On Friday, the Supreme Court raised significant concerns about the Enforcement Directorate’s (ED) arrest policy under the Prevention of Money Laundering Act (PMLA). The court highlighted a notable discrepancy: out of 1,142 prosecution complaints filed, only 513 arrests have been made. This gap prompted the court to question whether the ED has a consistent policy for making arrests under PMLA.
The Case of Arvind Kejriwal
The case in focus involved Delhi Chief Minister Arvind Kejriwal, who challenged his arrest in a liquor scam case. The bench of Justices Sanjiv Khanna and Dipankar Dutta scrutinized data from the ED’s official website. They noted that as of January 31, 2023, the agency had recorded 5,906 Enforcement Case Information Reports (ECIRs). However, searches were conducted in only 531 ECIRs, with 4,954 search warrants issued. Among these, 176 ECIRs were against former parliamentarians, legislators, and counsellors.
Supreme Court’s Observations
The Supreme Court emphasized the need for the ED to adopt a uniform and consistent approach to arrests. Under Section 45 of PMLA, the ED’s opinion is crucial when granting bail. This section imposes a stringent twin-test condition, shifting the burden onto the accused to prove their innocence. If the accused appears prima facie guilty, bail is denied. The court stressed that the ED should apply this standard uniformly to all cases.
Doctrine of Proportionality
The Supreme Court did not provide a final opinion on Kejriwal’s plea to quash his arrest. Instead, it referred the matter to a larger bench to decide whether an accused can challenge their arrest on the grounds of unnecessary detention. This consideration is based on the doctrine of proportionality, which aims to balance individual rights with public interest.
Given the complexity of the legal question, the court granted interim bail to Kejriwal. However, his regular bail plea will be reviewed on its merits by the Delhi High Court. The bench noted that Kejriwal’s arrest met the requirements of Section 19 of PMLA, which allows ED officers to arrest individuals if they have “reasons to believe” that the accused is guilty of money laundering.
Legal Framework for Arrests by ED
Under the law, senior ED officers can arrest a person based on material in their possession or if they have reasons to believe the person is guilty of a PMLA offense. These reasons must be recorded in writing and communicated to the accused. Kejriwal argued that his arrest did not meet these requirements, claiming the reasons to believe were insufficient and biased.
Arguments and Court’s Stance
Kejriwal’s legal team argued that the necessity of arrest under PMLA should be as stringent as the conditions for granting bail. They contended that the arrest was not necessary given the timing and the evidence. The ED defended the arrest, citing political corruption and the need to secure evidence. The agency argued that Kejriwal failed to appear despite multiple summonses, making his arrest necessary for the investigation.
The court acknowledged that the reasons provided by the ED for Kejriwal’s arrest included the formulation of an excise policy intended to obtain kickbacks and bribes. The judgment noted that the policy was allegedly designed to promote cartelization and benefit those providing bribes.
Judicial Review and Principle of Proportionality
The court acknowledged the limited power of judicial review over the ED’s “reasons to believe.” It highlighted that the power to arrest must be exercised cautiously, respecting individual rights and avoiding routine or cavalier use of such power. The principle of proportionality, ensuring a fair balance between individual rights and public interest, was a key consideration.
The court referred to various judgments related to arrest powers, emphasizing that the officer must be satisfied that the arrest is necessary. The power to arrest should not be exercised in a routine manner, as it has severe repercussions on individuals’ lives and liberties.
Concerns Over Arrest Policy
The Supreme Court’s judgment underscored the importance of a uniform arrest policy under PMLA. The court highlighted that the power to arrest under Section 19(1) of the PMLA must be exercised with caution. The reasons for arrest should be recorded in writing and must conclusively declare that the arrestee is guilty. Additionally, the officer cannot ignore material that exonerates the arrestee.
The court expressed concern that the ED had not made many arrests despite filing numerous complaints. It noted that the principle of parity or equality enshrined under Article 14 of the Constitution should not be invoked to repeat irregularities. However, when multiple courses of action are available, the need and necessity to arrest should be carefully evaluated.
The Supreme Court’s judgment reflects the ongoing effort to ensure fairness and consistency in the application of the law. The court stressed that the power to arrest under PMLA must be exercised with stringent safeguards against pre-trial arrests. The reasons for arrest must be recorded in writing and should conclusively establish the arrestee’s guilt. The judgment also highlighted the need for a balanced approach, ensuring that arrests are made only when genuinely necessary and supported by sufficient evidence.
(With inputs from agencies)
