Home / News / India /  SC upholds ED’s right to make arrests

NEW DELHI : The Supreme Court on Wednesday upheld the Enforcement Directorate’s (ED) right to make arrests and seize assets, while rejecting multiple challenges to the Prevention of Money Laundering Act (PMLA).

A bench led by Justice A.M. Khanwilkar said ED should put more information in the public domain. It said the lack of judicial officers dealing with PMLA cases is a serious issue, asking the government to address the problem.

The court further held that Enforcement Case Information Report (ECIR) cannot be equated with a First Information Report (FIR) and that it is only an internal document of the ED. Therefore, the provisions of the Criminal Procedure Code (CrPC) relating to FIR will not apply to ECIR. Supplying ECIR to the accused is not mandatory, and disclosure of grounds of arrest is sufficient.

However, the person, when presented in the Special Court, can ask for records to see if continued imprisonment is necessary.

The judgement bears importance since it dealt with issues relating to investigatory powers, calling witnesses, arrests and seizures performed by the ED and the PMLA bail process.

The ruling has set a precedent to how ED and other probe agencies are allowed to act in any current or future cases. It comes after more than 200 petitions challenged the constitutionality of several provisions of the PMLA.

“The judgment provides much-needed clarity on prosecution under the PMLA, by linking it to the principal criminal activity which led to the initiation of prosecution under the PMLA. The judgment clarifies that if the principal criminal case falls, there can be no prosecution for money laundering. However, should there be arrests made in the course of the investigations, securing bail would be an uphill task, as the Supreme Court has upheld the re-instatement of the stringent tests to secure bail provided for under the PMLA.", said Anuj Berry, partner, disputes and white-collar crime practice at Trilegal.

Gauri Rasgotra, partner & head-Delhi at Cyril Amarchand Mangaldas said, “On the issue of bail, the court has completely given a go-by to the earlier judgment of the Supreme Court, which had clearly declared the twin conditions for bail to be unconstitutional being violative of Article 14 and Article 21 of the Constitution. Therefore, the threshold for bail as well as anticipatory bail would have to go through the twin tests as prescribed in the new amendment. This would mean that even for anticipatory bail, the public prosecutor has to be heard. The court has further held that at the prima facie stage, the duty of the court is not to weigh the evidence meticulously, but to arrive at a finding on the basis of broad probabilities. This will strengthen the hands of the ED in pursuing cases relating to money laundering."

Some of the high-profile PMLA cases before the Supreme Court include Karti Chidambaram’s INX Media investigation, corruption charges against former Akali minister Sarwan Phillaur and his son, the e-tender scam in Madhya Pradesh, and money laundering charges against diamond trader Ritesh Jain, and other businessmen.

Priyanka Gawande
Priyanka Gawande is a senior legal correspondent at Mint. She has worked as legal reporter for four years with both television and digital mediums. Based in Mumbai, she reports on disputes across sectors including banking, corporates and finance. This also includes insolvency and bankruptcy cases and intellectual property rights (IPR) litigation. Her focus also comprises tracking capital markets and disputes relating to securities law. Previously, Priyanka worked with Informist Media for 2.5 years covering major insolvency and bankruptcy cases and corporate developments. She started her career in journalism with Business Television India (BTVi) where she reported on primary markets, banking, finance and insurance companies.
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