Supreme Court Ruling on Enforcement Directorate’s (ED) Powers

New Delhi, 16 May 2024: In a groundbreaking decision, the Supreme Court declared that the Enforcement Directorate (ED) can no longer arrest individuals under Section 19 of the Prevention of Money Laundering Act (PMLA) once the Special Court has acknowledged a money laundering complaint. This historic ruling signifies a major shift in how the ED operates, emphasizing the need for judicial oversight.

Key Highlights of the Judgment:

1. Restricting Arrest Powers:
   • The Supreme Court ruled that once the Special Court takes notice of a complaint under Section 4 of the PMLA, the ED loses its authority to arrest the accused under Section 19.
   • If the ED needs to detain the accused for further investigation, they must seek permission from the Special Court.
2. Role of the Special Court:
   • The Special Court will decide on the Enforcement Directorate’s (ED) request for custody after hearing both sides.
   • Custody will only be granted if the court believes it is necessary for the investigation.
3. Scope for Further Investigation:
   • The ED can arrest individuals not initially listed as accused if they meet Section 19 requirements.
4. Procedures Following Complaint:
   • After a complaint is filed under Section 44(1)(b) of the PMLA, the process follows Sections 200 to 205 of the Code of Criminal Procedure (CrPC).
   • Typically, if the accused was not arrested before the complaint, the Special Court issues a summons rather than a warrant.
   • If the accused responds to the summons, they are not considered in custody and do not need to apply for bail.
   • The court may require a bond under Section 88 of the CrPC, which is not the same as bail.
5. Bail Conditions:
   • If the accused does not respond to the summons, the Special Court can issue a warrant, starting with a bailable warrant and escalating if necessary.

Supreme Court’s Deliberation: At the heart of this landmark ruling was the question of whether providing a bond under Section 88 of the CrPC, which ensures the accused’s presence in court, is equivalent to applying for bail under Section 45 of the PMLA.

• Petitioner’s Argument: The accused argued that once they appear in court and submit a bond under Section 88, it should not be considered bail, thus bypassing the stringent conditions of Section 45.
• ED’s Argument: The ED maintained that securing a bond under Section 88 is effectively the same as securing bail, and therefore, the conditions of Section 45 should apply.

Case Background: This landmark case arose when an accused in a money laundering investigation appeared in court as required. The High Court had previously denied anticipatory bail because the accused did not meet the conditions under Section 45 of the PMLA. The Supreme Court reserved its judgment on April 30, 2024, after hearing detailed arguments from both sides.

This ruling marks a significant change, ensuring that the power to arrest by the ED is balanced with necessary judicial oversight, upholding the principles of justice and due process.