Supreme Court Rules On ED’s Arrest Powers Under PMLA

In a landmark judgment delivered on Thursday, the Supreme Court issued a significant directive regarding the powers of the Enforcement Directorate (ED) under the PMLA.

The decision, handed down by a bench led by Justice Abhay S. Oka, marks a pivotal moment in the legal landscape surrounding financial crimes.

The verdict stipulates that should the ED deem it necessary to detain a suspect for further investigation, it must seek permission from the special court.

Justice Oka emphasized the importance of due process in such cases. He stated, “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.”

This directive underscores the court’s commitment to balancing law enforcement needs with individual rights.

However, the ruling clarified that individuals not formally accused in the complaint may still be subject to arrest by the ED under the provisions outlined in Section 19 of the Prevention of Money Laundering Act (PMLA), 2002.

This provision delineates the agency’s authority to apprehend suspects not directly implicated in the initial complaint.

Moreover, the Supreme Court’s decision relaxed the stringent conditions for bail under Section 45 of the PMLA.

Bail Seekers To Fulfill Criteria:

Previously, bail seekers had to fulfill twin criteria:

• Demonstrating their innocence
• Proving they wouldn’t commit further offenses while released on bail.

The court’s intervention, driven by concerns over arbitrary restrictions, aims to afford accused individuals a fairer chance to seek bail.

The backdrop of this ruling traces back to earlier legal battles over the constitutionality of the PMLA’s provisions.

Notably, a division bench in November 2017 had struck down Section 45(1) for its imposition of additional bail conditions, a decision later overruled by a bench in July 2022.

This reversal, in the Vijay Madanlal Choudhary case, reinforced the formidable hurdles faced by accused individuals in securing bail and shifted the burden of proof onto them.

However, recognizing the need for review, a bench led by then Chief Justice N V Ramana agreed to reconsider the contentious aspects of the PMLA judgment.

Notably, concerns over procedural fairness, including the provision of essential documents to the accused at the time of arrest and the presumption of innocence, prompted this reevaluation.

In a subsequent development last November, a special bench, led by Justice S.K. Kaul, directed the challenges against the ED’s powers to be referred to the Chief Justice of India for the formation of a new bench.

This procedural move underscores the ongoing legal scrutiny surrounding the enforcement of anti-money laundering laws and the delicate balance between security and individual rights.

The Supreme Court’s latest decision represents a crucial step in redefining the contours of justice in financial crime cases, reaffirming the principles of due process and fair treatment for all parties involved.

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