Supreme Court To Hear Tomorrow TN Minister Senthil Balaji's Plea Against Madras HC Order Allowing ED Custody

The Supreme Court has listed for tomorrow (July 21, 2023), the pleas filed by Tamil Nadu Minister V Senthil Balaji and his wife, challenging the Madras High Court's judgment holding that the Directorate of Enforcement is entitled to take him into custody in connection with the cash-for-jobs scam. The matter was mentioned before a bench comprising CJI DY Chandrachud, Justice PS Narasimha, and Justice Manoj Misra. 

Senior Advocate Kapil Sibal, appearing for Balaji, submitted before the court–

"There was a difference in opinion in Madras High Court. It went to a third judge and the matter will become infructuous if it is not heard immediately. Because then he will be taken in police custody. The bench is already dealing with it." 

At this juncture, the Solicitor General of India Tushar Mehta stated–

"I have also filed an SLP against the same order."

CJI DY Chandrcahud remarked–

"We will keep this matter tomorrow and Mr SG, please see if your junior can just give a number to the registrar, so we will keep your matter tomorrow also then."

However, the SG argued that the matter could be kept for Monday. He said–

"After the two judges delivering separate judgements, one division and the third judge concurring, the matter is now directed to be posted before the division bench. That is the stage. So nothing will happen."

Sibal interjected to the same and asked–

"How can my learned friend say that nothing will happen?"

CJI DY Chandrachud then stated–

"The apprehension is that he will be taken into police custody...We will keep it tomorrow."

Arguments raised in the Petitions

Balaji and his wife Megala have both filed separate petitions before the Apex Court. 

The petition filed by Balaji argues that as per Section 19 of the Prevention of Money Laundering Act, 2002 (PMLA), any person arrested by the ED is required to be taken to the special court or magistrate within 24 hours. Further, there is no specific provision entitling the ED to either keep the accused in custody beyond 24 hours, or any other provision for the magistrate to allow the same. It adds that the ED's Power to arrest does not include the power to seek custody owing to the absence of a specific provision for the same. 

The petition also challenges the Madras High Court's view allowing the period of custody to be more than 15 days from the initial date of arrest. While relying on various judgements, the plea states that under Section 167 of CrPC, any order of custody on the expiry of 15 days from the date of production can only be "otherwise than in the custody of police". 

Highlighting the illegality of arrest and remand, the petition states that the ED has not communicated the grounds of arrest to the petitioner and thus the arrest of illegal. Further, it argues that the ED has failed to comply with Section 41A of the CrPC, which requires a notice prior to the arrest to be served to the petitioner. It also alleges that the sessions judge, while granting remand, did not consider the violation of Section 19 of PMLA in petitioner's arrest. Thus, the remand order suffered from non-application of mind. 

The plea filed by Megala relies primarily on two judgements– Vijay Madanlal Chaudhary v. Union of India, 2022 SCC OnLine 92 and CBI Vs. Anupam Kulkarni, (1992) 3 SCC 341 to argue that the decision of the Madras High Court was contrary to the settled position of law. It argues that the Supreme Court has authoritatively interpreted and explained the object, scheme, and ambit of powers under the PMLA in its judgement in Vijay Madanlal Chaudhary "where it is categorically held that the officers of the ED are not police officers." The rationale behind the same is that the object of the Act is not penal but regulatory in nature. Thus, the Act only empowers the ED to conduct an inquiry and not an ‘investigation’ as understood under the provisions of the CrPC. It adds–

"Once ED officers have been held not be police officers, there is no question of them seeking custody under Section 167 CrPC, which provision is only applicable to a “officer in charge of a police station” or “police officer”."

Relying on the Anupam Kulkarni case, the petition argues that police custody under Section 167 of CrPC can only be for the first 15 days of remand and thereafter it can only be judicial custody. The petition submits–

"The impugned orders have in effect legislated and conferred right on ED beyond the scope of the statute i.e PMLA and CrPC inasmuch as despite not being police officers they have been held entitled to seek police custody and that too for a period beyond first 15 days of the remand order."

Decision of the Madras High Court

On July 14, the third judge of the Madras High Court had ruled in favour of the ED, holding that the central agency is entitled to seek police custody of an accused in a money laundering case. The matter was referred to the third judge Justice CV Karthikeyan following a split in the division bench of Justices Nisha Banu and Bharatha Chakravarthy. 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. Justice Karthikeyan 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." Justice Karthikeyana also agreed with Justice Chakravarthy in holding that the habeas corpus petition in the instant case was not maintainable as there was no illegality in the arrest of Balaji.

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.