Guest Post: Per Incuriam and the Appellate Tribunal's Reading of Section 8(3) PMLA

(This is a guest post by Riddhi Alok Puranik)

A May 2026 order of the Appellate Tribunal constituted under the PMLA 2002 (“ATPMLA”), disposing of four appeals in the NSEL investigation, does something I argue that a Tribunal is not permitted to do. Confronted with a Delhi High Court Division Bench judgment going against how the Directorate of Enforcement read the PMLA, the Tribunal neither followed that authority nor distinguished it on the facts. It held the judgment — Directorate of Enforcement v. Rajesh Kumar Agarwal — to be per incuriam and declined to follow it.

The underlying dispute is narrow. Section 17 of the PMLA allows an authorised officer to search and seize or freeze property. Section 20 allows an authorised officer, on fresh recorded reasons, to retain that property for up to 180 days. Section 8(3) allows the Adjudicating Authority (also constituted under the PMLA) to confirm a retention. Rajesh Kumar Agarwal reads these as sequential i.e. without a Section 20 order the retention is void, and there is nothing for section 8(3) to confirm. The Directorate's case, which the Tribunal accepted, is that Section 8(3) carries an independent power to order retention on a Section 17(4) PMLA application, so that Section 20 may be bypassed altogether.

That interpretive question is contested and is now before the Supreme Court. The Tribunal was entitled to think the Delhi High Court wrong about it. What it could not have done, in my respectful submission, was to declare a Division Bench judgment as per incuriam. This is for two independent reasons: the doctrine does not fit a judgment that construed the very provision said to have been overlooked, and a Tribunal subject to a High Court’s superintendence cannot invoke this rule to avoid a judgment it disagrees with. This piece takes both objections in turn, then sets out why the ED’s reading of section 8(3) fails on the ordinary tools of construction, and finally what is at stake institutionally if the Tribunal’s approach stands.

The Interpretive Question

Three provisions of PMLA govern what happens to property after an ED search:

• Section 17(1) empowers authorised officers to search and seize, or where seizure is impracticable, freeze property, on a recorded reason to believe. Section 17(2) requires the officer to forward those reasons and material to the Adjudicating Authority immediately. Section 17(4), inserted by the 2013 amendments, requires the officer, within thirty days, to file an application before the Authority "requesting for retention of such record or property seized....or for continuation of the order of freezing."
• Section 20 is titled "Retention of property". Section 20(1) provides that where property has been seized or frozen under Section 17, an officer authorised by the Director who has recorded fresh reasons to believe that the property "is required to be retained for the purposes of adjudication under Section 8" may retain or continue the freeze for up to 180 days. Section 20(2) requires that retention order and accompanying material to be forwarded to the Authority. Section 20(3) mandates return of property on expiry of 180 days unless the Authority permits continuation. Section 20(4) requires the Authority, before permitting such continuation, to satisfy itself that the property is prima facie involved in money-laundering and required for adjudication.
• Section 8(3) provides that where the Adjudicating Authority decides under Section 8(2) that property is involved in money-laundering, it shall, "by an order in writing, confirm the attachment of the property made under sub-section (1) of section 5 or retention of property or record seized or frozen under section 17 or section 18" whereupon the attachment or retention may continue during investigation for up to 365 days, or the pendency of proceedings.

The dispute here is about the "or" in Section 8(3) PMLA and the operative verb. Does "confirm" distribute across both objects, so that the Authority confirms either a Section 5 PMLA attachment or a Section 17/18 PMLA retention that must first exist under Section 20? Or, does "or" introduce a separate, verb-free power for the Authority to directly order retention on a section 17(4) application, bypassing section 20 entirely?

What the Delhi High Court Held, and What has Followed

In Rajesh Kumar Agarwal, the Delhi High Court read the PMLA scheme as sequential, where Section 17 supplies the seizure/freeze power, Section 20 supplies the executive-layer retention authority for up to 180 days, and Section 8(3) supplies quasi-judicial confirmation for any continuation beyond that. Section 17(4) PMLA is the procedural mechanism through which the officer brings the matter before the Authority and is not an independent retention mechanism [Rajesh Kumar Agarwal (41)–(60)]. Retention not founded on a Section 20 order is void ab initio, incapable of being cured by later confirmation [Anirudh Pratap Agarwal (88)].

This decision is, for now, settled law in the Delhi High Court. Anirudh Pratap Agarwal v. Enforcement Directorate called Section 20 "the crucial link" between seizure and adjudication [Anirudh Pratap Agarwal (34)]. Directorate of Enforcement v. Poonam Malik followed. Ravi Aggarwal v. Deputy Director, Enforcement Directorate treated Rajesh Kumar Agarwal as binding precedent and held that section 8(3) "only governs confirmation."

