BREAKING: Supreme Court Rules ED Cannot Arrest Accused After Special Court Takes Cognizance of PMLA Complaint

By: Admin
May 16, 2024
Categories: News|PMLA
4 Min Read

In a landmark judgment on Thursday, May 16, the Supreme Court ruled that the Enforcement Directorate (ED) and its officers cannot arrest an accused under Section 19 of the Prevention of Money Laundering Act (PMLA) after the Special Court has taken cognizance of the money laundering complaint. If the ED requires custody of such an accused, they must apply to the Special Court.

The bench, comprising Justices Abhay S. Oka and Ujjal Bhuyan, stated, “Once cognizance is taken of the offence under Section 4 of the PMLA based on a complaint under Section 44, the ED and its officers cannot use Section 19 to arrest the accused named in the complaint. If the ED requires custody of the accused who appears after receiving a summons, it must apply to the Special Court. The Special Court, after hearing the accused, must issue an order with brief reasons. Custody may be permitted if the Court is convinced that custodial interrogation is necessary, even if the accused was never arrested under Section 19.”

The judgment also clarified that the ED could arrest individuals not named as accused in the existing complaint, provided the requirements of Section 19 are met, for further investigation into the same offence.

Additional conclusions from the judgment include:

If the ED has not arrested the accused before filing the complaint, the Special Court should, as a rule, issue a summons rather than a warrant. Even if the accused is on bail, a summons should be issued.
If the accused appears before the Special Court in response to a summons, it does not constitute custody, so applying for bail is unnecessary. However, the Special Court may require the accused to furnish bonds under Section 88 of the Code of Criminal Procedure (CrPC).
A bond under Section 88 CrPC is merely an undertaking. Thus, accepting a bond under Section 88 does not equate to granting bail, and the twin conditions of Section 45 of the PMLA do not apply.
If the accused does not appear, the Special Court can issue a warrant under Section 70 CrPC. Initially, a bailable warrant should be issued, followed by a non-bailable warrant if the bailable warrant cannot be served.
The Supreme Court considered whether executing a bond under Section 88 CrPC for court appearance constitutes applying for bail, thus invoking the twin conditions of bail under Section 45 of the PMLA. The petitioner argued that appearing in court and submitting a bond under Section 88 CrPC does not equate to applying for bail, so the conditions under Section 45 PMLA should not apply. Conversely, the ED contended that securing a bond under Section 88 CrPC is akin to securing bail, making Section 45 PMLA’s conditions applicable.

After hearing both sides, the Court reserved its judgment on April 30, 2024.

Background: In a money laundering case, the accused appeared in court following a summons and executed a bond under Section 88 CrPC to ensure his presence. This proceeding was treated as a bail process, necessitating compliance with Section 45 of the PMLA. The accused, fearing arrest after the summons, sought anticipatory bail from the High Court. The High Court denied the bail, stating the accused did not meet the second condition under Section 45 PMLA, which requires the Court to believe the applicant is not guilty of the offence and unlikely to commit another offence while on bail. The accused then approached the Supreme Court, challenging the High Court’s decision.

Case Title: Tarsem Lal v. Directorate of Enforcement Jalandhar Zonal Office, Special Leave to Appeal (Crl.) No(s). 121/2024 (and connected matters)