ED can’t make PMLA arrest after cognisance, needs court nod: Supreme Court
The Supreme Court said that once a special court takes cognisance of a complaint under PMLA, the Enforcement Directorate will have to approach the special court if it wants custody of an accused.
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"If the accused appears before the special court by summons (issued by court), it cannot be treated that he is in custody," bench said. (File)The Supreme Court ruled Thursday that the Enforcement Directorate cannot directly arrest a person under the Prevention of Money Laundering Act (PMLA) once a special court takes cognisance of its complaint and the agency will have to approach the court if it wants custody of that person.
The bench of Justices A S Oka and Ujjal Bhuyan, which was hearing Tarsem Lal vs Directorate of Enforcement, Jalandhar Zonal Office, said, “After cognisance is taken of the offence punishable under Section 4 of the PMLA based on a complaint under Section 44, the ED and its officers are powerless to exercise powers under Section 19 to arrest a person shown as accused in the complaint. If the ED wants custody of the accused who appears after service of summons for conducting further investigation in the same offence, ED will have to seek custody of the accused by applying to the special court.”
“If the accused appears before the special court pursuant to a summons, he shall not be treated as if he is in custody. Therefore, it is not necessary for him to apply for bail. However, the special court can direct the accused to furnish bonds in terms of Section 88 of the Code of Criminal Procedure (CrPC),” it said.
The question before the Supreme Court was whether an accused, once he appears before the Special Court in response to a summons, will still be required to apply for bail in terms of Section 437 of the CrPC and if he has to, whether it will be governed by the twin conditions imposed by Section 45 of the PMLA.
In the case pursued by the ED Jalandhar Zonal Office, a bond executed by a PMLA case accused under Section 88 of CrPC was treated as a bail proceeding notwithstanding that he appeared before the court in compliance with the summons issued to him. As a consequence, he had to seek bail. He then approached the High Court for grant of anticipatory bail. Denying him relief, the High Court said he had not satisfied the second condition under Section 45 of PMLA.
The relief this ruling provides
The Supreme Court’s ruling extends protection against arrest by the ED when an accused is actively participating in the investigation without being evasive. The relief is significant as the bar for grant of bail, once arrested, is very high in ED cases.
The bench said the special court “after hearing the accused… must pass an order on the application after recording brief reasons. While hearing such an application, the court may permit custody only if it is satisfied that custodial interrogation at that stage is required even though the accused was never arrested under Section 19”.
“However, when ED wants to conduct further investigation concerning the same offence, it may arrest a person not shown as an accused in the complaint already filed, provided the requirements of Section 19 are fulfilled,” it said.
“If the accused was not arrested by the ED till the filing of the complaint by taking cognisance of a complaint under Section 44 as a normal rule, the court should issue a summons to the accused and not a warrant. Even in the case where the accused is on bail, a summons must be issued,” it said.
The bench said that special courts can even grant exemption from appearance in a case where the accused shows sufficient cause.
“If the accused does not appear, the special court can issue a warrant in terms of Section 70 CrPC. The special court must issue first a bailable warrant. If it is not possible to effect service of bailable warrant, then recourse can be taken to non-bailable warrants,” it said.
It said “a bond furnished according to Section 88 CrPC is only an undertaking by an accused who is not in custody to appear before the court on the date fixed”. Therefore, an order accepting bonds under Section 88 from the accused does not amount to a grant of bail, it said.
If a warrant is issued on account of non-appearance, the court has the power to cancel the warrant and it is not necessary to apply for bail, the bench clarified.
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