Section 50 of PMLA does not give ED power to arrest: HC

The Enforcement Directorate’s (ED’s) power to issue summons under the Prevention of Money Laundering Act (PMLA) does not include the power to arrest a person and does not arise as a natural corollary of requiring a person’s attendance, the Delhi high court has said, while holding that authorities “cannot take a person into custody on their whims and fancies”.

The observations, made in a judgment on Thursday, comes at a time when the Supreme Court is contemplating a review of certain provisions of the PMLA. The top court in July last year, in the Vijay Madanlal Chaudhary case, upheld ED’s powers relating to summons, arrest, property seizure and searches – a ruling that has since been challenged.

The high court bench of justice Anup Jairam Bhabhani was of the view that ED’s power to issue summons “is different and distinct from the power of arrest”.

The power relates to Section 50 of the PMLA that deals with summoning witnesses and requiring them to give true information since providing false information attracts punishment under Section 63.

READ | Scrutiny of money laundering law is in national interest: Apex court

The 2022 judgment was criticised for a disquieting erosion of the safeguards to rights to life, liberty, property and against self-incrimination, especially at a time when a spate of ED raids and other actions against opposition leaders has mired the federal financial crime agency in allegations of politicisation.

On October 18, the court set the ball rolling for hearing a review plea on November 22, 2023 by brushing aside objections by the centre.

“The power under section 50 of the PMLA to issue summons to a person and to require the production of documents and record statements, which is akin to the powers of a civil court, is different and distinct from the power under section 19 to arrest a person. These are two separate and distinct provisions,” said the HC judge.

According to the bench, the probe agency’s power to take a person into custody is not untrammelled and it has to comply with three three-fold requirement of having a reasonable belief that a person is guilty of money laundering, which must be on the basis of material in its possession and the reasons for which must be recorded in writing.

“The authorities do not have the power to arrest on their whims and fancies,” the court said.

The judgment --- which came on a plea filed by petitioner Ashish Mittal --- further held that a person apprehending arrest by ED can file for a pre-arrest bail irrespective of being named as an accused in the Enforcement Case Information Report (ECIR) or the prosecution complaint.

“To interpret the provisions of section 438 of CrPC (anticipatory bail) differently in the context of PMLA would be contrary to two Constitution Bench decisions of the Supreme Court in Gurbaksh Singh Sibbia (supra) and Sushila Aggarwal (supra), which expressly lay-down that the filing of an FIR, viz. formal accusation, is not a condition precedent for filing an application under section 438 Cr.P.C,” the court said.

Mittal in his plea had contended that he apprehended his arrest on the basis of the summons issued to him by ED requiring his presence in its Chandigarh office on August 21, 2023. He, in his plea filed through senior advocate Mohit Mathur, also sought for a stay of the proceedings emanating from the complaint.

Opposing the relief sought, the ED, appearing through advocate Anupam S Sharma, argued that he was neither named as an accused in the ECIR or in the case registered by CBI. He also told the court that although Mittal was previously issued summons on four occasions, he was never arrested then.