Why the Per Incuriam Label Fails

The doctrine does not fit on its own terms

A decision is per incuriam when rendered in ignorance or forgetfulness of an inconsistent statutory provision or a binding authority. The AT-PMLA itself quoted Morelle v. Wakeling and Municipal Corporation of Delhi v. Gurnam Kaur to this effect [M/s N K Proteins (58), (60)], correctly stating that decisions given "in ignorance of the terms of a statute" may be treated as per incuriam. But Rajesh Kumar Agarwal was not rendered in ignorance of section 8(3): it construed that provision exhaustively alongside Sections 17 and 20. 

The ATPMLA held that Rajesh Kumar Agarwal is in conflict with the Supreme Court's judgment in Vijay Madanlal Choudhary v. Union of India. This claim has a structural problem though which the ATPMLA did not confront: Vijay Madanlal Choudhary was a constitutional challenge to the PMLA's enforcement architecture, not a case where the precise sequencing of Sections 20 and 8(3) was in issue. Paragraph 84 of that judgment describes the Section 17(2) and 17(4) safeguards in general terms, noting that the Authority "passes an order of retention" following a show-cause process, as part of the Supreme Court's analysis that the overall scheme contains inbuilt safeguards rendering it constitutionally valid.

It does not decide, because it was not asked to decide, whether a Section 20(1) order is a mandatory precondition to the Authority's section 8(3) power. A constitutional imprimatur on the overall architecture is not a specific holding on a sequencing question within that architecture. A court that subsequently decides that sequencing question does not thereby "ignore" the constitutional approval judgment. The Tribunal treated these as interchangeable when they are not.

Nor does the supposed conflict with Vijay Madanlal Choudhary sustain the per incuriam label even on its own terms. There is a fundamental difference between saying that a judgment is inconsistent with, or departs from, Paragraph 84 and saying that it is per incuriam because paragraph 84 was overlooked. Per incuriam requires ignorance of a binding, applicable ratio; it does not require agreement with every prior holding on a general scheme. The ATPMLA conflated disagreement with a precedent and holding that the precedent was per incuriam, which are entirely different propositions.

A lower adjudicatory body may disagree with a High Court's reasoning, but it lacks the institutional authority to treat that precedent as non-binding on that basis alone.

A Tribunal cannot in any case apply the label to a High Court

Even if the doctrine technically applied, the ATPMLA cannot invoke it against a judgment of the Delhi High Court. This is directly settled. In Union of India v. Chand Singh, the Delhi High Court held that "it is not open to the Tribunal to characterise a judgment of a High Court as per incuriam." [Chand Singh (7)]. One narrow latitude was recognised: where a tribunal has before it Supreme Court judgments that state the law differently from a High Court, it may follow the Supreme Court in preference. That is not a licence to call the High Court wrong on the statute; it is a duty, in cases of genuine conflict, to follow the higher court. That latitude is unavailable here because the claimed conflict with Vijay Madanlal Choudhary does not exist. 

What we have is a statutory tribunal substituting its own reading of section 8(3) for that of the High Court. The constitutional architecture forecloses this. The Supreme Court in East India Commercial Co. v. Collector of Customs held that a tribunal subject to a High Court's superintendence cannot ignore the law that court has declared and proceed in violation of it; if it could, the entire logic of supervisory jurisdiction collapses [East India Commercial Co Ltd (14), (31)]. L. Chandra Kumar v. Union of India placed High Court superintendence over tribunals within the basic structure of the Constitution [L. Chandra Kumar (79), (92)].

Why the ED's Interpretation Cannot Hold: A Convergence of Methods

The foundational error does not depend on the underlying interpretation being wrong. But it is worth examining why multiple orthodox techniques converge against the ED's position, because the Tribunal treated the grammar point as sufficient without considering what it does to the rest of the Act.

Grammar and the distribution of "confirm"

The subject-verb-object structure of section 8(3) is: "he shall, by an order in writing, confirm the attachment... or retention... under section 17 or section 18". "Confirm" is the operative verb, governing a single object list connected by "or." On the ED's reading, "or retention" introduces a power to originate retention, i.e. a power for which there is no verb in the sentence and no source in Section 8's architecture.

The Tribunal read "or" as disjunctive and derived from it a new, separate power. But "or" being disjunctive establishes only that there are two distinct objects; it does not supply a second, different verb [M/s N K Proteins (37)]. Filling that gap requires reading words into Section 8(3) that Parliament did not write, which is precisely what the Supreme Court in Vijay Madanlal Choudhary itself said constitutes rewriting the statute [Vijay Madanlal Choudhary [33)].

The Section 5 PMLA Structural Argument

The most telling textual point comes from a direct comparison with Section 5 of the PMLA. Section 5(1) reads: "he may, by order in writing, provisionally attach such property for a period not exceeding one hundred and eighty days from the date of the order". This language is self-contained. It grants the Director an executive power of attachment directly, sets its own duration, and requires no separate provision to authorise retention. Section 8(3) then "confirms the attachment... made under sub-section (1) of section 5" and it confirms a prior executive order that Section 5 itself generates.

