Explainer: ED powers, arrest, bail — why is the Apex Court revisiting its landmark 2022 PMLA ruling

The Supreme Court is preparing to revisit one of its most consequential judgments on the Prevention of Money Laundering Act (PMLA), four years after it upheld a range of stringent powers available to the Enforcement Directorate (ED). A newly constituted three-judge Bench headed by Chief Justice of India Surya Kant, and comprising Justices Joymalya Bagchi and V Mohana, will hear review petitions questioning the court's July 2022 decision in Vijay Madanlal Choudhary v. Union of India. The original ruling was delivered on a batch of 241 petitions challenging several provisions of the anti-money laundering law.

The significance of the exercise goes well beyond one case. The 2022 judgment shaped how the ED could investigate money laundering, arrest suspects, attach property and question people, while also endorsing a demanding bail regime for those accused under the PMLA. Critics have argued that the combination gives the investigating agency extraordinary powers while limiting some of the procedural protections ordinarily available to an accused. The government, on the other hand, has defended a stringent legal framework as necessary to combat sophisticated financial crime and prevent proceeds of crime from being concealed or moved.

What exactly is the PMLA?

The Prevention of Money Laundering Act, 2002, is India's principal legislation for combating money laundering. Broadly, it seeks to punish the laundering of proceeds generated through specified criminal activity and enables authorities to trace, provisionally attach and ultimately confiscate property connected with such proceeds. The ED is the principal agency responsible for investigating money-laundering offences under the Act.

A PMLA investigation ordinarily has a link to what is known as a “scheduled offence” — an underlying offence listed in the Schedule to the Act from which the alleged proceeds of crime originate. This makes money laundering distinct from the original crime: the PMLA is concerned with the handling of the proceeds generated from criminal activity relating to the scheduled offence.

Over the years, amendments expanded the law and strengthened the ED's powers. These provisions generated repeated constitutional challenges, particularly over arrest, searches and seizures, attachment of property, statements recorded by ED officers and the stringent conditions imposed on bail.

What did the Supreme Court decide in 2022?

On July 27, 2022, a three-judge Bench comprising Justices A.M. Khanwilkar, Dinesh Maheshwari and C.T. Ravikumar delivered the Vijay Madanlal Choudhary judgment. The court substantially upheld the PMLA framework and rejected challenges to several of the ED's investigative and enforcement powers.

One particularly important conclusion concerned the Enforcement Case Information Report, or ECIR. The ECIR is often described as the ED's equivalent of the document through which it records the commencement of a money-laundering investigation. The Supreme Court, however, held that it could not simply be equated with a police FIR. It treated the ECIR as an internal ED document and held that supplying a copy to every person concerned was not mandatory.

That distinction matters enormously. In an ordinary criminal case, an accused can obtain an FIR and therefore know the allegations forming the basis of the police case. Under the approach endorsed in Vijay Madanlal, an accused under the PMLA does not have an equivalent automatic entitlement to the ECIR.

Why is arrest such a contentious issue?

The PMLA gives authorised ED officers the power to arrest when statutory requirements are satisfied, including having reason to believe, on the basis of material in their possession, that a person is guilty of an offence under the Act. The 2022 judgment upheld the legal framework governing those powers.

The controversy arises from the broader procedural architecture. Critics argue that when an investigating agency can arrest someone without first providing the investigative document comparable to an FIR, the accused may have limited knowledge of the precise case being built against them at a critical stage. Defenders of the law argue that money laundering investigations are fundamentally different from conventional police cases, often involving complex financial trails, multiple jurisdictions and attempts to dissipate assets.

The tension, therefore, is between investigative secrecy and procedural fairness — how much information must be disclosed to a person whose liberty is being curtailed, and at what stage?

Why is getting bail under PMLA difficult?

Section 45 of the PMLA contains what are commonly called the “twin conditions” for bail. The provision creates a substantially higher threshold than the ordinary bail test in many criminal proceedings.

Broadly, before releasing an accused on bail, the court must be satisfied that there are reasonable grounds for believing that the person is not guilty of the alleged offence and is not likely to commit an offence while on bail. That places an unusual burden on an accused seeking liberty before the trial has established guilt.

