ED cannot arrest people on whims and fancies; Section 50 PMLA does not include power to arrest: Delhi High Court

The Delhi High Court held on Thursday held that the power of the Enforcement Directorate (ED) to arrest a person under Section 19 of the Prevention of Money Laundering Act (PMLA) is not untrammeled and the ED cannot arrest a person on its whims and fancies [Ashish Mittal v Directorate of Enforcement & Anr]..Justice Anup Jairam Bhambhani said that there is a three-fold requirement that must be complied with by the agency before arresting a person.“Firstly, the Director must entertain a reasonable belief that the person arrested is guilty of an offence under the PMLA, and not under any other enactment; Secondly, the reasons for such belief must be recorded in writing; and Thirdly, such belief must be based on material that is in the Director’s possession,” the Court observed..Pertinently, the Court also said that ED's powers to issue summons under Section 50 of the PMLA does not include powers to arrest. "To be sure, the power to arrest is conspicuously absent in Section 50 of the PMLA. Though section 19 of the PMLA empowers designated officers of the ED to arrest any person, subject to satisfying the conditions mentioned in that provision, it is clear that the power to arrest does not reside in Section 50 nor does it arise as a natural corollary of summons issued under Section 50," the judgment said. .Justice Bhambhani further held that a person apprehending arrest by the ED can file for anticipatory bail even if he/she is not named as an accused in the Enforcement Case Information Report (ECIR) or the prosecution complaint."A person can seek relief under section 438 CrPC ex-ante i.e., prior to both arrest and accusation. To interpret the provisions of section 438 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 CrPC.” Justice Bhambhani referred to the Supreme Court's decision in V Senthil Balaji vs State and said that non-compliance with Section 19(1) of the PMLA would vitiate the arrest itself and that compliance with Section 19(2) is a solemn function which brooks no exceptions..The Court’s observation came while dealing with a plea filed by one Ashish Mittal seeking quashing of the ECIR in Educomp case.Mittal further sought a direction that ED be restrained from taking any coercive steps against him curtailing his liberty. He said that he has a strong apprehension that he will be illegally detained/arrested by ED and will be made a scapegoat to protect the interest of the main promoters/alleged main beneficiaries of the company.Meanwhile, the ED raised a preliminary objection to the plea and argued that the trigger for filing the present petition was merely a summons issued under Section 50 of the PMLA and nothing more; and that it is settled law that a writ petition seeking stay or quashing of summons is not maintainable.ED informed the Court that the petition is premature as Mittal has not been named in the FIR registered by the CBI or in the ECIR..After considering the case, Justice Bhambhani dismissed the plea noting that the petition is premature and that the petitioner can file for anticipatory bail.The Court, however, clarified that the High Court under Article 226 of the Constitution is not barred from exercising its jurisdiction and entertaining writ petition by a person who is not named accused in the scheduled offence or the ECIR.“It can never be so, since that would derogate from the well settled position of law as enunciated in the celebrated decision of the Supreme Court in L. Chandra Kumar vs. Union of India,” the Court said. .Senior Advocate Mohit Mathur along with advocates Shikhar Sharma, Mayank Sharma and Harsh Gautam appeared for Ashish Mittal.ED was represented by its Special Counsel Anupam S Sharma as well as advocates Prakarsh Airan, Harpreet Kalsi, Ripudaman Sharma, Abhishek Batra and Vashisht Rao..[Read Judgment]