Senthilbalaji case: PMLA requires ED to possess materials, indicating ‘guilt’, before resorting to arrest, argues Kapil Sibal

Appearing before Justice C.V. Karthikeyan, the third judge hearing a habeas corpus petition filed by arrested Minister V. Senthilbalaji’s wife Megala following a split verdict by a Division Bench, the Senior Counsel says ED officials are not police officers and so they can only inquire and not investigate

Updated - July 12, 2023 01:41 pm IST

Published - July 11, 2023 09:45 pm IST - CHENNAI

Kapil Sibal. File

Kapil Sibal. File | Photo Credit: Shiv Kumar Pushpakar

The Prevention of Money Laundering Act (PMLA), 2022, is a sui generis (unique) statute which enables the Directorate of Enforcement (ED) to arrest a person only after being in possession of materials to believe him/her to be “guilty of an offence” under the law. Hence, the ED cannot be treated as an investigating agency empowered to unearth the truth through custodial interrogation, senior counsel Kapil Sibal argued before the Madras High Court on Tuesday, July 11, 2023.

Appearing before Justice C.V. Karthikeyan, the third judge named by Chief Justice S.V. Gangapurwala following the July 4 split verdict delivered by Justices J. Nisha Banu and D. Bharatha Chakravarthy on a habeas corpus petition filed by arrested Minister V. Senthilbalaji’s wife Megala, Mr. Sibal said the Supreme Court itself had categorically ruled that ED officials were not police officers and therefore they have no power of investigation.

When Justice Karthikeyan wanted to know how else could the ED officials go about finding out other details related to money laundering after arresting the accused, the senior counsel said it could be done only by way of an inquiry and not investigation in exercise of the powers conferred on the ED officials under Section 50 of the Act to summon any person, compel production of records, receive evidence on affidavits and examining witnesses and documents.

Mr. Sibal claimed that the only period when the ED officials could keep a person in custody was the 24-hour period within which they were supposed to produce him/her before a magistrate after arrest. “The whole scheme of the PMLA is regulatory. The Supreme Court says, what can be done by the ED is not investigation but only an inquiry,” he said and referred to the wide powers given to ED officials under Section 17 of the Act with respect to search and seizure.

After reading Sections 17(1)(a) and (b) of the PMLA which empowers the ED officials to break open the lock of any door, box, locker, safe, almirah or other receptacle in order to enter and search any building, place, vessel, vehicle or aircraft where there was reason to believe that records or proceeds of the crime were kept, the judge, in a lighter vein, remarked, “It appears they can virtually ransack any place.”

Mr. Sibal went on to state that if he succeeds in convincing the judge that the ED was not empowered to subject any person to custodial interrogation, the issue of its taking the Minister in custody beyond 15 days of arrest would not arise at all. He pointed out that the Division Bench had passed an interim order on the HCP on June 15 and ordered the shifting of the Minister from a government hospital to a private hospital.

Then, the High Court ordered that he would nevertheless remain to be in judicial custody. This order was actually passed under Section 167 of the Code of Criminal Procedure and not under Article 226 (writ jurisdiction) of the High Court because there was no power to remand under Article 226. An order for custodial interrogation obtained by the ED from a sessions judge on June 16, after the High Court’s June 15 order, was bad in law, he argued.

In his second line of argument, the senior counsel said the ED could not now complain of not being able to execute the custodial interrogation order just because the Minister was in a private hospital. “Custody means taking custody of the body of the accused. It has nothing to do with situ (a place). They need not necessarily take him out of the hospital. All that the ED had to do was to interrogate the Minister in the hospital which they did not do,” he added.

Further, asserting that custodial interrogation could not be granted beyond the period of 15 days from arrest, Mr. Sibal said interrogation could be done even in judicial custody. “In this case, they [the ED] chose not to interrogate. This is a case where they say they could not interrogate in the manner they wanted. They chose not to execute an order obtained by them. This cannot be permitted. In fact, their memo itself says doctors did permit them to interrogate,” he said.

“Right from beginning to end, there has been overreach by the Enforcement Directorate in this case. Therefore, I submit that the judgment of Justice Nisha Banu is correct enunciation of law,” Mr. Sibal concluded. Following him, senior counsel N.R. Elango, too, made submissions on behalf of the petitioner and accused the ED of having violated the fundamental rights of a citizen by not having followed the procedures established by law while arresting the Minister at 1.39 a.m. on June 14.

At this point of time, the judge said, “Now, why did this individual [the Minister] refuse to receive the grounds of arrest? You first explain that before pointing the fingers. Justice Chakravarthy uses the word ‘drama’ in his judgment. You too have a duty to abide by the rule of law. When you don’t abide and put up tantrums, what can they [the ED] do? First explain why did you resist. When ED officer tells you about the grounds of arrest and you are not willing to hear, nobody can do anything about it.”

The senior counsel explained that the Minister had actually cooperated in the entire search operation carried out by the ED at his official residence in Chennai from 11 a.m. to 11 p.m. on June 13. “He also gave a statement. What more does the ED expect? The man was in a stressful condition and so he suffered a heart condition. That was why the ED officials themselves had admitted him in a government hospital,” Mr. Elango said.

After the conclusion of the arguments on the petitioner’s side on Tuesday, the judge adjourned the matter to Wednesday for Solicitor-General Tushar Mehta and Additional Solicitor-General AR.L. Sundaresan to argue on behalf of the ED.

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