Delhi excise case verdict brings EDs arrest powers under lens – The Tribune

A Delhi court on Friday raised serious concerns over the practice of the Enforcement Directorate of effecting arrests and initiating prosecution under the Prevention of Money Laundering Act (PMLA) even before the underlying predicate offences are subjected to judicial scrutiny.

The observations came in a detailed order passed by Special Judge Jitendra Singh while discharging all accused, including Arvind Kejriwal, Manish Sisodia and K Kavitha.

The court noted that proceedings under the PMLA imperil personal liberty on the basis of a presumption of “proceeds of crime” arising out of scheduled offences, with the accused then required to satisfy stringent bail conditions to avoid prolonged incarceration even at the pretrial stage.

Referring to the settled legal position that money-laundering offences do not survive in the event of closure of the predicate offence, the court observed: “Despite this settled legal position, the prevailing practice reveals a disturbing inversion of the statutory scheme, wherein coercive powers of arrest and prolonged custody are invoked even before the foundational facts relating to the scheduled offence are judicially tested. This results in a situation where an individual is deprived of personal liberty on the strength of an allegation whose legal sustainability remains uncertain and contingent upon a future outcome in a parallel investigation.”

The court recorded that the ED often proceeds to file prosecution complaints even before the investigation into the scheduled offences is completed by the concerned agency.

“In such situations, while the proceedings under the PMLA are set in motion, the investigation in the predicate offence continues to remain inconclusive, and in many cases even the filing of a charge-sheet therein is awaited. This court itself is a witness to a case where the proceedings relating to money laundering have reached the final stage of arguments on charge, whereas, in the predicate offence, the investigation is still underway to determine whether any offence has been committed at all,” the court said.

Describing this as an “anomalous situation”, the court said it gives rise to serious legal and constitutional concerns, since the continuation of PMLA proceedings remains contingent upon the survival of the predicate offence.

Emphasising the guarantee of personal liberty, the court held: “A procedure which permits prolonged or indefinite incarceration on the basis of a provisional and untested allegation, while the very substratum of the offence remains under investigation, risks degenerating into a punitive process rather than a regulatory or investigative one. Liberty, once curtailed, cannot be meaningfully restored by a subsequent acquittal, nor can the passage of time compensate for the loss occasioned by unwarranted pre-trial detention.”

At the same time, the court acknowledged that the statute confers wide powers on the ED to combat money laundering, including attachment, arrest and prosecution, recognising the transnational and clandestine nature of such offences.

“The exercise of such power must therefore be harmonised with the settled principle that arrest and prolonged incarceration are exceptions, and not the rule,” the court said.

The court stressed the need to evolve a framework that balances effective investigation with the inviolable right to personal liberty.