Section 24 of the Prevention of Money Laundering Act, 2002 is the provision that inverts one of criminal law's oldest presumptions. Ordinarily the prosecution must prove guilt beyond reasonable doubt; under Section 24, once a person is charged with the offence of money-laundering, the Authority or Court shall presume that the proceeds of crime are involved in money-laundering, and it is for the accused to prove the contrary. This reverse or "negative" burden is the engine that makes the PMLA's evidentiary scheme work, and it has been among the most fiercely litigated features of the Act. Understanding precisely what the prosecution must still establish before the presumption bites, and where the line of constitutionality lies, is essential for any judiciary or CLAT-PG aspirant.
The bare text and statutory scheme
Section 24, headed "Burden of proof", provides: "In any proceeding relating to proceeds of crime under this Act,— (a) in the case of a person charged with the offence of money-laundering under section 3, the Authority or Court shall, unless the contrary is proved, presume that such proceeds of crime are involved in money-laundering; and (b) in the case of any other person the Authority or Court, may presume that such proceeds of crime are involved in money-laundering."
The architecture is two-tiered. Clause (a) applies to a person charged under Section 3 and creates a mandatory presumption ("shall presume"). Clause (b) covers "any other person" — typically a non-accused whose property has been provisionally attached or is before the Adjudicating Authority — and confers only a discretionary presumption ("may presume"). The phrase "unless the contrary is proved" signals that the presumption is rebuttable, not conclusive. To grasp the section fully, read it alongside the definition of proceeds of crime, the offence in Section 3, and the broader scheme set out in the PMLA notes hub.
"Shall presume" versus "may presume": the Evidence Act grammar
Section 24 is drafted in the technical vocabulary of the Indian Evidence Act, 1872 (now the Bharatiya Sakshya Adhiniyam, 2023). "Shall presume" is defined in Section 4 of the Evidence Act: the court is bound to regard the fact as proved unless and until it is disproved. "May presume" leaves it to the court's discretion either to regard the fact as proved or to call for proof of it. The drafters therefore deliberately calibrated the two clauses — an accused who has been charged faces a compulsory presumption, while a third party faces only a permissive one.
Crucially, the presumption operates on a specific fact: that the proceeds of crime are involved in money-laundering. It does not presume the existence of proceeds of crime in the first place, nor does it presume the commission of a scheduled offence. Those are anterior facts the prosecution must independently establish. The presumption is thus narrow in its object even though sweeping in its rhetorical effect, a distinction the Supreme Court would later make central to the section's survival.
The pre-2013 position and the 2013 substitution
As originally enacted, Section 24 read: "When a person is accused of having committed the offence under section 3, the burden of proving that the proceeds of crime are untainted property shall be on the accused." Two features attracted criticism. First, the burden fastened on a mere accused — arguably from the moment of accusation, even before charge. Second, the burden was framed as proving a positive ("untainted property") rather than rebutting a presumption.
The Prevention of Money-Laundering (Amendment) Act, 2012 (which came into force on 15 February 2013) substituted the present text. The threshold was shifted from "accused" to "charged", the two-tier "shall/may presume" structure was introduced, and the burden was recast as displacing a rebuttable presumption. The amendment also brought the provision into closer alignment with the FATF framework discussed in the introduction and genesis chapter, where reverse-onus clauses in proceeds-of-crime statutes are an accepted international technique. Exam answers should note that the "charged" threshold means clause (a) is engaged at trial after a complaint is taken cognizance of, not merely on registration of an ECIR.
Foundational facts: what the prosecution must prove first
The single most important qualification on Section 24 is the doctrine of foundational facts. A reverse-onus clause is constitutionally tolerable only because, before it operates, the prosecution must establish certain basic or "foundational" facts beyond reasonable doubt; only then does the evidentiary burden shift to the accused to rebut the resulting presumption. This principle did not originate in the PMLA. It was firmly laid down for reverse-burden provisions generally in Noor Aga v. State of Punjab, (2008) 16 SCC 417, where the Court, upholding Sections 35 and 54 of the NDPS Act, held that the prosecution's reverse burden does not absolve it from establishing a prima facie case, and that the presumption operates only once the statutory conditions are fully satisfied.
Applied to Section 24, the foundational facts the prosecution must prove are: (i) the commission of a scheduled (predicate) offence generating proceeds of crime; (ii) that the property in question was derived or obtained, directly or indirectly, as a result of that criminal activity, so as to constitute proceeds of crime; and (iii) the accused's involvement in some process or activity connected with such property. Only after these are made out does the presumption that the proceeds "are involved in money-laundering" arise, casting on the accused the burden of proving the contrary. The presumption, in other words, is the last link, not a substitute for the prosecution's primary case.
