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SC upholds ED's power to arrest, attach property under money-laundering law

Source: PTI
Last updated on: July 27, 2022 18:40 IST
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The Supreme Court on Wednesday said the supply of a copy of the Enforcement Case Information Report (ECIR) in every case to the person concerned is "not mandatory" and it is enough if the Enforcement Directorate (ED) discloses the grounds of arrest while arresting an accused. 

Photograph: PTI Photo

The apex court said that an ECIR cannot be equated with the First Information Report (FIR) under the Code of Criminal Procedure (CrPC) in view of the special mechanism envisaged by the Prevention of Money Laundering Act, 2002.

While upholding the validity of certain provisions of the 2002 Act, the top court observed that PMLA being special legislation and considering the complexity of the inquiry or investigation both for the purposes of initiating civil action as well as prosecution, non-supply of ECIR in a given case cannot be faulted.

 

A bench headed by Justice A M Khanwilkar noted that ECIR may contain details of the material in possession of the authority and recording satisfaction of reason to believe that the person is guilty of a money laundering offence.

The bench observed that if it is revealed before the inquiry or investigation is required to proceed against the property being proceeds of crime, including to the person involved in the process, may have a "deleterious impact" on the final outcome of the inquiry or investigation.

"So long as the person has been informed about grounds of his arrest that is sufficient compliance of mandate of Article 22(1) of the Constitution," the bench, also comprising Justices Dinesh Maheshwari and C T Ravikumar, said in its 545-page judgment.

Article 22 (1) of the Constitution says that no person, who is arrested, shall be detained in custody without being informed of the grounds for such arrest, and nor shall he be denied the right to consult and to be defended by a lawyer of his choice.

The top court delivered its verdict on a batch of petitions concerning the interpretation of certain provisions of the PMLA.

It upheld the ED's powers relating to arrest, attachment of property involved in money laundering, and search and seizure under the PMLA.

The bench said ECIR is an internal document of ED and the fact that FIR in respect of scheduled offence has not been recorded does not come in the way of the authorities referred to in section 48 of the Act to commence inquiry/investigation for initiating 'civil action' of 'provisional attachment' of the property being proceeds of crime.

"Supply of a copy of ECIR in every case to the person concerned is not mandatory, it is enough if ED at the time of arrest, discloses the grounds of such arrest," the bench said.

It said when the arrested person is produced before the special court, it is open to the court to look into the relevant records presented by the authorised representative of ED for answering the issue of the need for his or her continued detention in connection with the offence of money laundering.

The bench also dealt with the submissions made about the opacity surrounding the usage of the ED manual.

"Even when ED manual is not to be published being an internal departmental document issued for the guidance of the authorities (ED officials), the department ought to explore the desirability of placing information on its website which may broadly outline the scope of the authority and measures to be adopted by them as also the options/remedies available to the person concerned before the authority and before the special court," it said.

The bench noted that considering the mechanism of inquiry/investigation for proceeding against the property, being proceeds of crime, under this Act by way of civil action (attachment and confiscation), there is no need to formally register an ECIR unlike registration of an FIR by the jurisdictional police in respect of cognisable offence under the ordinary law.

"There is a force in the stand taken by the ED that ECIR is an internal document created by the department before initiating penal action or prosecution against the person involved with process or activity connected with proceeds of crime," it said.

The bench noted that section 19(1) of the 2002 Act postulates that after arrest, as soon as may be, the person should be informed about the grounds for such arrest and this stipulation is compliant with the mandate of Article 22(1) of the Constitution.

It said from the submissions that were made across the Bar, it is noticed that in some cases, ED has furnished a copy of ECIR to the person before the filing of the complaint.

"That does not mean that in every case same procedure must be followed. It is enough, if ED at the time of arrest, contemporaneously discloses the grounds of such arrest to such person," it said.

The bench said non-supply of the ECIR, which is essentially an internal document of ED, cannot be cited as a violation of constitutional rights.

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