ED cannot make arrests under PMLA on a whim, says SC
SC wonders if ED even has a consistent policy on when it should arrest people; ED’s power to arrest must be based on objective, fair consideration of material
The Supreme Court on July 12 held that the power to arrest under the Prevention of Money Laundering Act (PMLA) cannot be exercised on the “whims and fancies” of Directorate of Enforcement (ED) officers.
The court wondered if the ED even had a consistent, uniform and ”one-rule-for-all” policy on when they should arrest people. It said the ED’s power to arrest must be based on objective and fair consideration of material against a person.
Under the PMLA, ED officers can arrest a person if they have reasons to believe, based on the material in their possession, that the individual is guilty.
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A Bench of Justices Sanjiv Khanna and Dipankar Datta, in a judgment, said the power of arrest given to ED officers under Section 19 (1) of the PMLA was drastic and ran the risk of violating the right to life and liberty under Article 21 of the Constitution.
The judgment was based on a petition filed by Delhi Chief Minister Arvind Kejriwal challenging the validity of his arrest by the ED on money laundering charges. The court granted him interim bail.
Pulling out data on ED cases from 2023, Justice Khanna, who authored the verdict, said 5,906 Enforcement Case Information Reports (ECIRs) were registered as on December 31, 2023. However, search was conducted in 531 ECIRs by issue of 4,954 search warrants. The total number of ECIRs recorded against ex-MPs, MLAs, and MLCs was 176. The number of persons arrested was 513 whereas the number of prosecution complaints filed is 1,142. The data have not been updated as on date.
“The data raises a number of questions…” Justice Khanna noted.
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Highlighting that PMLA allowed arrests on the subjective opinion of ED officers, the court said an officer’s “reasons to believe” that a person was guilty and deserved arrest should not be based on mere suspicion.
“Suspicion requires a lower degree of satisfaction, and does not amount to belief. Belief is beyond speculation or doubt… Existence and validity of the ‘reasons to believe’ goes to the root of the power to arrest. The subjective opinion of the arresting officer must be founded and based upon fair and objective consideration of the material, as available with them on the date of arrest,” the Supreme Court held.
Justice Khanna agreed with Mr. Kejriwal that an accused under PMLA should be given in writing the reasons which led an investigating officer to believe that he was guilty and deserved to be arrested.
The Supreme Court held that ED officers should not exclusively focus on the incriminating material against a person while deciding the question of arrest. Subjectivity of the opinion was not a carte blanche to ignore relevant absolving material without an explanation.
“An officer should not be allowed to selectively pick and choose material implicating the person to be arrested. They have to equally apply their mind to other material which absolves and exculpates the arrestee. The power to arrest under Section 19(1) of the PML Act cannot be exercised as per the whims and fancies of the officer,” Justice Khanna held.
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