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PMLA abused to topple governments, no ED official held for misusing power: Sibal
Senior advocate Kapil Sibal made the arguments in the Supreme Court while arguing in Tamil Nadu minister V Senthil Balaji’s case
The Prevention of Money Laundering Act (PMLA) has been abused to topple governments and no Enforcement Directorate (ED) official has been arrested for wrongly exercising power under the law for a decade, senior advocate Kapil Sibal told the Supreme Court while arguing for Tamil Nadu minister V Senthil Balaji.
Balaji has challenged in the Supreme Court the Madras high court order allowing ED to take his custody in a case related to alleged bribery for jobs when he was a minister in the previous All India Anna Dravida Munnetra Kazhagam government between 2011 and 2015.
Sibal on Thursday said his client may lose or win but the law must stand the test of the future, prompting solicitor- general Tushar Mehta to intervene.
Mehta called the argument “emotive” and out of context. He said there have not been more than 300 arrests under PMLA since it was enacted in 2002. “It also provides for a two-year sentence for the wrong arrest.”
Sibal responded by wondering whether there has been a single arrest on this count. “Tell me who has been sentenced...Using the law, governments have been toppled. This is what is our worry.”
Sibal said an ED official is not a police official. He added police have the power to seek custody of an accused for further investigation under Section 167 of the Code of Criminal Procedure (CrPC). He added it is not for ED.
Sibal said the Supreme Court in July 2022 upheld the argument in the Vijay Madanlal Chaudhary case. He added the court said that ED cannot be equated to a police officer or person in charge of a police station.
The judgment upheld crucial powers of arrest, investigation, search, and seizure available to ED officials. It held that ED’s investigation is not the same as contemplated under the CrPC.
The bench Sibal was arguing before on Thursday said arrest cannot be concluded as punishment. “You make arrest not because you are guilty but for purposes of investigation. Under PMLA, let us say that initially, they find something on money laundering against you. They will still want to know where the money has gone which they need to investigate.”
Sibal called the question important with serious implications. But he wondered under which law custody can be given to ED. “The three-judge bench in Vijay Madanlal case has said an investigation under PMLA is only an inquiry. If it was an investigation, then all powers of the police will be available. If this court holds there is some extra power by which police custody can be obtained, you will go contrary to Vijay Madanlal by holding investigation is not an inquiry. Judicially this court cannot determine something which is absent in law.”
Sibal cited PMLA Section 19 dealing with arrest. It allows ED to make an arrest if the material in its possession gives “reason to believe” that a person has been guilty of an offence punishable under this law.
“Section 19 does not say prima facie view. This Act excludes ED from being police officers. How do we get out of it?” asked Sibal.
The bench observed perhaps the ED performs a twin role. “They wear two hats at the same time,” referring to the regulatory function under PMLA and the police function under CrPC.
Mehta told the court arrest is not made on the conclusion of the investigation under Section 19. “The threshold of my satisfaction under Section 19 is arrest on suspicion leading to further investigation.” He referred to Section 44 of the Act, which allows ED to carry out further investigation and even file a closure report if no case is made out. “This makes it clear that arrest does not suggest guilt.”
Sibal told the court that the CrPC kicks in the moment an accused is arrested and produced before a magistrate within 24 hours of arrest.
Balaji was arrested on June 14 and produced the same day before a magistrate. He complained of uneasiness and was shifted to the hospital. ED obtained his custody but could not question him due to his hospitalisation.
Sibal said CrPC Section 167 allows police to detain an accused for a maximum of 15 days. He added this period was over and argued that the court can send him in judicial custody and not ED custody.
The court asked Sibal why cannot ED ask for more time beyond 15 days. “So long as the investigation is not complete, they may ask for further custody.” Sibal replied that such continued detention is not possible under PMLA.
As the arguments remained inconclusive, the court ordered the resumption of the hearing in the matter on Tuesday.