Section 17’s drafting rationale clearly departs from section 5. It could have, in order for it to be construed as a similar self-containing code, included language providing that the seizing officer may, by order in writing, retain such property for a period not exceeding 180 days. It does not thus, replicate the logic of section 5. Section 17 authorises officers to seize or freeze and contains no self-standing retention authority whatsoever. The officer who seizes under Section 17(1) has no power under section 17 to retain. Section 17(4)'s language confirms this: the officer files "an application requesting for retention", the language of petition to another body, not the language of independent executive order.

The retention authority for Section 17 PMLA property was placed, deliberately and separately, in Section 20. Section 20(1) mirrors section 5(1) in structure and provides that property "may, if seized, be retained... for a period not exceeding one hundred and eighty days". That is the executive retention order. Section 8(3) then confirms it, in the same manner that it confirms the section 5 attachment in the attachment track.

The expressio unius (Latin: expression of one thing is exclusion of another) inference is straightforward.  Parliament clearly enacted two enforcement tracks in the same statute. Under the attachment framework in Section 5, the authority to act and the authority to retain the property for 180 days are contained within a single provision. By contrast, under the search-and-seizure framework, Parliament distributed those functions across Sections 17 and 20, with Section 17 authorising the initial seizure and Section 20 governing subsequent retention. This structural choice reflects deliberate legislative design, where both tracks converge at section 8(3) for quasi-judicial confirmation but both require a prior executive order.

The ED’s argument effectively treats a seizure under Section 17 PMLA as the functional equivalent of an attachment under Section 5 for the purposes of Section 8(3). On this view, the Adjudicating Authority may confirm the seizure itself, even in the absence of a prior order under Section 20. Such an interpretation collapses the distinction that the statute deliberately maintains between the attachment and seizure mechanisms. If a seizure under Section 17 were by itself sufficient to attract Section 8(3), Section 20 would cease to perform any independent role within the search-and-seizure framework. The result would be to render Section 20 redundant, which is a consequence that the statutory scheme does not support.

Differential predicates

Section 20(1) PMLA obliges the authorised officer to record reasons showing that the property must be retained for the purposes of adjudication under Section 8. Section 8(2), which serves as the basis for any order under Section 8(3), requires the Adjudicating Authority to make a substantive finding that the property is involved in money laundering. These are materially different standards operating at different stages in the procedural machinery. The Section 20(1) determination is only a preliminary, executive-level judgement about investigative need while the Section 8(2) determination is a quasi-judicial finding on merits.

If the Section 17(4) PMLA application goes directly to the Adjudicating Authority without any section 20 order, the Authority is asked to make a full-blown section 8(2) money-laundering determination at the earliest possible post-seizure stage, before investigation is substantially complete, basis only the material forwarded under section 17(2). Parliament's decision to give the ED 180 days under section 20 exists precisely because that determination cannot responsibly be made immediately. Collapsing these tiers forces the Adjudicating Authority into an adjudication on merits at a stage for which the statutory scheme provides no adequate procedural preparation.

The Convention architecture

The PMLA's Statement of Objects and Reasons, reproduced in the Solicitor General's Note II, names the United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances 1988 as one of the international instruments calling for prevention of laundering of drug proceeds and confiscation of proceeds derived from such offences. Chapter VA of the Narcotic Drug and Psychotropic Substances Act, 1985 (“NDPS Act”) was enacted to implement the same Convention's Article 5 on confiscation, and its seizure-confirmation architecture under Section 68F is a two-step structure where the investigating officer seizes or freezes under section 68F(1), and the quasi-judicial competent authority confirms within 30 days under section 68F(2), failing which property is returned.

That confirmation power is precisely a power of confirmation, not an original power of seizure. PMLA was enacted to address the money laundering which the NDPS regime had left uncovered, extending the Convention's framework to the full range of scheduled offences. If the ED's reading of Section 8(3) as an original retention power were correct, that expanded statute would provide fewer executive-layer accountability steps in its search-and-seizure track than the narrower NDPS regime it was designed to go beyond. That outcome can’t be reconciled with the Centre's own framing of PMLA as giving effect to India's Convention obligations.

The Institutional Stakes

The Tribunal’s interpretive disagreement with the Delhi High Court can very well be legitimate. The question remains contested, and with both Rajesh Kumar Agarwal and Anirudh Pratap currently pending before the Supreme Court, awaiting the Apex’s resolution on interpretation. The difficulty lies not in the Tribunal’s disagreement, but in the institutional consequences it drew from it.

The ATPMLA sits in a legal order where it is subject to Delhi High Court jurisdiction under Articles 226 and 227 of the Constitution and, hears appeals that travel to the High Court under Section 42 of PMLA, and has before it a consistent body of Division Bench authority directly on point. If it disagrees with that authority, the remedies open to it are narrow and well-defined, which are to follow the High Court while recording the difficulty and distinguish on facts where facts genuinely differ. Declaring a Division Bench judgment per incuriam is not one of those remedies.

The practical consequences of the Tribunal's approach, left unchallenged, are that Section 20 protections become effective only for those who can afford to litigate back to the High Court under Section 42. The Adjudicating authority cites the ATPMLA and thus it has immunised itself from High Court correction. Property seized without a Section 20 PMLA order stays seized, and Article 300A operates at the Tribunal's discretion rather than as a function of law. That is not a procedural quibble. It is the difference between a safeguard that functions and one that exists only on paper.

