SC: ED barred from arresting after PMLA complaint taken by special court.
Justice Abhay S. Oka’s bench ruled that if custody of an accused is required for further investigation, the ED must seek approval from the special court. This directive underscores the procedural protocol for the ED’s handling of cases under investigation.
The Supreme Court, in a significant ruling on Thursday, established stringent guidelines regarding the arrest of accused individuals by the Enforcement Directorate (ED) in cases of money laundering. The bench, led by Justice Abhay S. Oka, asserted that once the special court has taken cognizance of the ED’s complaint, the agency is prohibited from arresting the accused on money laundering charges.
This ruling underscores the procedural safeguards aimed at protecting the rights of the accused and ensuring fair treatment under the law. In cases where the custody of an accused is deemed necessary for further investigation, the ED is mandated to approach the special court for approval. Justice Oka emphasized the importance of due process, stating that the special court must carefully consider the ED’s application for custody, taking into account the brief reasons provided and ensuring that custodial interrogation is justified.
The bench, which also included Justice Ujjal Bhuyan, emphasized that the special court’s decision regarding custody should be made after hearing the accused and recording brief reasons for its ruling. This meticulous approach aims to prevent arbitrary arrests and safeguard the rights of individuals implicated in money laundering cases.
Furthermore, the Supreme Court clarified that individuals not named as accused in the ED’s complaint may still be subject to arrest if warranted by Section 19 of the Prevention of Money Laundering Act (PMLA), 2002. However, such arrests must adhere to legal standards and procedural requirements, ensuring that individuals are afforded due process and fair treatment under the law.
Moreover, the apex court highlighted an important distinction regarding individuals appearing before the special court pursuant to summons issued under the PMLA. Unlike those arrested during the money laundering probe, individuals summoned to appear before the court need not satisfy stringent conditions for the grant of bail as stipulated under Section 45 of the PMLA.
Section 45 of the PMLA imposes twin tests for obtaining bail, which entail demonstrating that there are reasonable grounds to believe that the accused is not guilty of the alleged. By exempting individuals appearing before the special court from these stringent bail conditions, the Supreme Court aims to ensure that individuals summoned for questioning are not unduly burdened or deprived of their liberty without just cause.
Overall, the Supreme Court’s ruling serves to uphold the principles of justice, fairness, and due process in cases involving money laundering allegations. By setting clear guidelines for the ED’s arrest procedures and ensuring judicial oversight, the court reinforces the rule of law and protects the fundamental rights of individuals ensnared in the legal process.
The principles outlined by the court for granting bail in cases under the Prevention of Money Laundering Act (PMLA) underscore the importance of ensuring that individuals accused of such offenses are afforded fair treatment and due process. According to these principles, the court must be satisfied that there are reasonable grounds for believing that the accused is not guilty of the alleged offense. Additionally, the court must also be convinced that the accused seeking bail is not likely to commit any offense while on bail. These criteria serve as essential safeguards to prevent arbitrary detention and ensure that individuals are granted bail only when it is deemed appropriate and justifiable.
In November 2017, a division bench comprising Justices Rohinton Nariman and S.K. Kaul struck down Section 45(1) of the PMLA, which imposed two additional conditions for granting bail to individuals accused of money laundering. The bench deemed these conditions arbitrary, highlighting the need to uphold the principles of justice and fairness in bail proceedings.
However, in July 2022, the judgment in the Vijay Madanlal Choudhary case by a bench comprising Justice A.M. Khanwilkar, Dinesh Maheshwari, and C.T. Ravikumar overturned the previous decision. The three-judge bench upheld the 2019 amendments made to the PMLA, which significantly restricted the ability of accused individuals to secure bail. These amendments shifted the burden of proof of innocence onto the accused, making it exceedingly challenging for them to obtain bail and ensuring that they bear the onus of proving their innocence rather than the Enforcement Directorate (ED).
Subsequently, concerns regarding the PMLA judgment prompted a bench headed by then Chief Justice of India (CJI) N.V. Ramana to agree to a review. The review centered on two main issues: the failure to provide accused individuals with the Enforcement Case Information Report (ECIR) at the time of arrest and the undermining of the presumption of innocence.
In November of the following year, shortly before Justice S.K. Kaul’s retirement, a special bench led by him directed the pleas challenging the powers of the Enforcement Directorate to be presented before the Chief Justice of India for the constitution of a new bench. This decision highlighted the gravity of the issues at hand and the need for a comprehensive review of the legal framework governing money laundering cases.
Overall, the evolving legal landscape surrounding bail provisions in money laundering cases reflects the ongoing efforts to strike a balance between upholding the principles of justice and ensuring effective enforcement of laws aimed at combating financial crimes. The Supreme Court’s engagement with these issues underscores its commitment to upholding the rule of law and safeguarding the rights of individuals accused of money laundering offenses.