Vijay Madanlal Choudhary: the constitutionality of the reverse burden
The validity of Section 24 was authoritatively settled in Vijay Madanlal Choudhary v. Union of India, (2022) 10 SCC 1 (also reported as 2022 SCC OnLine SC 929; 2022 LiveLaw (SC) 633), decided on 27 July 2022 by a three-judge Bench of Justices A.M. Khanwilkar, Dinesh Maheshwari and C.T. Ravikumar. Among more than two hundred petitions challenging the PMLA, the petitioners contended that Section 24 inverts the presumption of innocence and is therefore violative of Articles 14 and 21 of the Constitution.
The Court rejected the challenge. It held that a reverse burden is a permissible and reasonable rule of evidence, justified by the clandestine nature of money-laundering and the practical difficulty of proving the illicit origin of laundered wealth, which lies peculiarly within the knowledge of the person dealing with the property. Importantly, the Court read down the sweep of the section by anchoring it to foundational facts: the presumption under Section 24 is not a free-standing assumption of guilt but operates only after the authorities have established the basics of the offence, and it remains rebuttable. So construed, Section 24 has a clear nexus with the legislative object and does not offend Articles 14 or 21. The judgment thus did for Section 24 what Noor Aga had done for the NDPS Act — sustained the provision by tethering it to a prior prosecutorial burden.
A rebuttable presumption and the standard of rebuttal
Because Section 24 uses the formula "unless the contrary is proved", the presumption is rebuttable. The accused need not prove innocence beyond reasonable doubt; the settled approach to reverse-onus clauses, as explained in Noor Aga, is that the accused discharges the burden on the standard of preponderance of probabilities, the civil standard. The accused may do so by leading positive evidence of a lawful source for the property, or by puncturing the prosecution's foundational case so that the presumption never validly arises.
The practical effect is a shifting evidentiary burden, not a shifting of the ultimate legal burden of the prosecution to prove the foundational facts. If the accused raises a probable and credible explanation that the property is untainted, the presumption is displaced and the prosecution must then prove its case in the ordinary way. This calibrated reading prevents Section 24 from collapsing into a presumption of guilt, and it is the reason the provision could be sustained against the Article 21 challenge.
It is worth distinguishing two senses of "burden" that students frequently conflate. The legal or persuasive burden of establishing the foundational facts — the scheduled offence, the proceeds of crime and the accused's nexus — never leaves the prosecution and is discharged on the criminal standard. What Section 24 shifts is the evidential burden on the single, narrow issue of whether the proven proceeds are involved in money-laundering. Once the accused adduces evidence sufficient to make his innocence probable on that issue, the tactical onus swings back. Courts therefore err if they treat Section 24 as relieving the State of proof altogether; the presumption is a bridge from proven foundational facts to a statutory inference, not a licence to convict on suspicion. This is precisely the construction that allowed the provision to coexist with the constitutional guarantee of a fair trial.
Section 24 at the bail stage: Gautam Kundu
The interaction between the reverse burden and the bail jurisdiction was examined in Gautam Kundu v. Directorate of Enforcement, (2015) 16 SCC 1. The appellant, chairman of Rose Valley group, sought bail in proceedings under Section 3. The Supreme Court held that the twin conditions of Section 45 must be satisfied before bail is granted in a PMLA case, and in that context observed that the burden of showing that the monies were not proceeds of crime, by virtue of Section 24, weighs against the accused even while the court forms its prima facie view on bail.
The case is significant for exam purposes because it illustrates how Section 24's presumption colours the satisfaction a court must reach under Section 45 — that there are reasonable grounds for believing the accused is not guilty. The reverse burden does not literally apply as a presumption at the bail stage in the same mandatory way as at trial, but it informs the gravity with which courts approach the prima facie assessment. Gautam Kundu remains a leading authority on the stringency of PMLA bail.
A subtle but examinable point is the difference between the burden under Section 24 and the burden built into the twin conditions of Section 45. Section 45 requires the court to be satisfied that there are reasonable grounds for believing the accused is not guilty — itself a form of reverse expectation at the threshold of liberty. Section 24, by contrast, governs proof at adjudication and trial. The two reinforce one another: an accused must persuade the bail court of a tenable case of innocence while knowing that, at trial, a statutory presumption will operate against him on the laundering issue. Gautam Kundu shows the courts declining to let the bail stage become a dress rehearsal for the trial, yet acknowledging that the legislative scheme deliberately front-loads difficulty onto the accused.
