The Supreme Court Tuesday ordered that the Enforcement Directorate (ED) should furnish grounds of arrest to the accused at the time of arrest. The court also observed that the federal agency “mandated with investigation of offence of money laundering and violations of foreign exchange laws” should not work clandestinely or be vindictive in its approach while conducting an investigation. A three-judge bench led by Justice A.S. Bopanna said a person’s right to know the reasons for their arrest is a constitutional right under Article 22 (1) that enables them to take legal counsel. The bench’s remarks on the ED come at a time when the apex court is seized of petitions seeking a review of its July 2022 judgment that upheld wide and sweeping powers entitled to the central agency under the Prevention of Money Laundering Act (PMLA).
In July last year, a two-judge bench led by Justice A.M. Khanwilkar (now retired) had upheld the stringent PMLA, including the provision under which the ED can arrest an individual on the basis of an ECIR (Enforcement Case Information Report) without informing them of its contents. The top court’s present order came while granting bail to two directors of real-estate firm M3M — Pankaj and Basant Bansal — who were summoned on 14 June for questioning in an alleged money laundering case. They were arrested in another ED case registered the same day, as was widely reported in the media. The duo moved the Supreme Court challenging their arrest and the Punjab and Haryana High Court order that refused to give them relief.Asking the federal anti-money laundering agency to maintain stringent standards of probity, fairness and not be vindictive in its functioning, the bench said the present case “speaks volumes about the ED and reflects poorly on their style of functioning, especially since the agency is charged with preserving the financial security of the country”. On the need for the agency to be transparent and fair, the bench said, “Being a premier investigating agency charged with the onerous responsibility of curbing debilitating economic offence of money laundering in our country, every action of the ED in the course of such exercise is expected to be transparent, above board and conforming to the pristine standards of fair play in action. The ED, mantled with far-reaching powers under the stringent Act of 2002, is not expected to be vindictive in its conduct and must be seen to be acting with utmost probity and with the highest degree of dispassion and fairness.”