Supreme Court Upholds ED’s Power To Arrest In Money Laundering Cases

Mumbai: The Supreme Court on Wednesday upheld the Enforcement Directorate’s power to arrest, attach, search and seizure under the Prevention of Money Laundering Act, 2002.

The court upheld the constitutionality of the provisions of sections 5, 8(4), 15, 17 and 19 of the PMLA, which deal with the powers of arrest, attachment, search and seizure of the ED. The court also upheld the inverse burden of proof under section 24 of the Act and held that it has a “reasonable connection” with the purposes of the Act.

The court also upheld the “two conditions” for bail in Section 45 of the PMLA Act and said that Parliament was competent to amend the said provision in 2018 even after the Supreme Court’s judgment in the Nikesh Tharachand Shah case (which had struck down the twin conditions).

The Bench said that Parliament is competent to amend Section 45 in its present form to remove the loopholes pointed out in the judgment of the Supreme Court.

The Court also held that the ED officers are not “police officers” and therefore the statements recorded by them under Section 50 of the Act are not affected by Article 20(3) of the Constitution, which guarantees the fundamental right against self-incrimination. The punishment of a fine or arrest for giving false information cannot be construed as a compulsion to give a statement. Section 50 procedure is in the nature of an inquiry, not an investigation.

The Court further said that the Enforcement Case Information Report (ECIR) cannot be clubbed with the FIR and is only an internal document of the ED. Therefore, CrPC provisions relating to FIR will not be applicable to ECIR.

Supply of ECIR is not mandatory and disclosure of grounds of arrest is sufficient. However, when the person is before the Special Court, one can call for the record to see whether continuous imprisonment is necessary.

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