Ending PMLA Procrastination: How 'Wherewithal' Test Reclaims Constitutional Liberty

However, on January 6, 2026, a Bench of the Supreme Court comprising Justices P.V. Sanjay Kumar and Alok Aradhe provided a critical constitutional bypass. This judgment is more than a simple bail order for a former corporate promoter; it is a judicial audit of a procedural engine that has long been stalled. By introducing what can be termed as the "Wherewithal Test," the Court has signalled that the State's inability to conduct a timely trial must now outweigh the gravity of the alleged crime. In daily practice at the criminal bar, it is evident how the "seriousness of the offence" is often weaponised to justify systemic delays. The Arvind Dham verdict finally provides the legal framework to challenge this status quo.

The Case of Arvind Dham: 16 Months in Procedural Purgatory- The facts of the Arvind Dham case serve as a microcosm of the PMLA's procedural pitfalls. Dham, the former promoter of Amtek Auto Ltd., was arrested by the Enforcement Directorate (ED) on July 9, 2024, following allegations of a bank fraud totalling approximately INR 673.35 crores involving IDBI Bank and the Bank of Maharashtra. His journey through the courts was a testament to the "jail as rule" paradigm currently dominating special statutes. His bail was dismissed by the Special Judge in January 2025 and subsequently by the High Court in August 2025. The primary ground for rejection remained consistent: the "gravity of the offence" and the "staggering scale" of the alleged financial fraud.

By the time the matter reached the Supreme Court in early 2026, Dham had spent over 16 months in custody. Crucially, the trial had not only failed to conclude; it had not even begun. The prosecution had cited over 210 witnesses and a mountain of documentary evidence. The proceedings were perpetually stalled at the stage of "scrutiny of documents", a phase where the defense and prosecution argue over the supply of legible copies and translated versions of seized material. This stage, which should be a procedural formality, has increasingly become a tool for indefinite pre-trial detention.

A central pillar of the ED's opposition to bail in PMLA cases is the "Magnitude of the Offence". In the Arvind Dham case, this magnitude was presented through a lens of creative accounting that deserves critical scrutiny. The prosecution frequently cited a staggering figure of ₹38,000 crore to the courts and the media. However, a deep dive into the records reveals a different story.

The ₹38,000 crore figure represents the total claims submitted by 23 creditors during the personal insolvency proceedings against Arvind Dham. In contrast, the actual "Predicate Offence”, the actual loss alleged by the two banks in the FIRs totalled ₹673.35 crore. While ₹673 crore is undoubtedly a significant sum, it is a far cry from the ₹38,000 crore used to project the case as "India's largest bank fraud". The Supreme Court's decision to grant bail despite these "staggering" figures marks a vital correction. It suggests that "magnitude" cannot be an abstract number pulled from insolvency records to justify the suspension of Article 21. If the proceeds of crime are linked to a specific predicate loss, the prosecution cannot use a "group debt" figure to satisfy the court's conscience regarding the gravity of the crime. This "Magnitude Mirage" has long been used to keep accused persons in jail by overwhelming the judiciary with astronomical numbers that are legally untethered to the PMLA complaint itself.

The first major contribution of the Arvind Dham ruling is its refusal to treat all economic offences as a single, homogenous class of "un-bailable" crimes. For years, the State has relied on the logic established in cases like Vijay Madanlal Choudhary, arguing that because economic offences bleed the nation's economy, they warrant a different set of rules. The Court in Arvind Dham dismantled this logic with surgical precision. It held that the "nature of the offence" cannot eclipse the "Right to Liberty".

The Bench noted that while PMLA is a special statute with its own rigours, it does not possess the power to "freeze" Article 21. By granting bail to an accused facing allegations of nearly INR 700 crores, the Court has effectively ruled that the scale of the alleged fraud cannot be used as a justification for turning pre-trial detention into a form of punishment. As the Court aptly noted, "prolonged incarceration of an undertrial... has the effect of converting pretrial detention into a form of punishment".

The 'Wherewithal' Test: A Shift in Performance Burden-

The most provocative aspect of this judgment, and the one that serves as its legal "hook", is the Court's observation on the State's capacity. The Court held:

"If the State or any prosecuting agency, including the court concerned, has no wherewithal to protect the fundamental right of an accused to a speedy trial under Article 21 of the Constitution, then the State or prosecuting agency should not oppose bail solely on the ground that the crime is serious."

This is a revolutionary admission from the Apex Court. It marks a shift from the "Reverse Burden" of Section 24 PMLA to a "Performance Burden" on the State. If the ED chooses to arrest an individual, it must be prepared to try them. If the agency's investigation results in a digital forest of millions of pages that the court system cannot "scrutinize" within a year, the State loses its legal standing to demand continued custody. In practice, it is common to see the ED filing supplementary complaints, sometimes three or four in a single case, which effectively resets the clock for the "commencement of trial". The Arvind Dham ruling suggests that this practice now has a constitutional expiry date. If the prosecution "has no wherewithal" to finish the trial, the "Twin Conditions" of Section 45 cannot be used to keep a person in jail for the duration of a trial that may take a decade.

The Arvind Dham logic does not stand in isolation. It is the logical successor to the 2025 mandate in Sarla Gupta v. ED, where the Supreme Court held that the ED must provide a list of "unrelied documents" to the accused. Information asymmetry has long been the ED's greatest weapon. By withholding documents they choose not to rely upon, the prosecution ensures the accused is fighting in the dark.

However, the 2026 jurisprudence suggests that the "Twin Conditions" for bail, where the judge must be satisfied that there are "reasonable grounds for believing that the accused is not guilty”, cannot be satisfied if the evidence that could prove innocence is locked in the ED's "unrelied" archives. The Arvind Dham verdict reinforces that the right to a fair trial is inseparable from the right to a speedy trial.

For the criminal bar, this judgment is also a critical early guide for the Bharatiya Nagarik Suraksha Sanhita (BNSS). It is noteworthy that Dham's bail was moved under Section 483 of the BNSS (the successor to Section 439 CrPC). This confirms that the High Courts' and Supreme Court's "special powers" regarding bail remain robust and are not diluted by the transition to the new Sanhita.

Furthermore, the "scrutiny of documents" phase is now anchored in Section 230 of the BNSS (formerly Section 207 CrPC). The Court's frustration with the delay at this stage underscores a fundamental truth: the "supply of documents" is not a mere formality; it is a prerequisite for justice. If the transition to BNSS was intended to modernise and expedite trials, the Arvind Dham ruling serves as a reminder that "modernisation" without "speed" is a hollow promise.

The PMLA was designed to fight systemic corruption, not to exhaust the life of an individual before they are even found guilty. For 16 months, Arvind Dham was a "pre-trial prisoner" in a case where the maximum sentence might only have been seven years. When pre-trial detention begins to approach the length of the potential sentence, the law ceases to be a shield and becomes a sword.

By prioritizing the "wherewithal" of the State over the "gravity" of the offence, the Supreme Court has re-anchored Indian law to its democratic roots. The judgment in Arvind Dham is a masterclass in judicial balancing. It acknowledges that while the State has the power to prosecute, it does not have the power to procrastinate at the cost of human liberty. For the defense bar, and for every individual caught in the PMLA's labyrinth, the message from the Apex Court is clear: the Constitution does not pause for the PMLA.

Author is an Advocate practicing at Supreme Court and Delhi High Court. Views are personal.