Judges Of PMLA Courts Not Supposed To Act Like "Extended Arm Of ED": Punjab & Haryana HC Quashes Unreasoned Custodial Interrogation Order

The Punjab and Haryana High Court has cautioned the Judicial Officers deployed at Special PMLA Courts to not act as an "extended arm" of the central investigating agency Enforcement Directorate, by passing orders of remand against the suspect as a matter of course.

Stating so, it set aside a Special Court's "routine order" granting ED custody for custodial interrogation of accused Balwant Singh in a PMLA case.

Justice Mahabir Singh Sindhu said, "there would be no hesitation to observe that...(remand) order is neither coherent; nor any reason(s) is/are discernible to sustain the custodial interrogation of petitioner for 04 days on mere asking of the E.D."

The bench criticized the Special Court for accepting ED's prayer in a routine manner and authorizing Singh's custodial interrogation, "while negating the salutary protection emanating from Article 21 of the Constitution".

Justice Sindhu highlighted that the Special Court did not advert to the relevant provisions of law for authorizing custodial interrogation in such like cases, nor examined the provisions of Section 44 of the PMLA and/or Section 309 of the Code.

Section 44 of PMLA provides that a Special Court while trying the scheduled offence or the offence of money-laundering shall hold trial in accordance with the provisions of the Code of Criminal Procedure, as it applies to a trial before a Court of Session.

"Here, it would be relevant to emphasize that the Judicial Officer(s), who have been assigned the task of Special Court under PMLA, is/are not supposed to act as an extended arm of the E.D and pass the remand order against the suspect as a matter of course," it added.

The Court noted that the Special Court while passing the impugned remand order, thereby authorizing custody of petitioner to the E.D, failed to consider the drastic consequences and negated the rule of law.

The Court was hearing a plea under Article 226 of the Constitution read with Section 528 of the Bharatiya Nagarik Suraksha Sanhita, 2023 seeking quashing of remand order and order directing judicial custody of Balwant Singh accused under PMLA.

It was alleged that loan facility to the tune of Rs.46 crore was fraudulently availed by M/s Tara Corporation Limited while showing bogus share capital and fictitious turnovers. ED submitted that the amount was never used for the intended purposes, instead, diverted to the accounts of sister concerns and other shell companies to misuse the loan amount. Balwant Singh and other co-accused were booked in the matter.

ED filed the complaint under Section 44 PMLA against 07 persons, including, the petitioner Balwant Singh, Jaswant Singh, Kulwant Singh and Tejinder Singh, M/s TCL, M/s THFL and M/s Tara Sales Limited.

Matter Adjourned Like Civil Dispute

After examining the submissions, the Court noted that Singh's ED custody was to end on 09.10.2024 but on that day, the Special Judge proceeded on a short casual leave and Singh was resultantly produced before the Judge on Duty, who simply posted the matter the next day, "like a civil dispute". the Judge on duty neither extended the remand nor remanded him to judicial custody. As a consequence, Singh remained in ED custody on the 5th day as well.

Justice Sindhu noted that again, on 10.10.2024, without there being any justification, Singh was remanded to judicial custody by the Special Court, upto 23.10.2024. This was later extended twice, effectively till 20.11.2024, without proper reason(s).

While noting that the impugned remand orders had been passed at the post-cognizance stage, the Court referred to Section 309 CrPC,  which prescribes "Power to postpone or adjourn proceedings."

It noted that Section 309(2) Explanation 1 of the Code envisages that an accused can be remanded to custody subject to the fulfillment of two pre- conditions viz., (i) the accused is in custody; and (ii) sufficient evidence has been obtained to raise a suspicion that the accused may have committed an offence and it appears likely that further evidence may be obtained by a remand.

"However, in the present case, none of above conditions had been satisfied on 05.10.2024 for the simple reason that neither the petitioner was in custody; nor there was sufficient evidence obtained by the E.D to the effect that he has committed an offence of money-laundering as no order in terms of Section 19 of the PMLA is passed by the competent authority till date," added the Court.

Stating that custodial interrogation as well as the subsequent orders for judicial custody have been passed by Special Court "without application of judicial mind", the Court held that the orders are "indefensible in law."

Registrar (Vigilance) To Look Into When Remand Order Was Uploaded By Special Court

While allowing the plea, the Court requested the Registrar (Vigilance) to ascertain the date and time when the detailed order dated 05.10.2024 was uploaded online by the Special Court. A report in this regard is to be filed within two months, for further action, if required

Mr. Vikram Chaudhri, Senior Advocate assisted by Mr. Keshavam Chaudhri, Advocate,

Ms. Hargun Sandhu, Advocate and Mr. Gorav Kathuria, Advocate, for the petitioner.

Mr. Satya Pal Jain, Addl. Solicitor General of India assisted by Ms. Meghna Malik, Central Govt. Counsel for the respondent.

Title: Balwant Singh v. Directorate of Enforcement

Citation: 2024 LiveLaw (PH) 357

Click here to read/download the order