ED’s Power to Arrest and Seek Custody

Why in News

• The Madras High Court upheld the legality of a TN minister arrest by the Enforcement Directorate (ED) and his subsequent remand in judicial custody in a money-laundering case linked to a cash-for-jobs scam.
• The question central to the debate was whether the ED has the power to seek custody of a person arrested.

 

Enforcement Directorate (ED)

• The ED was established in the year 1956 as an ‘Enforcement Unit’ under the Department of Economic Affairs, Ministry of Finance.
• Later, in 1957, this Unit was renamed as ‘Enforcement Directorate’.
• Presently, it is under the administrative control of the Department of Revenue (Ministry of Finance) for operational purposes.
• ED is responsible for enforcement of the Foreign Exchange Management Act1999 (FEMA), and certain provisions under the Prevention of Money Laundering Act 2002 (PMLA).
• The ED agency is essential to upholding law and order in India’s financial system and safeguarding the rights of the populace.

 

Powers of ED

• The PMLA gives the ED the authority to detain those who are accused of committing economic crimes.
• The ED has the authority to conduct searches and seizures of assets and real estate that have been obtained unlawfully.
• Individuals and organisations whose bank accounts are suspected of being used for money laundering or other economic crimes may have their accounts frozen by the ED.
• Properties and assets that were acquired illegally may be seized by the ED.

 

Madras HC Ruling

• The ED can subject any person accused in a case booked under the PMLA to custodial interrogation and that the Minister can be taken into custody even after the expiry of 15 days from his arrest on June 14.
• The court accepted the argument that ED officials are not police officers as per the law laid down by the SC in Vijay Madanlal Choudhary v. Union of India (2022).
  • The SC designated ED officials to not be police officers only because the statements given to the latter in any criminal case would not be admissible in evidence before the trial court under the CrPC.
  • Whereas statements given to the ED were admissible in evidence under the PMLA.
• Therefore, the argument could not be stretched to the extent of denying ED an opportunity to investigate the offence of money laundering effectively.
• The HCalso emphasised that the ED could not be left without remedy when it had not been able to interrogate the Minister since he was arrested, because he was admitted to a hospital.
• The court also took into consideration the SC’s ruling in Y. Balaji v. Karthik Desai (2023) where the court refused to discharge Mr. Balaji in the cash-for-jobs scam.

 

SC Judgements in the Past

• Vijay Madanlal Choudhary v. Union of India (2022)
  • Section 19 of the PMLA suggests the manner in which the arrest of a person involved in money laundering can be affected.
  • The provision had been challenged on the ground that it confers unequivocal power of arrest without a warrant.
  • In this landmark judgement, the SC upheld various provisions of the PMLA which relate to the powers of arrest, attachment, search, and seizure conferred upon the ED.
  • The court believed all the provisions under PMLA have a reasonable nexus with the objects sought to be achieved by the Act to prevent money-laundering effectively.
  • The purposes and objects of the 2002 Act is not limited to punishment for offence of money- laundering, but also to provide measures for prevention of money-laundering. It is also to provide for attachment of proceeds of crime.
  • The Act is also to compel the banking companies, financial institutions, and intermediaries to maintain records of the transactions and to furnish information of such transactions within the prescribed time in terms of the 2002 Act.
• Central Bureau of Investigation v. Anupam J. Kulkarni (1992)
  • The SC laid down the law that no police custody can be allowed beyond the first 15 days from the date of arrest; any further remand during investigation can only be in judicial custody. 
  • But this bar does not apply if the same arrested accused is involved in a different case arising out of a different transaction.
  • However, in April this year, a SC bench observed that this 1992 decision requires reconsideration.
  • The bench reasoned that at present the remand period can get over by the time a higher court sets aside an incorrect decision denying custody.
• Dr. Manik Bhattacharya v. Ramesh Malik (2022): The court observed that interim protection granted against CBI action cannot operate against the ED even if the underlying allegations are similar.
• P. Chidambaram v. Directorate of Enforcement (2019)
  • The SC rejected a prayer for anticipatory bail with respect to an offence of money laundering and proceeded to grant custody to the ED.
  • The court reasoned that in a case of money laundering which involves many stages of placement and layering of funds, a ‘systematic and analysed’ investigation is required which would be frustrated if pre-arrest bail is granted.
  • The court also cautioned that it must only exercise its inherent powers under Section 482 CrPC to interfere in an investigation into a cognisable offence if it is convinced that the power of the investigating officer is exercised mala fide.

 

Conclusion

• The ED has been conferred with vast powers, which have been upheld by the Apex Court as well, to protect the financial and economic interest of the nation.
• At the same time ED is bound to the constitution of India and therefore it is imperative for the agency to follow the constitutional provisions and not become a subject of criticism every now and then.

 

---

Q1) What is the writ of Habeas Corpus?

Habeas Corpus is a Latin word meaning ‘to have the body of’. It is an order issued by the court to a person who has detained another person, to produce the body of the latter before it. The court then examines the cause and legality of detention. 

 

Q2) What is the difference between Police Custody and Judicial Custody?

In police custody, the accused is held under police authority whereas in judicial custody the accused is kept under the order of the court. Police custody is for interrogation and investigation. Judicial custody is for the period between trial hearings and during the trial.

 

---

Source: The Hindu