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Supreme Court, Enforcement Directorate, Section 19 PMLA: “Probe Agency Can’t Arrest Accused If…”: Supreme Court’s Big Ruling


The Supreme Court of India (File).

New Delhi:

In a landmark ruling on Thursday, the Supreme Court curtailed the Enforcement Directorate’s power to arrest an accused – under Section 19 of the Prevention of Money Laundering Act, or PMLA – if the accused appears as summoned by a special court that has taken cognisance of the complaint.

In such cases the agency must first seek that court’s nod, the top court said.

“After cognisance 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,” the Supreme Court said.

Section 19 of the PMLA allows 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…”

Crucially, the agency must inform the individual, “as soon as may be” of the grounds for the arrest.

Specifically, the top court said in cases where an accused was not arrested till the time the ED filed its complaint, they could not be arrested afterwards. The special court must first issue a summons and, if the accused duly answers that summons, they could not been seen as being ‘in custody’.

“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,” a bench of Justice Abhay S Oka and Justice Ujjal Bhayan said, adding, custody could only be granted if that court believes custodial interrogation is required.

An arrest warrant – under Section 70 of the Code of Criminal Procedure – can only be issued if the accused failed to answer the summons, and, in the first instance, this must be a bailable warrant.

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In a significant ruling – one seen as emphasising protection offered from arbitrary arrest by the central agency – the top court also said accused individuals not arrested before answering a court summons – need satisfy the stringent ‘twin test’ for bail as laid down by the PMLA.

The ‘twin test’ states bail will only be given to money laundering accused if the court is satisfied the individual is not guilty and if they are unlikely to commit crimes, including similar offences, on bail.

The specific background to this ruling is a money laundering case in which the accused had appeared before a special court as summoned. The question then was if the accused had to meet the ‘twin test’ for grant of bail if the special court had taken cognisance of the offence in question.

The top court had earlier reserved its judgement on April 30.

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Today’s landmark ruling comes two months after the top court dismissed a petition seeking review of an earlier verdict that said the ED is required to furnish grounds of arrest to an accused in writing “without exception”, saying there was no error in its judgement warranting reconsideration.

Then the court had noted that “mere non-cooperation of a witness, in response to summons issued under Section 50, will not be enough to render him/her liable to arrest under Section 19”.

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