Explained | The Enforcement Directorate Chief tenure extension controversy

The Supreme Court on July 27 extended ED Chief SK Mishra’s tenure till September 15 in the wake of the FATF evaluation. What is the case? What has the Court held previously?

August 03, 2023 01:43 pm | Updated August 05, 2023 06:59 pm IST

File photo: Enforcement Directorate (ED) Director Sanjay Kumar Mishra, is seen in New Delhi on November 3, 2022. The Supreme Court granted an extension of tenure to Mishra till Sept. 15 but made it clear there will be no further extension, on Thursday, July 27, 2023.

File photo: Enforcement Directorate (ED) Director Sanjay Kumar Mishra, is seen in New Delhi on November 3, 2022. The Supreme Court granted an extension of tenure to Mishra till Sept. 15 but made it clear there will be no further extension, on Thursday, July 27, 2023. | Photo Credit: PTI

The story so far: The Supreme Court on July 27 extended the tenure of the incumbent Director of Enforcement Directorate (ED) Sanjay Kumar Mishra till September 15, 2023, to serve ‘public and national interest.’

The Court, in a verdict delivered on July 11,directed Mr. Mishra to quit office by July 31 after opining that his continuance till November 2023 at the helm on a third consecutive extension was illegal. The government had been given time till July 31 to find a replacement for Mr. Mishra, taking into consideration the government’s submission that Mishra’s presence was necessary for the ongoing evaluation by the Financial Action Task Force (FATF). FATF is an independent international body to prevent and combat money laundering and terror financing, with its secretariat located at the headquarters of the Organisation for Economic Cooperation and Development.

However, just four days before the deadline, the Union government filed an urgent application asking the Supreme Court to permit Mr. Mishra to continue in his post till October 15 on the grounds that his presence was necessary for the still-ongoing evaluation by the FATF.

A Bench headed by Justice B.R. Gavai and also comprising Justices Vikram Nath and Sanjay Karol partially allowed the plea and extended the tenure till September 15. The Bench, however, made it clear that it would not have entertained the government’s request in ‘ordinary circumstances’ and that no further requests for Mr. Mishra’s extension would be granted. It underscored that Mishra would cease to be ED Director from September 15-16 midnight.

Mr. Mishra was first appointed ED Director for a two-year term in November 2018. This term expired in November 2020. In May 2020, he had reached the retirement age of 60.

However, on November 13, 2020, the Union government issued an office order stating that the President had modified the 2018 order to the effect that the time period of ‘two years’ was changed to a period of ‘three years.’ The government order in essence extended Mr. Mishra’s tenure with a retrospective effect, making it a three-year tenure against the initial two years, even though he had attained superannuationbefore the expiry of the two years.

What was the 2021 ruling?

The Union government’s order of November 2020 extending Mr. Mishra’s tenure with retrospective effect waschallenged before the Supreme Court in the case Common Cause v. Union of India (2021). In September 2021, a Bench comprising Justices L Nageswara Rao and BR Gavai upheld the tenure extension but clarified that Mishra would not be given any further extension beyond November 17, 2021, upon completion of three years of his tenure, issuing a writ of mandamus to this effect. It also underscored that the extension of the tenure of ED officers who have attained the age of superannuation should be done only in ‘rare and exceptional cases’ and that such extensions should be for a short period only.

The Bench also highlighted that in Section 25(d) of the Central Vigilance Commission (CVC) Act, the words “not less than two years” cannot be read to mean ‘not more than two years’ and that there is no fetter on the power of the Central Government in appointing the Director of Enforcement beyond a period of two years.

“We hold that a Director of Enforcement can be appointed for a period of more than two years by following the procedure prescribed under Section 25 of the CVC Act,” the Court added.

Amendments to the law

In November 2021, three days before Mr. Mishra was about to retire, two ordinances were promulgated by then-President Ram Nath Kovind, amending the laws governing the CBI and ED and thereby enabling the government to keep the two chiefs in their posts for a year after the completion of their two-year terms and to keep giving these one-year extensions until they complete five years as chiefs.

Despite the Supreme Court’s ruling in Common Cause, the Union government on November 15, 2021, introduced amendments to the CVC Act, The Delhi Special Police Establishment Act, 1946, and the Fundamental Rules in 2021, which allowed ED and CBI chiefs’ tenures to be extended by up to three years after the mandated term of two years. On the strength of these amendments, the tenure of both the CBI and ED Directors could now be extended by one year at a time till the completion of five years from the date of the initial appointment.

As a result of these amendments, Mr. Mishra was granted another one-year extension of tenure for the second time. In November last year, the 1984-batch IRS officer was granted a third tenure extension up to November 18, 2023.

What was the July 11 vedict?

A batch of petitions was filed in the Supreme Court challenging the orders allowing the extension of Mr. Mishra’s tenure as well as the amendments to the law. The petitions were filed by Congress party spokesperson Randeep Singh Surjewala, Trinamool Congress leader Mahua Moitra and social activist and general secretary of Madhya Pradesh Congress Mahila Committee Jaya Thakur.

