The Supreme Court on extension of tenure of ED’s chief

The Supreme Court dismissing a petition had refused to interfere with the extension of service of the (ED) Enforcement Directorate Chief. And stated that the CVC Act, 2003 only said that such officers shall hold office for not less than two years which cannot be read to mean not more than two years.

So, let us see what is the confusion regarding the tenure of ED’s Chief.

The Enforcement Directorate:

• The Directorate of Enforcement (ED) is a multi-disciplinary organization mandated with the investigation of offenses of money laundering and violations of foreign exchange laws.
• It functions under the Department of Revenue of the Ministry of Finance.
• As a premier financial investigation agency of the Government of India. The Enforcement Directorate functions in strict compliance with the Constitution and Laws of India.

What is the Structure of ED?

• Headquarters: New Delhi
• Headed by: Director of Enforcement.
• There are five regional offices in Mumbai, Chennai, Chandigarh, Kolkata, and Delhi headed by Special Directors of Enforcement.
• The Directorate has 10 Zonal offices each of which is headed by a Deputy Director and 11 sub Zonal Offices each of which is headed by an Assistant Director.
• Recruitment: Recruitment of the officers is done directly and by drawing officers from other investigation agencies.
  • It comprises officers of the IRS (Indian Revenue Services), IPS (Indian Police Services), and IAS (Indian Administrative Services) such as Income Tax officers, Excise officers, Customs officers, and police.
• Tenure: In November 2021, the President of India promulgated two ordinances allowing the Centre to extend the tenures of the directors of the Central Bureau of Investigation (CBI) and the Enforcement Directorate from ‘two years to up to ‘five years.

What were the Amendments say regarding ED’s chief?

• The Delhi Special Police Establishment (DSPE) Act, 1946, and the Central Vigilance Commission (CVC) Act 2003have has been amended to give the Government the power to keep the ‘two chiefs’ in their posts for one year after they have completed their two-year terms.
• The chiefs of the Central agencies currently have fixed two-year tenure, but can now be given three annual extensions.
• However, no further extension can be granted after the completion of a period of five years. In total including the period mentioned in the initial appointment.

What are the statutory functions of ED?

• Foreign Exchange Management Act, 1999 (FEMA): It is a civil law enacted to consolidate and amend the laws relating to facilitating external trade and payments and to promote the orderly development and maintenance of the foreign exchange market in India.
  • ED has been given the responsibility to conduct an investigation into suspected contraventions of foreign exchange laws. And regulations and to adjudicate and impose penalties on those adjudged to have contravened the law.
• 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 an investigation to trace the assets derived from proceeds of crime. To provisionally attach the property, and to ensure the prosecution of the offenders and confiscation of the property by the Special court.

Why is the ED being criticized?

The Supreme Court (SC) is examining allegations of rampant misuse of the Prevention of Money Laundering Act, 2002 (PMLA) by the government and the Enforcement Directorate (ED). 

Major Allegations include:

• Being Used for Ordinary Crimes: PMLA is pulled into the investigation of even “ordinary” crimes and assets of genuine victims have been attached.
• Lack of Transparency and Clarity: The EDtreats itself as an exception to the principles and practices [of criminal procedure law]. And chooses to register an ECIR on its own whims and fancies on its own file.
• ED cannot take action suo motu: The ED will investigate the matter and may attach the property of an accused person. And also make an arrest and start proceeding with the violation of the provisions of FEMA and PMLA act. The matter will be resolved by way of adjudication by courts or PMLA courts.