The twin conditions had previously been struck down by the Supreme Court in its 2017 Nikesh Tarachand Shah judgment. Parliament subsequently amended the law, and in Vijay Madanlal, the Supreme Court upheld the amended bail provision.

This has remained one of the most debated features of the PMLA. At the bail stage, evidence has not yet been fully tested at trial. Requiring a court to reach a preliminary conclusion about whether the accused appears not guilty can consequently make release considerably harder.

What about statements made to ED officers?

Another contentious feature concerns statements recorded during an ED investigation. Under ordinary criminal law, protections surrounding statements made to police officers are intended to guard against compelled self-incrimination and unreliable confessions.

The Supreme Court's 2022 reasoning treated ED officers exercising PMLA powers differently from conventional police officers for these purposes. This distinction has substantial practical consequences because statements recorded during a money-laundering investigation can become important evidence in subsequent proceedings.

For critics, this creates an imbalance: the agency has strong coercive investigative powers without being subjected to every procedural restriction applicable to police. Supporters of the framework argue that the ED performs a specialised statutory function and cannot automatically be treated as a conventional police force.

Why did the Supreme Court agree to a review?

Review petitions followed soon after the 2022 judgment. When the matter initially came before the Supreme Court in August 2022, the court indicated that at least some aspects of the judgment warranted reconsideration. The continuing challenge has since kept alive the larger debate over the balance between the State's power to investigate money laundering and constitutional protections available to individuals.

The review proceedings have taken time. Preliminary arguments were heard before a Bench headed by Justice Surya Kant, and the matter has now moved to a reconstituted Bench. On August 20, 2026, the court settled the new composition after both sides consented. The Bench will comprise CJI Surya Kant and Justices Joymalya Bagchi and V Mohana. Senior advocate Kapil Sibal, appearing for the review petitioners, and Solicitor General Tushar Mehta, representing the ED, raised no objection to the change.

The change itself should not be mistaken for a finding that the 2022 judgment was wrong. A review is a narrowly structured judicial remedy, and the court must first deal with the legal basis on which reconsideration is sought.

Has PMLA jurisprudence changed since 2022?

The legal landscape has not remained static. In cases decided after Vijay Madanlal, the Supreme Court has had repeated opportunities to examine arrest procedures, bail and safeguards governing ED investigations. This developing body of law is important because the practical operation of the PMLA today cannot be understood solely by reading the 2022 judgment in isolation.

At the same time, Vijay Madanlal remains the foundational ruling supporting several important elements of the PMLA regime. That is precisely why the review matters. Any alteration to its central conclusions could affect not merely future investigations but a large body of pending PMLA litigation.

Can the entire 2022 judgment now be overturned?

Not automatically. A review petition is fundamentally different from a regular appeal. The Supreme Court does not ordinarily reopen a concluded judgment simply because another interpretation is possible. Review jurisdiction is exceptional and subject to a much narrower threshold.

That means the forthcoming proceedings should not be understood as the Supreme Court beginning the original PMLA litigation afresh. The crucial preliminary question is the permissible scope of review and which conclusions in Vijay Madanlal can legitimately be reconsidered.

Depending on how the Bench approaches those questions, it could leave the central framework intact, modify particular conclusions or take a course that results in broader reconsideration of aspects of the earlier ruling.

Why does the review matter beyond the ED?

At its core, the case raises a constitutional question familiar to every criminal justice system: how much power should the State possess when investigating serious crime, and what minimum safeguards should remain available to the person being investigated?

Money laundering can involve elaborate corporate structures, cross-border transfers, shell entities and rapid movement of assets, giving the State a strong case for specialised investigative powers. But arrest, prolonged incarceration and restrictions on property directly affect personal liberty and property rights, making safeguards equally important.

The Supreme Court's eventual decision could therefore reshape the balance struck in 2022. It will determine whether one of India's toughest economic-crime laws continues to operate broadly under the framework approved in Vijay Madanlal or whether parts of that framework require recalibration four years later.