ED’s powers to arrest and seek custody

The Madras High Court upheld the legality of arrest of a Minster of Tamil Nadu by the Enforcement Directorate (ED) and his subsequent remand in ‘judicial custody’ in a money-laundering case linked to a cash-for-jobs scam.

Key-highlights of the verdict:

• According to the verdict, ‘ED Officers’ do not have Powers of Police Officer and they cannot hold custody beyond first 24 hours of Arrest.
• ED can subject any person accused in a case booked under the Prevention of Money Laundering Act (PMLA), 2002, to custodial interrogation and that the person can be taken into custody even after the expiry of 15 days from his arrest.
• However, in Central Bureau of Investigation v. Anupam J. Kulkarni (1992), the Supreme Court laid down the law that no police custody can be allowed beyond the first 15 days from the date of arrest; any further remand during investigation can only be in judicial custody.

Key Questions

• The investigation by the Enforcement Directorate is an inquiry for the purposes of the Prevention of Money Laundering Act.
• In other words, the ED officers conduct inquiries, gather evidence, and make arrests once a conclusion of guilt is reached before filing a complaint.
• All statements recorded during this inquiry are admissible.
• Now, in this context, the question arises: “If ED officers are neither police officers, nor officers in charge of a police station, and the ‘investigation’ is in the nature of an inquiry, then under what power will they seek police remand?”

Power of ED for ‘interrogation’ and ‘Custody’:

• Under Prevention of Money Laundering Act, 2002 (PMLA): Following the recommendations of the Financial Action Task Force (FATF) India enacted PMLA.
• The ED has been entrusted with the responsibility of executing the provisions of PMLA by conducting investigation to trace the assets derived from proceeds of crime, to provisionally attach the property and to ensure prosecution of the offenders and confiscation of the property by the Special court.
• The ED carries out search (property) and seizure (money/documents) after it has decided that the money has been laundered, under Section 16 (power of survey) and Section 17 (search and seizure) of the PMLA.
• On the basis of that, the authorities decide if arrest is needed as per Section 19 (power of arrest).
• Under Section 50 of the PMLA, the ED can also directly carry out search and seizure without calling the person for questioning.
• It is not necessary to summon the person first and then start with the search and seizure.
• If the person is arrested, the ED gets 60 days to file the prosecution complaint (chargesheet) as the punishment under PMLA doesn't go beyond seven years.
• If no one is arrested and only the property is attached, then the prosecution complaint along with attachment order is to be submitted before the adjudicating authority within 60 days.