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The Tilting Scale: Weighing the Burdens of the ED & the Accused in Bail Proceedings Under PMLA – An Analysis

The Prevention of Money Laundering Act, 2002 (‘PMLA’) has faced rigorous scrutiny since its introduction by the Government of India. Designed to tackle the serious economic offence of money laundering, this legislation has been criticised for granting the Directorate of Enforcement (‘ED’) arbitrary power to arrest individuals under s. 19 of the PMLA on mere suspicion. Those arrested can apply for bail like in any other criminal offence; however, being a special statute, s. 45 of the PMLA imposes additional criteria on the accused to prove before the Court. While the ED must substantiate its grounds for arrest and demonstrate the belief that the accused is guilty of money laundering, the accused must discharge his burden at the bail stage by satisfying conditions laid down by the Code of Criminal Procedure, 1973 (‘CrPC’), as well as s. 45 of the PMLA. This article attempts to examine the burdens on both the ED and the accused to determine whose burden is heavier in theory.

S. 19 of the PMLA: Power to Arrest

The term ‘arrest’ derived from the Latin words ‘ar-’ (to) and ‘resto-‘  (to stop, remain behind, stay back), is defined by Black’s Law Dictionary as the seizure or restraint of someone forcefully, keeping them under custody by legal authority in a criminal charge to secure the administration of law. An essential element of arrest is the intention to arrest by an authority empowered by law, which must be understood by the person being arrested.

S. 19 of the PMLA outlines the ED’s authority to arrest any person suspected of laundering money. It states that the Director, Deputy Director, Assistant Director, or any other officer authorised by the Central Government through general or special order can arrest a person if they have reason to believe that the person is guilty of money laundering based on material in their possession. Procedurally, this reason to believe must be in writing, and the ED must immediately inform the individual of the grounds for their arrest. Post-arrest, the ED must forward a copy of the order and the material in its possession to the adjudicating authority (‘AA’) in a sealed envelope, and the arrested individual must be produced before the competent Court within 24 hours.

From a bare reading of s. 19 of the PMLA, it is evident that, beyond procedural requirements, the ED must prove its reason to believe that the arrested person is guilty of money laundering. This belief must be based on material in the ED’s possession at the time of arrest, which could be documents or information collected by the ED during its investigation, as well as statements of the accused under s. 50 of the PMLA, and statements of co-accused or other persons examined during the process.

In the landmark judgement of Pankaj Bansal v. Union of India[i], the Hon’ble Supreme Court of India (‘SC’) upheld the constitutional validity of s. 19 of the PMLA. The primary issue was whether the arrest under s. 19 of the PMLA was valid and lawful, and whether the remand orders passed at trial were justified. The SC held that the arrest and subsequent remand were not legally sustainable due to non-compliance with s. 19 of the PMLA. The SC noted that the lower Court failed to record that the ED had reason to believe the arrest was justified, a necessary requirement. The judgement interpreted the procedural requirements of s. 19 of the PMLA: (a) reason to believe regarding money laundering in writing, (b) grounds of arrest and material in possession forwarded to the AA in a sealed envelope, and (c) the right of the accused to be informed of the grounds of arrest without delay. The SC observed that if the accused had no knowledge of the grounds of arrest, they could not file a bail application under s. 45 of the PMLA. Informing the grounds of arrest in writing balances the rights of the accused under a. 22 of the Constitution of India (‘Constitution’) and the sanctity of the investigation.

Shifting of Burden of Proof from ED to Accused

Under PMLA, the initial burden of proof lies with the ED under s. 19 of the PMLA to substantiate before the Court why and on what grounds the accused was arrested. The ED must establish a ‘reason to believe’ that the accused is involved in money laundering, punishable under PMLA, supported by prima facie evidence. Once this preliminary burden is discharged, the burden of proof shifts to the accused to demonstrate why the Court should grant bail. The shift requires the accused to rebut the evidence presented by the ED and prove their innocence. Although it is settled that the initial onus of proof is on the ED, it has been observed in practice that the ED often merely skims their reasons to believe and places the entire burden on the accused to prove their innocence at the bail stage, even when the trial is yet to gain momentum.