Guest Post: 'Complaint Cases' as Scheduled Offences under the PMLA

(This is a Guest Post by Sandeep Dash)

On 16.12.2025, a Court of the Special Judge, PMLA, in Rouse Avenue Courts, Delhi, passed a detailed order refusing to take cognizance of the Prosecution Complaint (‘PC’) under provisions of the Prevention of Money Laundering Act, 2002 (‘PMLA’) by the Enforcement Directorate (‘ED’) in the National Herald case.

The investigation and PC in the case stemmed from an order by the Court of a Metropolitan Magistrate taking cognizance of offences on a ‘private complaint’ by Dr. Subramanian Swamy against Sonia Gandhi, Rahul Gandhi and others alleging commission of offences under Sections 403, 406 & 420 read with Section 120B of the IPC, 1860. The details of the allegations in the said complaint are secondary to the present discussion.

During the pre-cognizance hearing (introduced under the BNSS), the proposed accused argued against maintainability of the PC, arguing that the ED had no jurisdiction to commence investigation under the PMLA in the absence of a First Information Report (‘FIR’) for the scheduled offence. Since the scheduled offence was based only on a complaint filed by a ‘private person’ under Section 200 Criminal Procedure Code 1973, it failed to meet the threshold requirement of an ‘FIR’ to initiate investigation and prosecution. On the contrary, the ED argued that PC was maintainable, as the scheduled offence could arise under three situations – either from a FIR, or a statutory complaint by a public servant or a private complaint.

The Court’s order hinges on the determination of a question of law that it frames early in the order – whether the registration of a FIR for the scheduled offence is a threshold requirement for investigation and consequent prosecution under the PMLA? Answering in the affirmative, the court reasoned that the ‘investigative potential of a FIR’ was much more than a ‘complaint’. In the facts of the case, I agree with the decision of the court. However, by framing the issue only around the necessity of an FIR, the court created an impression that an FIR is the only condition under which investigation and prosecution under the PMLA can be initiated.

I argue that a more general line of enquiry, with the question formulated as – ‘what is a threshold requirement for investigation and consequent prosecution under the PMLA?’ yields more appropriate answers to the when a scheduled offence is said to have been committed for triggering a PMLA investigation. In this, I argue firstly, that while it is correct that institutional investigation is a sine qua non for triggering PMLA investigation, the same can be done through ‘complaint cases’ and not necessarily only through FIRs; and secondly, that the law laid down in Vijay Madanlal Chaudhary indicates additional safeguards in such non-FIR scheduled offences.

The law on money laundering, as it is now understood in India, is hinged upon two key concepts – the ‘scheduled offence’ and ‘proceeds of crime’. Money laundering is variously described to be a ‘piggy-backing’ offence; others have called it a ‘parasitic’ and ‘dependent’ offence. What this means is that an offence of money laundering can come into the picture if and only if another offence has already taken place. This latter offence is called a ‘Scheduled Offence’, and ought to be one or more from among the various offences listed in the Schedule to the PMLA.

For instance, for laundering murder ransom money, the commission of murder is a prerequisite. The offence of ‘murder’ then becomes the ‘Scheduled Offence’ and the ransom ‘derived and obtained’ by committing this ‘Scheduled Offence’ becomes ‘Proceeds of Crime’. As soon as any dealing is done with these ‘Proceeds of Crime’ (handling, concealing, transferring, transforming, etc.), an offence under the PMLA can be said to be made out. What that means is that you may not have murdered anybody, and hence, will not be liable for the offence of murder u/s 302 of the Indian Penal Code, 1860 (S. 101 of the Bharatiya Nyaya Sanhita, 2023), but still be liable for helping move the ransom money under Section 3 of the PMLA.

For the purpose of the PMLA, when is a scheduled offence said to have been committed? Can it be said to have been committed at the moment of its actual physical commission, as in when the murderer’s axe lands on the neck of the victim, and he dies? Or can it be said to have been committed when the law is set in motion against such a murderer, as in his arrest or the making of a complaint about the murder by an eyewitness, or registration of an FIR? Or, further still, can it be said to have been committed when the issue is investigated by the police, and a formal charge is filed before the court?

Answering this question is key to understanding and answering the question facing us – at which stage can the ED jump in and initiate proceedings under the PMLA? Can it initiate PMLA proceedings, when –

1. Though a ‘Scheduled Offence’ has been committed, it has neither been reported nor investigated.
2. Though not investigated, it has been reported.
3. It has been investigated, and the perpetrator has been formally accused.

