In a landmark ruling on Thursday, the Supreme Court limited the Enforcement Directorate’s (ED) authority to arrest individuals under Section 19 of the Prevention of Money Laundering Act (PMLA) if the accused appears as summoned by a special court that has taken cognizance of the complaint. The agency must now seek approval from the court before making an arrest.
The Supreme Court, as quoted by NDTV, stated, “After cognizance is taken of the offence… the ED and its officers are powerless to exercise powers under Section 19 to arrest the person shown as accused in the complaint.”
Section 19 of the PMLA permits ED officers to arrest an individual “on the basis of material in possession (and) reason to believe (to be recorded in writing) that the person is guilty…” and requires the agency to inform the individual of the grounds for arrest “as soon as may be.”
Importantly, the Supreme Court clarified that if an accused was not arrested before the ED filed its complaint, they could not be arrested afterward.
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The special court must issue a summons, and if the accused complies, they cannot be considered ‘in custody.’ Justice Abhay S Oka and Justice Ujjal Bhayan explained, “If the ED wants custody of (an) accused after the person (answers a special court’s) summons, it needs to apply to the special court,” adding that custody could only be granted if the court believes custodial interrogation is necessary.
An arrest warrant under Section 70 of the Code of Criminal Procedure can only be issued if the accused fails to respond to the summons, and initially, this must be a bailable warrant.
In a significant ruling emphasising protection from arbitrary arrest, the Supreme Court also noted that accused individuals not arrested before answering a court summons need to satisfy the stringent ‘twin test’ for bail as laid down by the PMLA. This test requires the court to be satisfied that the individual is not guilty and unlikely to commit similar offences while on bail.
This ruling stems from a money laundering case where the accused appeared before a special court as summoned, raising the question of whether they had to meet the ‘twin test’ for bail if the court had taken cognizance of the offence.
The Supreme Court had reserved its judgment on April 30. This landmark decision follows the court’s dismissal of a petition seeking a review of an earlier verdict, which mandated the ED to provide written grounds for arrest without exception, emphasizing that non-cooperation alone was insufficient for arrest under Section 19.
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