Supreme Court limits ED’s power to arrest PMLA accused

Sub: Polity

Sec: Constitution

Context:

The Supreme Court said when an accused appears before a court in pursuance of a summons, the agency will have to apply to the court concerned to get his custody.

More on news:

The judgment was based on an appeal filed by Tarsem Lal against the ED challenging a Punjab and Haryana High Court denying him anticipatory bail.

About the recent ruling:

In a landmark judgment, the Supreme Court of India ruled that the Enforcement Directorate and its officers cannot arrest an accused under Section 19 of the PMLA after the Special Court has taken cognizance of the complaint.
If the accused appears before the special court pursuant to a summons, it cannot be treated that he is in custody.
If the ED wants custody of such an accused, it will have to apply to court for custody.
ED can get custody after application to the special court.
The court will only grant custody with reasons satisfying that custodial interrogation is needed.
The special court can direct the accused to furnish bonds in terms of Section 88 of the Code of Criminal Procedure.
Accused who appeared before the court pursuant to the summons are not required to apply for bail, and thus, the twin conditions of Section 45 of PMLA are not applicable.
It is not necessary for the accused to apply for baiL.
An accused who appears in a special court pursuant to its summons, could be exempted from personal appearance in the future.
If an accused does not appear after a summons is served, the special court could issue a bailable warrant followed by a non-bailable one.
When the ED wants to conduct a further investigation concerning the same offense, it may arrest a person not shown as an accused in the complaint filed under Section 44(1)(b) of the PMLA, provided the requirements of Section 19 (procedures of arrest) under the Act were fulfilled.

What are the twin conditions?

The twin conditions of bail under Section 45 of the PMLA pose stringent thresholds for an accused.
- The person has to prove in court that he or she is prima facie innocent of the offense.
- The accused should be able to convince the judge he would not commit any offense while on bail.
The burden of proof is entirely on the incarcerated accused, who would be often handicapped to fight the might of the state.
In November 2017, the Supreme Court invalidated Section 45(1) of the PMLA, which concerned the imposition of two extra conditions for granting bail to money laundering accused.
However, the Center subsequently reinstated this provision through amendments to the PMLA.

What is the PMLA act?

Prevention of Money Laundering Act, 2002 (PMLA) was enacted to fight against the criminal offense of legalizing the income/profits from an illegal source.
The Prevention of Money Laundering Act, 2002 enables the Government or the public authority to confiscate the property earned from the illegally gained proceeds.
Section 19 of the PMLA allows ED officers to arrest an individual on the basis of material in possession (and) reason to believe (to be recorded in writing) that the person is guilty.

About ED?

It is a Multi-Disciplinary Organization mandated with the task of enforcing the provisions of two special fiscal laws – Foreign Exchange Management Act, 1999 (FEMA) and Prevention of Money Laundering Act, 2002 (PMLA).
The administrative control of the Directorate was transferred from the Department of Economic Affairs to the Department of Revenue in 1960.
The Directorate enforces two laws;
- FEMA, a Civil Law having quasi-judicial powers, for investigating suspected contraventions of the Exchange Control Laws and Regulations with the powers to impose penalties on those adjudged guilty.
- PMLA, a Criminal Law, whereby the Officers are empowered to conduct enquiries to locate, provisionally attach/confiscate assets derived from acts of Schedules Offenses besides arresting and prosecuting the Money Launderers.