ED Cannot Arrest Accused After Special Court Has Taken Cognizance Of PMLA Complaint : Supreme Court

In a significant judgment, the Supreme Court on Thursday (May 16) held that the Enforcement Directorate (ED) and its officers cannot arrest an accused exercising powers under Section 19 of the Prevention of Money Laundering Act (PMLA) after the Special Court has taken cognizance of the complaint of money laundering.

If the ED wants custody of such an accused, then they will have to apply to the Special Court.

"After cognizance 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 the 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 of the same offence, ED will have to seek custody of the accused by applying to the Special Court. After hearing the accused, the Special Court must pass an order on the application after recording brief reasons. While hearing the application, the Court may permit custody only if it is satisfied that custodial interrogation is required even though the accused was never arrested under Section 19" pronounced the bench comprising Justices Abhay S Oka and Ujjal Bhuyan.

The bench also stated that if the ED wants to conduct a 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.

Other conclusions of the judgment

Once a complaint under Section 44(1)(b) of the PMLA is filed, it will be governed by Sections 200 to 205 of the Code of Criminal Procedure. None of those provisions are inconsistent with the PMLA.

If the accused was not arrested by the ED till the filing of the complaint, the Special Court, while taking cognizance of the complaint, as a normal rule, must issue a summons to the accused and not a warrant. Even if the accused is on bail, a summons must be issued.

If the accused appears before the Special Court pursuant to a summons, it cannot be treated that he is in custody. Therefore, it is not necessary for the accused 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.

A bond furnished in terms of Section 88 CrPC is only an undertaking. Therefore, the order accepting bond under Section 88 does not amount to grant of bail and hence, it is not necessary to fulfil the twin conditions of Section 45 of the PMLA to accept the bond.

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.

The crux of the issue before the Supreme Court is whether the execution of the bond by an accused for showing his presence before the court under Section 88 of Cr.P.C. would amount to applying for bail to make twin conditions of bail under Section 45 of the Prevention of Money Laundering Act, 2002 applicable.

During arguments, it was argued by the petitioner/accused that once he appeared before the court in compliance with the summons and submitted a bond under Section 88 of Cr.P.C. for securing its presence in the court, then the bond executed under Section 88 wouldn't be treated as a bail to attract the twin conditions under Section 45 PMLA.

Whereas the Directorate of Enforcement (ED) argued that whenever the powers under Section 88 of Cr.P.C. is exercised by the court regarding securing the bond for the presence of the accused then it would amount to securing bail and the provisions under Section 45 of PMLA would apply i.e., the bail would be granted only if the twin conditions are followed.

After hearing both the parties as length the Court reserved the Judgment on April 30, 2024. 

Background

In a money laundering case, the accused had appeared before the court in compliance of the summons issued to him. However, the proceedings of the bond executed by the petitioner/accused under Section 88 of Cr.P.C. for securing its presence was treated as a bail proceeding requiring the mandate of Section 45 of PMLA to be fulfilled.

While apprehending an arrest after the issuance of summons, the accused approached the High Court for the grant of anticipatory bail. Denying an anticipatory bail to the accused while observing that the petitioner did not satisfy the second condition under Section 45 PMLA, as per which before granting bail, a Court must be satisfied that there are reasonable grounds for believing that the applicant is not guilty of such an offence and is not likely to commit any offence while on bail.

Against the decision of the High Court, the petitioner/accused approached the Supreme Court.

Senior Advocate Mr. Siddharth Luthra argued for the petitioner, whereas Additional Solicitor General (ASG) SV Raju appeared for the Respondent/Directorate of Enforcement (ED).

Counsels For Petitioner(s) Mr. Sidharth Luthra, Sr. Adv. Mr. Akbar Siddique, AOR Mr. Sheezan Hashmi, Adv. Mr. Mihir Joshi, Adv. Mr. Aakash Dubey, Adv. Mr. Rahul Khare, Adv. Mr. Rajneesh Chuni, Adv. Mr. Parv K. Garg, Adv. Mr. Parwez Akhtar, Adv. Mr. Harsh Kumar Singh, Adv. Mr. Animesh Mishra, Adv. Mr. Javed Muzaffar, Adv. Mr. Malik Javed Ansari, Adv. Dr. Smriti Raturi Sharma, Adv. Mr. Sidharth Luthra, Sr. Adv. Ms. Sakshi Kakkar, AOR Mr. Shakti Singh, Adv. Mr. Kartikey Dang, Adv. Mr. Rudraditya Khare, Adv. Mr. Sahir Seth, Adv. Mr. Harsh Tyagi, Adv. Mr. Harshit Sethi, Adv. Mr. Nikhil Jain, AOR Mr. Rahil Mahajan, Adv. Ms. Mansi Tripathi, Adv. Mr. Manmeet Singh, Adv. Mr. Harshit Sethi, Adv. Mr. Nikilesh Ramachandran, AOR Mr. Rahil Mahajan, Adv. Ms. Mansi Tripathi, Adv. Mr. Lovekesh Aggarwal, Adv.

Counsels For Respondent(s) Mr. S.V. Raju, Ld. A.S.G. Mr. Mukesh Kumar Maroria, AOR Mr. Zoheb Hussain, Adv. Mr. Annam Venkatesh, Adv. Mr. Arkaj Kumar, Adv. Mrs. Rajeshwari Shankar, Adv.

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

Citation : 2024 LiveLaw (SC) 383

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