Rohit Tandon and the gravity of money-laundering
Rohit Tandon v. Directorate of Enforcement, (2018) 11 SCC 46 reinforced the same theme. Arising out of the demonetisation-era conversion of unaccounted cash, the Supreme Court reiterated that the twin conditions under Section 45 are mandatory and must be complied with even on an application under Section 439 CrPC, and emphasised that courts must weigh the nature of the allegations, the role of the accused and the likelihood of tampering with evidence. Read with Section 24, the case shows the cumulative stringency of the PMLA: a presumption of involvement at trial, married to onerous bail conditions, makes the position of an accused materially harder than under the ordinary criminal law.
The broader judicial attitude was captured in P. Chidambaram v. Directorate of Enforcement, (2019) 9 SCC 24, where the Court cautioned that economic offences constitute a class apart and that courts should be slow to grant bail given their grave impact on the financial fabric of society. These bail-stage cases are best studied together with the punishment chapter to appreciate the full deterrent design of the statute.
Comparison with reverse-onus clauses in other statutes
Section 24 is not unique. Indian law contains a family of reverse-onus and presumption provisions whose constitutionality has been repeatedly upheld on the foundational-facts logic. In P.N. Krishna Lal v. Government of Kerala, 1995 Supp (2) SCC 187, the Supreme Court upheld presumption provisions of the Abkari Act, reasoning that the legislature may place part of the burden on the accused where the relevant facts lie within his special knowledge. Sections 35 and 54 of the NDPS Act, sustained in Noor Aga, presume a culpable mental state once possession of contraband is shown. Section 139 of the Negotiable Instruments Act presumes that a cheque was issued in discharge of a debt. Section 20 of the Prevention of Corruption Act presumes that a public servant who accepts gratification did so as a motive or reward.
The common thread is that each presumption (i) is rebuttable, (ii) operates only after a foundational fact peculiarly provable by the State has been established, and (iii) shifts a burden the accused is uniquely placed to discharge. Section 24 fits this template. The doctrinal lesson, valuable in both mains answers and interviews, is that a reverse burden survives Article 21 scrutiny precisely when it is hedged by these three conditions; a provision that presumed guilt from mere accusation, with no anterior prosecutorial burden, would not.
The comparison also helps locate Section 24 on a spectrum of severity. The Negotiable Instruments Act presumption is the mildest — it presumes only consideration, leaving the dishonour itself to be proved. The NDPS and Prevention of Corruption presumptions are stronger because they reach the mental element. Section 24 sits with these stronger presumptions: it presumes the very gravamen of the offence (involvement in laundering) rather than a peripheral fact. That is why the foundational-facts qualification matters more here than in a cheque-bounce case — the heavier the presumption, the more insistent courts must be that the State first proves the underlying criminality. Aspirants who can articulate this graded analysis, rather than simply listing reverse-onus statutes, demonstrate the comparative reasoning examiners reward.
Interaction with the presumptions in Sections 22 and 23
Section 24 does not work in isolation. Section 22 creates a presumption as to records or property found in the possession or control of any person in the course of a survey, search or seizure — the contents of such records, and the truth of their contents, are presumed unless the contrary is shown. Section 23 supplies a presumption in inter-connected transactions: where money-laundering involves two or more inter-connected transactions and one or more of them is proved to be involved in money-laundering, then, for the purposes of adjudication or confiscation under Section 8 or for trial, it shall, unless otherwise proved, be presumed that the remaining transactions form part of such inter-connected transactions.
Together, Sections 22, 23 and 24 form an integrated evidentiary chain. Section 22 helps establish the authenticity of seized records; Section 23 allows a proven tainted transaction to taint connected ones; and Section 24 presumes that the resulting proceeds of crime are involved in money-laundering. In Vijay Madanlal Choudhary the Court upheld these presumptions collectively as reasonable evidentiary devices, each rebuttable and each operating only on a proven foundation. A complete answer on Section 24 should locate it within this trio rather than treating it as a stand-alone rule.
The burden in attachment and adjudication proceedings
Section 24 expressly applies to "any proceeding relating to proceeds of crime under this Act", which includes the civil-style processes of provisional attachment and adjudication, not merely criminal trial. When property is provisionally attached and the matter goes before the Adjudicating Authority, clause (b)'s discretionary "may presume" typically governs a non-accused property-holder, while clause (a)'s mandatory presumption attaches to a person already charged. The interplay with attachment of property under Section 5 and confirmation under Section 8 is therefore direct.
In Vijay Madanlal Choudhary the Court clarified that even at the adjudication stage the authority must have material before it — a "reason to believe" recorded in writing — and the person noticed under Section 8 is given an opportunity to indicate the source of the property and show cause. The reverse burden does not dispense with this minimum of natural justice; it merely shifts the evidentiary onus once the State has placed foundational material on record. For aspirants, the takeaway is that Section 24 cuts across both the punitive and the confiscatory limbs of the PMLA, which is why it is examined as a structural provision rather than a mere trial rule.
