Supreme Court’s Major Decision: Probe Agency Cannot Arrest Accused without Valid Reason under Section 19 PMLA

The Supreme Court of India recently made a ruling regarding the powers of the Enforcement Directorate (ED) under the Prevention of Money Laundering Act (PMLA). The ruling stated that in cases where the accused has not been arrested at the time the ED files its complaint, the agency cannot arrest the accused afterwards. Instead, the agency must first seek the court’s permission, issue a summons, and then apply for custody if necessary.

If the accused appears before the special court as summoned, the agency must follow a “twin test” to determine if bail should be granted. This test involves assessing whether the accused is not guilty and is unlikely to commit further crimes if released on bail. The court also emphasized that custody could only be granted if the special court believes custodial interrogation is required.

Additionally, the ruling clarified that an arrest warrant can only be issued if the accused fails to answer the summons, and it must be a bailable warrant in the first instance. The agency must inform the individual of the grounds for arrest as soon as possible if custody is deemed necessary. This ruling came in the context of a specific money laundering case, where the accused had appeared before a special court as summoned.

The Supreme Court’s judgment was reserved on April 30 and it emphasized that mere non-cooperation of a witness to a summons will not be enough to render them liable for arrest under the PMLA. In summary, the ruling sets clear guidelines for the ED’s powers in arresting individuals under the PMLA and emphasizes the importance of following due process and court permission in such cases.