Delivering the verdict in the case (Jaya Thakur v. Union of India), a Bench comprising Justices BR Gavai, Vikram Nath, and Sanjay Karol upheld the amendments made by the legislature but ruled that the extensions granted to Mr. Mishra were contrary to the Court’s 2021 judgment in Common Cause.

Attempting to put an end to the Centre’s exercise of repeatedly seeking tenure extensions for Mr. Mishra, the court held that he could continue to serve as the ED Director only till July 31 —four months before his third extension ends in November. The Court reasoned that it was permitting such a leeway to aid with the ‘smooth transition’ of official responsibilities to Mr. Mishra’s successor.

By upholding the 2021 amendments, the Court disagreed with the submissions made by amicus curiae senior advocate K.V. Viswanathan, presently a Supreme Court judge, who argued that the Centre could use the prospect of service extensions as a ‘carrot and stick’ policy to ensure that the CBI and ED Directors work according to its wishes. He pointed out that a Director “would always succumb to the pressure of the government so as to ensure that he gets further extension.”

Dismissing the submissions, the Court observed that the extensions were not given at the ‘sweet will’ of the government but instead were recommended by a five-member High-Level Committee comprising the Central Vigilance Commissioner and Vigilance Commissioners. Besides, the committees were required to record reasons in writing in support of their recommendations, the Court added.

The Court further said the 2021 amendments were enacted by the Parliament and that the Court cannot sit in judgment over their wisdom. It further held that the amendments were passed by elected representatives of the people who are “supposed to know and be aware of the needs of the people and what is good and bad for them.”

Why did the Centre seek yet another extension?

In the 12-page affidavit seeking modification of the top Court’s July 11 verdict, the Centre said that it is compelled to approach the Supreme Court seeking an extension in view of the ongoing FATF review of India’s money-laundering probe operations which is at a critical stage.

The government’s application said that the FATF is an inter-governmental body develops recommendations to prevent and combat money laundering and terror financing and about 200 countries including India have committed to implementing these standards.

Emphasising the need for Mr. Mishra’s continuance in the national interest, the government contended, “At such a critical juncture, it is essential to have an individual who is well-acquainted with the overall status of money laundering investigations and proceedings across the country and also the intricacies of the procedures, operations, and activities of the investigating agency, at the helm of affairs at the Directorate of Enforcement.”

Additionally, the Centre highlighted that any transition in leadership at the ED at this stage would significantly impair the ability of the agency to provide necessary assistance to and cooperation with the assessment team and thereby adversely impact India’s national interests.

The Centre also pointed out that although the Supreme Court in its July 11 verdict had declared the orders allowing the extension of Mishra’s tenure to be illegal, the Court still took into consideration the concerns surrounding the FATF review. It had earlier been argued by the government that the post of the ED Director was not a promotional post, so nobody was losing a career opportunity due to the extension of Mishra’s tenure.

What did the Court rule this time?

The Supreme Court on July 27 permitted the extension of his tenure till September 15 in view of ‘larger national interest’, primarily to ensure that the FATF review of India’s money-laundering probe operations proceeds efficiently.

The Bench also posed tough questions to Solicitor General Tushar Mehta —. “Are you not giving a picture here that your entire department is full of incompetent people except for this one person... Is it not demoralising for the entire force that except for this one person, the entire department will collapse,” Justice Gavai enquired.

The Court also highlighted that it could have stopped Mr. Mishra from continuing as ED Director from the very day of the judgment on July 11, but it had allowed him to continue till July 31 for the sake of a smooth transition.

The petitioners argued that a tenure extension would constitute a ‘gross abuse’ and would make mincemeat of the settled law. They also emphasised that the government’s application was, in essence, a ‘review in disguise’ of the July 11 verdict.

However, the Court subsequently relented and proceeded to accede to the Centre’s request, but for a month less than what was sought. “Taking into consideration larger national interest, we permit ED director to continue for some more period,” the Court held.

Concerns raised

The July 27 verdict, has, however been flagged by experts for being an instance of judicial deference to the Centre. Concerns have been raised about the fact that not only did the apex Court not impose any punitive measures on the Centre for violating its orders on two occasions, but it also allowed Mr. Mishra to continue his illegal tenure without providing any sound legal justification for the same.

Underscoring the troubling precedent this verdict sets with respect to the Supreme Court’s reluctance to enforce its own orders in the face of executive apathy, constitutional law scholar Gautam Bhatia wrote — “If the Supreme Court is unable – or unwilling – to enforce its own previous, direct orders (not once, not twice, but many times) in the face of executive recalcitrance, then what hope – if any – ought citizens to have in its ability or willingness to adjudicate cases involving serious and far-reaching constitutional breaches by the executive?”

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