Kejriwal interim bail | Court draws line on ED power to arrest: Must be ‘rigid, restrictive’

After the 2022 landmark ruling in the Vijay Madanlal Chaudhary vs Union of India case, where the SC upheld almost all of the ED’s powers, this is the first major instance where the court has circumscribed the powers of the central agency.

The ruling, even as it leaves the key question — on when an arrest is legally necessitated — to be considered by a larger Bench, raises several questions on how the ED uses its vast powers under the PMLA.

Section 19 of the PMLA, which deals with arrests, states that an ED officer “may” arrest a person if, “on the basis of material in his possession”, he has “reason to believe (that reason for such belief to be recorded in writing) that any person has been guilty of an offence punishable under this Act…”

The SC, in its 66-page ruling, expressed doubts on the ED’s wide interpretation of the phrases in the provision. The phrase “reason to believe” has been deemed a largely subjective appreciation of the ED. In the 2022 ruling too, the ED defended the provision, which was approved by the Court, on the grounds that it is a high-ranking official who makes the call to arrest.

“Subjectivity of the opinion is not a carte blanche to ignore relevant absolving material without an explanation. In such a situation, the officer commits an error in law which goes to the root of the decision-making process, and amounts to legal malice,” the Court said.

“DoE (Department of Enforcement) has drawn our attention to the use of the expression ‘material in possession’ in Section 19(1) of the PML Act instead of ‘evidence in possession’. Though etymologically correct, this argument overlooks the requirement that the designated officer should and must, based on the material, reach and form an opinion that the arrestee is guilty of the offence under the PML Act. Guilt can only be established on admissible evidence to be laid before the Court, and cannot be based on inadmissible evidence,” the SC said.

“Power to arrest under Section 19(1) is not for the purpose of investigation. Arrest can and should wait, and the power in terms of Section 19(1) of the PML Act can be exercised only when the material with the designated officer enables them to form an opinion, by recording reasons in writing that the arrestee is guilty,” it said.

The Court underlined that since the bar for bail is high under PMLA, the power to arrest must be “rigid and restrictive.”

“The language of Section 19(1) is clear, and should not be disregarded to defeat the legislative intent — to provide stringent safeguards against pre-trial arrest during pending investigations. Framing of the charge and putting the accused on trial cannot be equated with the power to arrest. A person may face the charge and trial even when he is on bail,” it held.