SC says ED can't arrest PMLA case accused once special court takes cognisance of complaint

Supreme Court
Supreme Court of India. File Photo: AFP

New Delhi: The Supreme Court here on Thursday held that the Enforcement Directorate (ED) cannot arrest an accused under Section 19 of the Prevention of Money Laundering Act (PMLA) after a special court has taken cognisance of the complaint of money laundering.

A bench of justices Abhay S Oka and Ujjal Bhuyan said when an accused appears before a court in pursuance of a summons, the agency will have to apply to the court concerned to get his custody.

"After cognisance is taken of the offence punishable under Section 4 of the PMLA based on a complaint under Section 44 (1)(b), the ED and its officers are powerless to exercise power under Section 19 to arrest a person shown as an accused in the complaint," the top court said.

If the accused appears before the special court by summons issued by the court, it cannot be treated that he is in custody, it said.

"Accused who appeared before the court pursuant to the summons not required to apply for bail, and thus twin conditions of Section 45 of PMLA are not applicable," the bench said in its judgment.

The twin conditions state that when an accused in a money laundering case applies for bail, the court has to first allow the public prosecutor to be heard and only when it is satisfied that the accused is not guilty and unlikely to commit a similar offence when released, can bail be granted.

The top court noted the submission that some of the special courts under the PMLA are following the practice of taking the accused into custody after they appear pursuant to the summons issued on the complaint.

Therefore, the accused are compelled to apply for bail or for anticipatory bail apprehending arrest upon issuance of summons, it said.

"We cannot countenance a situation where, before the filing of the complaint, the accused is not arrested; after the filing of the complaint, after he appears in compliance with the summons, he is taken into custody and forced to apply for bail. Hence, such a practice, if followed by some Special Courts, is completely illegal.

"Such a practice may offend the right to liberty guaranteed by Article 21 of the Constitution of India. If the ED wants custody of the accused who appears after service of summons for conducting further investigation in the same offence, the ED will have to seek custody of the accused by applying to the Special Court," the bench said.

The apex court said the special court must pass an order on the application by recording brief reasons after hearing the accused.

"While hearing such an application, the Court may permit custody only if it is satisfied that custodial interrogation at that stage is required, even though the accused was never arrested under Section 19. However, when 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," it said.

The apex court judgment was pronounced on a question of whether an accused in a money laundering case has to meet the stringent twin test for bail even in cases where the special court takes cognisance of the offence.

Issuing a slew of directions, the top court said once a complaint is filed, it will be governed by Sections 200 to 205 of the CrPC as none of the said provisions are inconsistent with any of the provisions of the PMLA.

"If the accused was not arrested by the ED till filing of the complaint, while taking cognizance on a complaint under Section 44(1)(b), as a normal rule, Court should issue a summons to the accused and not a warrant. Even in a case where the accused is on bail, summons must be issued.

"After a summons is issued under Section 204 of the CrPC on taking cognizance of the offence punishable under Section 4 of the PMLA on a complaint, if the accused appears before the Special Court pursuant to the summons, he shall not be treated as if he is in custody. Therefore, it is not necessary for him to apply for bail," the bench said.

The apex court, however, said the special court can direct the accused to furnish a bond.

"In a case where the accused appears pursuant to summons before the special court, on a sufficient cause being shown, the Special Court can grant exemption from personal appearance to the accused by exercising power under Section 205 of the CrPC.

"If the accused does not appear after a summons is served or does not appear on a subsequent date, special court will be well within its powers to issue a warrant in terms of Section 70 of the CrPC. Initially, special court should issue a bailable warrant. If it is not possible to effect service of the bailable warrant, then the recourse can be taken to issue a non-bailable warrant," the bench said.

The top court said a bond furnished according to Section 88 CrPC is only an undertaking by an accused who is not in custody to appear before the court on the date fixed.

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