The Delhi High Court recently passed an important judgment regarding the powers of the Enforcement Directorate (ED) under the Prevention of Money Laundering Act (PMLA). The court stated that the ED's ability to summon an individual under Section 50 of PMLA does not grant them the power to arrest.

Justice Anup Jairam Bhambhani, who presided over the case, noted that while Section 50 of the PMLA does allow ED officers to arrest individuals that meet certain requirements, it lacks the authority to arrest. This judgement brings clarity to the distinction between the powers granted to ED officers under section 50 and section 19 of the PMLA.

The court clarified that Section 50's power to issue summonses to individuals, demand documents, and record statements is similar to that of a civil court. This means that the ED can use these powers to conduct investigations and gather evidence against individuals suspected of money laundering. However, it does not give them the power to arrest.

On the other hand, Section 19 of the PMLA does grant designated officers of the ED the authority to arrest someone, subject to certain requirements. This power to arrest is separate from the powers granted under Section 50 and cannot be assumed as a natural outcome of a summons under Section 50.

This judgement is significant as it clarifies the limits of the ED's powers under the PMLA. It ensures that the agency does not overstep its boundaries and violate the rights of individuals during investigations. At the same time, it empowers the agency to conduct investigations effectively and efficiently. In conclusion, the Delhi High Court's judgement is a welcome step towards ensuring justice and fairness in the fight against money laundering and financial crimes.

The utilization of one power over the other could result in a complex legal conundrum. If allowed, anyone summoned under section 50 of the Prevention of Money Laundering Act (PMLA) to produce documents or make a statement under oath could refuse to comply with the summons on the mere chance that the Enforcement Directorate (ED) might use its powers under section 19 to arrest them. Such a scenario would create a legal loophole and undermine the very purpose of the PMLA, which is to combat money laundering and other financial crimes.

The court's rejection of Ashish Mittal's plea to nullify an Enforcement Case Information Report (ECIR) filed by the ED in 2020 and to halt all related proceedings was based on the fact that granting such relief would contradict the legal system. Mittal had received a summons to appear before the ED on August 21 but refused to comply, citing fear of being unlawfully detained or used as a scapegoat. He also claimed that he had not been given a copy of the ECIR.

Justice Bhambhani, however, noted that since the ECIR had not been presented to the court and Mittal was not authorized by law to receive a copy of it, there was no way to assess the grounds for the requested nullification. The court's decision to reject Mittal's plea was based on the fact that he had failed to provide any concrete evidence to support his claims.

The court's warning that Mittal might be forced to take action against his will highlights the importance of complying with legal procedures and cooperating with law enforcement agencies. Refusing to comply with a summons under the PMLA could result in legal consequences, including arrest and prosecution. It is crucial that individuals understand their legal rights and obligations and act accordingly to prevent any legal complications or consequences. The court's decision in this case serves as a reminder that the legal system must be respected and followed to maintain the integrity of justice.

In India, if you want to challenge a decision of the government or any other authority, you can file a writ petition under Article 226 of the Constitution of India. This provision empowers the High Court of a state to issue orders or directions to any person, authority or government within its jurisdiction, to enforce fundamental rights or legal obligations.

However, there has been a long-standing debate on whether a person who is not formally accused in a scheduled offense or a prosecution arising from an Enforcement Case Information Report (ECIR), can approach the High Court under Article 226. This issue was finally addressed by the court in a recent case, where it clarified that the High Court can indeed consider a petition from someone who is not formally accused in a scheduled offense or a prosecution arising from an ECIR, under Article 226 of the Constitution.

The court's decision has far-reaching implications as it now provides a legal recourse to individuals who may have been affected by the actions of the government or any other authority, but were not directly involved in the scheduled offense or the ECIR. This will ensure that the constitutional rights of such individuals are protected and upheld by the judiciary.

It is important to note that the writ jurisdiction under Article 226 is discretionary, which means that the High Court can refuse to entertain a petition if it is satisfied that there is an alternative remedy available to the petitioner. Additionally, the court may also refuse to entertain a petition if it is satisfied that the petitioner has approached the court with a mala fide intention or for an ulterior motive.

In conclusion, the court's clarification on the scope of Article 226 is a welcome development as it ensures that the constitutional rights of all individuals are protected and upheld, irrespective of their involvement in a scheduled offense or an ECIR. This decision will go a long way in strengthening the democratic fabric of the country and ensuring that justice is accessible to all.

The petitioner's counsel was Mr. Mohit Mathur, Senior Advocate, assisted by Mr. Shikhar Sharma, Mr. Mayank Sharma, and Mr. Harsh Gautam, Advocates. The respondents' counsel was Mr. Anupam S. Sharma, Special Counsel, along with Mr. Prakarsh Airan, Ms. Harpreet Kalsi, Mr. Ripudaman Sharma, Mr. Abhishek Batra, and Mr. Vashisht Rao, Advocates for Respondents/ED. The case was titled Ashish Mittal v/s Directorate Of Enforcement & Anr.

Written By: Suraj Nihal