Criticisms, the pending review, and balance
Section 24 continues to draw academic and judicial criticism. The core objection is that, by presuming involvement in money-laundering once a person is charged, it dilutes the presumption of innocence that Nikesh Tarachand Shah v. Union of India, (2018) 11 SCC 1 had described as a cardinal principle when it struck down the original twin-condition bail clause in Section 45 (later revived by amendment and upheld in Vijay Madanlal Choudhary). Critics argue that the foundational-facts safeguard is illusory in practice because the same investigating agency controls both the predicate-offence material and the laundering allegation.
A batch of review petitions against Vijay Madanlal Choudhary remains pending before the Supreme Court, the Court having earlier observed that at least two aspects — relating to the supply of the ECIR and the reversal of the presumption of innocence — may require reconsideration. Until the review is decided, however, Vijay Madanlal Choudhary is binding and Section 24 stands as good law. The balanced exam position is this: Section 24 is constitutionally valid as a rebuttable presumption tethered to foundational facts, but its compatibility with Article 21 rests entirely on courts insisting that the prosecution discharge its anterior burden before the onus shifts.
Exam takeaways and answer framework
For a high-scoring answer, structure Section 24 in four moves. First, state the text and the two-tier "shall presume" / "may presume" distinction, noting the 2013 substitution that shifted the threshold from "accused" to "charged". Second, explain that the presumption is rebuttable on preponderance of probabilities and operates only on the narrow fact that proceeds are "involved in money-laundering". Third, deploy the foundational-facts doctrine from Noor Aga (2008) 16 SCC 417 and its application in Vijay Madanlal Choudhary (2022) 10 SCC 1 to show why the provision survives Articles 14 and 21. Fourth, integrate the companion presumptions in Sections 22 and 23 and the bail-stage authorities Gautam Kundu (2015) 16 SCC 1 and Rohit Tandon (2018) 11 SCC 46.
The crisp one-line proposition to memorise: Section 24 PMLA creates a rebuttable reverse burden that presumes proceeds of crime are involved in money-laundering, but only after the prosecution proves the foundational facts — a scheduled offence, proceeds of crime, and the accused's connection to the property — failing which the presumption never arises. Continue your revision with the offence of money-laundering and the full PMLA notes hub.
Frequently asked questions
What does Section 24 of the PMLA say?
Section 24 provides that in any proceeding relating to proceeds of crime, a person charged with money-laundering under Section 3 faces a mandatory presumption that the proceeds of crime are involved in money-laundering ("shall presume"), while any other person faces only a discretionary presumption ("may presume"). The presumption is rebuttable — it applies "unless the contrary is proved".
Is the reverse burden of proof under Section 24 constitutional?
Yes. In Vijay Madanlal Choudhary v. Union of India, (2022) 10 SCC 1, the Supreme Court upheld Section 24 as a reasonable rule of evidence not violative of Articles 14 or 21, because the presumption is rebuttable and operates only after the prosecution establishes the foundational facts of the offence.
What are the foundational facts the prosecution must prove before Section 24 applies?
The prosecution must first prove, beyond reasonable doubt: (i) the commission of a scheduled offence generating proceeds of crime; (ii) that the property was derived from that criminal activity so as to be proceeds of crime; and (iii) the accused's involvement in a process or activity connected with the property. Only then does the presumption shift the burden, a principle drawn from Noor Aga v. State of Punjab, (2008) 16 SCC 417.
What standard must the accused meet to rebut the presumption?
The accused need only rebut the presumption on the preponderance of probabilities (the civil standard), not beyond reasonable doubt. This may be done by proving a lawful source for the property or by demolishing the prosecution's foundational case so that the presumption never validly arises.
How was Section 24 changed by the 2013 amendment?
The original provision placed the burden of proving that proceeds were "untainted property" on a mere accused. The 2012 Amendment Act (in force 15 February 2013) substituted the present text, shifting the threshold from "accused" to "charged", introducing the two-tier "shall presume"/"may presume" structure, and recasting the burden as rebutting a presumption.
Does the Section 24 presumption apply at the bail stage?
Not as a mandatory trial presumption, but it strongly colours the prima facie assessment. In Gautam Kundu v. Directorate of Enforcement, (2015) 16 SCC 1, and Rohit Tandon v. Directorate of Enforcement, (2018) 11 SCC 46, the Court held the burden flowing from Section 24 weighs against the accused when courts apply the twin conditions of Section 45 in deciding bail.