Madras High Court Upholds ED's Right To Take TN Minister Senthil Balaji Into Custody; Says 'If ED Can Arrest,They Can Seek Custody Too'

Settling conflicting views regarding the power of the Enforcement Directorate to seek police custody of the accused, the Madras High Court ruled that the central agency was entitled to seek the custody of Tamil Nadu Minister Senthil Balaji in the money laundering case over the alleged cash-for-jobs scam.

Justice CV Karthikeyan, the third judge to whom the matter was referred to following a split in the division bench of Justices Nisha Banu and Bharatha Chakravarthy, ruled in favour of the ED. Deciding a habeas corpus petition filed by Balaji's wife Megala, Justice Banu had held that Enforcement Directorate is not entrusted with the powers to seek police custody under the Prevention of Money Laundering Act. Differing from this opinion, Justice Bharatha Chakravarthy had held that the Habeas Corpus Petition is not maintainable and the ED was entitled to police custody of the accused.

Now, Justice Karthikeyan has endorsed the view of Justice Chakravarthy by saying : "The fact that respondents(ED) can take custody for further investigation cannot be denied. The respondent, in this case, had a right to get custody. I would align my opinion with the reason given by Justice Bharatha Chakravarthy in this aspect".

ED officers not 'police officers'; but they can get custody

Justice Karthikeyan accepted the argument made by Senior Advocate Kapil Sibal on behalf of the petitioner that ED officials are not police officers. This argument was based on the Supreme Court's judgment in the 2022 Vijay Madanlal Choudhary case. "The respondents are not police officers. They have never been characterized as police officers anywhere in the Act. This assertion of the learned counsel cannot also be denied or disputed by the respondents", the judge stated.

However, the judge noted that the Session Judge had remanded Balaji to judicial custody as per Section 167 CrPC, following which the nomenclature of "detenu" changes to "accused". The judge also noted that Section 167(2) CrPC enables the remand of the accused to "such custody as such Magistrate thinks fit" during the first fifteen days and does not specify whether it has to be "police custody" or "judicial custody".

While Sibal argued that custody cannot be granted unless ED officials were to be police officers, Solicitor General of India Tushar Mehta placed reliance on Section 19 of the Prevention of Money Laundering Act to say that ED can exercise police powers. SG also contended that if judicial remand order can be passed, custodial interrogation order can also be passed.

Settling the issue, Justice Karthikeyan noted that Section 19 of the PMLA authorised ED officials to arrest a person if there are reasons to believe that is guilty of any offence punishable under the Act. Holding the word "punishable" to be of great significance, the judge observed that once the word punishment is used, then the provisions of CrPC will apply.  The person so arrested will have to subjugate himself to the laws of trial and such trial must be under the process of CrPC.

It was held that officers like Director, Deputy Director or Assistant Director or any other authorised officer who are empowered to arrest a person under Section 19 can take advantage of the provisions of the CrPC though they are not "police officers", as the PMLA says that CrPC will apply to proceedings under it.

"It had been held in Vijay Madanlal that ED are not police officials, but nowhere it was said that they cannot take custody. If investigation requires custody, then custody can be sought as a matter of right", the Court ruled. When arrest is possible, then seeking custody is also possible.

"Detenu has to abide by law. Every accused has a right to prove innocence during trial but no accused has a right to frustrate an inquiry or investigation", the Court added.

Argument that arrest was illegal rejected

The Court rejected the arguments on the illegality of arrest.

"I reject the argument that grounds of arrest were not informed, because money laundering is not a standalone offence that does not have any background. The respondents were at his doors since June 13. He should have known why. He can't claim innocence", Justice Karthikeyan held.

The judge also noted that after the remand order passed by the Sessions Judge, the accused himself applied for bail, which means that he has submitted himself to the procedure of arrest.

No exceptional circumstance to entertain habeas after judicial remand

While opining that habeas corpus after an order of judicial remand is maintainable in exceptional circumstances, Justice Karthikeyan held that no exceptional circumstances were present in the instant case to entertain the habeas corpus petition.

Whether the period of hospital treatment should be excluded from the first 15 days of remand?

On the third issue whether ED would be entitled to exclude the period of hospital treatment of Balaji from the first 15 days of remand (the period during which they can seek police custody), Justice Karthikeyan aligned with the view of Justice Chakravarathy. However, Justice Karthikeyan left it to the wisdom of the division bench to determine the first date of police custody and the days for which exclusion should be granted.

"But as but as a statement of law, I would hold that exclusion of time is permissible", Justice Kartikeyan said. After answering the issues, he ordered that the habeas corpus petition be placed before the Chief Justice to be placed before the division bench for further procedure.

Woes of the victims

In the order, Justice Karthikeyan made reference to the "woes of the victims" of the cash-for-jobs scam, who might have mortgaged their homes or sold the household jewellery to pay bribe to secure the much coveted government jobs. In this regard, the judge opined that the objective of the PMLA is two-fold. . One is to determining the trail of the amount & if possible restoring it back to victims. The other is punishment for offence of money laundering.

Senior Advocates Kapil Sibal and Elango had argued on behalf of the petitioner. Solicitor General of India Tushar Mehta and Additional Solicitor General ARL Sundareshan argued for the ED.

Background

Balaji, the Minister of Electricity, Prohibition and Excise, was arrested by the ED on June 15 in connection with a cash-for-jobs scam relating back to his term as Transport Minister during the 2011-16 AIADMK government. The arrest followed an order of the Supreme Court in May which set aside a direction of the Madras High Court staying the proceedings in the money laundering case against him.

On the very day of the arrest, his wife filed a habeas corpus petition before the High Court contending that the arrest and detention was illegal. The High Court denied him interim bail but allowed him to be shifted to a private hospital named Cauvery Hospital after he complained of chest pain. He underwent heart surgery at the hospital while under judicial custody. Although the ED approached the Supreme Court against the Madras High Court's order entertaining the habeas petition, the Top Court refused to interfere and decided to await the final decision of the High Court.

Case Title: Megala v State

Citation: 2023 LiveLaw (Mad) 198