'Since ED Is Not Police, They Can't Keep Accused In Custody Beyond 24 Hrs After Arrest' : Senthil Balaji's Argument In Supreme Court

Tamil Nadu Minister V Senthil Balaji has approached the Supreme Court 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.

On 14th July, 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 Karthikeyan 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.

Challenging the order of the Madras High Court Balaji has approached the Apex Court on the following grounds:

ED's Power to seek Custody

Balaji has challenged the ED's power to seek custody stating that in the absence of a specific provision under the Prevention of Money Laundering Act, 2002 the power to arrest would not include to power to seek custody. Even though Section 19 of the PMLA 2002 contains the power to arrest it also requires the person arrested to be taken to the Special Court or Magistrate within 24 hours. Balaji contends that there is no specific provision that entitles the ED to keep the accused in custody beyond 24 hours, or any provision for the Magistrate to allow it.

The petitioner has also referred to the Apex Court judgment in Vijay Madanlal Chaudhury which held that the ED is not the police. Since ED is not the police, the powers under the PMLA given to the ED for arrest of an accused cannot be stretched to include custody beyond 24 hours, it is argued. The petitioner also points out that various other statutes which provides the power to arrest to an Enforcement Agency, confers the same powers on the agency as the officer in charge of a Police Station. The petitioner refers to Section 35(3) of the FERA Act, Section 104(3) of the Customs Act, and Section 69 of CGST Act in this regard.

The maximum period an accused can be kept in custody is 24 hours under Section 19(3) of the PMLA Act, which is in consonance with Article 22(3) of the Constitution and Section 57 of the CrPC, it is contended.

Out Limit of 15 Days of Custody To Police From Date Of Arrest

The petitioner also argues that the ED not being the police has no right to seek custody, but in the event of arrest by the ED the period of custody cannot extend beyond 15 days from the date of arrest.

The petitioner argues that the ED was aware of the Balaji’s medical condition and yet sought for his police custody. It is also argued by Balaji that the ED seeking exclusion of the period for hospital treatment is an illegal way of enhancing the 15 days period of police custody prescribed.

Balaji has taken the ground that in view of the judgements of the Apex Court in CBI v. Anupam J. Kulkarni, (1992) 3 SCC 141 and Budh Singh V State of Punjab (2000) 9 SCC 266, the time period of custody specified in Section 167 CrPC cannot be beyond 15 days.

Balaji specifically refers to the judgement in CBI v. Anupam J. Kulkarni, which held that under the language of Section 167 CrPC makes it clear that any order of custody on the expiry of fifteen days from the date of production, can only be "otherwise than in the custody of the police". This was also followed in Budh Singh V State of Punjab, the petitioner submits. The petitioner also argues that the decision in CBI V Vikas Mishra on which the High Court has relied on, is not good in law and that the Court ought not to have deviated from the settled position of law overlooking Anupam J. Kulkarni and Budh Singh.

The petitioner submits that the judgment of Justice D. Bharatha Chakravarthy, which was later accepted by Justice Karthikeyan held that the time spent by the accused in Hospital, till he is not in a position to be fit to be interrogated has to be excluded from the initial 15 days time for grant of custody to the ED. The petitioner submits that instead of relying on the settled position of law, the High Court proceeded on the principle of "unearthing of the truth" as its primary objective.

Illegality of Arrest and Remand

i) Non-Communication of Grounds Of Arrest:

Balaji argues that ED has not communicated the grounds of arrest to him and hence his arrest is illegal. Balaji argues that the High Court committed a serious error in rejecting the submission of the Petitioner with regard to non-communication of grounds of arrest. The High Court had observed that Petitioner should have known since the ED was at his doors since June 2013. Merely because a person applied for bail it cannot be assumed that he was aware of his grounds of arrest it is argued. Information of grounds of arrest is the most fundamental compliance of Section 19 of the PMLA, the petitioner submits.

Balaji submits that ED prepared two documents: the Grounds of Arrest and the Arrest Memo. However, both documents present conflicting stances by ED. In the Grounds of Arrest document, it is recorded that the information about Balaji's arrest was communicated to his brother Ashok and other relatives/friends, with copies of mobile statements and emails attached. However, this document lacks any statement from the ED stating that the grounds of arrest were informed to the detenu, as required by Section 19 of PMLA.

On the other hand, the arrest memo contains a handwritten note stating, "grounds of arrest conveyed to V. Senthil Balaji as he is not co-operating, arrest memo is being executed in the presence of Panchai. V. Krishna Kumar and 2. Venkatesan Appasamy." It is argued that such a note on the arrest memo holds no significance when it is not documented on the grounds of arrest, which is a statutory requirement, Balaji has submitted before the Apex Court.

ii) Non-Compliance of Section 41-A of CrPC

Balaji also argues that the ED has failed to comply with Section 41A of CrPC as no notice was served on him prior to his arrest. It is contended that Section 41A is an important procedural safeguard against illegal arrest, required to be followed before person can be deprived of his liberty.

The petitioner argues that the conclusion in the High Court judgment that Section 41A of CrPC does not apply to proceedings initiated under PMLA is incorrect:

a. The provisions of the CrPC are generally applicable, as per Section 4 read with Section 5 of CrPC, unless otherwise stated. In the case of PMLA, Section 65 explicitly mentions that the provisions of CrPC apply unless they are inconsistent with PMLA. There is no inconsistency between Section 19 of PMLA and Section 41A of CrPC.

b. It is argued that according to the interpretation given in the judgment of Satender Kumar Antil V CBI, (2022) 10 SCC 51, Section 41A of CrPC must be followed even in cases of arrest made under Section 19 of PMLA. The argument made by the ED that the Satender Antil judgment does not mandate the use of Section 41A of CrPC for arrests in PMLA cases is contrary to the actual interpretation of the judgment, it is contended. The Satender Antil judgment explicitly makes compliance with Section 41A of CrPC mandatory for all States and Union Territories it is argued.

It is also argued that in Arnesh Kumar v. State of Bihar, (2014) 8 SCC 273, directions were issued that no arrest can be made without following the mandate of Section 41A of CrPC when an offence is punishable with imprisonment which may be less than seven years or which may extend to seven years whether with or without fine.

iii) Non Application of Mind While Passing the Remand Order

Even though the arrest of the petitioner had been effected in violation of Section 19 PMLA the Sessions Judge while granting remand on 14.06.2023 did not consider this, Balaji argues. The Sessions Judge passed remand order without considering the relevant documents which shows non application of mind on his part. The non-communication of reasons of arrest amounts to infraction of Article 22 of the Constitution, it is argued.

Another ground indicating non-application of mind that has been raised is that while issuing the remand order, it stated that the reasons for the arrest were communicated to the Balaji but he refused to acknowledge them, but it fails to take into account the Panchnama, which recorded events from 8.30 am to 11 pm on June 13, 2023. The Petitioner argues that the Panchnama does not mention that the detenu refused to cooperate and that there is no record of events between 11 pm and 1.39 am when the arrest actually took place. Since the Panchnama does not contain any such information about non-cooperation by the accused, who had otherwise fully cooperated from 8.30 am until 11 pm, the mere statement by the ED claiming non-cooperation should not have been accepted by the Sessions Court, it is argued.