The bare statute of PMLA is not very helpful in answering this question. However, some help came in the form of Paragraph 31 in Vijay Madanlal Chaudhary: “The authorities under the 2002 Act cannot resort to action against any person for money-laundering on an assumption that the property recovered by them must be proceeds of crime and that a scheduled offence has been committed, unless the same is registered with the jurisdictional police or pending inquiry by way of complaint before the competent forum. For, the expression “derived or obtained” is indicative of criminal activity relating to a scheduled offence already accomplished. Similarly, in the event the person named in the criminal activity relating to a scheduled offence is finally absolved by a Court of competent jurisdiction owing to an order of discharge, acquittal or because of quashing of the criminal case (scheduled offence) against him/her, there can be no action for money-laundering against such a person or person claiming through him in relation to the property linked to the stated scheduled offence.”

What we see in these paragraphs is some narrowing down of the situations when the ED can exercise the full range of its powers. Two situations emerge:

• A scheduled offence has been committed, and the said offence is registered with the jurisdictional police, i.e., an FIR under Section 154 Cr.P.C.OR
• A scheduled offence has been committed, and it is pending inquiry/trial by way of a Complaint (There is a 3rd, very important situation where the ED may jump in to a limited extent, i.e., through disclosure u/s 66(2) of PMLA, which is beyond the scope of this discussion).

Situation (i) is straightforward, and the registration of a FIR is enough for the ED to get going. This is not disputed by anybody. Situation (ii) is the tricky bit, and it is essential to understand what the words ‘Complaint’ and ‘pending inquiry’ mean here. First, what is a ‘Complaint’? Under the criminal procedure in India, the criminal law can generally be set in motion either through the police/other Law Enforcement agencies competent to file Final Reports u/s 173 Cr.P.C. or by way of complaints, made directly to the Magistrate u/s 200. We are not concerned about the police here, but rather with the route of ‘complaint’.

These complaints can be made by two kinds of persons: firstly, by private persons and secondly, by certain authorities. In case of private persons, for instance, anyone may initiate criminal proceedings by filing a ‘private complaint’ before the Magistrate, who can then either order the registration of an FIR and investigation by the police, or may take cognizance and proceed for a trial based on the material in the complaint itself. This latter route is the way that Dr. Subramaniam Swamy’s complaint came to be.

Would such a complaint, disclosing offences mentioned in the schedule to the PMLA, confer jurisdiction to the ED? Would that not mean that a complaint filed by anybody (which includes a ‘nobody’) can become the basis for subsequent action by the ED? Dr. Subramaniam Swamy perhaps has nothing to do with the National Herald, and in that sense, is not even a ‘victim’. Can such complaints, often political, be enough for the ED to move in? Will it not be an affront to justice if anybody and everybody is handed the power to potentially become the architect of a money laundering investigation?

These are legitimate questions; however, the court’s order does not venture into this territory of enquiry. Instead, it looks at the bare statute of PMLA and accompanying rules. The first proviso to Section 5(1) of the PMLA in the context of a provisional attachment order says that – “Provided that no such order of attachment shall be made unless, in relation to the scheduled offence, a report has been forwarded to a Magistrate under section 173 of the Code of Criminal Procedure, 1973 (2 of 1974), or a complaint has been filed by a person authorised to investigate the offence mentioned in that Schedule, before a Magistrate or court for taking cognizance of the scheduled offence, as the case may be, or a similar report or complaint has been made or filed under the corresponding law of any other country”

Reading this (this is the only remaining place in the entire act, where this issue finds mention) suggests that it is only the complaints filed by the authorities investigating under the respective offences mentioned in the schedule that can be the basis of action by the ED. A similar provision is part of Rule 3(2) of the Prevention of Money-Laundering (Forms, Search and Seizure or Freezing and Manner of Forwarding the reasons and Material to the Adjudicating Authority, Impounding and the period of Retention) Rules, 2005.

A contextual reading of the order, where it interprets Vijay Madanlal Chaudhary, does reveal that the court was cognizant of the possibility of such non-FIR-based scheduled offences (See Para 151 of the order). However, the restrictive framing of the question prevented the court from delving deep into why it is only the kind of private ‘complaint’ case filed by Dr. Subramaniam Swamy that fails to meet the threshold for the ED to investigate, and not all complaint cases in general.

In the order, the court misattributes wide investigative powers (arrest, search, recording of statements, etc.) only to an Investigating Officer investigating under an FIR. The discussion by the court gives an impression of a blanket exclusion of complaint cases. But if that is the case, how would non-IPC offences, which are part of the schedule to the PMLA, but require no FIR for investigation, and are prosecuted through ‘complaints’ under Section 200 Cr.P.C., trigger a PMLA investigation?

An illustrative list of offences in the schedule that are investigated by ‘authorities’ other than police, and prosecuted by way of ‘complaints’, is useful:

Sr. No.	Act in the PMLA Schedule	Offences in the Schedule	Investigative Authorities	Empowering Section
1.	Environment Protection Act, 1986	Section 15 r/w 7 and Section 15 r/w 8	Several officers, including the District Collector, Secretary to the Ministry/Department of Environment, the Seed Inspector, Officers in the Central & State Pollution Control Boards, etc.	Section 19 r/w Notification No. S.O. 394(E), published in Gazette No. 185, dt.16.4.1987 & further amendments
2.	Customs Act, 1962	Section 135	Officers of the Customs Department	Section 137
3.	Securities and Exchange Board of India Act, 1992	Section 12A r/w 24	Securities and Exchange Board of India	Section 26 r/w 2(1)(a)
4.	Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015	51	Income Tax Department	Section 55

 

Note that many of these authorities can also exercise powers of arrest, search, and seizure, recording of statements, collection of specimens, etc., under their respective special laws, despite not being ‘police’. A cumulative reading of the statute, the schedule and the law laid down by the Supreme Court in Vijay Madanlal Chaudhary points to the fact that not all scheduled offences arising out of complaint cases are out of bounds for the ED. Complaint cases by persons authorized to investigate those offences, where there is no provision for an ‘FIR’ can be the basis for investigation by the ED.

