Introduction
No dimension of the Prevention of Money Laundering Act’s enforcement history has generated more sustained controversy in the period from 2020 to 2025 than the pattern of Enforcement Directorate investigations directed at political opponents of the central government. The structural features of PMLA, which place extraordinary investigative and prosecutorial power in the hands of a central executive agency with limited judicial review at the investigation stage, create an institutional architecture that is inherently susceptible to allegations of selective enforcement. When that enforcement power is visibly directed at leaders of opposition political parties in the months preceding elections, and when investigations against persons who subsequently align with the ruling party appear to slow or lapse, the rule of law concerns are not merely theoretical. This article examines the documented pattern of ED investigations involving opposition political figures, the legal framework governing prosecutorial discretion and its limits, the Supreme Court’s approach to allegations of mala fide investigation, and the comparative case for structural independence in anti-money laundering enforcement.
Legal Framework
The Enforcement Directorate’s power to register an Enforcement Case Information Register (ECIR), the PMLA equivalent of an FIR, is entirely within the executive’s discretion. Unlike an FIR under the CrPC, which must be registered by the police upon receipt of information about a cognizable offence, and which can be ordered by a Magistrate if the police refuse, there is no judicial mechanism to compel or review the ED’s decision to open or not open an ECIR in a particular case. The ECIR is an internal document; as the Supreme Court held in Vijay Madanlal Chourasiya, the accused has no right to a copy of the ECIR and cannot challenge its registration except in limited circumstances involving jurisdictional error or complete lack of material.
The ED operates under the administrative control of the Ministry of Finance, Department of Revenue. The Director of Enforcement is appointed by the central government, and the ED’s budget, personnel, and operational priorities are determined by the executive. This institutional structure concentrates investigative and prosecutorial authority under PMLA in an agency that is structurally subordinate to the government of the day, without any statutory provision for independence or insulation from political direction.
The constitutional protection against arbitrary state action under Article 14 (equality before the law and equal protection of laws) and Article 21 (protection of life and personal liberty) extends to investigative actions by the ED. An investigation undertaken for extraneous purposes, including political persecution, would in principle violate Article 14. However, the judicial threshold for establishing mala fide exercise of investigative power is extremely high: courts require either direct evidence of extraneous motivation or a pattern of conduct so implausible on legitimate grounds that no inference other than mala fide is reasonably available.
Judicial Developments
The Manish Sisodia case, arising from the Delhi liquor policy investigation, proceeded through multiple stages in 2023 and 2024. Sisodia, a senior leader of the Aam Aadmi Party and Deputy Chief Minister of Delhi, was arrested by the CBI in February 2023 and subsequently by the ED in March 2023. His bail applications were rejected by the trial court and the Delhi High Court on multiple occasions, with both courts holding that the twin conditions of Section 45 PMLA were not satisfied. The Supreme Court, in August 2024, granted bail primarily on the ground of prolonged pre-trial incarceration rather than on any finding about the merits of the PMLA case. Notably, the Supreme Court did not engage with the selective prosecution argument, confining its reasoning to the Article 21 dimension of trial delay.
The Arvind Kejriwal case was more directly confrontational with the question of selective enforcement. Kejriwal, the Chief Minister of Delhi and AAP’s national convenor, was arrested by the ED in March 2024 in connection with the same liquor policy case. In a series of proceedings culminating in the Supreme Court granting interim bail on May 10, 2024 for the Lok Sabha election campaign period, the Court’s observations touched on the timing of the arrest relative to the election schedule. While the Court was careful not to make any direct finding of mala fide, its decision to grant interim bail on grounds that included the democratic interest in an elected leader being able to campaign was read as an implicit acknowledgment of the contextual dimensions of the arrest timing.
The Hemant Soren case from Jharkhand, arising from an alleged land scam, followed a similar trajectory: the Chief Minister of Jharkhand was arrested by the ED in January 2024, and the Jharkhand High Court’s refusal of bail was challenged before the Supreme Court. The Supreme Court granted bail in August 2024, again primarily on the ground of prolonged incarceration and the bail conditions under Section 45 being applied disproportionately to the facts.
The K. Chandrashekar Rao family cases from Telangana, and the investigations into various Congress party leaders in Rajasthan and Himachal Pradesh, form part of a broader pattern that has been repeatedly highlighted in parliamentary debates, including in the questions and statements of the Parliamentary Standing Committee on Finance.
Contemporary Issues and Analysis
The empirical dimension of selective enforcement allegations deserves careful examination. Data cited in parliamentary debates and reported by investigative journalism outlets indicate that a disproportionate number of ED investigations in the period from 2014 to 2024 have been directed at leaders of opposition parties relative to leaders of the ruling alliance. Statistical patterns, of course, are not conclusive evidence of selective enforcement: the governing party controls more of the machinery of government and may therefore have more members implicated in governance-related corruption that forms the predicate offence for PMLA proceedings. But the pattern of investigations appearing to pause or be dropped following political defections to the ruling coalition is harder to explain on neutral grounds.
