4 July 2023 2:24 PM GMT
The Madras High Court on Tuesday gave a split verdict in the Habeas Corpus plea filed by S Megala, wife of Senthil Balaji against his arrest by the Enforcement Directorate. The Enforcement Directorate had arrested Balaji on June 14 in a money laundering case associated with the Cash-for-jobs scam, in which he was allegedly involved during his tenure as the Transport Minister between...
The Madras High Court on Tuesday gave a split verdict in the Habeas Corpus plea filed by S Megala, wife of Senthil Balaji against his arrest by the Enforcement Directorate. The Enforcement Directorate had arrested Balaji on June 14 in a money laundering case associated with the Cash-for-jobs scam, in which he was allegedly involved during his tenure as the Transport Minister between 2011 and 2016.
Justice J. Nisha Banu of the division bench held that the Habeas Corpus petition was maintainable since the order of custody passed by the Principal Session Judge was without jurisdiction and authority and therefore illegal.
Justice Banu also observed that since the Enforcement Directorate officers do not have the powers of a Station House Officer under the Prevention of Money Laundering Act, they could not have moved for custody of the Minister.
"Under the present scheme, the officers empowered to arrest under Sec 19 of PMLA, 2002, are required to produce the accused to the competent court within 24 hours of arrest and seek only Judicial remand and the same may be ordered by the judicial magistrate under the extant provisions of the Act. In effect, ED cannot hold custody of any person beyond the first 24 hrs of arrest," said Justice Banu.
However, Justice D. Bharatha Chakravarthy disagreed with the reasonings and the conclusion reached by Justice Bano. Justice Chakravarthy passed a separate verdict, which can be read here.
Whether ED has the power to seek Custody of the persons arrested?
On the question of ED’s powers to seek police custody, Justice Banu observed that since the officers under the PMLA are not given powers of a police officer, they could not seek police custody. She noted that the officers empowered to arrest under Section 19 of the PMLA are required to produce the accused to the competent court within 24 hours of arrest and can only seek Judicial remand.
Justice Banu opined that though normally CrPC governs the powers of arrest, search and seizure, these powers are entrusted to Officers enforcing the Special Acts like NDPS, Customs, FERA, PMLA etc.
"Usually, the officers who file final report under Sec 173 CrPC after completion of investigation are police officers. The officers under special laws usually file complaint (Private) under Section 200 of CrPC after investigations. However, that alone is not the test to determine whether a particular officer has the powers of a police officer or not though it is the dominant test. The colour and character of the powers entrusted with the officers will determine whether the officers enforcing special enactments can be termed as police officers," the judge said.
Justice Banu further observed that since custody heavily impinges on the fundamental right of citizens, Section 167 of the CrPC is the lone provision under which it can be awarded. No special act has ever intended to empower officers to seek custody otherwise than through the provisions of Sec 167 CrPC, the judge said.
"Wherever officers are empowered to conduct investigations, the machinations of CrPC becomes applicable. If any of the above provisions is violated the detention becomes illegal. Thus parliament has consciously maintained a balance between the fundamental right to liberty and the need for restraining persons in conflict with laws and the need for custodial detention to conduct investigations," Justice Banu said.
Justice Banu said The Central Excise Act, 1944, The CGST Act, 2017 and FERA, 1973 indicates that Sec 167 applies only to those officers who enjoy the powers of a station house officer by virtue of them being empowered to act as an officer in charge of a police station under the CrPC and the concerned special acts.
"Similar provisions to empower ED Officers as Station House Officers are not provided under PMLA, 2002. It appears that the Parliament has consciously omitted to confer with the ED Officers acting under PMLA, 2002 the power of a Station House Officer.
The judge added that the decision to not empower ED Officers appears "a conscious bridle considering the sweeping powers granted to the authorities under the Act. Though the offences of Money Laundering is distinct from any or all of the scheduled offences under PMLA, 2002, there is a bar on the ED officials to suo-moto file ECIR for the offence of money laundering. An FIR or Complaint by a competent authority in a predicate offence is a sine qua non for ED officials to initiate a proceeding under the PMLA."
Justice Banu said Chapter IV of PMLA, 2002 obligates the Banking Companies, Financial Institutions and intermediaries that are normally touted as the routes to integrate laundered money back into the system to provide information to the Enforcement Directorate officials in the format so desired and keep records.
"It is a sweeping power that can help identify the trails of the proceeds of crime and the trails of the laundered money to confiscate property that are proceeds of crime so also to complete substantial meaningful investigations. It was observed by the Hon’ble Supreme Court in the case of Vijay Madanlal Choudhary & Ors vs UOI & ors the proceeding under PMLA, 2002 is more in the nature of inquiry proceedings and not investigations. The collection of evidences to track the POC and money laundering trail are predominantly documentary in nature. Therefore, it appears that the Parliament in its wisdom did not see the need for custodial interrogation for proceedings under PMLA, 2002 beyond the first 24 hours of arrest."
Justice Banu also said it will be wrong to assume that the means of fair investigation will be frustrated if police custody contemplated under Sec 167 CrPC is not awarded to ED officers to bolster the investigations into the offence of money laundering.
"Parliament has vide Sec 53 of PMLA, 2002 invested the Union Government with blanket powers to confer the powers under PMLA to any officer of the Central Government or State Government seemingly sufficient to find, track seize and confiscate Proceeds of Crime and its trails," she added.
Maintenance of Habeas Corpus Petition
On the question of maintainability of the Habeas Corpus petition, Justice Banu noted that though on the face of case laws, it would appear that the Habeas Corpus petition is not maintainable once a legal remand order is passed, the same would depend upon the type of detention.
Drawing differences between preventive detention and detention against an offense, Justice Banu noted that though in the former, violation of procedural safeguards is of no consequence after a valid judicial remand, in the latter, a failure to follow the procedural safeguards at the time of arrest will vitiate the proceedings and a writ of habeas corpus would lie.
Justice Banu noted that the Principal Sessions Judge remanded Balaji to police custody for a period of 8 days on June 16 whereas on June 15, in its interim order, the High Court had specifically mentioned that he will continue in Judicial custody.
Since the ED officers did not have powers of a police officer to seek custody, Justice Banu observed that the order of custody passed by the Principal Sessions Judge was without jurisdiction and without authority of law and was thus illegal.
“The order fails the test of legality both of law and omission to follow judicial discipline and we have no hesitation to hold that the detention at the time of hearing the Habeas Corpus Petition is illegal. Accordingly, we hold that Habeas Corpus Petition is maintainable in the facts and circumstances of this case,” she noted.
Exclusion of Time
On the question of exclusion of time, Justice Banu noted that since ED was not entitled for custodial interrogation, the question of exclusion of time ceases to arise and thus, the petition filed in this regard by the ED seeking exclusion of time is liable to be dismissed.
Justice Banu said that as per settled law, the period of police custody could not be extended beyond 15 days from the date of initial remand.
Though Solicitor General Tushar Mehta had relied on the decision of the Supreme Court in CBI vs Vikas Mishra, wherein the court had deviated from the stricter view, Justice Banu noted that in that case, the accused was using unscrupulous methods to frustrate the investigation, whereas in this case, the detenu had genuine ailments.
“Such circumstances does not seem to exist in the present case as the ailment of the detenu appears genuine and the detenu has undergone a by-pass surgery and ED officials themselves have after expert medical opinions thought it not fit to take custody of the detenu awarded to him. His condition was examined by the Government Doctors, the ESIC doctors deputed by the Enforcement Directorate and the doctors of the private hospital who treated him,” Justice Banu observed.
Case Title: Megala v State
Citation: 2023 LiveLaw (Mad) 184