Vijay Madanlal and the PMLA Framework: What the 2022 Constitutionality Ruling Established

The Supreme Court’s decision in Vijay Madanlal Choudhary v. Union of India, 2022 INSC 757, is the principal modern authority on the structure of the Prevention of Money-Laundering Act, 2002. It upheld several challenged provisions, including the statutory scheme for inquiry, arrest, attachment and bail.

The offence and proceeds of crime

Section 3 requires involvement in a process or activity connected with “proceeds of crime”, a term linked to property derived or obtained from criminal activity relating to a scheduled offence. The scheduled offence supplies the criminal source; money laundering is a separate offence focused on dealing with its proceeds.

The Court treated Section 3 as covering the listed forms of involvement, including concealment, possession, acquisition, use, projecting or claiming tainted property as untainted. Liability nevertheless requires proof of the statutory elements against the particular accused.

ECIR and investigation

The Court held that an Enforcement Case Information Report is an internal ED document and is not equivalent to an FIR. It did not require supply of the ECIR in every case, but emphasised communication of the grounds of arrest under Section 19. Later decisions, including Pankaj Bansal, have strengthened the practical requirement that grounds be furnished in writing.

Bail and self-incrimination

The judgment upheld the twin conditions in Section 45. It also sustained the Section 50 summons-and-statement framework, reasoning that officers exercising those powers are not police officers for the rule governing confessions to police. The voluntariness and evidentiary use of a particular statement can still be contested on the facts.

Limits of the ruling

Vijay Madanlal does not eliminate judicial review. ED action must satisfy the text of the PMLA, constitutional protections and later binding decisions. Nor does the judgment permit prosecution without identifiable proceeds connected to a scheduled offence.

Sources

Supreme Court of India, Vijay Madanlal Choudhary v. Union of India, 2022 INSC 757: https://api.sci.gov.in/supremecourt/2014/3989/3989_2014_4_1501_36874_Judgement_27-Jul-2022.pdf

Prevention of Money-Laundering Act, 2002: https://dor.gov.in/prevention-money-laundering

#PMLA #MoneyLaunderingLaw #SupremeCourt