SC ISSUES NOTICE ON PLEA CHALLENGING ED'S POWERS UNDER PMLA SECTIONS 50 & 63:

A writ petition has been filed before the Supreme Court challenging the constitutional validity of Sections 50 and 63 of the Prevention of Money Laundering Act, 2002 (PMLA). The petition contends that these provisions violate Articles 14, 20, 21, and 300A of the Constitution. Last week, a bench consisting of Chief Justice of India BR Gavai and Justice AG Masih issued a notice to the Union government in response to the petition and ordered that it be tagged with a similar pending matter (WP(Crl) 65/2023).

Section 50 of the PMLA grants Enforcement Directorate (ED) authorities powers akin to those of a civil court, along with other investigative powers. These include: (1) powers equivalent to those of a civil court; (2) the authority to summon any individual to give evidence or produce documents; (3) a legal obligation upon those summoned to comply with such summons; (4) treatment of such proceedings as judicial proceedings under Sections 193 and 228 of the Indian Penal Code; and (5) the power to impound documents or records produced during the proceedings, provided reasons for such action are recorded.

Section 63, on the other hand, prescribes penalties for furnishing false information or for failing to comply with the provisions of the Act.

The petition raises multiple constitutional and procedural concerns regarding Sections 50 and 63 of the PMLA. It contends that Section 50, particularly the power conferred upon the Enforcement Directorate (ED) to summon and record statements from individuals who are not accused in a case, opens the door to potential coercion and self-incrimination. This, the petition argues, infringes upon the rights guaranteed under Articles 20(3) and 21 of the Constitution. Furthermore, the petition challenges the validity of the Supreme Court’s decision in Vijay Madanlal Choudhary v. Union of India, urging that it should be declared per incuriam, or rendered without proper legal consideration. Given the gravity of the issues involved, the petition seeks a reconsideration of the matter by a larger bench under Article 145(3) of the Constitution, which mandates that substantial questions of constitutional law be decided by a bench of at least five judges. Notably, the Vijay Madanlal decision is already under review by a bench comprising Justices Surya Kant, Ujjal Bhuyan, and N. Kotiswar Singh.

Additionally, the petition criticizes the ED’s expansive investigative powers, especially the practice of not disclosing the Enforcement Case Information Report (ECIR), which it claims facilitates a "roving and fishing inquiry"—a type of indiscriminate investigation that is legally impermissible. The petition also raises due process concerns, asserting that the ED’s practice of summoning individuals without providing reasons violates fundamental rights and the basic tenets of criminal procedure. It emphasizes that every criminal statute must adhere to the principles of fair play and that Indian criminal jurisprudence does not permit the issuance of summons without a justified explanation.

In the Vijay Madanlal Choudhary judgment, the Supreme Court held that officers of the ED are not considered “police officers,” and thus statements recorded by them under Section 50 are not protected by Article 20(3) of the Constitution, which guarantees the right against self-incrimination. The Court stated that the imposition of a fine or the possibility of arrest for providing false information cannot be considered a form of compulsion to testify. It further categorized proceedings under Section 50 as inquiries, not investigations.

The Court also clarified that an ECIR is not equivalent to an FIR and is merely an internal document of the ED. Consequently, the provisions of the Criminal Procedure Code (CrPC) governing FIRs do not apply to ECIRs. The Court held that the ED is not obligated to furnish a copy of the ECIR to the accused; providing the grounds of arrest is deemed sufficient. However, once a person is produced before the Special Court, that court has the authority to request the ED’s records to assess whether continued detention is justified.