What does SC’s red line for arrests by ED mean?

SC sets legal standards to prevent arbitrary arrests by ED in Kejriwal case, emphasizing judicial scrutiny, reasons to believe,& protection of personal liberty.

New Delhi Marked by a series of dramatic twists and turns, the legal journey of Delhi chief minister Arvind Kejriwal in the excise policy case witnessed the Supreme Court laying down a raft of significant legal standards on Friday to prevent arbitrary and unjust arrests by the Enforcement Directorate (ED), thereby balancing effective law enforcement with the protection of individual rights.

The Supreme Court of India building in New Delhi. (File)

Addressing the broader implications of arresting powers under the Prevention of Money Laundering Act (PMLA), a bench of justices Sanjiv Khanna and Dipankar Datta strived to ensure that such powers are exercised judiciously and in line with constitutional safeguards.

“Arrest, after all, cannot be made arbitrarily and on the whims and fancies of the authorities. It is to be made on the basis of the valid “reasons to believe”, meeting the parameters prescribed by the law. In fact, not to undertake judicial scrutiny when justified and necessary, would be an abdication and failure of constitutional and statutory duty placed on the court to ensure that the fundamental right to life and liberty is not violated,” underscored the bench.

To be sure, the bench referred one of the critical issues involved in the case – the legal scope of integrating the necessity to arrest and the doctrine of proportionality into cases under the Prevention of Money Laundering Act (PMLA) – to a larger bench

Right to challenge arrest and judicial review

The bench relied on a series of judgments, including those in Pankaj Bansal Vs Union of India and others (2023), V Senthil Balaji Vs State and others (2024) and Prabir Purkayastha Vs State (2024), to underline the Supreme Court’s commitment to protecting personal liberty and ensuring that law enforcement agencies adhere to due process and fairness in line with Article 22(1) of the Constitution, which protects people’s right to know why they are being detained. These judgments obligated ED to provide written grounds of arrest to the accused, besides mandating courts to immediately release an arrested person if there are procedural or substantive violations.

Emphasising the stringent safeguards prescribed by the legislature to prevent abuse and unauthorised use of the power to arrest, the court highlighted the importance of judicial scrutiny in ensuring that the conditions for arrest under Section 19(1) of PMLA are satisfied.

“Power to arrest a person without a warrant from the court and without instituting a criminal case is a drastic and extreme power. Therefore, the legislature has prescribed safeguards in the form of exacting conditions as to how and when the power is exercisable. The conditions are salutary and serve as a check against the exercise of an otherwise harsh and pernicious power,” the court stated.

It further emphasised that the power to arrest under Section 19(1) is not for the purpose of investigation. “Arrest can and should wait, and the power in terms of Section 19(1) of the PMLA can be exercised only when the material with the designated officer enables them to form an opinion, by recording reasons in writing that the arrestee is guilty,” it noted.

The bench underscored that the conditions imposed by the legislature under PMLA must be subjected to judicial scrutiny if the arrestee challenges their arrest.

Rejecting ED’s argument that the power to arrest is neither an administrative nor a quasi-judicial power and that judicial scrutiny would interfere with the investigation, it noted: “We hold that the power of judicial review shall prevail, and the court is required to examine that the exercise of the power to arrest meets the statutory conditions.”

Provision of “reasons to believe” to the arrestee

Section 19(1) of PMLA empowers ED to arrest a person provided that the arresting officer can form and record in writing, “reasons to believe” that the accused is guilty of a PMLA offence.

ED argued that while “grounds of arrest” has to be supplied to accused, there is no need to furnish “reasons to believe” because it is an internal and confidential document.

Rejecting this contention, the bench held that the court must give meaningful and full play to the legislative intent given that the power of arrest is drastic and violates Article 21. “Providing the written ‘grounds of arrest’ does not in itself satisfy the constitutional requirement. The authorised officer’s genuine belief and reasoning based on the evidence that establishes the arrestee’s guilt is also the legal necessity,” it said.

Existence and validity of the “reasons to believe” goes to the root of the power to arrest, said the bench, adding it would be “incongruous” to hold that the accused can be denied a copy of the “reasons to believe” after ruling that he is entitled to challenge his arrest.

“We are concerned with violation of personal liberty, and the exercise of the power to arrest in accordance with law. Scrutiny of the action to arrest, whether in accordance with law, is amenable to judicial review. It follows that the “reasons to believe” should be furnished to the arrestee to enable him to exercise his right to challenge the validity of arrest,” ordered the bench.

Grave suspicion cannot be the sole reason to arrest

ED argued in the matter that when grave suspicion is sufficient to frame a charge and put the accused to trial, it can lead to an arrest too. The court, however, shot down this argument.

“This contention should not be accepted since we are not dealing with the trial, framing of charge or recording the evidence...The PMLA provision on arrest is clear and should not be disregarded to defeat the legislative intent – to provide stringent safeguards against pre-trial arrest during pending investigations. Framing of the charge and putting the accused on trial cannot be equated with the power to arrest,” it said.

Highlighting the distinction between “reason to believe” from “grave suspicion”, the bench held that the former refers to the reasons for the formation of the belief which must have a rational connection with or an element bearing on the formation of belief.

ED can’t cite only incriminating materials

The Delhi CM had argued that the ED’s “reasons to believe” selectively referred only to the incriminating material, ignoring the material to support his claim of innocence.

Dealing with this contention, the court held that although the legality of the “reasons to believe” has to be examined based on what has been recorded by ED, the arresting officer cannot ignore the material which exonerates the arrestee.

“Any such non-consideration would lead to difficult and unacceptable results. First, it would negate the legislative intent which imposes stringent conditions. As a general rule of interpretation, penal provisions must be interpreted strictly. Secondly, any undue indulgence and latitude to ED will be deleterious to the constitutional values of rule of law and life and liberty of persons,” said the bench.

An ED officer, the court said, cannot be allowed to selectively pick and choose material implicating the person to be arrested. “They have to equally apply their mind to other material which absolves and exculpates the arrestee. The power to arrest under Section 19(1) of the PML Act cannot be exercised as per the whims and fancies of the officer,” it added.

The subjectivity of the ED officer’s opinion is not a carte blanche to ignore relevant absolving material without an explanation, said the court, adding such a situation would amount to legal malice.