ED Raids and the Saurabh Bhardwaj Case: Kafkaesque Procedure or Due Process?

Architecture of Money-Laundering Law: An Academic Appraisal

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Karan Bir Singh Sidhu is a retired officer of the Indian Administrative Service (Punjab cadre) and former Special Chief Secretary to the Government of Punjab. He holds an M.A. in Economics from the University of Manchester, UK. His writings explore the intersection of due process, personal liberty, money-laundering jurisprudence, and the need for expeditious trials, with a focus on constitutional fidelity and governance reform.

Enforcement Directorate and PMLA Back in Focus

Today’s (26 August) Enforcement Directorate raids at premises linked to Saurabh Bharadwaj, the former Delhi Health Minister, in connection with alleged money laundering tied to hospital and health-infrastructure projects in the National Capital Territory, have once again placed the Prevention of Money-Laundering Act, 2002 (PMLA) at the centre of political and legal debate. The predicate offence rests on an Anti-Corruption Branch (ACB), Delhi, FIR dated 26 June 2025, which concerns alleged irregularities across 24 hospital projects in the capital, collectively valued at over ₹5,500 crore. Leaders of the Aam Aadmi Party (AAP) immediately decried the action as political vendetta, drawing parallels to Kafka’s The Trial, where an individual is compelled to defend himself in a process that seems opaque, endless, and detached from clarity. Beyond partisan narratives, however, lies the need for a careful academic appraisal of how the law functions, where it draws its strength, and where constitutional limits assert themselves.

I. The Legal Architecture in Outline

The PMLA rests on three sequential pillars:

1. Trigger and Scope. The law punishes money-laundering connected with “proceeds of crime,” defined as property derived from a scheduled (predicate) offence. Without such an underlying crime, PMLA cannot stand.

2. Investigatory Instruments. The ED initiates an ECIR, distinct from a police FIR and not ordinarily supplied to the subject. From this point, it may summon individuals for testimony and documents (Section 50), conduct searches and seizures, and provisionally attach property to prevent dissipation.

3. Adjudication and Trial. Following investigation, a prosecution complaint is filed before a Special Court. Once the Court takes cognizance, investigation powers continue, but custodial decisions fall under judicial supervision.

This structure is essential for understanding both the powers of the ED and the safeguards afforded to individuals.

II. The Predicate (Scheduled) Offence: Jurisdiction’s Keystone

The predicate offence is the jurisdictional condition for the ED. Without a scheduled offence, there are no proceeds of crime; without proceeds, there is no laundering.

• Existence of a predicate offence. The ED’s powers are triggered by the presence of a scheduled offence that has generated tainted value. General suspicion of irregularity is insufficient.

• Need not be named in the FIR. A person may be culpable in laundering even if not named in the predicate FIR. What matters is a demonstrable nexus with proceeds of a scheduled crime.

• Impact of acquittal. If the predicate offence is quashed or ends in acquittal on the merits, the laundering prosecution ordinarily collapses. By contrast, if the predicate survives against others, laundering charges may still be pursued against anyone tied to processing those proceeds.

This architecture ensures that laundering prosecutions are not free-floating but anchored in demonstrable criminality.

Section 17A PC Act: a safeguard in CBI/police/vigilance cases—not for ED under PMLA

Section 17A of the Prevention of Corruption Act, 1988—inserted with effect from 26 July 2018—requires prior approval of the appropriate government before police agencies (such as the CBI or State Vigilance/ACB) can conduct any enquiry or investigation into decisions taken by a public servant in the discharge of official functions. This procedural shield does not extend to proceedings under the PMLA: the Enforcement Directorate does not investigate the corruption offence itself, but probes the laundering of “proceeds of crime” arising from a scheduled offence (which may be a PC Act offence). Consequently, ED powers to search, summon, attach, and arrest under the PMLA are not contingent upon a Section 17A approval, even where the predicate involves alleged corruption by incumbent or former public servants; the Section 17A approval requirement applies to the predicate investigation by police/vigilance, not to the ED’s money-laundering inquiry or investigation.

III. The ECIR and the Summons Paradox

The ECIR is an internal document, not shared with the subject. Instead, individuals are summoned under Section 50 to appear, produce documents, and answer questions on oath. This raises a dilemma: is one a witness or a suspect?