Insofar as a ‘complaint case’ by a private person is concerned, the court was right in its order to hold that it cannot be the basis for action by the ED. Apart from the reasons discussed above, there are other logistical and ethical reasons for not allowing something like this. From the perspective of the state, collusive and weak complaints are often filed to defeat a genuine complaint, which would then defeat the PMLA case. From the perspective of the accused, as is the situation in the present case, Mr. Swamy allegedly delaying the trial in the complaint case, thereby also potentially compromising the progress of the PMLA case, is also a case in point.

The second leg of my argument is that in complaint cases, the ED cannot investigate until the court before which the complaint has been filed by the concerned authority has taken cognizance of the complaint. There are two legs to this argument. The first needs us to understand what the phrase ‘pending inquiry’ used above in Paragraph 31 in Vijay Madanlal Chaudhary. I argue that the stage of inquiry in a Complaint case is always post-cognisance by a magistrate, in terms of the ratio laid down by the Hon’ble Supreme Court in Rameshbhai Pandurao Hedau & Pradeep S. Wodeyar. In fact, in most places, complaint cases are not formally registered/numbered till the court has taken cognizance of the case. Dr. Abhishek Manu Singhvi, in an election affidavit filed before getting elected to the Rajya Sabha, gave a glimpse into this practice. The image is attached below.

This means that the ED, in case the scheduled offence is not registered by way of a FIR/Chargesheet but rather, a ‘Complaint pending inquiry’ filed by a person authorized to investigate that offence, can exercise jurisdiction if and only if the magistrate/court has taken cognizance of such a complaint. Where no cognizance has been taken in a complaint case, the ED cannot prosecute, as it would have no locus to investigate the case.

There is also a logical answer to why cognizance is important in ‘complaint cases’. Time and again, the highest courts of the country have decisively held that there ought to be a judicial application of mind before passing an order of cognizance. The summoning of an accused in a criminal trial is a serious matter, which must be done after a thorough examination of the evidence, both oral and documentary. A summoning order can be passed only after providing cogent reasons – this position of law was most recently reiterated and summarized by the Supreme Court in JM Laboratories. 

In complaint cases, this threshold must be strictly enforced. The reason is simple – investigations by the police are technically supposed to be monitored by the area magistrate where the police station falls, and thus, at least theoretically, the investigation is judicially monitored. In complaint cases, even by authorities, no such monitoring exists, and thus, greater scrutiny is warranted.

Guest Post: A Battle Between Bail and Silence — Comparing Section 45 PMLA with US Pre-Trial Prosecutorial Discovery

(This is a guest post)

The present post analyses the constitutionality of restrictive bail conditions in the Indian anti money laundering law from the perspective of the right against self-incrimination. Section 45 of the Prevention of Money Laundering Act, 2002 (“PMLA”) imposes twin conditions that an accused must meet to secure bail: (i) satisfy a court that there are “reasonable grounds to believe” that the accused is “not guilty of the offence”, and (ii) that the accused is unlikely to commit any further offences while on bail. By way of background, the Indian Supreme Court dismissed a challenge to Section 45, PMLA in Vijay Madanlal Choudhary v. Union of India. Petitions seeking a review of the judgment are pending). However, neither the original judgment nor grounds taken in the review petition sufficiently discuss the interplay between Section 45, PMLA, and the right against self-incrimination.

This post employs a comparative analysis of case law pertaining to pre-trial prosecutorial discovery rules in criminal cases in the United States to explore the intersection between Section 45, PMLA, and the right against self-incrimination.

Hypothetical Scenario: The Conflict Between Self-Incrimination and Disclosure of Material During a Bail Hearing

Imagine an accused is facing charges of money laundering, with one of the key allegations being that they received the proceeds of a crime from person X at location Y on a specific date. Aware that they must provide prima facie evidence of innocence to secure bail, the accused submits an affidavit to the court asserting that their mobile phone’s GPS data places them far from location Y at the relevant time. In response to this assertion, the prosecution requests the accused’s phone password to verify the accuracy of the GPS data. Apprehensive that failure to comply with this request could result in their bail application being denied, the accused agrees to provide the password to unlock the phone voluntarily.