S. 45 of the PMLA: Offences to be Cognizable and Non-Bailable

S. 45 of the PMLA prescribes the twin conditions that the accused must satisfy to be eligible for bail in money laundering cases. This section begins with a non-obstante clause[ii], meaning that the provisions of CrPC apply in addition to, and not in derogation of, what is specifically provided under this section[iii]. S. 45(1) of the PMLA prescribes the following conditions:

a)  The public prosecutor (‘PP’) has had an opportunity to oppose such bail application.

b)  The Court is satisfied that there are reasonable grounds for believing that the individual arrested is not guilty of laundering money.

c)  The Court is satisfied that the individual is not likely to commit any offence while on bail.

The proviso to s. 45(1) of the PMLA provides certain relaxations for persons under the age of 16, females, sick or infirm persons, or if the person is accused of laundering less than Rs. one crore. Additionally, s. 45(2) of the PMLA states that the requirements for bail eligibility under the CrPC apply, and the accused must also fulfil these conditions.

Ingredients to be Proved by the ED and the Accused

When the ED arrests a person under PMLA, it must ensure that the constitutional and fundamental rights of that person are not violated. This includes procedural requirements under PMLA’s arrest provision. The ED must prove its reasons for believing that the accused is guilty of laundering money based on material already in its possession at the time of arrest. Essentially, the ED must prove only one element at the bail stage: its reasons to believe the arrest.

Conversely, the accused must satisfy several conditions to secure bail: they must demonstrate reasonable grounds to believe they are not guilty of laundering money, will not commit further offences while on bail, are not a flight risk, will not tamper with evidence or influence witnesses, will cooperate with the investigation, and will be present for the trial. Courts consider factors such as the seriousness of the charge, severity of punishment, nature of accusations, prima facie evidence, the accused’s character and antecedents, and the veracity of their defence. Courts are not required to conduct a detailed examination of evidence during bail proceedings but must be satisfied that the case against the accused appears genuine and backed by prima facie evidence. Although the Court does not require the prosecution to prove the guilt of the accused beyond a reasonable doubt[iv] - which is the subject matter of the trial – the accused must provide reasonable grounds for their innocence. To do so, the accused must reveal aspects of their defence to demonstrate such reasonable grounds. Therefore, the standard of proof required of the accused at the bail stage can be considered roughly equal to half of the standard required at the trial stage.

In economic offences, the burden of proof in bail proceedings is crucial. Under s. 24 of the PMLA, the Court shall presume that proceeds of crime are involved in money laundering unless proven otherwise. This shifts the burden of proof onto the accused to prove that though there may be proceeds of crime, no offence of money laundering has been committed. Thus, where proceeds of crime arise from a predicate offence, there is a presumption that such proceeds have been laundered, making the accused liable. This is unlike general criminal jurisprudence, where the accused is deemed innocent unless proven guilty. The accused must establish a prima facie case to rebut this statutory presumption, which can be based on probable cause[v] and add an additional burden on the accused even before the trial.

Judicial Precedents in Bail Jurisprudence

The twin conditions of s. 45(1) of the PMLA were stuck down in the case of Nikesh Tarachand Shah v. Union of India[vi], where the SC declared s. 45(1) of the PMLA to be unconstitutional. However, an amendment in 2018 revived the section with appropriate changes. These changes were later challenged and upheld in the case of Vijay Madanlal Choudhary v. Union of India[vii]. The earlier version of s. 45(1) of the PMLA stipulated that the offence should be punishable by a term of imprisonment of more than three years under Part A of the schedule, which applied to a specific class of accused. This was deemed violative of as. 14 and 21 of the Constitution. The Finance Act, 2018 amended this defect. The twin conditions apply to all accused persons charged under the PMLA, imposing a heavier burden of proof at the bail stage.

Several cases highlight the stringent nature of the twin conditions under s. 45 of the PMLA, and the significant burden on the accused to secure bail. In the case of Manish Sisodia[viii], the SC refused bail to the former Deputy Chief Minister of Delhi, who was accused of money laundering and corruption related to the Delhi liquor policy. This decision was made despite the Delhi High Court (‘DHC’) noting that economic offences, while serious, should not always be equated with the most severe crimes, such as those punishable by death or life imprisonment. The DHC emphasised the right to bail in cases of prolonged delay and incarceration, aligned with the constitutional mandate for a speedy trial.

On 10.05.2024, the SC, in the case involving Arvind Kejriwal[ix], granted interim bail due to the ongoing 18th Lok Sabha elections, not on the merits of the case. The prosecution argued that the grounds for arrest and the reasons to believe should satisfy the authorised officer making the arrest, which the Court should consider sufficient to validate the arrest.

