The Supreme Court of India ruled Thursday that the Enforcement Directorate (ED) has no authority to arrest an individual directly under the Prevention of Money Laundering Act (PMLA), 2002 with only recognition of the complaint from a court. The top court determined that to obtain custody, the central agency must seek permission from the special court. The PMLA is a piece of legislation passed by the Parliament of India to combat money laundering and enable the seizure of assets obtained through such illegal activities.
The court concluded in part that:
(i) After cognizance is taken of the offence punishable under Section 4 of the PMLA based on a complaint under Section 44, the ED and its officers are powerless to exercise powers under Section 19 to arrest a person shown as accused in the complaint; and
(j) If the ED wants custody of the accused who appears after service of summons for conducting further investigation in the same offence, the ED will have to seek custody of the accused by applying to the Special Court.
The Supreme Court delivered the ruling more than two months after rejecting a petition requesting a review of a previous verdict. The earlier verdict stated that the ED must provide written grounds for the arrest of an accused “without exception.” The court found no errors in its judgement that would justify reconsideration.
The current decision was delivered in response to a petition filed by Tarsem Lal, who had challenged a previous Punjab and Haryana High Court order in a PMLA case against him. The high court rejected his anticipatory bail plea, reasoning that he failed to meet one of the conditions outlined in Section 45 of the PMLA.
Section 45 of the PMLA stipulates certain conditions for securing bail. The court must be convinced that there are valid reasons to believe the accused is innocent of the alleged offense and that the accused, if granted bail, will not engage in any criminal activity.
In this case, the Supreme Court considered whether an accused person would still need to apply for bail under Section 437 of the CrPC after appearing before the special court in response to a summons. The Supreme Court deliberated on whether the conditions under Section 45 of the PMLA would apply if bail were required.
The court emphasized that the accused does not need to meet the strict criteria for bail under Section 45 of the PMLA when they voluntarily appear before the special court following the ED complaint. The court ruled that if the ED seeks custody of an accused, it must apply to the special court. This ruling makes it easier for accused individuals to obtain bail in money-laundering cases.
The court emphasized in its ruling that the ED has the authority to conduct additional investigations into the same offense and may even arrest individuals not initially named as accused in the filed complaint, provided they meet the requirements outlined in Section 19 of the PMLA.
