Supreme Court Reserves Verdict in TN Minister Senthil Balaji’s Plea Against HC Verdict Allowing ED Custody

A bench of Justices AS Bopanna and MM Sundresh also declined the request of the central agency to pass any urgent order regarding their request to take Balaji into custody. Solicitor-General for India Tushar Mehta also argued that the question of the applicability of Section 167 of the Code of Criminal Procedure, 1973 had already been settled, and as such, there can be no reference of this issue, as prayed for by the petitioners, to a larger bench.

“I only have two requests. First, I do not see any reason for reference to a larger bench since the issue over Section 167 of the Code is clear. There cannot be a reference. It was prayed for and rejected. Second, as we are running against time, Your Lordships may consider passing some operative order, so that we may know what…”

Senior Advocate Mukul Rohatgi protested, saying, “Your Lordships may decide it at the earliest.”

“You will get the full order. We will consider this and if necessary, if there is some difficulty, we can list it on some day and pronounce only operative portion. Today we will not say anything,” Justice Bopanna said, before reserving the judgment in the clutch of appeals.

What have the petitioners argued?

Senior Advocate Kapil Sibal earlier argued that the power to make an arrest under the Prevention of Money Laundering Act could not be conflated with the power to seek police remand, and the Enforcement Directorate’s custody of the minister flew in the face of the 2022 judgment of the Supreme Court in Vijay Madanlal Choudhary. In other words, it was illegal inasmuch as ED officers were not ‘police officers’ under the Prevention of Money Laundering Act, as per the Vijay Madanlal Choudhary decision. The senior counsel also, inter alia, explained that there was a bar on the officers of the Enforcement Directorate from seeking police remand since ‘investigation’ under the governing statute was interpreted to be an ‘inquiry’ in this judgment, in addition to officers not being held to be police officers.

Section 167 of the Code cannot apply ‘wholesale’ to the Prevention of Money Laundering Act, Sibal insisted. His contention was that only a ‘truncated’ form of the section would apply, starting from the time when an accused is produced before a magistrate leading to the magistrate taking cognisance of the offences.

Senior Advocate Mukul Rohatgi supplemented these contentions by arguing that investigating agencies like the Directorate of Enforcement (ED) had no vested right to take an accused into police custody, even within the first 15 days since the permission of a magistrate was a necessary prerequisite then. The senior counsel insisted that judicial custody was the rule, and police custody the exception. In support of this contention, he relied on the 1992 Anupam Kulkarni ruling, in which the top court had said that an accused could not be detained in police custody after the expiry of 15 days from their initial arrest. Notably, Rohatgi also questioned the correctness of the Supreme Court’s decision in the April 2023 Vikas Mishra judgment, in which a bench headed by former judge MR Shah called for reconsideration of the Anupam Kulkarni bar on police custody beyond 15 days from the date of arrest. This ruling, the senior counsel told the bench, was made in per incuriam since it ignored the decision of a coordinate bench. Owing to the conflicting positions adopted by previous benches, Rohatgi urged the court to refer the matter to a larger bench.

Both Sibal and Rohatgi have also doubted the necessity of custodial interrogation saying that the minister, who is currently in a prison hospital under judicial custody, may still be interrogated by the Enforcement Directorate without police remand. Yesterday, Rohatgi told the apex court bench:

“It is not as if some golden right is lost forever. The Enforcement Directorate can still interrogate while the accused is in judicial custody. Just that, they will have to make an application. As of today, Senthil Balaji is recovering from a bypass. He is in a prison hospital. For some time every day, he can still be interrogated. We are willing to make this concession.”

What has ED argued?

The main thrust of the Enforcement Directorate’s objection to Senthil Balaji and his wife’s pleas was the applicability of Section 167 of the Code of Criminal Procedure to the provisions of the Prevention of Money Laundering Act dealing with police remand.

“Section 167 of the Code applies to the Prevention of Money Laundering Act. They cannot have a ‘made to measure’ provision, where the section will only apply with respect to judicial custody, default bail, and other things, but not to the grant of police remand…This is the ratio of Deepak Mahajan. Section 167 applies to all special statutes, unless there is anything contrary, in which case the concerned provision of the special statute will prevail. For them to succeed, they will have to show that there is some provision contrary to Section 167", SG argued.

Justice Sundresh appeared to agree with this contention. The judge remarked:

“This is a dangerous proposition. If Section 167 does not apply, then you can always have your sweet time for filing the final report. There would be no power of remand, no need for reasoned order, no need for you to complete the investigation within 60 days.”

Besides this, Solicitor-General Mehta argued that the conduct of the accused prevented the Enforcement Directorate from exercising its right of custodial interrogation, owing to an order of the court. To ‘bring truth to life’ was not just a right, but also a duty owed to the victims of the crimes the embattled legislator is accused of committing, the law officer told the bench. “This is a duty that the ED was not allowed to perform owing to intervening circumstances and the order of a constitutional court.”

