New Delhi: The Supreme Court on Wednesday upheld the Enforcement Directorate’s power to inquire, arrest and attach property under the Prevention of Money Laundering (PMLA) Act.
A bench led by Justice AM Khanwilkar delivered the verdict on a batch of petitions challenging the process of arrest, seizure and investigation carried out by the ED and seeking interpretation of provisions of the PMLA.
The court upheld the constitutionality of the provisions of Sections 5, 8(4), 15, 17 and 19 of the PMLA, which relate to the powers of ED’s power of arrest, attachment and search and seizure. It also affirmed the “twin conditions” for bail in Section 45 of the PMLA.
The Court also held that the supply of Enforcement Case Information Report (ECIR) under PMLA proceedings is not mandatory since ECIR is an internal document and cannot be equated to a First Information Report (FIR).
“ECIR cannot be equated with FIR and ECIR is an internal document of ED.
Supply of ECIR to accused is not mandatory and only disclosure of reasons during arrest is enough. Even the ED manual is not to be published since it is an internal document,” the Court held.
The Court also rejected the argument about proportionality of punishment under PMLA act with respect to scheduled offences as wholly “unfounded”.
However, the Court held that question of enactment of amendments in 2019 to PMLA Act as money bill has to be decided by a larger bench of seven judges before whom the same question is already pending.
Under the stringent PMLA law, the power of arrest, granting bail, seizure of property are all outside the ambit of the Code of Criminal Procedure (CrPC).
The petitioners contended that the investigation agencies effectively exercise police powers, so they should be obligated to follow the CrPC while conducting investigations. Since the ED is not a police agency, statements made by the accused to the ED during an investigation can be used against the accused in judicial proceedings, which is against the legal rights of the accused.
The petitioners have argued about how the procedure for initiating an investigation, summoning witnesses or accused persons for questioning, recording of statements, attachment of assets violate the fundamental right of liberty.
Though the punishment for money laundering is a maximum term of seven years, securing bail is very difficult under the statute.
Petitioners have also argued that the power the ED officers are entrusted with under Section 50 of the PMLA to summon anyone and record their statement and force them to sign their statement, makes the defendant devoid of the safeguards and is a gross violation of the Constitution.
The government has, however, defended the Act, stating that it is a special law and has its own procedures and safeguards in it.
The Centre has also argued that money laundering is a serious threat to the economic strength of the country and sought to provide a stringent regime for dealing with it.
