Power to arrest must be used sparingly: ASG to ED officials

Additional solicitor general (ASG) SV Raju on Thursday asked Enforcement Directorate (ED) officers not to make arrests in money-laundering cases “hastily” as this would not yield them good results in courts, and advised them to rather use their powers to arrest sparingly and at a later stage of investigation.

Speaking at an ED Day event at Bharat Mandapam in Delhi, ASG Raju, who represents the federal agency in multiple high-profile cases, emphasised that the provision of arrest is “very crucial” for all agencies that carry out investigations as often, it is the threat of arrest that makes a person disclose certain things.

“Arrest is very crucial for all agencies which are carrying out investigation. Many times, it is the threat of arrest that makes a person disclose certain things. You must use your power to arrest not liberally but sparingly, and you must use it at a very late stage, not at a nascent stage (of investigation),” Raju said.

The event, marking completion of 69 years of the establishment of the agency, was also attended by Union minister of state (MoS) for finance Pankaj Chaudhary, ED director Rahul Navin, Central Bureau of Investigation (CBI) director Praveen Sood, and senior officers of the financial crimes probe agency.

Elaborating on why the arrest should be delayed, the ASG said: “Under PMLA (prevention of money laundering act), you must furnish the grounds of arrest and reasons to believe before taking someone into custody. So, if you arrest a person early, you may not have those grounds of arrest or you may not have reasons to believe that undergo the scrutiny of courts to say that yes reasons are justifiable for arrest.”

“So, if you delay it (arrest) a little bit, you will get proper appreciation of courts also. Many times, courts say grounds of arrest or reasons to believe are not proper,” Raju added.

He said arrest also defeats the purpose of section 50 of the PMLA, under which ED records the statements of people connected to the case that are admissible as “evidence” in the courts. Material evidence can be gathered when ED interrogates a person, but if a person is arrested, the section 50 statement becomes “vulnerable” and it is no longer evidence, the ASG said.

“So, you have to obtain a section-50 statement before the arrest ... and therefore, my second suggestion is that do not be hasty in arresting people. Take your time, get the evidence and then arrest,” he added.

Raju said if ED arrests a person early, when the investigation is not over, and due to this, the agency is not able to file a chargesheet within the stipulated 60 days, then the accused, even a worst offender, will get the “default” bail.

The senior law officer also suggested that “hawala” dealers should be categorised as reporting entities, so that they provide information to the agency about their clients who move huge amounts of cash.

Raju also asked ED to be careful about section invoking vicarious liability – making director of a company liable for it. He was referring to the agency naming former Delhi chief minister Arvind Kejriwal as accused along with the Aam Aadmi Party (AAP) in Delhi excise irregularities by invoking section 70 of the PMLA.

The companies under Section 70 can be defined as partnership firm or an association of persons (AOP) etc.

“We are today facing the issue if a political party was an AOP and our case is that it is an AOP...that it is a deemed company under Section 70. And we have referred to the representation of the people act. This is pending in court so I will not say much,” he said.

On the occasion, ED director Navin said the anti-money laundering law was left largely ineffective before 2014, and the slowdown in adjudication of these cases can be attributed to the general delay in the judicial system of the country coupled with the inherent complexity of such investigations.

He also said ED had a “commendable conviction” rate of 93.6% as out of the 47 cases decided by courts till now, there have been only three acquittals.

“After 2014, however, there has been a significant step-up in enforcement activity. From 2014 to 2024, 5,113 new PMLA investigations were initiated, averaging more than 500 cases per year,” the agency chief said.