Upon inspection, the prosecution confirms accuracy of the GPS data, but in the process, examines other files and data on the phone, discovering additional incriminating material that they were not aware of. The prosecution subsequently submits a counter-affidavit, which includes this newly discovered material. In response, the accused argues that this material should not be taken into consideration, asserting that it was obtained through their compelled disclosure and is therefore subject to the protections afforded by the right against self-incrimination. The prosecution argues that the password was provided voluntarily without any court order, and it does not amount to compelled disclosure.

I’ll build on this example and examine the constitutionality of pre-trial disclosures made by an accused during the bail stage.

US Case Law

The Indian guarantee against compelled self-incrimination avowedly borrows from the self-incrimination clause of the Fifth Amendment to the U.S. Constitution. Historically, the values of the American accusatorial system required the state to shoulder the entire burden in a criminal prosecution without any compelled help from the accused and the accused is not required to disclose their defence until the prosecution has presented its case. However, this privilege has been eroded through legislative provisions that require the accused to disclose certain portions of their evidence before trial.

In Williams v. Florida (“Williams”), the rule under challenge required the accused to disclose a list of alibi witnesses before trial. The accused was convicted and appealed against conviction on the ground that compelling him to reveal the name of his alibi witnesses violated his right against self-incrimination. However, the challenge was dismissed by the U.S. Supreme Court. To reach its conclusion, the Court first recognised that the privilege against self-incrimination consists of three elements: (i) compelled disclosure (ii) related to testimonial matter (iii) incriminating nature of the communication. The Court held that two elements, i.e., testimonial communication and ‘tendency to incriminate were present in the rule requiring disclosure of alibi witnesses. However, it concluded that the relevant rule did not compel the accused to disclose alibi witnesses. It reasoned that the defence had intended to present the alibi witnesses at trial regardless, and by providing the prosecution with this information prior to trial, the defence was simply ‘accelerating the timing of the disclosure’, thereby facilitating a more efficient trial process. It was held that even during the trial, the accused would still face the same choice: (i) to remain silent, or (ii) to offer a defence that could potentially lead to self-incrimination through cross-examination.

‘Acceleration of timing’ is an established principle today based on which pre-trial discovery by prosecution has been expanded vastly over the years. It is widely believed that prosecutorial discovery enhances the state’s ability to rebut the accused’s case and effectively cross-examine their witnesses. In light of the analysis of Williams, the issue arises as to whether the prosecution is entitled to seek any and all forms of disclosure under the guise of the ‘acceleration of timing’ principle. The subsequent cases suggest a different interpretation.

There are two ways in which pre-trial discovery from an accused can assist the prosecution. It can either (i) help prosecution in investigating the grounds of defence taken by the accused and consequently, help in preparing rebuttal evidence to the defence of the accused; and (ii) provide leads to the prosecution that can help in building a case-in-chief against the accused.

Various commentators have argued that Williams was only concerned with and envisaged the preparation of rebuttal evidence using pre-trial discovery by an accused. The Court's reasoning supports this argument. Firstly, the court equated the situation of pre-trial discovery with the stage of defence evidence at a trial, where the accused must reveal the identity of their witnesses and submit them to cross-examination, which may furnish the State with leads to incriminating rebuttal evidence. Therefore, the court only intended to confine itself to rebuttal evidence while testing constitutionality of the discovery rule requiring disclosure of alibi defence. 

In this regard, it is further pertinent to recall that in Williams, the Court held that the alibi discovery rule did not amount to a compelled disclosure since the choice between (i) remaining silent and (ii) presenting a defence that might incriminate the accused through cross-examination or provide leads to the state to impeach their witness is ‘inherent in the trial process’. The natural corollary of this reasoning is that choices compelling an accused to make choices not inherent in a trial process amount to a compelled disclosure and, hence, violate the right against self-incrimination. In a case where the accused’s disclosure can be used to build the prosecution’s case-in-chief, the accused’s decision whether or not to disclose requires them to choose between defending by affirmative evidence or defending by failure of government proof. 

In his article on prosecutorial discovery, Prof. Eric Blumenson argues that such a choice is not inherent in the trial process, since at a trial, the accused leads evidence only after the government proves a prima facie case, and hence, the adversarial criminal process protects an accused from aiding the prosecution in building its case in chief. Therefore, if the prosecutorial discovery rule, as approved in Williams, is used by the prosecution to build its case in chief, the said discovery would not pass the ‘acceleration of timing’ principle in Williams and, accordingly, would violate the right against self-incrimination.

Secondly, the fact that the majority opinion’s focus was only on rebuttal evidence can be gauged from the examples it cites in the opinion. The Court gave an example to the effect that if the disclosure rule was not in place, the way alibi testimony would have played out is that the prosecutor would have asked for a continuance / adjournment after the alibi witness’s examination-in-chief and would have found rebuttal testimony to impeach the alibi witness before cross-examining them. The Court concluded that since the said sequence of events would not violate the accused’s right against self-incrimination, neither would the pre-trial discovery rule at issue in Williams. Therefore, the said example makes it evident that the scope of Williams was limited to rebuttal evidence and the judgment did not envisage use of prosecutorial discovery as a tool to build a case-in-chief.

