India Explained
ImplementedBJPNarendra Modi

PMLA amendments (2019) and the Supreme Court's Vijay Madanlal Choudhary ruling (2022)

The Finance (No. 2) Act, 2019 amended the 2002 money-laundering law; in July 2022 the Supreme Court upheld the Enforcement Directorate's arrest, attachment and bail provisions, and a review is pending.

Civil liberties · Idea originated under Atal Bihari Vajpayee (1998)

Facts

  • The Prevention of Money Laundering Act, 2002 received assent on 17 January 2003 and came into force on 1 July 2005, with enforcement assigned to the Enforcement Directorate (ED) [3].
  • The Finance (No. 2) Act, 2019 (Act 23 of 2019) amended the PMLA. A Lok Sabha reply states it inserted a proviso to s.44(1)(b) from 1 August 2019 requiring closure reports in cases where no offence is made out [4]. A note filed in the Supreme Court lists the Act as amending ss.3, 44(1)(b), 44(1)(d) and 45(2), among others [5]. That note is a submission and not a court finding.
  • Section 45 (twin bail conditions) was set aside by the Supreme Court on 24 November 2017 in Nikesh Tarachand Shah and re-enacted in revised form by Act 13 of 2018 [1][3].
  • On 27 July 2022 a three-judge bench (Khanwilkar, Maheshwari and Ravikumar JJ.) in Vijay Madanlal Choudhary v. Union of India upheld ss.5, 19, 24, 44 and 50 and the 2018 form of s.45; held that the ECIR is an internal document that need not be supplied to the accused if the grounds of arrest are disclosed; held that the 2019 Explanation to s.3 is clarificatory; and left to the larger bench in Rojer Mathew whether some amendments could be made through a Finance Act [1].
  • On 22 to 25 August 2022 the Court accepted a review petition and said two aspects needed reconsideration: non-supply of the ECIR and the reversal of the burden of proof [3]. On 31 July 2025 a bench headed by Justice Surya Kant began hearing the review petitions, starting with maintainability; nothing was decided on the merits [2].
  • On 3 October 2023 Pankaj Bansal v. Union of India required written grounds of arrest to be furnished to the arrested person [6]. On 9 August 2024 the Court granted bail to Manish Sisodia, saying that where delay is coupled with long incarceration the right to bail has to be read into s.45 [7].
  • Parliamentary replies show 5,422 PMLA cases and 23 convictions to 31 March 2022, and 6,312 cases and 120 convictions over about 11 years 7 months to late 2025; the two periods and measures differ [4][8].

Why

Reasons given by those who did it

  • The 2019 Explanation to s.3 was described by the Supreme Court as clarificatory, intended to make clear that the offence covers any process or activity connected with proceeds of crime [1].
  • The Union told the Court in 2022 and 2025 that the ED's powers are needed to trace and attach proceeds of crime and that review should be limited to two issues [1][2].
  • The ED Director said in May 2025 that before 2014 the law was largely ineffective with fewer than 200 cases a year and that completed trials show a 93.6% conviction rate [9].

Criticism of that reasoning

  • Petitioners argued the amendments were passed through a Finance Act as money bills, the ECIR is withheld from the accused and the burden of proof is reversed (review petitions of Karti P. Chidambaram and others) [2].
  • In August 2024 a Supreme Court bench told the ED to focus on the quality of prosecution and evidence after the low conviction count was cited [10].

Benefits and concerns

Benefits (2)

  • Wider legal tools for attaching proceeds of crime and prosecuting laundering independently of the final conclusion of the predicate case.The Court held ss.5 and 3 valid and read the offence broadly [1]. ED reports 461 provisional attachment orders worth Rs 30,036 crore in 2024-25 and Rs 1,54,594 crore under attachment as of March 2025 [9].
  • Case registrations and searches rose after 2019, with the ED registering 562 cases in 2019-20, 981 in 2020-21 and 1,180 in 2021-22 against 178 in 2014-15.Lok Sabha reply of 25 July 2022 [4].

Concerns (3)

  • Low count of convictions relative to cases registered, and long pendency, on the official figures.23 convictions against 5,422 cases to March 2022 [4]; 120 against 6,312 cases in the December 2025 reply [8]. The ED cites 93.6% of 47 decided cases [9]; the two measures are different.
  • Petitioners argue that the stringent bail conditions and the reverse burden of proof limit accused persons' rights (the Court upheld the 2018 form of s.45 in 2022); the Court has since read bail into s.45 after long delay and required written grounds of arrest.Sisodia bail order, 9 August 2024 [7]; Pankaj Bansal, 3 October 2023 [6].
  • No official data on the party or state of persons investigated; the government says ED does not maintain it.Rajya Sabha reply, 6 August 2024, state-wise data is not maintained [11].

Evidence points

+2.0
points, mean of two scorers (scale −25 to +25)
+2 to +2
range between the two scorers' totals
Low confidence
scorers agree within 1 point on every criterion
ReachHow many people did the action materially affect?
Mean +0.5A +1B 0
Outcome evidenceDo official or independent data show the intended result (or its opposite), compared with the era baseline and peers?
Mean 0.0A 0B 0
Cost and sustainabilityIs the fiscal cost proportionate, and is the effect durable?
Mean +0.5A 0B +1
Process and rightsWas it made with debate, consultation and legal soundness, and did it respect rights and court rulings?
Mean −1.0A −1B −1
DeliveryWas it implemented as announced, on time and at scale?
Mean +2.0A +2B +2

Positive meanNegative meanScorer AScorer B

Scorer A. Case registrations and attachments rose, but convictions stayed very low relative to cases, bail and burden-of-proof concerns persist, and review is pending, so outcome data are mixed.

Scorer B. Case registrations and attachments rose, but conviction counts stay low and the Court has accepted review on two aspects, leaving outcome evidence mixed.

Context used when scoring

Era baseline
Before 2014 the ED registered fewer than 200 PMLA cases a year, and the 2002 Act's first conviction came years after commencement (ED Director's statement, 2025); the 2022 reply showed 23 convictions in 17 years.
Lag before outcomes show
5 years
Shocks considered
covid-2020
Uncertainty
Low confidence. Scorer totals are +2 and +2. How uncertainty is shown.

In depth

The Prevention of Money Laundering Act was enacted in 2003 under the Vajpayee-era government and has been amended repeatedly, including by the Finance (No. 2) Act, 2019 under the Modi-era government. The 2019 changes touched the definition of the offence, the ED’s closure of cases and the court process; a note filed in the Supreme Court lists the sections, but the text of the Act was not opened for this entry [5].

In July 2022 the Supreme Court upheld the ED’s central powers and the stringent bail conditions in Vijay Madanlal Choudhary, while saying the ED must disclose grounds of arrest [1]. Review petitions on at least two aspects are pending [2]. Later rulings added limits, including written grounds of arrest [6] and bail where there is long delay [7].

Official figures show more registered cases and searches after 2019 [4], but only a small number of convictions relative to cases registered [4][8]. The ED cites a high rate in decided cases [9]. These are different measures, and the date of the 2019 Act’s assent (1 August 2019, the date the closure-report proviso took effect) and the exact text of each 2019 change should be confirmed from the Gazette.

Sources

Last reviewed .Report an error orchallenge a score.

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