During the days of prohibition in the US, the bootlegging mafia generated huge amounts of money in cash. The acquisition of cash had to be legitimised and the mafia came up with the idea of setting up laundromats or laundries, where customers normally pay their dues in cash. This financial innovation to whitewash money from illicit trade into legitimate business proceeds was the origin of the phrase “money laundering”. It is a truth universally acknowledged that illicit trades generate large amounts of cash and one of the ways of curbing illicit trade is to curb the outflow and utility of cash proceeds. The process of money laundering typically involves the principles of placement, layering and integration. Especially the illicit trade in arms and drugs – which generates huge cash profits – was sought to be curbed on an international scale with the formation of the Financial Action Task Force in 1989. In 1990, the Political Declaration and Global Programme of Action was adopted and in 1998, the Political Declaration and Action Plan against Money Laundering was adopted. Following the adoption of these instruments, India enacted the Prevention of Money Laundering Act in 2002. Implementation of the Act was left to the domain of the Enforcement Directorate (ED), a division of the finance ministry.However, far from confining itself to the laundering of drugs and arms money, the Indian government ended up diluting the focus of the Act by including a whole host of unconnected ordinary offences in the schedule to the PMLA known as “predicate offences”. Crimes under the Copyright Act, pollution Acts and a whole host of economic offences including bribery, were jostled into an overbroad schedule. If money was earned from any of these offences and then sought to be legitimised by investing its proceeds in the creation of assets, those assets were called the ‘proceeds of crime’. The PMLA allowed the state to seize to punish those who sought to launder the money.Ordinarily, the investigation of most crimes is done by the State Police Department as law and order is a state subject. State governments effectively decided which crimes were investigated and which were neglected. The Union government used to interfere in criminal investigations through the Central Bureau of Investigation (CBI). However, the CBI legislation required the consent of the state to operate within its territory. When faced with overzealous central investigations, many states refused permission for the CBI to operate within their territory.‘Investigatorial’ vengeance?The ED, however, has no such limitation. And in the past few years, particularly under the NDA government, it has become an institution of what one might term, investigatorial vengeance against politicians of the opposition parties and opposition-ruled states. For instance, the ED recently summoned Rajasthan chief minister Ashok Gehlot’s son to Delhi and conducted searches at the premises of Chhattisgarh chief minister Bhupesh Baghel’s political adviser. In short, electoral deficiencies were remedied and electoral dominance was achieved by generous resort to the ED.Several Opposition politicians approached the Supreme Court earlier this year against the misuse of the ED. The court, however, refused to entertain the petition and allowed the petition to be withdrawn while observing: “Come back with a concrete case, where there has been a specific instance or instances of the agencies being used to selectively target leaders. On the basis of the law that we have laid down, we can evolve general principles with respect to the facts of the case.”That case came squarely before the court in Manish Sisodia’s bail application and in the opinion of this author, the judgment has failed the standards of fairness to which every accused is entitled and sets a dangerous prosecution-friendly precedent which may later come to haunt those who are in power today but may not be in the same position tomorrow. Also Read | No Bail to Sisodia: SC Ignored Basic Principles, Questions of Targeted Political PersecutionWhere are the “proceeds of crime”?Briefly stated, the prosecution case is that the liquor policy in Delhi was changed to give wholesale distributors 12% commission instead of 5% and the estimated difference earned by the wholesalers was to the order of Rs 585 crore. About Rs 100 crore of this extra profit has been alleged to have been utilised to support the AAP campaign in the Goa elections. There appears to be no particular, specific money which is directly involved in the hands of Manish Sisodia or under his direct control. There are thus no directly displayable “proceeds of crime.”It must be remembered that bribery is an offence under the Prevention of Corruption Act, 1988 and is a predicate offence under the PMLA. However, not every case of bribery is a case of money laundering – unless and until the money generated from the offence of bribery is sought to be converted into assets which could be termed as “Proceeds of Crime”. In the absence of such demonstrable proceeds, there would be no case of money laundering established over which the ED would have jurisdiction.The SC itself in the Vijay Madanlal Choudhary vs Union of India matter illustrated how every commodity involved in a crime does not turn into proceeds of crime. For example, the vehicle used in the commission of a scheduled offence may be attached as property in the concerned case (crime) but it may still not be within the meaning of “proceeds of crime” of the PMLA. In these circumstances, it does reasonably appear that the ED was on a roving and fishing expedition to somehow connect the minister in charge of the liquor policy with the crime of money laundering and to possibly fix others higher up in the ministerial chain with the same offence. Two things need to be emphasised – the change in liquor policy was not the act of Sisodia alone. It was in fact, endorsed by a cabinet decision. The court, while dealing with the question of bail, has specifically kept aside the question of whether a cabinet decision can be made the subject matter of a criminal prosecution. Secondly, it has got over the inconvenient fact that there currently exists no proven money trail directly into the hands of Sisodia by saying that even if money was spent on behalf of the party’s campaign in Goa, he exercised “possessory domain” over the money spent. The real problem with any case being filed by the ED is the extreme difficulty in securing bail. Section 45 of the PMLA requires that the court should be satisfied that the person is not guilty and is not likely to repeat the offence. Similar provisions in other Acts have been interpreted by the court to make the grant of bail almost impossible without concluding a full trial. It is also pertinent to state that very rarely has a PMLA case gone to trial and been concluded in a reasonable amount of time, thus when a man is arrested under the PMLA and no speedy trial is available and no bail pending trial is granted, the process itself is the punishment. The Supreme Court of India. Photo: Pinakpani/Wikimedia Commons. CC BY-SA 4.0.Selective application of harsh lawsThe Sisodia judgment is a rare lengthy judgment of 41 pages which denies bail to an accused. The only clear charge that the court has relied upon is a charge of causing loss to the public exchequer. Absent any element of personal aggrandisement or creation of proceeds of crime, the PMLA case should not have been allowed to continue. Instead, the court has given the prosecution a further chance to prove its case and allowed Sisodia an opportunity to apply again for bail if the trial moves at a snail’s pace over the next three months. This judgment will have a precedential value that will bind all courts in India. The surprisingly thin logic of this judgment will end up denying the liberty of a lot of citizens other than Manish Sisodia who have also been caught in the Kafkaesque world of the PMLA. While hard cases are known to make bad law, Sisodia’s case is that of a bad law, being made harder by a harsher interpretation of harsh legislation.Someone has rightly said that the essence of tyranny is the ability to make a harsh law and use it selectively against your opponents. If courts fail to see through this game, they fail to perform their constitutional duty to protect the lives and liberties of India’s citizens.