The Supreme Court on Thursday observed that the Enforcement Directorate (ED) and its officers cannot arrest an accused exercising powers under Section 19 of the Prevention of Money Laundering Act (PMLA) after the Special Court has taken cognizance of the money laundering complaint.
The court added that if the ED wants custody of such an accused, then they will have to apply to the Special Court. It observed that after cognizance is taken of the offence punishable under Section 4 of the PMLA based on a complaint under Section 44, the investigation agency and its officers are powerless to exercise powers under Section 19 to arrest the person shown as accused in the complaint.
The apex court underlined that if the ED wants custody of the accused who appears after service of summons for conducting further investigation of the same offence, the central agency will have to seek custody of the accused by applying to the Special Court. It added that the Special Court after hearing the accused must pass an order on the application after recording brief reasons.
The bench of Justice Abhay S Oka and Justice Ujjal Bhuyan pronounced that while hearing the application, the court may permit custody only if it is satisfied that custodial interrogation is required even though the accused was never arrested under Section 19.
The bench further stated that if the ED wants to conduct a further investigation concerning the same offence, it may arrest a person not shown as an accused in the complaint already filed, provided the requirements of Section 19 are fulfilled.
The judgment further underlined that once a complaint under Section 44(1)(b) of the PMLA is filed, it will be governed by Sections 200 to 205 of the Code of Criminal Procedure. It added that none of those provisions are inconsistent with the PMLA.
The bench remarked that if the accused was not arrested by the ED till the filing of the complaint, the Special Court, while taking cognizance of the complaint, as a normal rule, must issue a summons to the accused and not a warrant. It clarified that even if the accused is on bail, a summons must be issued.
It noted that if the accused appears before the Special Court pursuant to a summons, it cannot be treated that he is in custody. Hence, it is not necessary for the accused to apply for bail. Nonetheless, the special court can direct the accused to furnish bonds in terms of Section 88 of the Code of Criminal Procedure, the bench observed.
The issue before the top court is whether the execution of the bond by an accused for showing his presence before the court under Section 88 of Cr.P.C. would amount to applying for bail to make twin conditions of bail under Section 45 of the Prevention of Money Laundering Act, 2002 applicable.
During the hearing, it was argued by the petitioner that once he appeared before the court in compliance with the summons and submitted a bond under Section 88 of Cr.P.C. for securing its presence in the court, then the bond executed under Section 88 wouldn’t be treated as a bail to attract the twin conditions under Section 45 PMLA.
Meanwhile, the ED argued that whenever the powers under Section 88 of Cr.P.C. is exercised by the court regarding securing the bond for the presence of the accused then it would amount to securing bail and the provisions under Section 45 of PMLA would apply, stating the bail would be granted only if the twin conditions are followed.
Considering submissions of both the counsels, the Court reserved the judgment for April 30, 2024.