How courts pushed back against Enforcement Directorate in 2024

In the past five years, the Enforcement Directorate (ED) has been able to secure conviction in only 4.6 percent of the Prevention of Money Laundering Act (PMLA) cases which went to trial in courts..The ED has filed prosecution complaints in a total of 911 cases since 2019; 257 of them are pending before trial courts. Only 42 of these resulted in conviction, with a total of 99 accused being found guilty by the trial courts in these cases.This was revealed by the Union Ministry of Finance in response to a query by Congress Member of Parliament (MP) Randeep Singh Surjewala on December 10. The abysmal conviction rate becomes more glaring when data available since 2014 is brought into the picture. Between 2014 and August 2024, the ED registered 5,297 cases. Only 43 reached the verdict stage in courts..As ED cases proceed at a snail’s pace, accused in these cases generally struggle to get bail from the courts. This is because of Section 45 of the PMLA, which mandates that a money laundering accused be released only when the judge is satisfied that “he is not guilty of such offence and that he is not likely to commit any offence while on bail”. This year, the prolonged incarceration of accused arrested by the ED came repeatedly into question before the Supreme Court. The arbitrary application of the power to arrest was also frowned upon by the top court. Owing to the Court's intervention, the ED’s actions remained under a microscope and a number of seminal verdicts were pronounced. .In a remark indicative of the approach taken by the top court, a Bench in October said that courts may have to start quashing PMLA cases like fabricated cruelty cases arising out of matrimonial disputes.A series of verdicts stressed on the primacy of liberty over the stringent tests required to be met for release under Section 45 of the PMLA. While review petitions against the contentious verdict in Vijay Madanlal Choudhary v. Union of India on the validity of stringent PMLA provisions remain pending, we take a look at how the Supreme Court liberalised bail under the anti-graft legislation and also put checks on the arresting powers of ED officers..ED's arrest powers.In one of the first major rulings on PMLA this year, the Court held that an accused who is not arrested during the investigation would not be required to meet the stringent test for bail under Section 45 of PMLA.The Court also rejected the ED argument that such accused, on appearing before the trial court in pursuance of summons, would be considered to be in deemed custody.The ED cannot arrest an accused once the special court is seized of the matter on filing of the complaint, the Court ruled further. It was further held that arrest for any further investigation can be done only after seeking the Court’s permission..Liberalisation of bail under PMLA.2023 and 2024 saw a series of arrests of major political leaders, particularly those belonging to the Aam Aadmi Party (AAP). This meant a constant fight in the courts for their release. In the end, these arrests led to landmark decisions on bail and the ED’s powers of arrest.On July 12, a Bench of Justice Sanjiv Khanna (now CJI) and Justice Dipankar Datta granted interim bail to former Delhi Chief Minister Arvind Kejriwal. In doing so, the top court rejected the ED’s argument that exercise of power to arrest by the ED cannot be subject to judicial review. “The exercise of the power to arrest is not exempt from the scrutiny of courts. The power of judicial review remains both before and after the filing of criminal proceedings/prosecution complaint. It cannot be said that the courts would exceed their power, when they examine the validity of arrest under Section 19(1) of the PML Act, once the accused is produced in court in terms of Section 19(3) of the PML Act,” it said.In this regard, the Court also said that the ED cannot refuse to disclose its "reasons to believe guilt" of the accused. Under Section 19 PMLA, the ED can arrest a person whom it has reason to believe is guilty of an offence under the Act.The Court also ruled that ED officers, before exercising the power to arrest under Section 19 of PMLA, cannot ignore the material which exonerates the accused. .While granting bail to another AAP leader Manish Sisodia, the top court sent a strong message to High Courts and trial courts to not “play safe” by routinely denying bail to accused, even in open and shut cases.“The liberty guaranteed under Article 21 of the Constitution does not get abrogated even for special statutes where the threshold twin bar is provided and such statutes, in our opinion, cannot carve out an exception to the principle of bail being the rule and jail being the exception,” the Court said later in bail order of AAP’s Vijay Nair.The Court on August 28, while relying on Manish Sisodia’s bail order, said that the general principle of law that 'bail is the rule and jail is the exception' applies even in money laundering cases..In Tamil Nadu Minister Senthil Balaji’s bail order, the Court on September 26 said that constitutional courts cannot allow the stringent bail conditions under PMLA to become instruments in the hands of the ED to continue incarceration for a long time when prosecution is delayed.“If the Constitutional Courts do not exercise their jurisdiction in such cases, the rights of the undertrials under Article 21 of the Constitution of India will be defeated,” it reiterated. .Are statements given to ED admissible as evidence?.In the Balaji case, the Court went on to hold that when an accused is in custody under the PMLA, any statement given by him under Section 50 to the ED in any other case would be inadmissible in trial.“The reason being that the person in custody pursuant to the proceeding investigated by the same Investigating Agency is not a person who can be considered as one operating with a free mind. It will be extremely unsafe to render such statements admissible against the maker, as such a course of action would be contrary to all canons of fair play and justice,” it reasoned.This somewhat put a cloud of doubt over the three-judge Bench’s finding in the Vijay Madanlal Chaudhary case that statements given to the ED under Section 50 are admissible as evidence. The finding is under challenge in the review petitions against that ruling..Can ED prosecute public servants without government sanction?.On November 6, the Court held that the ED cannot prosecute public servants in cases linked to their official duty, without prior sanction of the competent authority under Section 197 of the Code of Criminal Procedure (CrPC).Section 197 of the CrPC protects public servants from prosecution if they are accused of committing a crime while acting in discharge of their duties. It says that prior sanction must be obtained from the concerned government before a public servant can be prosecuted for any such act.This judgment meant that a number of politicians including Kejriwal, Sisodia and Congress leader P Chidambaram have moved the High Court for stay on money laundering proceedings against them..AAP lawmaker Amanatullah Khan was the first to get a major relief on the basis of the top court’s ruling. A trial court refused to take cognizance of the PMLA complaint against him for want of sanction and ordered his immediate release.The ED is still struggling to come up with a proper response on the petitions being moved on the basis of the top court’s ruling.So far, in many cases, it has argued that the sanction taken for prosecution of the accused in the predicate offence may be sufficient to cover the PMLA case as well..How the Supreme Court emboldened other courts.The Supreme Court’s stance on prolonged custody of undertrials and emphasis on liberty has also seemingly emboldened many High Courts and even trial courts to scrutinise the actions of the central agency.On September 23, the Punjab and Haryana High Court pulled up the ED for interrogating an accused for 14 hours and 40 minutes at a stretch. It asked the investigating agency to sensitise its officers on the issue of prolonged custody. Earlier, the Bombay High Court had also taken exception to ED officers recording statements at unearthly hours, observing that the person summoned cannot be deprived of sleep, which is a basic human right..This prompted the ED to issue a circular on October 11 directing its officers to make every effort to record statements of persons during office hours as opposed to the wee hours of the morning.A trial court judge in Delhi on November 27 frowned upon the ED’s argument that only a constitutional court can grant bail on the grounds of long incarceration and delay in trial. All courts, including the trial courts, are mandated to protect and enforce constitutional rights and the Constitution per se, the judge asserted.“The state and its agency are expected to be equal votaries of liberty. Instead of channelizing their energy and resources for speedy trial, it appears that the entire thrust of the prosecuting agency is to keep the accused in detention without trial,” the special judge said further while granting bail to an accused.On November 18, the Punjab and Haryana High Court had a message for trial courts as well - that they are not supposed to act as an extended arm of the ED and pass remand orders against accused routinely without application of mind.