In a unique case of Union of India v. Hassan Ali Khan & Anr.[x], a PMLA accused was initially granted bail by the Bombay High Court. However, the SC later cancelled the bail on several grounds. It was held that the accused was unable to rebut the presumption raised against him under s. 24 of the PMLA and failed to prove that the wealth he possessed was neither proceeds of crime nor untainted property. The SC also noted that the accused had international connections, multiple bank accounts, and three passports, making him an imminent flight risk if released on bail.

In another case, Dalip Jindal v. Directorate of Enforcement[xi], the DHC rejected a regular bail application filed under s. 45 of the PMLA by an accused charged with defrauding a bank, a scheduled offence under the PMLA. The DHC concluded that the bail application did not satisfy the twin conditions of s. 45 of the PMLA. The DHC observed prima facie evidence that the accused, through his companies, conducted false transactions involving acquisition, possession, and concealment of proceeds of crime punishable under s. 3 of the PMLA.

Comparing the Burdens: ED versus Accused

The standards of proof in criminal law range from reasonable suspicion and probable cause to beyond reasonable doubt. In satisfying the various ingredients for bail, the accused must meet different standards of proof. For example, an accused charged under s. 146 of the Indian Penal Code, 1860 (‘IPC’) for rioting must prove to the Court that they will not tamper with evidence or influence witnesses, only to the extent of probable cause. An accused under s. 420 of the IPC must prove to the Court beyond a reasonable doubt that they will not flee the country but only provide probable cause that they will not influence any witness. However, an accused under the PMLA must meet the CrPC conditions on a standard ranging from beyond reasonable doubt to probable cause but must convince the Court regarding the twin conditions beyond reasonable doubt.

The theoretical analysis of the burden on the ED and the accused reveals distinct responsibilities for each party. The ED’s burden primarily involves establishing a prima facie case and adhering to procedural protocols. While significant, this is essentially a one-time requirement with an average standard of proof to justify the arrest. In contrast, the accused faces a continuous and multilayered burden. They must not only counter the presumption of guilt but also meet multiple stringent conditions to secure bail. This includes proving their innocence at a preliminary stage, a substantial burden even before the trial begins.


The burden on the ED and the accused under the PMLA’s ss. 19 and 45 of the PMLA create a complex legal landscape where the presumption of guilt and stringent bail conditions place a significant onus on the accused. While the ED must establish a reasonable belief based on evidence for the arrest, the accused must overcome multiple hurdles to secure bail, including rebutting the statutory presumption and satisfying several stringent conditions. This continuous and layered burden, which unfolds even before the trial gains momentum, tips the scales of justice unfavourably against the accused.

Judicial precedents in PMLA bail jurisprudence highlight the heavy onus on the accused. Courts’ stringent application of the twin condition under s. 45 of the PMLA often results in bail denial, underlining the severity of the burden on the accused. This judicial approach reflects the gravity of economic offences and attempts to balance fairness in the pre-trial stage.

This theoretical dissection of the PMLA’s provisions reveals a precarious situation: although the ED’s burden is non-trivial, it pales compared to the ongoing and multifaceted burden shouldered by the accused. The presumption against the accused and demanding bail conditions compel them to prove their innocence to an unusually onerous level even before the trial begins. This situation calls for a critical reassessment of how justice is administered in the preliminary stages of PMLA cases, ensuring that the scales of justice do not disproportionately burden the accused.

End Notes

[i] 2023 SCC Online SC 1244

[ii] A non-obstante clause means a statutory provision that intends to give an overriding effect over the other provision or code. A non-obstante clause is inserted at the beginning of the provision with the objective of providing the overriding effect of the other provision or code.

[iii] Bibhu Prasad Acharya v. ED, (2019) 1 ALT (Crl) 194 (AP)

[iv] Y.S Jagan Mohan Reddy v. CBI, (2013) 7 SCC 439

[v] Upendra Rai v. ED, (2019) 262 DLT 382

[vi] (2018) 11 SCC 1

[vii] (2022) SCC Online SC 929

[viii] (2023) SCC OnLine SC 1393

[ix] 2024 SCC Online SC 848

[x](2011) 10 SCC 235

[xi]2024 SCC OnLine Del 772

Authored by Siddharth Jha, Advocate at Metalegal Advocates. The views expressed are personal and do not constitute legal opinion.


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