The institutional problem is this: because the ED has unreviewable discretion in opening and prioritising ECIRs, because the ECIR itself is not shared with the accused, and because the courts have declined to inquire into the motivation for opening an ECIR absent extraordinary circumstances, there is no procedural mechanism through which selective enforcement can be identified and corrected. Even where a pattern is statistically demonstrable, the courts’ tools for providing relief are limited to scrutinising the specific case before them rather than addressing the systemic practice.
The rule of law framework developed by the Supreme Court in cases such as Common Cause v. Union of India and Subramanian Swamy v. CBI has recognised that prosecutorial discretion must be exercised in accordance with law and not for extraneous purposes. However, the application of this principle to the specific context of PMLA ECIRs and their relationship to political targeting has not been squarely tested.
A further constitutional concern arises under the democracy principle implicit in Articles 324 to 329 and the basic structure doctrine. Where the executive uses investigative agencies to incapacitate opposition leaders through arrest and prolonged pre-trial detention in the period immediately preceding elections, the effect is to distort electoral competition. This is not merely a rule of law concern but potentially a basic structure concern, given the Supreme Court’s repeated recognition in cases from Kesavananda Bharati to S.R. Bommai that free and fair elections are a component of the basic structure of the Constitution.
Comparative and International Perspective
The United Kingdom’s Serious Fraud Office (SFO) provides an instructive model of a structurally insulated investigative and prosecutorial agency. The SFO operates under the general superintendence of the Attorney General, not the Home Secretary or Treasury, providing a constitutional buffer between the agency and the day-to-day political executive. The Director of the SFO has security of tenure and statutory independence in individual prosecution decisions. In practice, the SFO’s case selection has been challenged in judicial review proceedings, with courts applying the Wednesbury unreasonableness standard to the decision not to prosecute as well as the decision to prosecute.
Germany’s public prosecution service (Staatsanwaltschaft) is governed by the principle of mandatory prosecution (Legalitätsprinzip), under which prosecutors are legally obligated to investigate and prosecute where there is sufficient evidence of a criminal offence, with no discretion to decline prosecution for policy or political reasons. This structural mandatory prosecution principle, while subject to its own critiques (principally that it creates unsustainable caseload pressures), eliminates the selective prosecution concern by removing prosecutorial discretion at the case selection stage.
The United States’ Department of Justice operates under political appointment at the senior levels but has developed institutional norms and the Inspector General oversight mechanism to monitor for improper political influence in case selection. The DOJ’s Public Integrity Section, which handles prosecutions of public officials, has specific guidelines on the timing of investigations relative to elections, designed to prevent the use of criminal proceedings as electoral weapons.
India has no equivalent of any of these structural protections for the ED. The Directorate functions as a department of the Ministry of Finance, its senior leadership is drawn from the IRS and IPS cadres with normal government service relationships, and there is no Inspector General or equivalent body with oversight of the propriety of ECIR registrations.
Practical and Policy Implications
The credibility of PMLA enforcement as an anti-corruption and anti-money laundering instrument depends, ultimately, on public and institutional confidence that it is being applied without political favour. Where that credibility is undermined, the costs extend beyond individual injustice: legitimate money laundering investigations are tainted by association with selective enforcement, businesses become uncertain about the neutrality of regulatory proceedings, and India’s international reputation in FATF assessments and investor perception is affected.
For practitioners representing clients in PMLA proceedings against a background of political controversy, the selective enforcement argument is both legally difficult and practically significant. Legally difficult because courts have set a high threshold for mala fide; practically significant because the factual context of the investigation is relevant to the proportionality assessment in bail proceedings and may inform the court’s willingness to scrutinise the prosecution’s evidence more carefully.
Suggestions and Reforms
A parliamentary oversight mechanism for ED investigations involving sitting members of Parliament, Ministers, or senior elected officials should be established, modelled on the UK’s Intelligence and Security Committee or the US Congressional oversight committees. This committee, composed of members from both the government and opposition benches, would receive periodic briefings on the status and basis of ongoing ECIR proceedings against elected officials, without compromising investigation confidentiality, providing a layer of democratic accountability.
The ECIR registration process should be made subject to a minimum documentation standard: before an ECIR can be opened against any elected official, the ED should be required to record in writing the specific material on the basis of which the ECIR is being opened, and this record should be filed with the Adjudicating Authority as a sealed document to be opened only if the official challenges the registration. This preserves investigative confidentiality while creating an auditable trail that can be reviewed for mala fide.
The appointment of the Director of Enforcement should be made by a collegium that includes a judicial member, the Comptroller and Auditor General, and a representative of the opposition, rather than being purely an executive appointment, bringing India’s approach closer to the UK and German models of institutional independence.
Conclusion
The PMLA’s enforcement architecture, though constitutionally valid and operationally effective in principle, is particularly vulnerable to selective deployment because it combines enormous investigative power with minimal structural independence from the political executive. The documented pattern of investigations against opposition politicians, the Supreme Court’s cautious but increasingly concerned judicial observations, and the absence of any institutional safeguard against politically motivated case selection, collectively present a rule of law problem that reforms at the margin cannot address. Structural independence of the ED, in the manner of the UK’s SFO or the CBI’s evolving institutional relationship with the courts, is not merely desirable; it is a prerequisite for PMLA enforcement to retain the legitimacy necessary for it to function as a genuine anti-money laundering instrument rather than an instrument of political contest.
