The Delhi High Court on Thursday held that the power of the Enforcement Directorate (ED) to arrest a person under Section 19 of the Prevention of Money Laundering Act (PMLA) is not unlimited and that the apex investigating agency cannot arrest a person as per its wish, reports Bar and Bench.
Justice Anup Jairam Bhambhani said that there is a three-fold requirement that must be complied with by the agency before arresting a person.
“Firstly, the Director must entertain a reasonable belief that the person arrested is guilty of an offence under the PMLA, and not under any other enactment; Secondly, the reasons for such belief must be recorded in writing,” the judge observed.
The third requirement, the court observed, was “such belief must be based on material that is in the Director’s possession”.
The court was hearing a plea filed by one Ashish Mittal seeking quashing of the ECIR in Educomp case. Mittal has sought directions from the court that ED be restrained from taking any coercive steps against him. He contended that he has a strong apprehension that he will be illegally detained/arrested by ED and will be made a scapegoat to protect the interest of the main promoters/alleged main beneficiaries of the company.
The Delhi High Court judge also observed that power to arrest is “conspicuously absent in Section 50 of the PMLA”.
“Though section 19 of the PMLA empowers designated officers of the ED to arrest any person, subject to satisfying the conditions mentioned in that provision, it is clear that the power to arrest does not reside in Section 50 nor does it arise as a natural corollary of summons issued under Section 50,” the judgment said.
The judge said that a person arrested by the ED can file for anticipatory bail even if he/she is not named as an accused in the Enforcement Case Information Report (ECIR) or the prosecution complaint.
Meanwhile, the ED had raised a preliminary objection to the plea arguing that the trigger for filing the petition was merely after summons were issued, and informed the Court that that petition was “premature” as Mittal has not been named in the FIR registered by the CBI or in the ECIR.
The judge then dismissed the plea noting that the petition was premature and said that the petitioner can file for anticipatory bail.