On ED’s power to arrest and seek custody

Source: The post is based on the article “On ED’s power to arrest and seek custody”  published in The Hindu on 21st July 2023.

What is the News?

The Madras High Court has upheld the legality of Minister V. Senthilbalaji’s 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.

What are the observations made by the Madras High Court?

The central question before the Madras High Court was whether the ED has the power to seek custody of a person arrested. 

In this, the High Court accepted the argument on behalf of the petitioner that ED officials are not police officers as per the law laid down by the Supreme Court in Vijay Madanlal Choudhary versus Union of India (2022). 

However, the court also held that the Supreme Court designated ED officials to not be police officers only for the reason that 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 former were admissible in evidence under the Prevention of Money Laundering Act (PMLA), 2002.

However, this observation could not be stretched to the extent of denying the ED an opportunity to subject the accused to custodial interrogation for unearthing crucial facts related to the alleged crime.

Hence, the court ruled that the ED can subject any person accused in a case booked under the Prevention of Money Laundering Act (PMLA), 2002, to custodial interrogation.

What were the Supreme Court verdicts in the past about the PMLA?

Vijay Madanlal Choudhary versus Union of India,2022: In this judgment, the Supreme Court upheld various provisions of the PMLA which relate to the powers of arrest, attachment, search, and seizure conferred upon the ED. 

– The court was of the opinion that all the provisions under PMLA have a reasonable nexus with the objects sought to be achieved by the Act to effectively prevent money-laundering.

Chidambaram versus Directorate of Enforcement (2019): In this case, the Supreme Court rejected a prayer for anticipatory bail with respect to an offense of money-laundering and proceeded to grant custody to the ED. 

– The court reasoned that money-laundering cases involves ‘systematic and analyzed’ investigations which would be impacted if pre-arrest bail is granted.