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Arrest under PMLA by ED
Context:
The Supreme Court held that the power to arrest under the Prevention of Money Laundering Act (PMLA) cannot be exercised on the “whims and fancies” of Directorate of Enforcement (ED) officers.
SC observations
- The ED should have a consistent, uniform “one-rule-for-all” policy for arrests, ensuring their power to arrest is based on objective and fair consideration of the evidence against a person.
- Under the PMLA, ED officers can arrest a person if they have reasons to believe, based on the material in their possession, that the individual is guilty.
- ED should arrest not on grounds of mere suspicion, but on beliefs based on fair and objective consideration.
- Suspicion requires a lower degree of satisfaction and does not amount to belief. Belief is beyond speculation or doubt.
- The power of arrest granted to ED officers under Section 19(1) of the PMLA is drastic and risks violating the right to life and liberty guaranteed by Article 21 of the Constitution.
- An officer should not be allowed to selectively pick and choose material implicating the person to be arrested. They have to equally apply their mind to other material which absolves and exculpates the arrestee.
- SC observation was based on low numbers of searches conducted by ED of the Enforcement Case Information Reports (ECIRs).
Enforcement Case Information Reports (ECIRs)
- Is an essential document used by the Enforcement Directorate (ED) in India.
- ECIRs serve a similar role to First Information Reports (FIRs) in criminal investigations.
- They are used specifically for money laundering offences and violations of foreign exchange laws.
- While ECIRs are similar to FIRs, they are considered “internal documents” and are not shared with the accused.
Legal provisions:
- Section 19 (1) of the PMLA : Power to arrest
- A person may be arrested if the Director, Deputy Director, Assistant Director, or any other officer authorised by the Central Government has reason to believe, based on material in their possession and recorded in writing, that the person is guilty of an offence under this Act.
- The arrested person shall be informed of the grounds for the arrest as soon as possible.
- The Supreme Court in Vijay Madanlal Choudhary vs Union of India (2022)upheld the validity of various contested provisions of the PMLA, including section 19 that deals with arrest, on the ground that all the provisions have a reasonable nexus with the objects sought to be achieved by the legislation in preventing money-laundering effectively.
- Section 45(1) of the PMLA: Offences to be cognisable and non-bailable.
- Requires that before a person is released on bail or bond, the public prosecutor must initially be given an opportunity to oppose the application, and when the prosecutor opposes bail, the court must apply the twin test before granting bail, which are:
- That there are reasonable classifications for believing that the accused is not guilty of the offence
- He is not likely to commit any crime while out on bail.