The 15 days rule, he further argued, would apply only to the magistrate which has no inherent jurisdiction. Seeking to distinguish the precedents relied on by the petitioners, Mehta added, “In the first instance, we requested the high court to pass an order in exercise of its constitutional jurisdiction excluding the period that Senthil Balaji was under hospitalisation. Note that in none of the cases the petitioners have relied on, including Anupam Kulkarni, was there a contemporaneous high court order preventing custody, nor did the prosecution continuously request to take the accused into custody since it was prevented by intervening circumstances beyond its control.”

Even if the bar of Section 167 were to disentitle the Enforcement Directorate from seeking police custody of the DMK leader beyond 15 days, the period would only be calculated from the date on which the agency secured ‘actual physical custody’ of the accused, Solicitor General Mehta argued. He explained:

“To attract the bar of Section 167, assuming that it applies, the clock starts when he is sent for detention in such custody. The word detention means actual physical custody. It means that a person is physically under the control of an investigating agency, and not just that the agency is allowed to interrogate him – either in hospital or in jail. That stage has not arisen and therefore, the 15 days’ period has not started, not due to any inaction of the Enforcement Directorate, but because of the intervention of a constitutional court.”

The law officer also invoked the doctrine of relation back to argue that once the high court came to the conclusion that the Enforcement Directorate was entitled to seek custody, by a majority of judges, it ought to have restored position as on date on which remand was sought. He asserted that the litigation was an attempt the legislator to ‘frustrate’ the process and evade custodial interrogation, saying, “Ultimately, the game is, he wanted to wait out the first 15 days to frustrate the process and rely upon the technicality of a judgment that does not apply to his case.”

Background

In June, DMK leader V Senthil Balaji and cabinet minister in the MK Stalin-led Tamil Nadu government was arrested by the Enforcement Directorate for his alleged role in a cash-for-job scam in the state, which is believed to have taken place between 2011-2016 during his tenure as the transportation minister under the then-AIADMK regime. This development came after the Supreme Court in May set aside a direction of the Madras High Court staying the proceedings in the money laundering case lodged by the Enforcement Directorate, effectively removing all fetters to the ED investigation. The top court also gave a nod to the agency to include the offences under the Prevention of Corruption Act in the investigation.

In the same month, the Madras High Court denied interim bail to Balaji but allowed his family’s request to transfer him to a private hospital. Balaji was arrested by the central agency after an 18-hour-long extensive search and interrogation conducted at his official residence, his official chamber at the state secretariat and his brother’s residence. After the minister’s arrest, his wife filed a habeas corpus petition before the high court praying, inter alia, that the legislator be allowed to be shifted to a private hospital to undergo medical treatment.

The Enforcement Directorate challenged the high court agreeing to take the petition on board and passing an interim order before the Supreme Court, arguing that it was not maintainable. But a vacation bench of the top court adjourned the hearing in the central agency’s plea, choosing to wait for the high court to deliver its verdict first.

However, earlier in July, the high court delivered a split verdict. On the one hand, Justice Nisha Banu observed that the habeas corpus petition filed by Balaji’s family was maintainable since, inter alia, the ED officers did not have the powers of a station house officer under the Prevention of Money Laundering Act, and as such, could not have moved for the custody of the minister. On the other hand, Justice Bharatha Chakravarthy held that Balaji's arrest did not amount to illegal detention, observing not only that the ED officers were competent to seek custody, but also that Balaji’s family had not made out a case of illegal custody or a mechanical remand order, which would have warranted the interference of the high court by way of a habeas corpus petition.

Hours after this verdict, the State sought to convince the top court to hear the appeals and finally decide the matter. However, a bench headed by Justice Surya Kant refused to heed the request of the central agency to decide the questions of law involved in the case and opted to continue waiting for the outcome of the litigation pending before the high court, as it had done earlier. However, the Supreme Court requested the Madras High Court Chief Justice to place the habeas corpus petition filed by Senthil Balaji's wife Megala before a larger bench at the earliest for an expeditious decision.

Following this split verdict, Justice CV Karthikeyan, who was assigned by the chief justice to resolve the split decision in this habeas corpus petition, has settled the conflicting views by holding that the central agency was entitled to seek the custody of the minister in a money laundering case over an alleged cash-for-jobs scam in the state. Endorsing the view of Justice Chakravarthy, Justice Karthikeyan held that while officers of the Enforcement Directorate were not police officers, they were competent to take an accused into custody for further investigation and this right of the agency to take Senthil Balaji could not be denied.

After this, the Tamil Nadu minister moved the Supreme Court in appeal against the high court’s verdict, inter alia, challenging the Enforcement Directorate’s power to seek custody of an accused in the absence of a specific provision under the Prevention of Money Laundering Act, 2002. His wife, Megala, also filed an appeal against the Madras High Court’s decision.

Last week, the Supreme Court issued notice in the batch of pleas over Senthil Balaji’s arrest. In view of this, yesterday, the high court division bench of Justices Banu and Chakravarthy decided to close the proceedings in the habeas corpus petition pending before it, without recording any observation regarding the starting date of the minister’s custody.

Case Details

1. 1.Megala v. The State | Special Leave Petition (Criminal) No. 8652-8653 of 2023
2. 2.V Senthil Balaji v. The State | Diary No. 28176 of 2023
3. 3.Directorate of Enforcement & Anr. v. Megala | Special Leave Petition (Criminal) No. 8750 of 2023