Unlike police questioning under the general criminal code, where statements are unsigned and limited in use, Section 50 compels sworn answers with penalties for silence or falsehood. Yet the constitutional privilege against self-incrimination remains: individuals may not refuse to attend, but they may decline to answer specific incriminating questions. The challenge lies in exercising this privilege carefully, recognising that refusal in entirety can itself attract sanction.

IV. Arrest and Procedural Safeguards

Arrest requires an authorised officer’s reason to believe, based on recorded material, that the person is guilty of laundering. Two safeguards have gained prominence:

• Written grounds of arrest. The person must be furnished with the concrete written grounds, ensuring transparency and enabling judicial scrutiny.

• Judicial control post-cognizance. Once a Special Court takes cognizance of the ED’s complaint, the ED cannot unilaterally arrest an accused not previously taken into custody. If custody is required, the Court must authorise it.

These developments reflect an increasing insistence that executive power be checked by procedural rigor.

V. Attachment First, Explanation Next

Provisional attachment enables rapid freezing of suspected proceeds to prevent concealment or transfer. By design, there is no pre-attachment hearing. But this speed is balanced by adjudication: the ED must bring its order before the Adjudicating Authority, where the affected party can contest the action in adversarial proceedings. Attachments fall where reasons are mechanical or where the predicate base is absent.

VI. Complaint, Cognizance, and Equilibrium

Unlike police chargesheets, PMLA prosecutions commence with a prosecution complaint. Cognizance marks the transition from executive control to judicial oversight. With the coming into force of the BNSS on 1 July 2024, the Supreme Court has clarified that when the Enforcement Directorate files a complaint under the PMLA on or after that date, the Special Court must provide the proposed accused an opportunity of being heard before taking cognizance under Section 223 of the BNSS. Orders of cognizance passed without such a hearing have been set aside. This BNSS-based hearing requirement did not exist under the earlier Code of Criminal Procedure and represents a significant new safeguard in favour of personal liberty and fair process.

• Summons and bond rather than immediate custody for those not previously arrested.

• Judicially authorised custody only if strictly necessary.

• Disclosure discipline, requiring clear identification of relied and unrelied documents.

This reflects a maturation of practice, emphasising fairness without diluting the law’s reach.

VII. Bail, Article 21, and the Burden of Time

Article 21’s promise of liberty through procedure established by law requires strict compliance. Courts have quashed arrests where statutory safeguards—such as written grounds—were ignored.

Equally, time matters. PMLA cases often involve thousands of documents and hundreds of witnesses, making decade-long trials possible. In such conditions, pre-trial custody risks becoming punishment by delay. Courts are increasingly willing to grant bail, with conditions, when prolonged incarceration is disproportionate to trial timelines. The principle is simple: even in stringent laws, liberty cannot be hostage to administrative difficulty.

VIII. Application to the Delhi Hospital Raids

In the present controversy involving the former Delhi Health Minister Saurabh Bharadwaj, three legal issues dominate:

1. Predicate clarity: which scheduled offences, if any, generated the alleged proceeds.

2. Procedural compliance: whether arrests, if effected, were supported by written grounds and conformed to post-cognizance discipline.

3. Proportionality in trial: if the case evolves into voluminous records and protracted hearings, bail applications will engage Article 21’s mandate for a fair and speedy trial.

These are legal inquiries, not partisan judgments.

IX. Conclusion: Courts as the Constitutional North Star

The judiciary remains the ultimate arbiter of balance in money-laundering cases. The PMLA equips the State with stringent powers, but it does not displace constitutional safeguards. The predicate offence anchors jurisdiction, written grounds of arrest secure transparency, adjudication tempers attachment, and judicial control after cognisance ensures fairness. Above all, Article 21 requires that “procedure established by law” be construed strictly.

In an era of sprawling economic offences and politically charged investigations, the courts’ insistence that trials not become indefinite and that bail be granted where process itself risks becoming punishment is not indulgence—it is fidelity to the Constitution. Kafka may still haunt the imagination, but in India’s constitutional framework, the courtroom, not the corridor, remains the final word.