A summons from the Directorate of Enforcement (ED) under the Prevention of Money-laundering Act, 2002 (PMLA) is serious, but it is not in itself an accusation. The ED summons those it suspects and also those it believes hold relevant information or documents. How a person responds can significantly affect what follows.
PMLA law has developed quickly through decisions of the Supreme Court, and parts of it remain under consideration. This note explains the framework in general terms.
The structure of the Act
The offence of money laundering under Section 3 is tied to proceeds of crime: property derived from a scheduled offence, one of the underlying offences listed in the Schedule to the Act. The scheduled offence is investigated by the police or another agency; the ED investigates the laundering of its proceeds.
The ED records its case in an Enforcement Case Information Report (ECIR). In Vijay Madanlal Choudhary v. Union of India (2022), the Supreme Court held that the ECIR is an internal document, not the equivalent of an FIR, and that supplying it to the person concerned is not mandatory.
The same judgment held that a money laundering case depends on the existence of proceeds of crime. If a person is finally discharged or acquitted of the scheduled offence, or the criminal case against them is quashed, there can be no offence of money laundering against them in respect of property linked to that offence.
The Section 50 summons
Section 50 empowers specified ED officers to summon any person whose attendance they consider necessary, to give evidence or produce records. A person summoned is bound to attend, in person or through an authorised agent as the officer directs, to state the truth and to produce the documents required. The proceeding is deemed judicial for certain purposes, so false evidence carries criminal consequences.
Vijay Madanlal held that ED officers are not police officers, so statements recorded under Section 50 are not excluded as confessions to the police are, and may be relied upon. It also held that the Section 50 process is an inquiry rather than a police investigation, and that statements recorded in it are not hit by the constitutional protection against compelled self-incrimination.
There is an important qualification. In Prem Prakash v. Union of India (August 2024), the Supreme Court held that a statement recorded under Section 50 from a person who is already in custody under the PMLA, whichever case that custody relates to, is not admissible against its maker.
Several practical consequences follow.
- Read the summons carefully: the capacity in which you appear to be called, the documents sought, and the date, time and place.
- Do not ignore it. Non-compliance can attract a penalty and prosecution. If the date is genuinely impossible, ask for another in writing, with reasons, and keep proof of the request.
- Prepare. Keep an indexed copy of every document you produce.
- Be accurate. Read your statement before you sign it, and ask for corrections where it does not reflect what you said.
- Take advice before attending. The presence of an advocate during questioning is not a right under the Act, though courts have on occasion permitted it, on conditions, in particular cases.
Arrest under Section 19
Section 19 allows an authorised officer to arrest a person only if, on the basis of material in the officer's possession, the officer has reason to believe, recorded in writing, that the person is guilty of an offence under the Act. The person must be informed of the grounds of arrest; a copy of the order and the material must be forwarded to the Adjudicating Authority in a sealed envelope; and the person must be produced before the court within twenty-four hours.
The Supreme Court has elaborated on these safeguards.
- Pankaj Bansal v. Union of India (3 October 2023): the grounds of arrest must be furnished to the arrested person in writing, as a matter of course and without exception. The Court also said that mere non-cooperation with a summons does not by itself justify arrest, and that the ED cannot expect a person it summons to confess.
- Ram Kishor Arora v. Directorate of Enforcement (December 2023): the requirement of written grounds applies to arrests made on and after 3 October 2023, the date of Pankaj Bansal.
- Tarsem Lal v. Directorate of Enforcement (May 2024): once the Special Court has taken cognizance of the ED's complaint, the ED cannot itself arrest an accused not arrested earlier; it must apply to the Special Court for custody.
- Arvind Kejriwal v. Directorate of Enforcement (July 2024): courts may examine whether the officer's reasons to believe are founded on the material. Whether the need and necessity of arrest is a separate ground of challenge was referred to a larger bench.
- Mihir Rajesh Shah v. State of Maharashtra (November 2025): written grounds of arrest, in a language the person understands, are required for every offence under every statute, so the requirement is not confined to the PMLA.
Bail
Section 45 requires that the Public Prosecutor be given an opportunity to oppose bail and, where the Prosecutor opposes it, imposes the twin conditions: the court must be satisfied that there are reasonable grounds for believing that the accused is not guilty of the offence and is not likely to commit any offence while on bail. Vijay Madanlal upheld these conditions. Under the proviso, the Special Court may grant bail without them to a person under sixteen, a woman, a person who is sick or infirm, or a person accused of laundering, alone or with co-accused, a sum of less than one crore rupees. In a line of decisions, particularly since 2024, the Supreme Court has also recognised that prolonged incarceration with no realistic prospect of an early trial can justify bail notwithstanding Section 45.
Provisional attachment and adjudication
Alongside any prosecution, the PMLA provides a separate process directed at property.
- Provisional attachment (Section 5). The Director, or an officer not below the rank of Deputy Director whom the Director authorises, may, recording reasons to believe in writing, provisionally attach property believed to be proceeds of crime that is likely to be concealed or transferred so as to frustrate confiscation. The order lasts up to 180 days, and does not by itself prevent the person interested from continuing to enjoy attached immovable property.
- Complaint (Section 5(5)). Within thirty days of the attachment, the officer must file a complaint before the Adjudicating Authority.
- Show-cause notice (Section 8(1)). The Adjudicating Authority issues a notice of not less than thirty days, calling on the person to indicate the sources of income or assets from which the property was acquired, and to show cause why it should not be declared to be involved in money laundering.
- Confirmation (Section 8(3)). If the Authority confirms the attachment, it continues during the investigation for up to 365 days, or during the pendency of proceedings relating to an offence under the Act before a court.
- Appeals. An appeal lies to the Appellate Tribunal within forty-five days (Section 26), and from the Tribunal to the High Court within sixty days (Section 42).
Confiscation ordinarily follows only on the conclusion of the trial, where the Special Court finds that money laundering has been committed (Section 8(5)); the Act makes separate provision where a trial cannot take place, for instance because the accused has died or absconded. If the Special Court finds no offence of money laundering, or that the property is not involved in it, the property is to be released (Section 8(6)).
The reply to the show-cause notice is the first formal opportunity to show how a property was acquired, and deserves the care of a court pleading, supported by bank records, tax returns and title documents.
What remains open
Review petitions against aspects of Vijay Madanlal Choudhary, including the supply of the ECIR and the reverse burden of proof under Section 24, have been pending before the Supreme Court since 2022, and the Kejriwal reference had not been decided at the time of writing. The law will keep developing, and advice should reflect the position on the day.