The Scarcity of Jurisprudence on the Use of Pre-Trial Discovery from the Accused to Construct the Prosecution’s Case-in-Chief

There appears to be a dearth of case law addressing whether pre-trial discovery from the accused can be used by prosecution to build its case-in-chief. Before Williams, the California Supreme Court in Prudhomme v. Superior Ct (“Prudhomme”) delineated two important points concerning the right against self-incrimination: (i) the right against self-incrimination is compromised when the disclosure could potentially ease the prosecution’s burden of proving its case in chief and the accused’s disclosure cannot be used for the said purpose; (ii) any disclosure that could serve as a “link in a chain” of evidence establishing the accused’s guilt is prohibited under the principle of right against self-incrimination.

Another Californian case took the same view as Prudhomme. In re Misener (“Misener”), a broader interpretation than Prudhomme was taken when the majority held that Fifth Amendment privilege does not end upon the establishment of a prima facie case by the prosecution and that it barred any prosecutorial discovery that prevented the prosecution from carrying the entire burden of proving the accused guilty beyond a reasonable doubt, whether compelled disclosure might serve to make the prosecution’s case or to unmake the accused’s.

Therefore, in Prudhomme and Misener, the California Supreme Court explicitly recognised that any pre-trial disclosure that lessens the burden of the prosecution in proving its case-in-chief is unconstitutional. However, none of these cases dealt with a scenario in which the prosecution used pre-trial disclosure to build its case-in-chief.

Both Prudhomme and Misener were subsequently overruled in Izazaga v. Superior Court. Here, the California Supreme Court sustained a broad reciprocal disclosure requirement, rejecting the Prudhomme analysis. The California Supreme Court held that under the rationale of Williams, pre-trial discovery does not constitute compelled self-incrimination. Therefore, Prudhomme and Misener were overruled based on the reasoning in Williams, which was itself confined to envisioning pre-trial discovery for the purpose of collecting rebuttal evidence, rather than for building the prosecution’s case-in-chief.

It is pertinent to note that the issue of whether the prosecution can use pre-trial discovery to build its case-in-chief was not answered and has remained unanswered. There is no denying that prosecutorial pre-trial discovery over the years has become broader. For example, trial court rulings, based on the ‘acceleration of timing of disclosure’ laid down in Williams, have accepted a requirement of advance notification of defences, of expert witnesses, and of all other witnesses. Nevertheless, it can be fairly argued that these pre-trial disclosures should serve solely to counter defence witnesses and cannot be utilised by the prosecution to establish its case-in-chief. 

An example of this principle can be found in a trial court judgment in State v. McClaren in which while allowing pre-trial discovery, the court held that “any concerns defendant has concerning the disclosure [itself] potentially being used by the prosecutor in the case-in-chief could be addressed by an in camera review by the circuit court.” Further, even in Izazaga, which overruled Prudhomme and Misener, the concurring opinion by Justice Kennard mentions that there is a limitation on the manner in which the prosecution may use the discovery, and that it would be “impermissible for the prosecution to use, as part of its case-in-chief, evidence gained through discovery of statements of potential defense witnesses.” Therefore, while courts have been liberal in allowing prosecutorial pre-trial discovery based on Williams' acceleration principle, they are cognizant of the possibility of violation of the Fifth Amendment Principle if the said discovery is used for building prosecution’s case-in-chief.

Applying U.S. Pre-Trial Discovery Principles to the Hypothetical Scenario in Bail Proceedings under Section 45, PMLA

The principles discussed in the preceding section regarding pre-trial prosecutorial discovery should be applied in bail proceedings under PMLA. The justification for this is evident: Section 45, PMLA forces the accused to reveal their defence at a pre-trial stage. Consequently, bail proceedings under PMLA mirror the function of pre-trial prosecutorial discovery, insofar as they afford the state early access to key aspects of the accused’s defence before the commencement of trial.

Accordingly, applying these principles in the Indian context, the argument remains that if the prosecution uses the information disclosed by the accused to build the ‘foundational facts’ in its counter-affidavit (or the chargesheet later), the same would violate Article 20 (3) of the Constitution. Currently, the prosecution is not restricted from doing this, and in practice, the prosecution routinely files supplementary reports / complaints based on arguments made by the accused at the bail and charge stage to plug loopholes in its case-in-chief. Accordingly, even as per a broad interpretation of discovery rules under U.S. jurisprudence, the current use of Section 45, PMLA is violative of Article 20 (3) of the Constitution.

In light of the discussion of jurisprudence surrounding pre-trial prosecutorial discovery in the U.S., it can be concluded that Section 45, PMLA directly impacts the right against self-incrimination. The compelled disclosure of the accused’s defence at this stage undermines the privilege against self-incrimination. The argument that such disclosure is voluntary overlooks the coercive nature of the choice between liberty and silence. Courts must adopt a restrictive interpretation of Section 45, PMLA to prevent its misuse by the prosecution as a tool to build its case-in-chief through the accused’s pre-trial disclosures at the bail stage. This approach ensures that bail proceedings do not become a prosecution strategy session.