The Supreme Court has expressed serious concern over the Enforcement Directorate’s (ED) authority to provisionally attach and seize assets without prior judicial scrutiny, flagging the potential for misuse of such wide-ranging powers. The observations were made while the Court was hearing a matter related to proceedings under the Prevention of Money Laundering Act (PMLA).
During the hearing, the bench noted that the ED is empowered to attach properties and take coercive action at the investigation stage itself, often before a court has examined the legality or necessity of such measures. The judges questioned whether the absence of an immediate judicial check could lead to arbitrary action and adversely affect individuals’ rights, particularly when allegations are yet to be proven.
The Court remarked that while combating money laundering is a legitimate and important objective, enforcement mechanisms must operate within constitutional limits. It emphasised that due process and safeguards are essential, especially when state action involves deprivation of property. The bench indicated that unchecked powers, even when conferred by statute, require careful scrutiny to ensure they do not violate fundamental rights.
The ED defended its authority by pointing to the statutory framework of the PMLA, which provides for confirmation of asset attachment by the adjudicating authority at a later stage. However, the Court observed that post-facto review may not always be sufficient protection, particularly when assets are frozen or seized for extended periods, causing severe financial and reputational consequences.
The Supreme Court’s remarks reflect a growing judicial unease over the balance between effective enforcement and individual liberties. The matter remains under consideration, with the Court expected to further examine whether additional safeguards or judicial oversight mechanisms are required to prevent potential abuse of power under the money laundering law.
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