ED Not Precluded From Carrying Out Investigation, Interrogation; Section 167 CrPC Applies To PMLA Cases Also: SG Tushar Mehta To Madras High Court

He added: “Your honour, if the police register a corruption case which is a predicate offence and I initiate PMLA proceedings, I'm prevented from investigating the corruption angle and the police is prevented from investigating PMLA. It is in that context the court said we're not police officers”.

Senior Counsels Kapil Sibal and NR Elango on Tuesday had argued that the PMLA is regulatory and the ED only has the powers to inquire, not investigate. Sibal also argued that ED is behaving like an authority investigating the predicate offence.

SG Mehta, representing the ED, today argued that investigation is an inbuilt part of PMLA and that investigation and inquiry have been used interchangeably in the enactment.

Taking the court through Section 44 of PMLA, Mehta also submitted that the Act provides a proviso where the investigation agency may file a closure report if no offence is made out. He submitted that if it was to be taken as if the ED could not investigate further after arrest as it already had materials in its possession while making arrest under S.19 of PMLA, then such a proviso would not have existed in the Act.

“If their argument is accepted that I already have materials to arrest under Section 19 and thus don't need 15 days custody, then why did the law provide a proviso that if no offence of money laundering is made out, the authority may file a closure report. Even after filing of complaint, investigation continues and there can be a further charge in supplementary chargesheet. Investigation is an inbuilt part of the Act,” Mehta said.

He also argued that the reason why legislature did not confer powers of a police officer on ED officials was because, unlike other special enactments, PMLA deals with only one offence of money laundering which is non-bailable and therefore, only a court can grant bail.

On the question of ED moving for custody despite the order of High Court saying that Balaji will continue in judicial custody, SG Mehta argued that the observation was only with respect to the question of bail and that the court did not restrict the ED from seeking custody or the Sessions Judge from granting custody.

“The argument by petitioner was when there was judicial order of remand, he should have continued in judicial custody and ED should not have sought custody. I say that the division bench said that he shall continue to be in judicial custody only on the question of enlarging him on bail. The court's emphasis was only that he should not be enlarged on bail. There was no restriction on us seeking custody or the Sessions Judge granting custody,” Mehta said.

Mehta also contended that ED’s application for custody came from a legal compulsion that emerged from the judgment of Kulkarni which says that application should be made within 15 days.

“The question is whether my application for custody was to overreach a judicial direction or a compulsion out of provisions of law. Anupam Kulkarni tells me I get only 15 days and if I don't apply I won't even get exclusion. So I had to apply. What I did was due to compulsion of statute and that cannot be held against me,” Mehta submitted.

Mehta also argued that Section 167 CrPC applies to the PMLA proceedings and it gives powers to the Special Judge to send a person to such custody as it thinks fit. He argued that this power cannot be taken away by a judicial order saying that the person should be kept in judicial custody.

When asked why ED never took custody even when an order was made by the Sessions Court, Mehta submitted that the conditions imposed therein made it impossible for the ED to interrogate and that those conditions were already challenged in the Supreme Court.

“We had already challenged those conditions. We have to assume about his medical condition. How will we interrogate him? Who will be answerable if something happens to him. So we had already challenged the conditions and these were pending… The conditions made a mockery of the custody. We could not interrogate him. Which is why we challenged it.. The condition says that the deputy director of Enforcement Directorate to interrogate the accused without any hindrance to health conditions of the accused and to the treatment provided to him. How will we ensure it,” he said.

ASG ARL Sundareshan also informed the court that the ED had obtained medical opinion from Cauvery Hospital, where Balaji was undergoing treatment, and the doctors had advised that Balaji had to be continuously monitored and that stressful conditions needed to be avoided.

Mehta also argued that the order of remand was a well-reasoned order which was made after taking into consideration all the aspects. He submitted that it was not a mechanical order and that it had not been challenged by Balaji’s side.

“There is no challenge to the order of remand. The law is settled that even if an order is a nullity, it'll have to be formally challenged. They can't just raise additional grounds. Lordship has seen the remand order. It is a well reasoned order. Both sides were represented. Arguments were heard. Judgments relied on were looked at. It was not a mechanical order. It can't be said that there was no application of mind. Every contention is recorded, heard and dealt with. My respectful submission is that even if an order is nullity, it needs to be challenged according to law,” he submitted.

Mehta also argued that Section 41A of CrPC will not apply to the proceedings initiated by ED as the central agency is bound by more stringent law under the PMLA. He added that the points of arrest were informed “as soon as possible” to Balaji as per the law.

On the point of exclusion, it was argued that the law laid down by the Supreme Court in the Anupam Kulkarni case should not be looked into in a stringent manner. He submitted that the 15-day period is the outer limit and the maximum period for which the ED could take custody. He added that if it is viewed strictly, any person could get hospitalized and may thus prevent interrogation by ED.

Case Title: Megala v The State

Case No: HCP 1021 of 2023