 2022 verdict, noting that aspects like not providing an Enforcement Case Information Report and reversing the presumption of innocence required reconsideration.

The 2022 verdict upheld certain provisions of the PMLA, stating that it was not an ordinary offence.